Maria Luisa Palma Codevilla v Paula Jane Kennedy-Smith NO and Others

The third and fourth respondents (purchasers) concluded an Offer to Purchase (OTP) with the first respondent (seller) on 4 February 2020 for property in Cape Town at a purchase price of R5,150,000. The sale was subject to a suspensive condition in clause 7.2 requiring approval of a mortgage bond of R4,950,000 by 14 February 2020, with provision for a 30-day extension with written consent. A first addendum extended this to 19 February 2020. The appellant (purchasers' mother-in-law) agreed to provide funds but could not do so by 19 February 2020, causing the OTP to lapse. On 20 February 2020, a second addendum was signed purporting to amend the financing arrangements and extend the deadline to 25 February 2020. The appellant paid R1,950,000 into the conveyancer's trust account. When the purchasers faced financial difficulties due to COVID-19 in May 2020, they sought to cancel. The appellant, having taken cession of the purchasers' claim, sought repayment on the basis that the OTP had lapsed and could not be revived.

• Whether an agreement for the sale of immovable property can be revived after the lapse of a suspensive condition
• Whether a suspensive condition can be waived or extended after the time fixed for its fulfilment has expired
• Whether the second addendum constituted a valid revival of the OTP or a new agreement
• Whether the second addendum complied with the formalities required by the Alienation of Land Act 68 of 1981

The appeal was upheld with costs (costs of one counsel only). The order of the full court was set aside. It was declared that: (1) the OTP concluded on 4 February 2020; and (2) the Addendum to Agreement of Sale concluded on 20 February 2020 purportedly extending the suspensive condition in clause 7.2 after its expiry date, were invalid and unenforceable. The first and second respondents were ordered to pay the appellant the sum of R1,950,000 which she had paid on behalf of the purchasers, together with interest. The first and second respondents were ordered to pay the costs jointly and severally.

When a suspensive condition in a contract for the sale of immovable property is not fulfilled by the date stipulated (including any validly extended date), the contract lapses by operation of law. After such lapse, there is no right that can be waived and no contract that can be revived or extended. Any purported waiver, revival, or extension of the suspensive condition after the expiry date for its fulfilment is legally incompetent and of no effect. The time limit for fulfilment of a suspensive condition is an essential term inserted to create certainty for both parties as to the fate of the contract. To allow post-expiry waiver or extension would render the time limitation entirely without content or purpose and would defeat the manifest intention of the parties in stipulating the deadline.

The majority judgment noted that parties wishing to continue with a transaction after a contract has lapsed may do so by entering into an entirely new agreement, which can be on the same terms and conditions as the lapsed agreement, provided it complies with all requisite formalities including those prescribed by the Alienation of Land Act 68 of 1981. The Court observed that Benkenstein v Neisius was wrongly decided and should not be followed, as it is inconsistent with binding authority. The minority judgment observed that subsequent conduct of parties may be relevant to demonstrating their intention at the time of signing an addendum, though such conduct cannot validate an agreement that fails to comply with legal requirements. The Court also noted that it is impermissible for a court to raise and decide a case on grounds not pleaded by the parties (mero motu), confirming the principle established in Fischer v Ramahlele.

This case authoritatively confirms and applies the established principle in South African law that once a suspensive condition in a contract of sale fails to be fulfilled by the stipulated date, the contract lapses by operation of law and cannot thereafter be "revived" by waiver or extension of the condition. The judgment reinforces that the time limit for fulfilment of a suspensive condition serves the important purpose of creating certainty for both parties. The case rejected the approach in Benkenstein v Neisius and confirmed the binding authority of Trans-Natal Steenkoolkorporasie, Fairoaks, and Pangbourne. It clarifies that parties wishing to proceed after a contract has lapsed must enter into an entirely new agreement complying with all statutory formalities, rather than attempting to revive or extend the lapsed agreement. The case is significant for conveyancing practice and the law of sale of immovable property.