Basson v Hanna

In 2002 the respondent, Tyrone Paul Hanna, and two others concluded an oral agreement with the first appellant, Christiaan Johannes Basson, in terms of which Basson sold one third of his member’s interest in Plot 31 Vaalbank CC to each of them. The purchase price was payable in monthly instalments over 20 years, together with interest agreed as prime plus 1%, and contributions to operating expenses. The parties later fell out. Basson took the stance that the agreement was invalid due to lack of consensus on the interest rate and other statutory non-compliance, and repudiated the agreement. During litigation Basson alienated the subject matter (the member’s interest) to third parties, making specific performance impossible. Hanna accordingly pursued damages in lieu of specific performance.

The appeal was dismissed with costs. The High Court order was amended to direct the first appellant to pay damages of R1 212 994.80 together with interest at 9.5% per annum from 14 September 2014 to date of final payment.

The case clarifies that lack of agreement on the precise nature of an interest rate does not necessarily invalidate a contract, and affirms the availability of damages in lieu of specific performance where performance has become impossible. It limits the reach of the controversial ISEP decision and strengthens remedial flexibility in South African contract law.