Court ruling: What if Occupation is Granted in an Agreement of Sale and the Seller Enters into a Second Agreement?

In the matter of Fulsome Properties (Pty) Ltd v Selepe and Others held recently at the High Court of South Africa, Gauteng Division, Pretoria, Fulsome Properties (Pty) Ltd (the applicant) requested an urgent interdict to restrain the first and second respondents (Fiona Gontse Selepe and Lentse Investments) from communicating and interfering in any manner whatsoever with the applicant’s tenant(s) residing at the property in question.

The ins and outs of subject to bond approval clauses

The facts of the case

On 1 and 4 October 2020, the applicant and first respondent entered into sale agreements for two different units. Deposits were to be paid on both properties, with the balance due on registration. The applicant paid both deposits to the first respondent within the allocated time, and the parties agreed that the applicant would be entitled to vacant occupation of the properties from 31 October 2020.  At this point, the applicant placed a tenant in the property with effect from 1 November 2020 and entered into a written lease agreement with the tenant on 13 November 2020. 

When the first respondent failed to provide the applicant’s attorney of record with the requested FICA documentation, or to sign the form allowing the release of the bond cancellation figures, the applicant’s attorney wrote a letter of demand in January 2021 requesting that the first respondent remedy her breach in the agreement of sale. Another letter written later that same month requested that she remedy her breach, failing which an application to compel specific performance would be applied for.

On 11 November 2020, the first respondent entered into an instalment sale agreement with the second respondent whereby the property was sold by the first respondent to the second respondent. The recordal of the agreement was registered in the Pretoria Deeds Office on 10 February 2021.  

On 1 March 2021, the second respondent’s attorneys contacted the applicant’s tenants. They were told to vacate the property and were advised, by email, that the monthly rental was to be paid to the second respondent with effect from 2 March 2021.

An application was made to the court to grant an interdict in favour of the applicant to restrain the first and second respondents from communicating and interfering in any manner whatsoever with the applicant’s tenant(s) residing at the property in question.

The court’s decision

For the court to decide in favour of the applicant, it must be satisfied that there has been proper compliance with the prerequisites of an interdict: 

  • A prima facie right. 
  • A well-grounded apprehension of the irreparable harm if the interim relief is not granted. 
  • The balance of convenience favours the granting of an interim interdict.
  • That the applicant has no other satisfactory remedy.  

The learned Van Zyl ADJP found in the case Gugu v Zongwana (supra) at paragraph [32]: “… the existence of an agreement for the sale of a specific thing does not prevent the creation of a competing personal right ex-contractu for the delivery or the transfer of the same moveable or immovable thing. Consequently, ownership is generally not acquired by the purchaser whose contract was the earlier one, but by the purchaser who was the first to obtain delivery or transfer without knowledge of the existence of the prior right of another” and at paragraph [33] “The accepted approach to successive sales and competing rights is that as a point of departure the possessor of the earlier right, in the case the appellants, is entitled to specific performance, unless the second purchaser can show that the balance of fairness is in his favour…”

In this case, the right to possession, use and enjoyment was first transferred to the applicant by the first respondent in terms of the agreement of sale and the possession and occupation of the property from 31 October 2020.  

The court found that as a result of the right of possession having already been transferred to the applicant, the first respondent was incapable of passing the same right of possession to the second respondent. Therefore, the applicant has the right to interdict the seller, namely the first respondent, from passing ownership to the second purchaser, namely the second respondent. 

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Court ruling: What if Occupation is Granted in an Agreement of Sale and the Seller Enters into a Second Agreement?

In the matter of Fulsome Properties (Pty) Ltd v Selepe and Others held recently at the High Court of South Africa, Gauteng Division, Pretoria, Fulsome Properties (Pty) Ltd (the applicant) requested an urgent interdict to restrain the first and second respondents (Fiona Gontse Selepe and Lentse Investments) from communicating and interfering in any manner whatsoever with the applicant’s tenant(s) residing at the property in question.

The ins and outs of subject to bond approval clauses

The facts of the case

On 1 and 4 October 2020, the applicant and first respondent entered into sale agreements for two different units. Deposits were to be paid on both properties, with the balance due on registration. The applicant paid both deposits to the first respondent within the allocated time, and the parties agreed that the applicant would be entitled to vacant occupation of the properties from 31 October 2020.  At this point, the applicant placed a tenant in the property with effect from 1 November 2020 and entered into a written lease agreement with the tenant on 13 November 2020. 

When the first respondent failed to provide the applicant’s attorney of record with the requested FICA documentation, or to sign the form allowing the release of the bond cancellation figures, the applicant’s attorney wrote a letter of demand in January 2021 requesting that the first respondent remedy her breach in the agreement of sale. Another letter written later that same month requested that she remedy her breach, failing which an application to compel specific performance would be applied for.

On 11 November 2020, the first respondent entered into an instalment sale agreement with the second respondent whereby the property was sold by the first respondent to the second respondent. The recordal of the agreement was registered in the Pretoria Deeds Office on 10 February 2021.  

On 1 March 2021, the second respondent’s attorneys contacted the applicant’s tenants. They were told to vacate the property and were advised, by email, that the monthly rental was to be paid to the second respondent with effect from 2 March 2021.

An application was made to the court to grant an interdict in favour of the applicant to restrain the first and second respondents from communicating and interfering in any manner whatsoever with the applicant’s tenant(s) residing at the property in question.

The court’s decision

For the court to decide in favour of the applicant, it must be satisfied that there has been proper compliance with the prerequisites of an interdict: 

  • A prima facie right. 
  • A well-grounded apprehension of the irreparable harm if the interim relief is not granted. 
  • The balance of convenience favours the granting of an interim interdict.
  • That the applicant has no other satisfactory remedy.  

The learned Van Zyl ADJP found in the case Gugu v Zongwana (supra) at paragraph [32]: “… the existence of an agreement for the sale of a specific thing does not prevent the creation of a competing personal right ex-contractu for the delivery or the transfer of the same moveable or immovable thing. Consequently, ownership is generally not acquired by the purchaser whose contract was the earlier one, but by the purchaser who was the first to obtain delivery or transfer without knowledge of the existence of the prior right of another” and at paragraph [33] “The accepted approach to successive sales and competing rights is that as a point of departure the possessor of the earlier right, in the case the appellants, is entitled to specific performance, unless the second purchaser can show that the balance of fairness is in his favour…”

In this case, the right to possession, use and enjoyment was first transferred to the applicant by the first respondent in terms of the agreement of sale and the possession and occupation of the property from 31 October 2020.  

The court found that as a result of the right of possession having already been transferred to the applicant, the first respondent was incapable of passing the same right of possession to the second respondent. Therefore, the applicant has the right to interdict the seller, namely the first respondent, from passing ownership to the second purchaser, namely the second respondent. 

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