The Western Cape High Court in Cape Town dismissed an application by a Hout Bay woman seeking to cancel a property sale agreement with her daughter and son-in-law over a disputed outstanding payment of R200,000.
Acting Judge Thobile Mgengwana found that S Phillips’ claim had lapsed because she only demanded the outstanding amount more than six years after the property was transferred into the couple’s names.
The dispute arose from a sale agreement signed on February 14, 2018, in terms of which Phillips sold a property in Hout Bay to her daughter, E, and her son-in-law, H, for R400,000.
The agreement provided that the purchase price would be paid upon registration of the property in the purchasers’ names. It also provided for a lifelong usufruct in favour of Phillips, allowing her to retain the right to use and enjoy the property during her lifetime.
The property was transferred in March 2018. The couple paid Phillips R200,000 on February 28 that year, leaving a disputed balance of R200,000.
More than six years later, in July 2024, Phillips, through her attorneys, demanded payment of the outstanding balance within seven days.
She subsequently cancelled the sale. After the purchasers disputed the debt, she cancelled the agreement and argued that they had forfeited the money already paid.
Phillips sought an order confirming the cancellation of the sale agreement or, alternatively, declaring it invalid. She also asked the court to direct that the property be transferred back into her name.
Couple disputed the agreed price
In opposing the application, the couple argued that the agreed purchase price had actually been R200,000, not the R400,000 recorded in the signed agreement.
They alleged that their attorney and conveyancer had inserted the higher amount for tax and transfer purposes, despite the parties allegedly having agreed on the lower figure.
The couple also maintained that they had spent substantial sums renovating the property while Phillips continued to reside there under the lifelong usufruct arrangement.
They further argued that any claim for the outstanding amount had lapsed because Phillips had waited more than six years after the transfer to demand payment.
Phillips denied that the parties had agreed to a purchase price of R200,000, relying on the written agreement signed by all parties.
Judge rejects the R200,000 agreement version
Judge Mgengwana found that the written agreement clearly recorded a purchase price of R400,000 and had been signed by both parties without reservation.
The court found that the purchase price was expressly stated in the agreement. It therefore concluded that there was consensus between the parties on the price of R400,000 and that the agreement was valid from the outset.
The judge also rejected the couple’s version that the lower price had been agreed upon, describing it as “palpably implausible and untenable”.
A significant factor was that the couple’s allegation was not supported by a confirmatory affidavit from their attorney and conveyancer, whom they claimed had inserted the higher price.
The court consequently found that the couple had breached the agreement by failing to pay the outstanding R200,000.
Three-year prescription period proved decisive
Despite finding that the couple had breached the agreement, the court still had to determine whether Phillips could rely on that breach to cancel the sale and reclaim the property.
Phillips argued that the outstanding amount only became due after she issued a written demand in July 2024, relying on a clause in the agreement that gave the purchasers seven days to remedy a breach after written notice.
The judge rejected this interpretation.
The judgment found that the purchase price became due upon registration of the property on 26 March 2018. The contractual clause did not postpone the date on which the debt became payable; it governed the steps Phillips could take after a breach occurred.
The court held that Phillips could have invoked the clause from 27 March 2018.
Under the Prescription Act 68 of 1969, the applicable prescription period was three years. Because Phillips only demanded payment in July 2024, her claim had been brought outside that period.
The judge also rejected her argument that prescription was irrelevant because she was not pursuing a straightforward monetary claim. The court noted that her July 2024 letter expressly demanded payment of R200,000 and that her application sought to enforce the contractual obligations.
The court therefore concluded that her claim for specific performance had been extinguished by prescription.
Application dismissed
In dismissing the application, the court did not grant Phillips’ request to cancel the agreement or return the property to her name.
The judgment highlights the importance of enforcing contractual rights within the applicable prescription period, even where a court finds that the other party breached a written agreement.
Although the court accepted that the couple had failed to pay the full purchase price recorded in the contract, Phillips’ delay in seeking enforcement ultimately proved decisive.
The court ordered her to pay the costs of the application.
sinenhlanhla.masilela@iol.co.za
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