The dispute arose from a residential building contract. Lorraine Du Preez, the owner of immovable property, initially contracted with Jonker Projekte CC to build a house for R1 million inclusive of VAT, payable in progress payments. Jonker Projekte CC was liquidated shortly after construction commenced. Tornel Props (Pty) Ltd purchased Jonker CC’s right to complete the partially built house and entered into a partly written and partly oral agreement with Du Preez in December 2006, incorporating the original building contract. Disputes arose regarding whether the contract price included VAT, whether certain items (such as a swimming pool and paving) formed part of the works, and most importantly whether Du Preez was obliged to make progress payments before completion. Du Preez refused to make any further payments until the house was complete, contrary to the contract terms. Tornel Props withheld further performance and Du Preez purported to cancel the contract, alleging repudiation by Tornel Props. Tornel Props then sued for damages.
The appeal was partly upheld. The order of the court a quo was set aside and replaced with an order directing the defendant to pay the plaintiff R104 817 with interest from 1 June 2007 at 15.5% per annum, costs of the action, and dismissing the counterclaim with costs. The appellant was ordered to pay the costs of the appeal and the costs of the condonation application.
The case is significant for its clear restatement of South African law on repudiation, reciprocal obligations, and the right to withhold performance in synallagmatic contracts. It affirms that a party entitled to performance may withhold its own performance where the other party fails to comply with a reciprocal obligation, without such conduct amounting to repudiation. The judgment also emphasises the objective test for repudiation and clarifies the evidentiary requirements for proving contractual damages.