Du Plessis & Smith NNO v Goldco Motor & Cycle Supplies (Pty) Ltd

The appellants, Du Plessis and Smith, were trustees of the Prosperitas Trust, which owned immovable property in Welkom. Goldco Motor & Cycle Supplies (Pty) Ltd leased premises in a building to be constructed by the trust. The lease, concluded in March 2005, contained an option clause granting Goldco an option to purchase the leased premises (Shop 1, Prosperitas Building) at a specified price, subject to escalation and to the opening of a sectional title register. The option was to be exercised by signing a written contract of sale drafted by the trust’s attorneys (Rossouw & Vennote) within 24 months. Goldco timeously indicated its intention to exercise the option and obtained financing. Although the sectional plan was approved and delivered to the attorneys, the trust’s attorney failed to draft the written contract within the option period. After the option period expired, the trust refused to sell. Goldco approached the Free State High Court, which found that the trust, through its attorney, had deliberately frustrated the exercise of the option. The trustees appealed to the Supreme Court of Appeal.

The appeal was dismissed with costs. The order of the High Court was amended to declare that the option to purchase was deemed to have been exercised and to direct the trustees to take all necessary steps to transfer Shop 1, Prosperitas Building, Welkom, to Goldco against payment of R4 840 000 plus VAT, with costs.

The case is a leading authority on the application of the doctrine of fictional fulfilment to the exercise of options in South African contract law. It confirms that an option grantor cannot rely on the deliberate frustration of a prescribed mode of exercise, particularly through its agent, to avoid being bound. The judgment clarifies the distinction between conditions and obligations in option contracts and reinforces the principle that no one may benefit from their own wrongful conduct.