Exdev (Pty) Ltd and Rodney Wolmer v Pekudei Investments (Pty) Ltd

On 15 June 2005, the respondent (plaintiff) and appellants (defendants) entered into a written agreement for multiple transactions. Plaintiff had initially sold certain sections at Twindale (sections 21, 22 and 23) measuring 260m² with 8 parking bays to the first defendant for R2,178,000 (clause 2). The first defendant intended to replace Twindale with a new building. The agreement provided that the first defendant would provide plaintiff with an office unit of the same size (260m²) and parking bays at the same price in the new building (clause 3). The agreement also granted plaintiff an option to purchase up to a further 140m² at market price when the building was completed (also clause 3), and contained a conditional undertaking by the second defendant personally to provide similar office space if the building was not erected within 30 months of obtaining rezoning (clause 4). The first defendant took transfer of sections 21-23 and rezoning was obtained in November 2006. However, the transaction for the office unit in the new building did not materialize. In September 2008, plaintiff sued for damages of R5.62m for alleged repudiation of the agreement. Defendants pleaded that the agreement was void for vagueness in the description of property and purchase price (for the option), and/or for non-compliance with section 2(1) of the Alienation of Land Act 68 of 1981. Plaintiff excepted to this defence.

• Whether the sale agreement complied with the requirements of section 2(1) of the Alienation of Land Act 68 of 1981
• Whether the description of the property sold (the res vendita) was adequate despite the seller having discretion to determine the shape and location of the unit
• Whether the sale and the option in clause 3 constituted separate and divisible contracts or a single unitary contract
• Whether the alleged invalidity of the option affected the validity of the sale

The appeal was dismissed with costs. The order of the court a quo was altered to: (a) uphold the exception with costs; (b) strike out the words 'and 3.3 to 3.3.4 below' in paragraph 3.2 of the plea; and (c) strike out paragraph 3.3 of the plea (which contained the defences based on vagueness and non-compliance with section 2(1)).

A sale of immovable property complies with section 2(1) of the Alienation of Land Act 68 of 1981 where the parties have agreed on the size of the property sold and its general location, even though the shape and precise position within a building under development are left to the bona fide discretion of the seller to determine. Such a contract falls within the recognized category where the res vendita is to be selected from a genus or class by one of the parties, and is valid provided the property can be identified from the contract itself without resorting to evidence of the parties' negotiations. Where a single written document contains multiple transactions relating to different subject matter with independent reciprocal obligations and no interlocking of terms, those transactions constitute separate and divisible contracts, and the invalidity of one does not affect the validity of the others.

The court made several important obiter observations: (1) Section 2(1) of the Alienation of Land Act has been fertile ground for litigation and has arguably failed to achieve its objectives of promoting certainty and avoiding disputes, being often abused by sellers seeking to escape contracts on technical grounds (para 1); (2) It was wholly inappropriate for the court a quo to have granted leave to appeal directly to the Supreme Court of Appeal in such a simple matter of no complexity (para 22); (3) The delays in delivering judgment in the court a quo (nine months for the exception judgment, three months for the leave to appeal judgment) were unacceptable and cause for concern. Justice delayed is justice denied. Judges owe it to litigants and the public to deliver judgments expeditiously, and the administration of justice falls into disrepute when they fail to do so (paras 23-25). However, Pillay and Ebrahim AJJA dissociated themselves from the criticism of the trial judge, noting that the court did not have a proper factual foundation to apportion blame for the delays (paras 28 and 30).

This case provides important guidance on the requirements of section 2(1) of the Alienation of Land Act 68 of 1981 regarding the description of immovable property sold. It confirms that: (1) Section 2(1) does not require a faultless or meticulously accurate description of property; (2) A sale is valid where parties agree to the essential characteristics of the property (such as size and general location) even if one party retains discretion to determine other features (such as shape and precise position), provided the property can be identified from the contract without resort to extrinsic evidence of the parties' negotiations; (3) Such contracts fall within the recognized category where a party may select the res vendita from a genus or class; (4) Multiple transactions contained in a single written document may constitute separate and divisible contracts if they relate to different subject matter, have independent reciprocal obligations, and their terms are not interlocked. The case reaffirms that the purpose of section 2(1) is to promote certainty, not to provide technical escape routes for parties seeking to avoid their contractual obligations. The judgment also contains important obiter remarks about judicial delays and the appropriate exercise of discretion in granting leave to appeal directly to the Supreme Court of Appeal.