In 2006 the appellant, Mr Noel Patrick McGrane, concluded a written agreement of sale with the respondent, Cape Royale The Residence (Pty) Ltd, for the purchase of a sectional title unit in a development to be constructed in Green Point, Cape Town. The agreement contained a clause dealing with the obtaining of a mortgage loan, framed as a condition precedent applicable only if the purchaser required finance. McGrane paid a deposit and later paid the full purchase price in cash. An addendum in 2007 adjusted the purchase price due to a reduced floor area. Despite payment and the opening of the sectional title register, the respondent refused to transfer the property, contending that the agreement was null and void because the appellant had not obtained a mortgage loan within the stipulated period. The appellant sued for specific performance. The High Court upheld the respondent’s plea that the condition precedent was unfulfilled, rendering the agreement unenforceable, and dismissed the claim. McGrane appealed to the Supreme Court of Appeal.
The appeal was upheld with costs. The order of the High Court was set aside and replaced with an order declaring that the agreement of sale was not null and void for non-fulfilment of the suspensive condition, and directing the respondent to pay the appellant’s costs in respect of the trial on the separated issue.
The case is significant for reaffirming South African principles on the interpretation of contracts, particularly mortgage-bond or subject-to-finance clauses. It confirms that such clauses are generally for the benefit of the purchaser, apply only if finance is required, and do not automatically impose an obligation to obtain a loan. The judgment also clarifies that waiver of a suspensive condition benefiting one party may be inferred from conduct and does not necessarily need to be expressly pleaded where the real issues were fully ventilated.