Eugene Bernhard De Klerk and Another v Steven-Lee Properties (Pty) Ltd and Another

In March 2007, the appellants (De Klerks) entered into two sale agreements with the first respondent (Steven-Lee Properties) for the purchase of two properties within a development in Vanderbijlpark, within the Emfuleni Local Municipality and the Vaal River Barrage area. The properties were registered in the appellants' names on 31 May 2007 and 8 June 2007, for purchase prices of R261,000 and R271,000 respectively. The development had been proclaimed as a township on 22 March 2006, after the municipality granted consent on 16 February 2006 confirming that all criteria for water and sanitation services had been met. Clause 15.1 of the sale agreements provided that "the DEVELOPER shall make the arrangements to the satisfaction of the appropriate local authority for the provision of essential services to the street border of the property." Towards the end of 2009, a dispute arose between the municipality and Rand Water Board regarding failures at the municipality's pump stations. Rand Water refused to approve further building until the municipality upgraded its pump stations. The appellants sought re-transfer of the properties, claiming clause 15.1 created a suspensive condition that had not been fulfilled, or alternatively that they were entitled to cancel the agreements.

• Whether clause 15.1 of the sale agreements created a suspensive condition
• Whether the term 'appropriate local authority' referred to the municipality or Rand Water Board
• Whether the first respondent had complied with its obligations under clause 15.1
• Whether there was a tacit term entitling the appellants to construct dwellings within a reasonable time or within 24 months of registration
• Whether the first respondent was in breach of contract entitling the appellants to cancel

The appeal was dismissed with costs. The court declined to award costs of two counsel to the first respondent as the issues were not sufficiently complicated to warrant such costs.

A clause requiring a developer to "make arrangements to the satisfaction of the appropriate local authority for the provision of essential services" constitutes a contractual term, not a suspensive condition, where the arrangements were made and approval obtained before conclusion of the sale agreement. A suspensive condition must relate to a future uncertain event; where the event has already occurred at the time of contracting, it cannot be a suspensive condition. The "appropriate local authority" for purposes of water and sanitation services in a property development is the municipality, not a statutory water board, as municipalities govern local government affairs under Chapter 7, section 151 of the Constitution. A developer's contractual obligation to make arrangements for essential services does not extend to guaranteeing future compliance by the municipality or obtaining subsequent approvals from statutory bodies after transfer. Upon registration of transfer, risk in the property passes to the purchaser, who must then deal with any subsequent regulatory requirements or infrastructure issues. A tacit term will not be inferred unless it is formulated in precise and exact terms.

The court observed that the appellants' letter of demand to the first respondent did not refer to any non-fulfilment of a suspensive condition, only to non-compliance with "conditions" of the sale agreements, which undermined their subsequent argument that clause 15.1 created a suspensive condition. The court noted that standard sale agreements were used at a time when certain conditions had already been met, and the appellants did not complain about non-compliance with clause 15.1 at the time of registration. The court commented that the appellants sought to rely on documents (the Services Agreement and Guide Plan) to which they were not party and which they may not have seen, which was an inappropriate approach to contract interpretation. The court remarked that there was nothing more the first respondent could do in terms of its obligations under clause 15.1, as it had no authority over either the municipality or Rand Water.

This case provides important guidance on the distinction between suspensive conditions and contractual terms in sale of land agreements. It clarifies that a suspensive condition must relate to a future uncertain event, whereas a contractual term imposes an obligation to act in a particular manner. The judgment is significant for establishing the limits of a developer's obligations in property sales - a developer is required only to make arrangements to the satisfaction of the local authority for essential services, not to guarantee future compliance by third parties (such as statutory bodies or municipalities) or the continued functioning of municipal infrastructure after transfer. The case also demonstrates the application of constitutional principles regarding local government competencies in contractual disputes, confirming that municipalities are the appropriate local authorities for water and sanitation matters, not statutory water boards. It reinforces the principle that upon registration of transfer, risk passes to the purchaser, and subsequent regulatory requirements or infrastructure failures cannot retrospectively invalidate a contract that has been performed.