A Bond Clause
Deadline Whooshes by and a Sale Dies – Can You Revive it?

“I
love deadlines. I love the whooshing noise they make as they go
by.” (Douglas Adams in The Salmon of Doubt)

Contracts often
contain suspensive conditions, a common example being the bond clause
in a property sale agreement. The standard bond clause provides that
the buyer must obtain a bond by a set deadline, and everyone’s rights
and obligations under the agreement are suspended until the bond is
granted. If the bond isn’t granted by the deadline, there is no sale.

In practice, the
buyer often struggles to meet the set deadline and asks for an
extension. If that happens to you, be sure to structure the extension
correctly and to get it done and dusted before the
deadline expires. 

Parties often think
“oops, we both missed the deadline, but no worries, we want the
sale to succeed so all we need do is agree to revive the
agreement.” But that’s a fatal mistake, because if a suspensive
condition fails, the contract dies and all your attempts to bring it
back to life – usually by way of an addendum or an extension of the
time limit – are doomed to fail. You will need a brand new contract if both of
you still want to proceed. 

Let’s illustrate this
point with a Supreme Court of Appeal (SCA) decision in which the
parties attempted to “revive” their agreement after the
bond clause had already failed.

A deadline
passes and a R5m house sale dies 

In February 2020
(i.e. shortly before the economic shock of the pandemic), the buyers
of a R5.15m house paid the agreed deposit on time but couldn’t raise
the required bond of R4.95m before the deadline set out in the bond
clause. A first addendum to the sale gave them another few days, and
that addendum was valid because both parties signed it before the
deadline expired.

But then the parties
made a fatal mistake. Only after the extended deadline had whooshed merrily past did they sign a
second addendum, agreeing to extend the date again and thus, they
both believed, saving the sale. 

The buyers now did
more than just get a bond – they paid R1.95m in cash and provided
bank guarantees for the rest. And they did all that before the second
deadline expired, so all seemed well with the sale. Until Covid
struck. That left the buyers with financial problems, so they tried
to exit the sale and get their money back. “No deal,” said
the seller, “the agreement is still valid and enforceable, you
have to take transfer.” 

Off to court went the
buyers, eventually ending up in the SCA, which held the sale to be
void and ordered the seller to refund them their R1.95m. The Court
couldn’t have been clearer in ruling that when a suspensive condition
(like a bond clause) isn’t fulfilled, the whole contract becomes
unenforceable. This despite the fact that both buyer and seller
clearly intended to proceed with the sale and thought they were
validly reviving it with their second addendum. 

Our law is clear – when a sale agreement has
already lapsed, there is nothing you can do to revive it. Only
a new agreement could have saved the sale, and the Court, on the
facts, rejected the seller’s attempts to convince it that the second
addendum was actually a new agreement. It was, said the Court, just
an invalid attempt to revive a dead contract. 

Here’s what to do
to keep that sale alive and well

Every situation will
be unique, but at the very least follow these three principles.

1. Failed
   suspensive conditions (in particular bond clauses) are notorious
   sources of dispute when property sellers and buyers come to
   blows. Make sure yours is clearly worded and reflects exactly
   what you have agreed to. A professionally drawn sale agreement tailored
   to your needs really is a no-brainer here.

2. Keep
   an eye on those deadlines! If you need to extend one, do so before it expires with a full, clear and signed addendum.

3. If
   you happen to miss the boat there, a whole new agreement is essential. It may well incorporate the same terms and
   conditions as the original (updated where applicable of course)
   but nothing less than a brand new deed of sale will pass
   muster.  

As always, sign
nothing until we’ve checked it for you!

A Thought for
Mandela Month – How Does Ubuntu Impact Your Legal Rights?

“In
Africa there is a concept known as ‘ubuntu’ – the profound sense that
we are human only through the humanity of others.” (Nelson
Mandela)

International
Nelson Mandela Day is celebrated worldwide on 18 July every year, but
in South Africa the whole of July is Mandela Month.

What
better time to talk about the concept of “ubuntu”, which
emphasises our interconnectedness and interdependence, and embraces
values like fairness, compassion, respect and dignity?

How does ubuntu
influence your legal rights? 

Our
courts have often considered, and sometimes applied, the principles
of ubuntu in a wide variety of legal contexts. The “it’s unfair
and unjust!” defence pops up regularly (often when discussing
whether something is “contrary to public policy”) in disputes
of all kinds.  Asset sales, property sales, leases, neighbours’
disputes, evictions, workplace litigation, franchise agreements,
criminal sentencing cases, civil claims, defamation claims, trust
disputes and so on – the list truly is endless. 

For
example, in 2023 the High Court refused to order the eviction of a
group of tenants, despite the fact that they were in breach of their
leases, on the basis that the eviction would render them homeless and
thus the application for eviction was “completely devoid of any
empathy for the [tenants’] living conditions. There is,” the
court stressed, “in fact, no ubuntu at all.”

When is a contract
unenforceable for being contrary to ubuntu?

When
it comes to contracts, we have wide freedom to contract as we please,
and people entering into agreements need to know with reasonable
certainty that the law will help them enforce compliance with those
agreements. Those principles have led our courts to confirm that the
fundamental principle of “agreements must be honoured” or
“you are bound by what you agree to” (“pacta sunt servanda”
in lawyer speak) still underpins our law. 

As
the Constitutional Court has put it, “a court may not refuse to
enforce contractual terms on the basis that the enforcement would, in
its subjective view, be unfair, unreasonable or unduly harsh … It is only where a
contractual term, or its enforcement, is so unfair, unreasonable or
unjust that it is contrary to public policy that a court may refuse
to enforce it. (Emphasis added.)

In
practical terms, this means that as a general rule our courts will
enforce agreements entered into freely and voluntarily. But they can
still be persuaded to hold a contract void and unenforceable if
satisfied that it is against public policy, a concept that is measured
objectively and informed by constitutional values such as ubuntu. A
good example is a 2013 High Court refusal to enforce an acceleration
clause in a loan agreement because of its draconian implications – it
would have allowed the lender to call up in full a debt of R7.6m
after the borrower had failed, through a miscalculation, to pay just
R86,57 in default interest. 

Every
case will be decided on its own facts and merits. That inevitably
opens up grey areas, which in turn provide fertile ground for uncertainty,
dispute, and litigation. So, although in practice our courts lean
strongly in favour of enforcing agreements as they stand, rather be
safe than sorry – the more closely your contracts of all types adhere
to principles of fairness and justice, the less likely you are to see
them challenged in court. (And the better you will sleep at night.)

Speak
to us if you’re uncertain whether or not your contracts and other
documentation will pass muster if measured against
ubuntu.  

What’s the
Normal Retirement Age? It’s Complicated, as The Plumber’s Tale Proves

“When
cognitive capacities are the focus, the 70s are the new 50s.”
(IMF)

Fake
news articles suggesting that South Africa was implementing a new
standard retirement age policy, supposedly from 30 May this year,
recently went viral on social media. Convincingly structured to look
realistic (AI’s dark hand there?), the articles suggested that 65 is
the new universal standard retirement age for all employees across
all sectors.

Complete
hogwash. 

What the law
actually says

• Age discrimination is
  “automatically unfair”, and any employer found to be
  guilty of it by unlawfully forcing an employee to retire early
  faces a compensation
  order of up to 24 months’ remuneration (double
  the normal award for a run-of-the-mill unfair dismissal),
  re-instatement or re-employment. 

• There is, however, an
  escape clause there for employers: “A dismissal based on
  age is fair if the employee has reached the normal or agreed
  retirement age for persons employed in that capacity.“

• Even where a dismissal
  itself is fair, you must still follow a fair process in
  implementing it – more on that below.

It’s
an important topic, with increasing numbers of employees wanting to
(or needing to) work into their 70s. A recent Labour Court ruling
showing those principles in action is well worth taking note of.

The plumber forced
to retire at 60

An
artisan plumber with 12 years of service had his employment
terminated when he turned 60.

He
asked the Labour Court to declare his dismissal automatically unfair
as other employees had been allowed to work until they were 65.
What’s more, he denied ever agreeing to retire at 60.

The
employer countered that it had a two-tier retirement policy which
obliged employees with more physically demanding jobs (site workers
such as artisan plumbers) to retire at 60 whilst supervisory and
administrative personnel (such as foremen and office staff) only had
to retire at 65. 

On
the facts, the Court declared the dismissal to have been fair,
finding that the evidence pointed to the employee being subject to a
retirement age of 60 because:

• The employer’s
  retirement policy was in line with the rules of the applicable
  Building Industry Pension Scheme. 

• Although no signed
  copy of his full employment contract could be found, the
  employer did produce a standard annexure to such a contract,
  confirming retirement at 60 and “probably” signed by
  him (he denied signing it but agreed the signature looked like his).

• A number of his
  fellow plumbers had also been retired at 60 (he attended their
  retirement functions), and other cases of retirement at age 65
  cited by him related to employees in the “65 tier” –
  that is in supervisory or administrative positions.

• Another plumber’s
  contract was produced, with the retirement provision in place.

Bottom
line: the employee hadn’t proved that his retirement at the
applicable retirement age of 60 was an automatically unfair
dismissal, and the Court held his dismissal to be fair.

How to ensure that
an age-related dismissal is fair

First prize is to specify an agreed retirement age in all your
employment contracts, ideally from day one. If you want to add a
retirement clause later, or to change anything about an existing
clause, be sure to do so by negotiation and agreement, not
unilaterally. And be sure to keep the original, fully-signed contract
safe and accessible (unlike the employer in this case who had to rely
on a scan of just the annexure to the contract).

Alternatively,
be ready to prove that there is a “normal or agreed retirement
age” for employees employed in the same capacity.

The dismissal must be genuinely based on the employee having reached
retirement age and cannot, for example, be a disguised retrenchment
or a dismissal for some other reason.

It’s crucial that you follow a fair process. Open communication,
reasonable notice, and applying the rules consistently to all
employees could be critical here.

Every case
will be different, so ask us for advice specific to your
situation. 

Private
Prosecution: Neighbours at War

“I
charge you by the law.” (William Shakespeare in The Merchant of
Venice)

Victims
of crime are entitled to see the perpetrators brought to justice.
Feeling that the justice system has failed you can cause significant
psychological harm and feelings of victimisation.

So,
what happens if you believe that you are the victim of a crime, which
you duly report to the police – only to be told that the NPA
(National Prosecuting Authority) has declined to prosecute?

You
could of course console yourself with the thought that “well, at
least I tried” and walk away unfazed. But if you feel strongly
enough about it, you are not without legal remedy – in appropriate
cases you could be advised to go the private prosecution route.

A
significant SCA (Supreme Court of Appeal) judgment last year provides
an excellent example of just such a case.

Neighbours at war
in an upmarket suburb

The
scene here is Kloof Road in Cape Town’s Bantry Bay, renowned for its
prime location on the Atlantic Seaboard, luxurious houses, and
panoramic sea views.

The
protagonists are next-door neighbours, whose acrimonious relationship
and long history of disputes was founded in the one owner’s
renovations, and the other’s strenuous objections to them. Who will
eventually win that particular battle remains for another court to
determine, but in the course of these disputes the one owner, a
senior attorney, accessed his neighbour’s confidential credit records
using a colleague’s login details.

This
tactic backfired when the neighbour laid criminal charges against her
adversary, saying that he had unlawfully and covertly accessed her
personal and private information without the required authority or
consent. She later added charges of fraud and defeating or
obstructing the administration of justice, alleging that during the
consequent investigation he had variously and falsely claimed firstly
to have not accessed her data, then to have had her consent, then to
have acted as her attorney, and lastly to have accessed her records
inadvertently.

The
media’s reporting of this high-profile spat created what the Court
later described as a “public spectacle”, and the trial
courts will have to wade through a web of hotly-contested and
conflicting evidence in their search for the truth. 

But
for now, our interest lies in the fact that the NPA declined to
prosecute on any of these charges. Undeterred, the neighbour
initiated a private prosecution, a move hotly contested by her
opponent all the way up to the SCA. 

What must you
prove to launch a private prosecution?

The
SCA, in ultimately allowing the neighbour to proceed, set out our law
on the matter. 

The
starting point is always the NPA issuing a certificate nolle prosequi
(a fancy Latin term meaning simply that the State declines to
prosecute), for it is that certificate which opens the door to you to
have a go at it yourself. As a side note here, legislation specific
to the SPCA, SARS and a few other specialised entities allows them to
prosecute specified matters without a nolle prosequi certificate –
but the rest of us need one.

Once
you’ve got your nolle prosequi certificate you must prove that:

• You have an interest
  in the issue of the trial.

• Your interest is
  substantial and peculiar to you. 

• Your interest arises
  from some injury individually suffered by you. 

• Your injury was
  suffered as a consequence of the commission of the alleged
  offence.

In
deciding whether or not to grant your application, the court will
also consider whether private prosecution would offend public policy.
If you are shown to be acting maliciously, vindictively, vexatiously,
or without foundation, your application will fail. 

Essentially,
the Court performs a balancing act between your right to have your
dispute “resolved by application of the law and decided in a
fair public hearing before a court”, and the accused person’s
“right not to be subjected to unfounded and vexatious private
prosecution.”

In
this case, the Court allowed the private prosecution to continue,
commenting that the accused would now have the opportunity to
vindicate his innocence at trial.

Think before you
leap 

Before
you charge blithely down this route, bear in mind that private
prosecution carries, in the Court’s words, “enormous financial
risk”. So be very confident of your prospects of success and
bear in mind that:

• Even if you win it’s
  a costly exercise, because you are now paying your own legal
  team and a private prosecutor out of your own pocket rather than
  relying on state officials to do the job for you.

• If you lose and the
  trial court finds your prosecution to be unfounded and vexatious
  (a real risk after the NPA declined to proceed), you risk punitive
  costs and compensatory orders. If the accused can prove you
  acted without reasonable cause and with malice, you could also
  be liable for damages in a separate civil claim for malicious
  prosecution.

Considering
a private prosecution? We’ll help you weigh up the pros and cons.

Legal Speak
Made Easy

“Nolle
prosequi”

A nolle prosequi (Latin for “do not want to pursue”) is a formal certificate
issued by the National Prosecuting Authority (NPA) when it decides
not to pursue criminal charges against a person accused of a crime.
This does not mean the accused is innocent, only that the state has
chosen not to proceed. That’s usually due to the NPA’s assessment
that there is no reasonable prospect of a successful prosecution. But
it does open the door for the person laying the charges to consider
instituting a private prosecution.