10. breach of contract

8/15/2019 10. Breach of Contract

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10. BREACH OF CONTRACT

Breach of contract is non fulfilment of contractual promises and undertakings, where there is no

acceptable excuse or justification in law for this. It is not breach if non fulfilment can be exonerated

under the law, for example, due to operative mistake or a supervening event rendering fulfilment

impossible. Common examples of breach include attempted fulfilment outside agreed time limits,

(mora) purposeful or intentional non fulfilment, (repudiation) and poor or unsatisfactor! fulfilment,

(positive malperformance).

10.1 Mora debitoris

[1] GOLDSTEIN AND WOLFF v MAISON BLANC (PTY) LTD "#$% ($) &' $$

(Cape rovincial *ivision, &outh 'frica, +$ &eptember "#$%)

In ovember "#$$, the defendant Compan!, -aison Blanc (t!.) td., placed an order in Cape /own

with the plaintiffs, -essrs. 0oldstein and 1olff of 2ohannesburg, manufacturers of ladies clothing,

for # frocks of a total value of 34+ "5s. /he order also stated under the words 67orwardingInstructions89 62anuar!:7ebruar! "#$4 7.;. I address m!self therefore, in the first place, to a consideration of the natural andgrammatical meaning of the words ?7orwarding Instructions . . . 2ohannesburg=. In m! opinion, the!

mean exactl! what the! sa!, namel!, that the instructions for forwarding are that the goods shall be

forwarded b! being dispatched from 2ohannesburg @7.;.


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the surrounding circumstances, that that was the intention of the parties. ( Mitchell v Howard Farrar

& Co . (4 .*.C. "5" at p. "$D) Bernard v Sanderson ("#" /* E5) Mayne v Wattle Extract Co .

("#+D * %#), and man! other decisions).

Faving regard to the magistrate@s finding, I will assume in plaintiff@s favour that there was no

express term making it essential for the goods to be forwarded b! the end of 7ebruar!. /here is,

however, a strong presumption that time is of the essence in a mercantile transaction proper ( Reuter v

Sala ("%E#, $ C.. at p. +$#) urr v Buxton White Lime Co . ("#D#, /.&. %E at p. %E#) Concrete

!roducts Co" #!ty"$ Ltd v %atal Leather ndustries ("#$ * 5EE at p. 5%D) Mac'eurtan (+nd d., p.

+%#)). /he contract in this case was one between a manufacturer and a retail dealer and clearl!

constituted a mercantile transaction. 7urthermore it related to fashion goods which to the knowledge

of both parties were purchased for resale during a season which admittedl! was limited in time

though there was a serious dispute as to the exact extent of the period of profitable sales of such

goods. It was admitted b! e


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fall awa! upon failure to deliver 2anuar!:7ebruar! are in truth referable to the expression of such a

belief b! the witnesses, rather than to an! attempt deliberatel! to mislead the Court.

/he magistrate did not reject the whole of the defendant@s evidence on several points he

accepted it in preference to that [!$] of e 8

OGIL%IE THOMPSON, A.J.concurred.

NOTES

". 'lthough not specificall! mentioned an!where in the judgment, this case is authorit! for at

least two propositions on mora de)itoris. /his is dela!ed performance b! the debtor, or an! part!

liable to perform under the contract. /he first is that failure to perform timeousl! ma! not justif!repudiation of the contract unless time is of essence of the contract. /he second proposition is that

time ma! be made of the essence of the contract b! an express stipulation, or it ma! appear to be so

from the nature of the contract or the surrounding circumstances.

+. /he third proposition is that where time initiall! is not of essence, expressl! or impliedl!, it

ma! still be made of essence through a due demand. ' contract therefore ma! be repudiated or

cancelled for dela!ed performance if the debtor does not perform after being given a reasonable

period within which to perform. 1hat is a reasonable period of time obviousl! will depend on the

circumstances of each case. In %el v Cloete"#E+ (+) &' "4D the nglish translation of the

summar! of the case reports that the appellant agreed to purchase a house from the

respondent on 5 ;ctober "#%, and paid an amount of


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and ,thers, "##5 B< 5%+ the respondents purported to cancel the sale and transfer of shares in'be=s Canteen to the applicants and to reinstate themselves as shareholders and directors upon being

dissatisfied with implementation b! the applicants of other aspects of the agreement. /he Figh Court

held that this was unlawful as the respondents had caused the compan! to meet and to pass the

resolution at a time when the! were no longer shareholders in the compan!. -artin ForwitH 'g. 2.

said at pp 5%# 5#D9

6In an! event, in m! anal!sis of the contract, time was not of the essence and the

purported cancellation is therefore of no effect. (&ee Microutiscos and *nother v"

Swart "#$# (5) &' E"4(') where the 'ppellate *ivision of &outh 'frica held at p. E5D

that9

?1here a time for the performance of a vital term in a contract has been stipulated for

and one part! is in mora b! reason of his failure to perform it within that time, but

time is not of the essence of the contract, the other part! can make it so b! giving

notice that if the obligation is not J5#DK complied with b! a certain date, allowing a

reasonable time, he will regard the contract as at an end.=

It was submitted b! -r. -atswetu that the letter of # ovember "##+ had the effect of

putting the applicants in mora. /his of course is not so because the! had cancelled the

agreement before the letter annexure was written and it was merel! to inform the

applicants that the agreement had in fact been cancelled. Lnder the circumstances

therefore, I find that the cancellation of the agreement between the parties is of no

effect. /his does not mean that the respondents might not have a cause of complaint.

I make no comment or pass an! opinion on that matter. -! conclusion is that the

respondents@ conduct in cancelling the agreement and taking transfer of the shares was

wrongful and of no effect. >8

In Standard Chartered Ban' o- Botswana v" Setlha'e J+DD"K + B< +%, a loan

agreement incorporated an acceleration clause, stipulating that in the event of default b! thedebtor in pa!ment of one or more of the monthl! instalments provided for, the whole of the

amount outstanding , together with interest thereon, 6would become due and pa!able on

demand8. In an application for summar! judgement, the applicant did not specificall! plead

that a demand had been made. /he Court held that it would be unsafe to grant summar!

judgment, as the debtor would have a legitimate defence at trial.

10." Mora creditoris

["] RANCH INTERNATIONAL PIPELINES (TRANS%AAL) (PTY) LTD v LMGCONSTR&CTION (CITY) (PTY) LTD' LMG CONSTR&CTION (CITY)(PTY) LTD v RANCH INTERNATIONAL PIPELINES (TRANS%AAL) (PTY)LTD AND OTHERS "#%$ (5) &' %"

(1itwatersrand ocal *ivision, &outh 'frica, "E 'pril "#%$)


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circumstances would not be an adeAuate recompense. It further alleged that lack of cooperation b!

Coming to the contract in casu , there is no reason to regard it in a different light.

/he remed! which is sought in casu is, indirectl!, specific performance. > [*+] >

J/he learned judge then referred to several authorities, including a thesis b! 'B *e Gilliers, Ch $ *e

1et and Neats 2o'al v Moti and *nother "#$" '* 5D$ Haynes v 3ingwilliamstown Munici.ality4

"#4" (+) &' 5E" and %ational 5nion o- (extile Wor'ers and ,thers v Stag !ac'ings #!ty$ Ltd and

*nother "#%+ ($) &' "4", and continued9K

> /he law is clear. /his is a remed! to which a part! is entitled as of right. It cannot be

withheld arbitraril! or capriciousl!. /his is another of the important differences between our law and

nglish law which starts off on the premise that a building contract is not specificall! enforceable

unless > Jcertain conditionsK are satisfied. /he right of an ordinar! servant who had been dismissed

http://products.jutalaw.co.za/nxt/foliolinks.asp?f=xhitlist&xhitlist_x=Advanced&xhitlist_vpc=first&xhitlist_xsl=querylink.xsl&xhitlist_sel=title;path;content-type;home-title&xhitlist_d=%7BSalr%7D&xhitlist_q=%5Bfield%20folio-destination-name:%27743506%27%5D&xhitlist_md=target-id=0-0-0-3023http://products.jutalaw.co.za/nxt/foliolinks.asp?f=xhitlist&xhitlist_x=Advanced&xhitlist_vpc=first&xhitlist_xsl=querylink.xsl&xhitlist_sel=title;path;content-type;home-title&xhitlist_d=%7BSalr%7D&xhitlist_q=%5Bfield%20folio-destination-name:%27824151%27%5D&xhitlist_md=target-id=0-0-0-4879http://products.jutalaw.co.za/nxt/foliolinks.asp?f=xhitlist&xhitlist_x=Advanced&xhitlist_vpc=first&xhitlist_xsl=querylink.xsl&xhitlist_sel=title;path;content-type;home-title&xhitlist_d=%7BSalr%7D&xhitlist_q=%5Bfield%20folio-destination-name:%27743506%27%5D&xhitlist_md=target-id=0-0-0-3023http://products.jutalaw.co.za/nxt/foliolinks.asp?f=xhitlist&xhitlist_x=Advanced&xhitlist_vpc=first&xhitlist_xsl=querylink.xsl&xhitlist_sel=title;path;content-type;home-title&xhitlist_d=%7BSalr%7D&xhitlist_q=%5Bfield%20folio-destination-name:%27824151%27%5D&xhitlist_md=target-id=0-0-0-4879


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to enforce his contract, was in issue in the %ational 5nion (extile Wor'ers case. /he contention that

the Court would not order the reinstatement of the servant as this would amount to an order for

specific performance of an emplo!ment contract involving the rendering of personal services was

rejected. 't "4 of the report, the case of ndustrial and Mercantile Cor.oration v *nastassiou

Brothers "#E5 (+) &' D" (1) is cited with approval.

/his case is ver! interesting as it provides a t!pical example of mora creditoris where the

creditor was compelled in -orma s.eci-ica to cooperate with the debtor (see "DF) without the learned

2udge apparentl! realising that he was appl!ing one of the principles of this doctrine. [0] &ee atDE 0, from which it appears that the learned 2udge had great difficult! because he

6considered man! authorities, both &outh 'frican and nglish and found none which

exactl! matches this situation.8

Fe therefore proposed to mention authorities

6which are in some wa! apt to this case and seek to appl! them in what seems to me to

be a practical manner.8

If, with respect, the learned 2udge had been apprised of the s!stematic approach of our

common law to mora creditoris, his problem would have disappeared. /he correct solution which he

nevertheless found (in a practical manner) would surel! have come more easil!. 's far as specific

performance is concerned, particularl! in a case where it is a matter of forcing the creditor to co

operate so as to make it possible for the debtor to perform his contract, the learned 2udge said the

following, at D#', with which I find m!self in complete agreement9

6It seems to me that a Court should avoid becoming supine and spineless in dealing

with the offending contract breaker, b! giving him the benefit of pa!ing damages

rather than being compelled to perform that which he had undertaken to perform and

which, when he was called upon to perform b! summons, and he chose to def! the

claim of the plaintiff. Fe went to the extent of engaging another person to suppl! thesame services for him, almost immediatel!. /his is to m! mind not a case where it can

be said to be impossible to perform either at the time when the summons was issued,

when he engaged the other supplier to install his eAuipment or even at the later stages,

during the trial of the action. /hat it would be inconvenient for him is likel!, that he

will suffer some financial loss is likel!, but that he has brought on himself b! an

arrogant denial of his commitments and I do not believe he should earn particular

s!mpath! for that. >8

'nd at "D'9

6/here is no reason b! wa! of evidence to assume that the seller and the supplier of

this eAuipment will not perform his part adeAuatel!. It is his business to installeAuipment and I would assume that, in the ordinar! course of events, he would do so

properl! in order to earn his mone!. I do not contemplate, with an! degree of anxiet!,

the prospect of a plaintiff who has obtained a decree of specific performance in his

favour, but who has to perform his part of the contract, in order to bring about

pa!ment, would do otherwise than perform properl!.8

In the process of deciding whether specific performance should be refused in casu as

contended b!


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1h! should there be an! difficult!M 1hat is the need of supervision an!wa!M *oes the Court ever

supervise the execution of its judgmentsM &urel! not. ;rders ad -actum .raestandum are made all the

time. /here is no supervision thereof and no intervention b! the &heriff. If there is an intentional

refusal to perform, contempt proceedings ma! follow. 1h! should different considerations then

appl! to building contractsM 'ccurate performance of them with the reAuisite skill or workmanship is

irrelevant in this context. 's it is in the [1K case of ever! other order ad -actum .raestandum. /he judgment creditor will surel! cancel the contract when it is unintentionall! incorrectl! performed.

/he judgment does not replace the contract. 'fter all, this risk, as well as that of not succeeding in

contempt proceedings, the owner took when he asked the Court for this order. It is his affair. If the

owner has elected to claim this remed! and he is prepared to take these risks, wh!, one ma! ask,

should it lie, as a matter of logic, in the mouth of the defaulting builder to advance an! reason

connected with the Aualit! of his performance or his general unwillingness, as a basis for avoiding an

order compelling him to perform his bargainM

In the instant case where the builder claims his right to perform and seeks onl! the emplo!er=s

cooperation to make this possible, in the sense of allowing him to perform, these considerations

appl! with much greater force. /he interdict which enforces this dut! is negative in form as it simpl!

prohibits


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handover the ke!s and documents for the vehicle. referring the plaintiff=s testimon! and evidence,

the Court held that the defendant had repudiated the contract. Fe could have taken other action to

enforce pa!ment of the balance of the purchase price. B! demanding the return of the vehicle, the

ke!s, the documents, and driving the vehicle awa! and using it for his own purposes, he exhibited a

deliberate and uneAuivocal intention no longer to be bound b! the agreement. /his was repudiation of

the agreement. /he plaintiff, having accepted the repudiation, was entitled to recover as damages the

+ 4DD initiall! paid for the vehicle.

LI%ESEY L&7E, CJ:

[#] 6> /he main issues for determination therefore are9

(i) what were the terms of the agreement between the partiesM

(ii) was there a repudiation of the agreementM

(iii) who repudiated the agreement, and did the other part! accept the repudiationM

(iv) if there was repudiation of the agreement, and acceptance thereof, what is the liabilit!

of the guilt! part!M

>

J 'fter establishing the terms of the agreement as summariHed above, the Chief 2ustice continued9K

>

[!] Was there a repudiation of the agreement M

ach part! alleged in his or her pleading that the other part! has repudiated the agreement.


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return of the vehicle and driving it awa! and using it for his own purposes, he exhibited a deliberate

and uneAuivocal intention no longer to be bound b! the agreement. Fe thereb! b! his conduct

evinced an intention to repudiate his obligations under the agreement. I also find that the plaintiff

accepted the repudiation.

But even if the ke!s and documents relating to the vehicle were handed to the defendant with

the permission or on the instructions of the plaintiff (which I do not believe), the defendant was not

obliged to take possession of the vehicle. Fe had his remed! if the plaintiff failed to pa! the

instalments. Fe could have sued the plaintiff for the balance of the purchase price. Instead of

pursuing his remed!, he took possession of the vehicle, used it for his own purposes and boasted that

the plaintiff would lose both the vehicle and her mone!. /hat boast was another manifestation of the

unreasonableness and highhandedness that the defendant displa!ed when he demanded the return of

the vehicle.

What is the liability of the guilty party?

/he defendant took possession of the vehicle for which the plaintiff had given him + 4DD as part

pa!ment of the purchase price. /he result is that the plaintiff has lost the vehicle and the defendant

has refused to refund the + 4DD or an! part thereof to her./he legal position is that an aggrieved person who has accepted the repudiation of a contract

is entitled to damages and ma! sue at once. /he measure of damages is the loss suffered as a direct

conseAuence of the breach. &ee 0ibson, South *-rican Merchantile and Com.any Law (th ed.) at p.

"". 's a result of the repudiation of the agreement, the plaintiff has lost the + 4DD she paid to the

defendant. In m! opinion she is entitled to that amount. ' similar situation arose in (rytsman v"

ohne "#4" (") &.'. E5 a case which went on appeal to the atal rovincial *ivision. In that case

the defendant sold and delivered a car to the plaintiff for 3"4D. /he plaintiff paid 3ED down, and the

balance was to be paid b! instalments. /he plaintiff became aware of defects in the car two da!s after

the sale. /hereafter he spent 5D shillings on repairs, bought a new t!re for 3%, drove the vehicle for a

total distance of $$ miles and paid an instalment of 3"D on account of the price. 'bout five weeks

after the sale the plaintiff repudiated the sale, and four da!s thereafter he returned the car to the

defendant. It was held that the prior conduct of the plaintiff (i.e. in exercising acts of ownership over the car) did not preclude him from repudiating the contract. 2udgment was given for the plaintiff for,

inter alia, the repa!ment of the sum of 3%D (i.e. the 3ED down pa!ment and the 3"D instalment).

/he plaintiff testified that she bought a spare wheel, spark plugs and clutch plate for the

vehicle. &he made no claim for those items, nor was an! evidence adduced as to the purchase price of

an! of them. I therefore make no award in respect of those purchases. It is not in dispute that the

plaintiff used the vehicle for her own purposes on a few occasions between *ecember "#%4, and

-arch "#%. But the defendant did not counterclaim to be compensated for such use.

[] /he defendant said that after he took possession of the vehicle from the plaintiff he paid


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;n "+ &eptemeber "### Oubu Investments (t!) td agreed to sell its propert!, ot "+E, 0aborone,

to Capital 0rowth (t!) td for ". million. arts of the propert! had been let to tenants, but in

clause .5 of the agreement the seller warranted that there are no lease agreements for the tenants and

that the! occupied the premises on a monthl! basis. /he purchaser therefore undertook either to

formalise the tenanc! or to give them one month notice to vacate. In clause 4.+ of the agreement, the

purchaser undertook that its conve!ancers will arrange to transfer the propert! within a reasonable

period, and the purchaser would within "$ da!s after reAuest furnish the seller with an acceptable

bank guarantee for the pa!ment. Clause # gave the seller the right to cancel the sale if the purchaser

failed to fulfill on the due date all the terms and conditions of the deed of sale. 1hen the seller and

the purchaser wrote jointl! to the tenants advising them about the sale of the propert! and of the fact

that the! were on a month to month tenanc!, at least two tenants produced copies of their written

fixedterm lease agreements. /he purchaser indicated that he wished the seller would sort out the

matter Auickl!. Before the matter could be sorted out, the seller=s attorne!, in a letter dated "4

&eptember "###, called on the purchaser to pa! the full consideration within three da!s, stating that

failure to do so would be regarded as unreasonable and a breach of the agreement. ;n " &eptember

"###, the purchaser=s attorne!, in response, reiterated that the seller should sort out the problem of

tenants with written lease agreements, and as soon as that was done, a banker=s guarantee for the

pa!ment would be available. ;n ++ &eptember "###, the seller=s attorne! wrote stating that purchaser was in breach of the agreement, and in terms of clause # of the agreement, the seller was cancelling

the contract. /he purchaser successfull! instituted action in the Figh Court to declare the contract

valid and enforceable. ;n appeal, the seller contended that contract had been repudiated b! the

purchaser=s letter of " &eptember of "###. /he court agreed that whether the letter amounted to

repudiation must be assessed objectivel!, but a careful reading of that letter, in the context of the letter

written on "4 &eptember and the deed of sale indicated that it was not repudiator! in nature. It

reAuired fulfillment of the contract b! the seller. It was the seller=s letter of ++ &eptember that

purported to cancel the agreement.

SIR JOHN BLOFELD JA:

["1$] 6> /he appellant@s attorne! is -r *u lessis. Fe wrote the letters of "4 &eptember and ++&eptember. Fe submitted before this court that the sale was repudiated b! the purchaser@s attorne! in

their letter of " &eptember "###. Fis submissions were in broad terms the same as those he put

before Collins 'g. 2. at trial. Fe submitted that it is necessar! to consider repudiation objectivel!. Fe

submitted that once the purchaser accepted rents from the tenants he exercised his right of ownership

of the propert! and that b! so doing he was liable to pa! the full purchase price within a reasonable

period. Fe conceded that three da!s might be too short a period. Fe further submitted that it was

immaterial what the intention of the writer of this letter was. /he proper test was to consider

objectivel! if the letter amounted to repudiation. Fe submits that this letter is a clear repudiation of

the contract. Fe further submits that clause .5 which relates to the tenancies was a collateral

warrant! onl! and that in an! event it is so worded that there was no breach of this clause b! the seller

as the wording is ambiguous.

I accept that the proper test for repudiation is an objective one. But apart from that I find theappellant=s submissions untenable. ' careful reading of the letter of " &eptember read in context

with the sale agreement and the letter from the seller of "4 &eptember convinces me that far from

being a letter of repudiation, looked at objectivel!, this was a letter reAuiring fulfillment of the

contract b! the seller. /he purported cancellation came from the seller alone in that letter of ++

&eptember.

-r *u lessis, for the appellant at all times in his submission conceded that if he failed to

persuade the court that that letter is a letter of repudiation then his whole case collapses. Fe has failed

to persuade me. I find that his case has totall! collapsed.

I also find that, contrar! to his submission, clause .5 was not a collateral warrant!. I further

find that the seller was in clear breach of this warrant!. ["1*]I note that -r /hipe gave an explanation for his actions in relation to this fixedterm lease

which was carefull! considered b! Collins 'g. 2. ike the trial judge I would reject his explanation.


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/he fact that there were undoubtedl! written fixedterm agreements with tenants was a clear and

obvious breach of this warrant!.

In m! view this is enough to dispose of this matter. /his appeal is dismissed with costs.8

7&MLEBEN J.A. and LORD WEIR J.A. agreed

NOTES

". In Sweet v Ragerguhara, "#E% (") &' "5", summarised and reproduced below, failure the

seller to give vacant possession of immovable propert! was in the circumstances of the case regarded

as an example of breach b! defective performance, not repudiation.

+. ' more recent, and perhaps clearer illustration of repudiation of a contract for the sale or

disposal of rights in immovable propert! is the unreported Botswana 7rancistown Figh Court

decision in *ccess Holdings #!ty$ Ltd v Setu'e and *nother (-I&C' 7+4:+DD+). ;n +$ 2une +DD+,

the respondent sold to the applicant under a written agreement his lease rights over 7arm PD $4,

andamatenga, for a purchase consideration of %D DDD. /he price was pa!able upon transfer b! the

Chobe and Board of the rights to the applicant. ;n +# 2une +DD+ the respondent informed theapplicant b! telephone hat he was cancelling the agreement. /his was confirmed in a letter of # th 2ul!

+DD+ written b! the respondent=s attorne!s. /he applicant refused to accept the cancellation, and

applied for orders confirming that the contract was binding and enforceable, and the purported

cancellation of no force or effect. /he respondent alleged in his Court papers that he cancelled the

contract because his daughter would not let him sell the farm and that as the contract was conditional

upon approval b! the Chobe land board, it could be cancelled b! either part! before such approval had

been granted. /he Court regarded these arguments as untenable and held that the applicant was

entitled to specific performance of the contract. 7rom pp E Q # of the t!ped transcript of the

judgment, -arumo, 2. said9

It is clear to me that the refusal b! the first respondent to go ahead with the terms

of the agreement constitute a breach of the same. It is settled law that a breach of thenature with which this Court is presentl! concerned does not necessaril! terminate the

contract. /he innocent part! is entitled, subject to the overriding discretion of the Court,

to elect whether to accept the cancellation and claim damages, or to keep the contract

alive and enforce it. (&ee Myers v *)ramson "#4+ (5) &.' "+"). /he innocent part!=s

entitlement to specific performance of the contract is settled and comes out clearl! in

the following passage b! Innes 2. in Farmers6 Co7o. Society #Reg$ v Berry "#"+ '*

5$5 at 54D.

6rima facie ever! part! to a binding agreement who is read! to carr! out his

own obligation under it has a right to demand from the other part!, so far as it

is possible, performance of his undertaking in terms of the contract. 's

remarked b! OotHe C2 in (hom.son v !ullinger ("%#$), ;< at p5D", ?the right

of a plaintiff to the specific performance of a contract where the defendant is in

a position to do so is be!ond all doubt.= It is true that Courts will exercise a

discretion in determining whether or not decrees of specific performance will

be made. /he! will not, of course, be issued where it is impossible for the

defendant to compl! with them. 'nd there are man! cases in which justice

between the parties can be full! and convenientl! done b! an award of

damages. But that is a different thing from sa!ing that a defendant who has

broken his undertaking has the option to purge his default b! the pa!ment of

mone!. 7or in the words of &tore! (Auit! 2urisprudence, sec E"E [] (a)) ?it isagainst conscience that a part! should have a right of election whether he would


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perform his contract or onl! pa! damages for the breach of it.= /he election is rather

with the injured part!, subject to the discretion of the Court.8

/he applicant has demonstrated its readiness to perform its obligations b! pa!ing the

purchase price into the /rust 'ccount of the first respondent=s erstwhile attorne!s. It also wants

the process of transferring the rights to be commenced before the second respondent. ;n the

other hand the first respondent cannot simpl! be permitted to evade his contractual obligations

because his daughter wants him to, nor can he do so b! making the unfounded claim that the

agreement is conditional and that material conditions of it have not been met. It is not. 'nd

there are no circumstances rendering the performance of his obligations impossible.

In the light of the above factors justice would be served b! the Court exercising its

discretion in favour of the enforcement of the agreement. /he application conseAuentl!

succeeds. > 8

10.#." C3482592v 5-/234

[!] BOTSWANA HO&SING CORPORATION v. LEMPADI, J"##%K B< "5"

(Court of 'ppeal, obatse, Botswana, 5D 2anuar! "##%)

/he respondent was emplo!ed as an accounts assistant b! the appellant on " &eptember "#E. 1hile

holding the position of credit controller, his emplo!ment was terminated on "E 2anuar! "##", 6in the

corporation=s interest and with immediate effect8. Fe was paid one month=s salar! in lieu of notice.

/he Figh Court held that he had been wrongfull! dismissed that he had not been given an adeAuate

opportunit! to answer allegations against him that finall! led to his dismissal, contrar! to the audi

alteram .artem rule, and that the corporation had not followed its own procedures when the decision

was taken to dismiss him. ;n appeal, the Court considered that he had numerous disputes and

disagreements with his emplo!ers throughout his period of emplo!ment, extending over "$ !ears. 't

the end of his six months probation, for example, he challenged the assessment of his efficienc! and

the need to extend the probation b! 5 months. 1hen the corporation refused to accede to his reAuestsfor promotion, on account of poor appraisals and lack of professional Aualifications, he accused his

supervisors of malice. In "#%4, he refused to cooperate with a properl! and legitimatel! conceived

job rotation scheme, regarding it as a plo! to demote him and den! him promotion. Fe alleged

victimiHation, sought intervention of the -inister of ocal 0overnment and ands, and instructed his

law!ers. /his was contrar! to clearl! laid out procedures reAuiring such complaints to be routed

through his superiors in the corporation. In "##D, he refused to be transferred to another post in his

department, which did not involve an! change in salar! or terms and conditions of service. 'gain,

contrar! to grievance procedures, he sought intervention of the ermanent &ecretar!, -inistr! of

ocal 0overnment and lands, alleging victimisation b! his superiors. Fe was suspended from dut!

for "4 da!s without pa!. 1hen he took up the post after the suspension, his service was poor and he

generall! refused to cooperate with his colleagues and supervisors. ;n "E 2anuar! "##", he was

summoned to a staff committee meeting and advised to take earl! retirement with full benefits, or facedismissal. ;n "% 2anuar! "##", he indicated that he would not resign, and he was served with a letter

dated "E 2anuar! "##", terminating his emplo!ment in the manner described above. /he Court of

'ppeal held that the respondent=s conduct and attitude throughout the period of emplo!ment had

undermined the confidence and trust on which the contract of emplo!ment is founded, and the

appellant was in the circumstances entitled to terminate the emplo!ment. /he emplo!ee b! his

conduct had effectivel! caused repudiation of his contract. /he Court further held that the respondent

had been given ever! opportunit! to make his own submissions, which he summaril! rejected. /he

appellant was therefore not in breach of the audi alteram .artem rule

LORD ALLANBRIDGE JA:

[1##] 6> 1hen -r. &pilg for the appellant appeared before this court he did not attempt to arguethat the respondent had been dismissed in accordance with the provisions of the appellant@s


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45

disciplinar! code. Fe adopted, for the first time in this case, the radical and fundamental approach that

the respondent=s conduct so undermined and damaged the working relationship between himself and

his emplo!er that the latter was entitled to cancel the contract without more ado and dismiss him.

/he authorit! for this approach is to be found in the recent case of Council -or Scienti-ic and

ndustrial Research v" Fi8en ("##) "E I2 "% ('). (/he Fi8en case). I will return to this case later

when I come to consider the law on this topic in greater detail. 7or present purposes it is sufficient to

note that the Fi8en case now establishes that in certain circumstances the conduct and attitude of an

emplo!ee can be such as so to damage the relationship of trust and confidence reAuired on both sides

of a contract of emplo!ment, that the emplo!er is entitled in law to dismiss the emplo!ee. If such a

situation did arise in the present case there will then be no necessit! for this court to consider further

the nature of the alleged procedural irregularities. &uch matters would be irrelevant if the respondent

had effectivel! repudiated his contract of emplo!ment in such a wa! as to entitle his emplo!er to

dismiss [1#] him, alwa!s provided that it was a fair dismissal. Oeeping that possible situation inview I will now consider what the conduct of this respondent was as revealed in the evidence

presented in the court a 1uo.

>

J'fter considering the conduct of the respondent as revealed b! the evidence presented in the Court a

1uo and the summar! of it b! the judge a 1uo, ord 'llanbrigdge 2' continued9K

J"4DK > /he legal Auestion now arises whether the appellant was entitled to treat the respondent=s

conduct as amounting to a repudiation b! him of his contract of emplo!ment with the appellant. -r.

-awere said he did not dispute the law as set out in the Fi8en case. Fis submission was that the

respondent=s conduct did not constitute such a material breach of contract as to be considered a

repudiation of it. In an! event, he said that this case was clearl! one where the emplo!er had

dismissed the respondent for disciplinar! reasons but had failed to follow the proper procedure for

such dismissal as decided b! the judge a 1uo.

't long last, in this somewhat length! judgment, I am now in a position to consider the ratio

of Fi8en6s case and then decide whether it can be applied to the facts of this case.

/he case of Fi8en was decided in the &outh 'frican Court of 'ppeal in ovember "##4. /he

respondent emplo!ee in that case faced a disciplinar! inAuir! on a charge of misconduct. Fe was amarine pollution engineer who had allegedl! offered to do private work for remuneration without the

consent of the appellant emplo!er. Fe was charged along with a coworker, -r. Botes, with

misconduct under the emplo!er=s disciplinar! code that forms part of the conditions of service. Fe

and Botes both refused to testif! at the disciplinar! hearing and both were found not guilt! on the

basis that the charges had not been found proved be!ond reasonable doubt. Fowever, there followed

correspondence which indicated that in view of what had happened, the respondent wrote that he had

completel! lost faith in his immediate supervisor and his divisional director and that their working

relationship was totall! and permanentl! damaged.

In the Industrial Court and the abour 'ppeal Court it was held in this case that the letters did

not amount to a repudiation of the contract. /hat was because in these letters the respondent made it

clear that he wished to remain in the emplo! of the appellant. In these circumstances the lower courts

took the view that he did not evince a clear and unambiguous intention not to go on with his contractof emplo!ment. /his view did not [1!1] find favour in the Court of 'ppeal who indicated it was toonarrow an approach. /he correct approach, as set out b! Farms 2.'. at page +4 FI, was9

6/he correct Auestion to ask appears to me to be whether the respondent@s ?attitude=

constituted a material breach of his contract (repudiation in the wide sense), a breach

that entitled the appellant to cancel it.8

/he learned judge said at a later stage in his judgment, at p. +*09

6It is well established that the relationship between emplo!er and emplo!ee is in

essence one of trust and confidence and that, at common law, conduct clearl!

inconsistent therewith entitles the ?innocent part!= to cancel the agreement. ( *ngehrn

& !iel v" Federal Cold Storage Co" Ltd "#D% /& E" at EEE%). ;n that basis it


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46

appears to me that our law has to be the same as that of nglish law and also that a

reciprocal dut! as suggested b! counsel rests upon the emplo!ee. /here are some

judgments in the 'C to this effect (for example 4 Hum.hries & 9ewel #!ty$Ltd v"

Federal Council o- Retail and *llied Wor'ers 5nion & others ("##") "+ I2 "D5+

('C) at "D5E0.) I ma! add that this much was not placed in issue for the respondent

b! -r. &choltH. It does seem to me that, in our law, it is not necessar! to work with

the concept of an implied term. /he duties referred to simpl! flow from naturalia

contractus.8

I gratefull! accept and agree with these Auotations from the learned judge who gave the

leading judgment in this case. It was concurred in b! three of the other judges of appeal, although the

remaining judge gave a dissenting judgment.

In these circumstances I am of the view that the courts of Botswana should be prepared,

where appropriate, to follow the ratio of the majorit! decision of the &outh 'frican Court of 'ppeal in

the Fi8en case. /hus the test to be applied in cases of this nature is whether the 6attitude of either the

emplo!er or emplo!ee constituted such a material breach of the emplo!ee=s contract of emplo!ment

that the innocent part! was entitled to cancel it. Faving applied this test it is, of course, necessar! to

go on to consider whether the method of cancellation adopted b! the innocent part! was a fair dismissal and was in accordance with the audi alteram .artem rule.

'ppl!ing this test to the somewhat exceptional circumstances of the present case I am more

than satisfied that the respondent=s attitude throughout the period of his emplo!ment, and especiall!

during the latter stage of it, was one which finall! resulted in a complete destruction of the ver!

foundation of the relationship between himself and the appellant, based as it must be on trust and

confidence between the parties. It is unnecessar! to repeat the outline of the appellant=s conduct,

which demonstrated such an attitude, as it has alread! been full! and ver! carefull! outlined b! the

judge a 1uo as shown in the extracts I have narrated from his judgment. /he final recommendations

made b! the *ivisional 'ccountant, the 7inance -anager [1!"] and the 0eneral -anager alldemonstrate that b! 2anuar! "##" the conduct of the respondent was such that it could no longer be

tolerated in his own and the corporation=s interests. /heir respective memoranda bear eloAuent

testimon! to the fact that the substratum of the respondent=s contract of emplo!ment had been soundermined b! his attitude and conduct that the appellant was entitled to cancel it and dismiss the

respondent.

1ere the circumstances of that dismissal fairM I have no doubt that the! were. /he appellant

corporation did not rush to judgment. /he *ivisional 'ccountant and the 7inance -anager both

recommended, on "+ ovember "##D, the dismissal of the respondent in their respective memoranda

forwarded to the 0eneral -anager. Fe did not write his own memoranda recommending the

respondent=s dismissal until " 2anuar! "##". /he following da! was an eventful one. /he

respondent was summoned to the 0eneral -anager=s office at %.5D a.m. Fe was told of the intention

of the 0eneral -anager to submit a full report to board members, to whom the respondent had

previousl! complained directl!. /he 0eneral -anager asked the respondent if he had an! comments

on such a proposed course of action. /he respondent replied he had nothing to sa!.

Falf an hour later at # a.m., the 0eneral -anager attended a meeting of the board members towhom he had circulated his own memorandum. 'fter a length! discussion, the members came to the

conclusion that9

6In view of the above (the 0eneral -anagers=s -emorandum) and in consideration of

his age and length of service with the corporation, the Committee resolved that

empadi be asked to retire with full benefits. 7ailure to accept this proposal he should

be dismissed.8

/he 0eneral -anager again saw the respondent at +.5D p.m that same afternoon and told him

of the board@s decision. /he two *eput! 0eneral -anagers present pleaded with -r. empadi to

accept the first option. ven at this stage the respondent=s superiors were prepared to be reasonable

and give him the opportunit! to depart on the most favourable financial terms. /he respondent was

not persuaded at that stage to accept such a reasonabl! generous offer and asked for and was given the


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47

right to sleep on it. Fowever, the next da! at %."4 a.m. the respondent refused to accept the

opportunit! of premature retirement and, true to his character and attitude which had been

demonstrated so often in the past, he refused to resign and said that he had again placed matters in the

hands of his law!ers.

In such a situation I am of the view that not onl! did the appellant corporation act reasonabl!

but, out of genuine concern for the welfare of the respondent, went further than the normal emplo!er

could be expected to go in terms of patience towards, and concern for, an undeserving emplo!ee.

/he! acted with a compassion which was spurned b! the respondent. /he! dismissed him in a

reasonable manner. 'fter giving the respondent ever! opportunit! to make his own submissions to

them which he summaril! rejected, the! were clearl! not in breach of the audi alteram partem rule.

;ne last matter remains. /he respondent was dismissed b! having his services with the

corporation terminated in the corporation=s interest. 1hilst the situation in this case did not reAuire the

disciplinar! procedure laid out in paragraph " of the revised 0eneral Conditions of Contract, as

[1!#] this was a case where the Fi8en ratio applied, he was dismissed with a period of onl! onemonth=s notice. B! virtue of the terms of paragraph +".$ of these 0eneral Conditions which relates to

a 6/ermination of mplo!ment with otice,8 he was entitled to two months= notice. Fe was

dismissed in terms of +$ .$.4 which covers 6an! other reasons in the interest of the corporation=s

operation8. Fe had more than "D !ears= service and in terms of paragraph +".5 he was entitled to6two calendar months notice.8 's he onl! received one month=s notice he is accordingl! entitled to a

further month=s salar! calculated on his monthl! earnings at the time. /his, however, is a ver!

marginal amount and will not affect the award of costs in favour of the appellant.

I would therefore allow this appeal, with costs. I would also make an order for pa!ment to the

respondent b! the appellant of an additional one month@s salar! in lieu of notice.8

TEBB&TT J.A. and HOETER J.A. agreed

10.#.# A429-235; 5-/234 35


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48

[$!0] 6> /he issue involves the socalled doctrine of anticipator! breach. It originated inngland and has been received b! us it has also spread inter alia to the Lnited &tates but

not without the expression of certain reservations b! rof Williston. Its true basis has been

contentious, but at least in its countr! of origin, or so it seems, the view is now favoured that

the anticipator! breach is a violation of ?not a future, but an existing obligation= (7urmston

Cheshire and Fi-oot6s Law o- Contract #th ed at 4# ED). In a review in the Law :uarterly Review "#E5 $4 $# at $E the author, * /iplad!, sa!s9

6/he better view would therefore seem to be that anticipator! breach so called

is the actual breach of an implied obligation of present performance. /he nature

of the obligation thus imposed will depend on the circumstances of the

particular case, but, generall! speaking, a promisor will be liable if he evinces

an intention not to be bound b! the contract.8

[$!1] /here can be little doubt that, in grafting the doctrine of anticipator! breach upon our law, the view that such a breach is the breach of an existing obligation would be consonant

with our law. It could be taken as an obligation ex lege, ie implied b! law > J/Khere appears> to be no real difficult! in ascribing such an obligation to flow, b! operation of C law, from

the )ona -ides underl!ing contractual relations in our law. 'll our contracts are said to be

)onae -idei (cf 1essels Law o- Contract paras "#E, "##E).

>

J4+K > It could be said that it is now, and has been for some time, felt in our domain, no

doubt under the influence of the nglish law, that in all fairness there should be a dut! upon a

promisor not to commit an anticipator! breach of contract, and such a dut! has in fact often

been enforced b! our Courts. It would be consonant with the histor! of our law, and also

legal principle, to construe this as an application of the wide jurisdiction to impl! terms

conferred upon a court b! the


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49

/here is much to be said for a wider view of anticipator! breach and to recognise a

classification of the modes of violation along the lines [$!#] suggested b! %iena)er ( su.ra at5). Fowever, for present purposes, the inAuir! ma! be directed at ?repudiation=, as a well

recognised form of anticipator! breach. /he Auestion to be answered ma! then be posed as

follows9 did the appellant repudiate his contract with the respondentM

Fe certainl! did not do so explicitl!. It is, however, generall! accepted that a promisor ma! do so b! conduct. /he Auestion in the present case is therefore whether, b! drawing up a

new plan for submission to the authorities, and therein allocating the respondent=s erven to a

school site, the appellant has ?repudiated= the contract.

1hat the proper test is to be applied to the promisor=s conduct is not obvious, as there

are, what appear to be, conflicting dicta in this regard. /his Court, however, seems to have

gravitated in the direction of an objective test based upon the reasonable expectation of the

promisee. > In !onisamy and *nother v ;ersailles Estates #!ty$ Ltd "#E5 (") &' 5E+ (') at

5%EB the following passage from the judgment of *GI 2 in 5niversal Cargo Carriers

Cor.oration v Citati ("#4E) + PB $D" at $5 is cited with approval9

6' renunciation can be made either b! words or b! conduct, provided it isclearl! made. It is often put that the part! renunciating must ?evince an

intention= not to go on with the contract. /he intention can be evinced either b!

words or b! conduct. /he test of whether an intention is sufficientl! evinced b!

conduct is whether the part! renunciating has acted in such a wa! as to lead a

reasonable person to the conclusion that he does not intend to fulfil his part of

the contract.8

/he test here propounded is both practicable and fair, and this is the test which I propose to

appl! in the present case.

/he Auestion is therefore9 has the appellant acted in such a wa! as to lead a reasonable

person to the conclusion that he does not intend to fulfil his part of the contractM ;bviousl!,

the ?reasonable person= must be placed in the position of the respondent. 1ould he, in that

position, have inferred that the appellant no longer intended to deliver erven #4 and #EM In

m! view, it would have been obvious to him that, in an attempt to obtain proclamation of the

township b! submitting the new plan for approval, the appellant was sacrificing his rights to

transfer of the erven. It follows that the appellant did commit an anticipator! breach of the

contract. 's it related to the whole of the contract, the respondent was entitled to rescind and

to claim back what he had paid. >

>

[$!] > /he appeal is dismissed with costs.8

M&LLER JA, 7OT> JA, JO&BERT JA and %ILJOEN AJA concurred.

10. D692v -5635?49

[*] SWEET v RAGERG&HARA, NO, AND OTHERS "#E% (") &' "5"

(*urban and Coast ocal *ivision, &outh 'frica, # &eptember "#EE)

/he applicant purchased from respondents immovable propert! described in the deed of sale as ot $

0len 'nil /ownship for the sum of


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applicant=s attorne! gave respondents a notice of intended rescission, which called upon them to give

vacant occupation of the propert! within 5D da!s. 't the expiration of this period, one person was

still in occupation of one of two buildings on the propert!. /he applicant applied in motion

proceedings for an order declaring that the agreement had been lawfull! cancelled. /he respondents

contested the legalit! or effectiveness of the notice of rescission for what ma! or ma! not have been a

material breach of the contract. /he Court held that failure b! the respondents to give the applicant

vacant occupation b! " 2anuar! "#EE was a breach of the agreement. 1hether it was a material

breach could onl! be decided upon b! viva voce evidence. /he Court distinguished between breach

through mora and defective performance. It held that the case involved the latter form of breach. /he

notice of rescission reAuired for this form of breach had to relate to the materialit! of the breach, an

issue to be resolved through viva voce evidence. /he notice of rescission was also ineffective because

it was eAuivocal. It was not clear whether the contract had been cancelled or it would remain in force

if vacant occupation would be given within the time set.

7&MLEBEN, J.:

1#] 6 Mora is 6the failure without lawful excuse to perform a promise timeousl! mora is, in

essence, a breach of the time factor of a promise. ( Mulligan4 o." cit ., p. +%5). 's ;oet , ++.".+$, putsit9 Mora est solutionis -aciendae vel acci.iendae -rustratoria dilatio. ;ur common law did not

recognise an! general right to resile when a debtor was in mora > J %el v Cloete "#E+ (+) &' "4D

('*) at p. "ED0.K Fence the introduction of such a right in certain circumstances b! notice of

rescission. > J Microutsicos and *nother v" Swart "#$# (5) &' E"4 ('*) at pp. E+# Q E5D.K

*efective performance, on the other hand, relates to timeous performance not in accordance

with the terms of the agreement > Jcf. *e 1et and Neats 43ontra'tereg , 5rd ed at p. "+5K. In such a

case, > a right to cancel, when such performance is materiall! defective has alwa!s been recognised

in our law without an! preceding notice of rescission. If, however, the defective performance is not of

that order no right to cancel exists. /he rights of the innocent part! are then limited to other forms of

relief. Cf. -ulligan, *amages for Breach, vol. E$, S"*" Law 9ournal , p. " *ucam. v Morton4 >

J "#$# (5) &' "" ('*) at p. "". K

/hus it clearl! emerges that these two forms of breach of contract are different in character and that different rules relating to the right to cancel appl! to each. /his is recognised and

emphasised in Cloete6s case. (&ee pp. "ED and "E5.) >

It ma! appear to be somewhat anomalous that a part! to a contract, who fails to carr! out a

vital term of a contract, is better placed than one whose timeous performance is materiall! defective.

In the former case the defaulting part! must receive a notice of rescission before a right to resile

accrues. /he explanation for this, however, appears to lie in the fact that in the latter case the breach

is construed no doubt in some cases somewhat artificiall! or constructivel! as

6one which evinces an intention on the part of the defaulter no longer to be bound b!

the terms of the contract for the future8

( *ucam. v Morton4 su.ra at p. "#). ;n the other hand, the mere failure to carr! out such anobligation on time, which in certain instances ma! be due to an oversight, is not viewed in the same

light.

In the present case we are in fact dealing with defective performance and not with a mora

situation. It follows, if the above reasoning is correct, that both counsel were wrong in submitting

with different objectives in view that, on the facts of this case, the notice of rescission has an!

relevance at all.

In the light of this conclusion it is not necessar! to deal with the various submissions, which

Auestioned the validit! of the notice of rescission. I [1#+] shall, however, briefl! discuss one of thearguments advanced b! -r. Ra-tesath in this regard, which was directed at the form of the notice of

rescission in the instant case.

's one would expect, one of the reAuirements relating to such a notice is that

6the part! giving the notice must be able, read! and willing to proceed to completion.8


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51

/his is a Auotation from &tonham, (he Law o- ;endor and !urchaser , cited with approval in Cloete6s

case, su.ra at p. "E" 7. ' notice will normall! either expressl! or impliedl! signif! such abilit!

and willingness and, if it has not been preceded b! an! communication of cancellation, no problem is

likel! to arise. If, however, the innocent part! has purported to cancel, two situations ma! exist. If

the agreement has in fact been cancelled the agreement is at an end and cannot be unilaterall! revived.

(&ee Chester-ield nvestments #!ty"$ Ltd . v ;enter , "#E+ (+) &' "# (1) at p. +). In such a case the

notice must, expressl! or impliedl!, contain an offer of waiver or abandonment of such cancellation

or, positivel! viewed, an offer to reinstate the agreement. 'n acceptance b! performance on the part

of the defaulting part! in accordance with the terms of such a notice would then revive it. (Cf.

%eethling v 3lo..er en *ndere , "#E ($) &' $4# ('*).) In the present case the applicant has

.ur.orted to cancel but whether this has had the effect of bringing the agreement to an end is still to

be determined b! viva voce evidence. /his, however, is to m! mind a distinction of no conseAuence.

ven if the agreement is in fact not validl! cancelled, he remains under dut! to retract his act of

cancellation, expressl! or impliedl!, and thereb! evince a willingness to perform. In such a case the

dut!, if an!thing, is a higher one since an unlawful cancellation is in itself a repudiation of the

agreement (cf. e Wet and 0eats4 su.ra at p. ""E *mod Bayat v oherty , "#"# * $$).

In this regard, and generall!, a notice of rescission ought to be clear and uneAuivocal. (Cf. !onisammy and *nother v ;ersailles Estates #!ty"$ F Ltd ., "#E5 (") &' 5E+ ('*) at p. 5%4). '

defaulting part! is entitled to know that, should he respond to the notice (which ma! involve him in

expense and inconvenience), the agreement will be acknowledged b! the other contracting part! and

that he will carr! out his obligations under it. 's alread! stated, a notice reAuiring performance will,

in the ordinar! course, impl! such acknowledgment of willingness to perform. ven if it is somewhat

ambiguous, the maxim inter.retatio charterum )egnigne -acienda est ut res magis valeat 1uam .ereat

would no doubt be applied.

Fowever, the notice of rescission sent in this case appears to be eAuivocal, if not wholl!

inconsistent. /he fourth paragraph thereof, which is the relevant one, reads as follows9

6Fowever, without in an! wa! conceding that the agreement between the parties has

not been validl! cancelled our client hereb! calls upon !our client to give vacantoccupation of the propert! to our client within 5D da!s from date hereof8

It will be seen that on the face of it there is no clear indication that the applicant, whatever the reaction

of the respondents might be, will not still rel! on his cancellation. In fact he expressl! persists in his

attitude that the agreement has been validl! cancelled.

It is possible that other admissible evidence, at this stage not before me, ma! reveal the letter

in a different light or establish that due notice of [10] rescission was given. 7or this reason I refrainfrom an! final pronouncement on this Auestion. Fowever, ex -acie the notice as contained in the letter,

in m! opinion there is much to be said for the view that it was not a valid notice.

In the result the appropriate order is the one to which counsel agreed, namel!, that the matter

be referred for the hearing of oral evidence on the disputed issues and that the costs of the application

be reserved for decision at such hearing.8

10.! I?-388


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the business was made in "#"E. 1ith nearl! "D !ears of the contract to run, the -unicipalit! initiated

action in the Cape rovincial *ivision claiming 3+D DDD damages for breach of contract, and

forfeiture of plant and machiner! erected and installed b! the firm in pursuance of the contract. /he

Court granted absolution from the instance on the claim for damages, but gave judgement for the

plaintiff on the second claim. /he 'ppellate *ivision granted judgement for the defendant on both

counts, and ordered the plaintiff to pa! costs. It held that the forfeiture clause in the contract was in

the nature of a penalt! for breach contract. 's an 'ct of &tate had rendered the contract impossible of

performance, the contract had expired. /here could be no breach if it could not be performed, and if

there was no breach, there was no basis for invoking the forfeiture order.

SOLOMON, A.C.J.:

[#] It will be convenient to deal first with the crossappeal of the plaintiff against the judgment of absolution from the instance on the claim for damages for breach of contract. /he learned 2udge held

that, inasmuch as the defendants had been deprived b! the action and authorit! of the &tate of the

power of carr!ing out their contract, this was a good answer to the claim for damages. In m! opinion

that was a perfectl! right decision. B! the order of the "%th -a!, "#"", under 'ct 5# of "#", the

business of the first defendants was ordered b! the /reasur! to be woundup, the! themselves having been previousl! interned as enem! subjects, and the second defendant was appointed to carr! out the

order. In these circumstances it is clear that b! virtue of this 'ct of &tate it became impossible for the

first defendants to perform their obligations under the contract. or was the second defendant in an!

better position. 7or his authorit! under /ransvaal 'ct 5" of "#D# was limited to carr!ing on the

business of the partnership onl! in so far as might be necessar! for the beneficial winding up thereof,

and his evidence was clear that 6it was not necessar! to carr!on the working of the plant for the

purpose of winding up the estate.8 > /hereafter in accordance with his dut! as controller he

proceeded to realiHe the propert! of the partnership, and paid over to the Custodian of nem! propert!

the sum of 35",""$. /he position therefore, was that b! the order of the /reasur! winding up the

business of the partnership it became impossible for the defendants to carr! out the contract with the

plaintiff, and the Auestion is whether in these circumstances the! can be held liable for damages for

breach of contract.B! the Civil aw a contract is void if at the time of its inception its performance is

impossible9 im.ossi)ilium nulla o)ligatio (*. 4D."E."%4). &o also where a contract has become

impossible of performance after it had been entered into the general rule was that the position is then

the same as if it had been impossible from the beginning9 etsi .laceat extingui o)ligationem si in eum

casum incideret a 1uo inci.ere non .otest< (*. $4."."$D, +). > [#!] > It is true that there areexceptions to the general rule laid down in the lex of the *igest cited above, which concludes thus9

6 %on tamen hoc in omni)us verum est"8 7or the purposes of this appeal, however, it is not necessar!

to discuss the exceptions, as there is no suggestion that the present case falls within an! of them. or

is it necessar! to consider generall! what are the circumstances in which it can be said that a contract

has become impossible of performance. 7or the authorities are clear that if a person is prevented from

performing his contract b! vis ma8or or casus -ortuitus4 under which would be included such an 'ct of

&tate as we are concerned with in this appeal, he is discharged from liabilit!. > Lnfortunatel! the rules of the Civil aw appear to have been ignored in several cases on this

subject which have come before our Courts, which have been guided entirel! b! the decisions of the

nglish Courts. /hus in Hay v. ivisional Council o- 3ing William+s (own (" .*.C. "DD). &-I/F,

2., Auoted with approval the law as laid down in !aradine v. 9ane ('le!n +) and in %icol4 v.

Marshland (.


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J /he learned 'cting Chief 2ustice then referred to restatements of the law in other cases such as

%orden v. Shaw (+ -. "4D) Coom)s v. Muller ("#"5, .*.2...*, $55) and Morgan and Ramsay v.

Cornelius and Hollis (5" ..*. $4%), and continued thus9K >

/his rule, however, as laid down in !aradine v. 9ane4 is not consistent with the principles of the Civil

aw, and indeed it has been considerabl! modified b! later nglish decisions. /hus in Horloc' v.

Beal ("#", " '.C. 4+4), ;


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C. G. MAASDORP, J.A and DE %ILLIERS, A.J.A., concurred.

[+] BENJAMIN % MEYERS "#$ C* 44

(Cape rovincial *ivision, &outh 'frica, +5 &eptember "#$)

/he respondent, as plaintiff, sued in a -agistrate=s Court for cancellation of a lease of certain

premises in ort liHabeth, and for the ejectment of the lessee. /he premises were let out for a garage

business. In Clause "+ of the lease, the lessee undertook that he would have at all times for sale

sufficient supplies of such brands of petrol and oils as he was permitted to stock and sale. Clause "5

provided for cancellation of the lease in the event of breach of an! of its conditions. /he plaintiff

alleged that contrar! to clause "+, the lessee at a certain time failed to have for sale on the premises

sufficient or an! supplies of petrol. /he lessee was in "#$4 convicted of a contravention of etrol

Control /he onus of establishing a breach of a condition of the lease which would justif! acancellation was on the plaintiff. I am satisfied that he discharged such onus for the evidence showed

that on the "th ovember "#$$ there was no petrol available for sale and that from that date

onwards, defendant could not, and [$$1] did not, receive an! further supplies from the oil companies./hat he ma! have received supplies from another source is a possibilit! but not a probabilit! in view

of the provisions of


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rovided that before prohibiting the suppl! of petrol to an! reseller under this subregulation

the Controller shall give such reseller not less than "$ da!s= notice of the grounds upon which such

prohibition is contemplated and shall consider an! representations made or information or evidence

submitted to him b! such reseller within that period8.

[$$"] /his is the onl! regulation which gives the Controller of etrol power to issue a 6prohibitionorder8.

I must presume that an official like the Controller of etrol did carr! out the routine laid down

b! this regulation (Ca.e Coast Ex.loration Ltd" v" Scholt/ ("#55, '.*. at p. E).

/he defendant must, therefore, be presumed to have had notice of the grounds upon which the

Controller intended to act, namel!, that the defendant either had wilfull! disregarded the provisions of

the regulations or was not taking all reasonabl! practicable measures to ensure that the regulations

were observed in his business.

/he controller ma! have acted on either of these grounds it does not seem to matter upon

which he acted, for, in either event, he must have acted because of the conduct of the defendant.

1hen one takes all these facts into account, and remembers that in a civil case a

preponderance of probabilit! is a sufficient basis for decision (West Rand Estates v" %ew =ealand

nsurance Co. ("#+4, '.*. at p. ++)) one is driven to the conclusion that the prohibition order was

issued because (a) the defendant=s conviction and (b) his conduct on one or other of the grounds setout in


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NEWTON THOMPSON, J., concurred.

[10] BOTSWANA MEAT IND&STRY WOR7ERS &NION v BOTSWANA MEATCOMMISSION J+DD4K + B< 5#E

(Figh Court, obatse, Botswana, +E ;ctober +DD4)

/he respondent operates abattoirs and other meat processing facilities in various parts of the countr!.

7ollowing outbreaks of foot and mouth disease in the 7rancistown area, it closed the 7rancistown

abattoir. &ome emplo!ees were temporaril! reassigned to a different abattoir. mplo!ees with

accrued leave were reAuired to proceed on leave. ;ther emplo!ees were told to go on unpaid leave,

and were given salar! advances or loans, eventuall! to be deducted in the usual manner from their

monthl! wages. /he applicants sought orders from the Figh Court declaring that it was unlawful to

force emplo!ees to go on unpaid leave during the closure of the abattoir, and not to pa! their wages

when the! were read! and available to work. It was also unlawful to force them to repa! salar!

advances or loans when the emplo!er had not paid salaries that should have been paid during the period of closure of the abattoir. /he respondent contended that foot and mouth disease had been an

unforeseeable event which excused it from its emplo!ment obligations towards its emplo!ees. /he

Court rejected this contention and granted the application. It held that the outbreak of foot and mouth

disease was a foreseeable event. It was onl! the timing which could not be foreseen or predicted. /he

closure of the abattoir notwithstanding, the respondent was in the circumstances liable to provide

work to its emplo!ees and to pa! wages for work provided or not provided. /he respondent was in

the circumstances not entitled to plead vis ma8or or casus -ortuitous as justification for non fulfillment

of its contractual or legal obligations towards its emplo!ees.

SAR7ODIEMENSAH AJ:

[#++] 6> /he issues for determination arising out of the JcaseK are9

(i) 1hether the outbreak of foot and mouth disease in +DD+ and +DD5 can be described as vis

ma8or or casus -ortuitous entitling the respondent to escape its obligations to the applicants

under their contract of emplo!ment.

(ii) 1hether the fact that the abattoir had to be closed as a result of which the respondent could

not temporaril! provide work to the applicants relieved the respondent from pa!ing the

applicants their salaries or wages.

(iii) 1hether the amounts paid to the emplo!ees during that period are loans or salar! advances

which must be recovered b! the respondent.

(iv) 1hether the emplo!ees who were temporaril! deplo!ed to obatse were entitled to be paid

their usual allowances and other benefits for the period that the! were in obatse.

;is ma8or is often referred to as an act of 0od. It is however not merel! that act of 0od but an

occurrence which could not have been foreseen or guarded against. It is an extraordinar! occurrence

which could not or its effects could not have been guarded against, particularl! the person seeking to

be excused from its effects could possibl! not have anticipated it and with reasonable care and

foresight could not have avoided its devastating effects or at the minimum reduced its effects and thus

entitle him to escape of his liabilities.

Casus -ortuitous is also described as a species of vis ma8or and it includes all direct acts of

nature the effects of which could not reasonabl! have been foreseen or guarded against.

/he sole nature of the respondent=s business is slaughtering cattle, packing and canning same

and other activities that are ancillar! or automaticall! flow therefrom. /he respondent relies on cattle


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brought to it b! farmers. ;n its own, as rightl! pointed out b! the respondent=s counsel, it does not

keep and rear cattle. It is subject to stringent regulations. It is common cause that if the farmers it

relies on do not have cattle to bring or for some other reason such as disease, cattle cannot be brought

to slaughter, it cannot operate.

Can such occurrences then, no cattle to slaughter, diseased cattle, ever be [00] anticipated b!the respondent and could such occurrences and their effects be avoided, or minimiHed b! the

respondentM ver! operation has its peculiar risks. /hat there will be disease outbreak among cattle,

be it foot and mouth, lung disease or others is inevitable. /he respondent in its own affidavit and in

court stated that this was not the first time it had been faced with disease among cattle causing a

disruption and closure of its abattoir and of course conseAuent losses to its operations.

' previous incident, concerning lung disease, occurred in -aun. /hen came the present

incidents, the most recent outbreaks, the subject matter of these proceedings which occurred on two

occasions, one after the other. /he first outbreak was in the -atsiloje area. /he announcement b! the

*epartment of 'nimal Fealth was made b! wa! of press release on # 7ebruar! +DD+, and stated that

as a result both the 7rancistown and obatse abattoirs would be closed with immediate effect. >

;n the first occasion, 7ebruar! +DD+, the 7rancistown abattoir was closed for five and a half

months. /he second outbreak occurred within a period of just about "+ months after the first outbreak.

/his time at -atopi, also in the 7rancistown area. /he press release to this effect is dated E 7ebruar!+DD5. /he acting chief executive of the respondent reported that reopening would not happen until

-a! +DD5. /he! were negotiating with &outh 'frica, and if negotiations were successful, the abattoir

would start slaughtering at the end of 'pril +DD5, but a review of the situation would be made in

-arch +DD5.

/he Auestion is, are these acts vis ma8or which could not have been guarded against with good

planning and foresightM It looks to me that an occurrence which happens regularl! cannot be said to

be a vis ma8or . ven if the respondent could argue that +DD+ was vis ma8or , and totall! unexpected, it

cannot b! an! principle of law be Jheard toK argue that the +DD5 outbreak was also vis ma8or . /his

was almost conceded to b! the defence counsel who found it difficult to stick to his assertion when

the Auestion was put to him.

/here is no doubt that the respondent was aware and could have anticipated such

eventualities. It however did nothing about ?damage control= or disaster management in the event of such eventualit!. It was eas! to proceed on the ?let us sit and wait= attitude because after all the

damage and inconvenience was going to be passed on to the emplo!ees.

's stated alread!, for casus -ortuitous to be applicable there must be both the elements of

unforeseeabilit! and inevitabilit!. I have come to the conclusion that the outbreak of foot and mouth

disease is a foreseeable event. It is onl! the timing which cannot be foreseen or predicted. /he lack

of preparedness and foresight on the part of the respondent cannot be relied on for them to plead vis

ma8or or casus -ortuitous to the prejudice of its emplo!ees. >

[01] > *id the fact of the closure of the abattoir absolve the respondent from meeting itscontractual obligations with its emplo!ees, principall! that of pa!ing them their wages, salaries and

other entitlementsM 1hat is apparent is that at no time did the emplo!ees fail or refuse to go work.

/he! at all times stood read! and willing to go to work.

>J/he Court then referred to &ections " (") and (+), and &ections "E (+) and +" (") of the

mplo!ment 'ct (Cap $E9D") on the duties and responsibilities of an emplo!er to provide work, and

to pa! for the work provided or not provided, and continued9K >

In the present case, the applicants (the emplo!ees) have not broken their contract of

emplo!ment. /he first part of s "(") is therefore not applicable. 1as the inabilit! of the emplo!ees to

perform due to the default of the emplo!erM >

Fas the emplo!er failed to provide workM /he answer is !es. Faving thus failed is he obliged

to pa! wagesM &ection "E(+) implies that unless the [0"] contract is terminated, it shall continue torun. /hat follows that the contract of emplo!ment between the plaintiff and the defendants, continued

to run. In the case of 9ohannes)urg Munici.ality v ,6Sullivan "#+5 '* +D", a train driver claimed his

wages for the period in which he had reported for work but had done nothing because the service was

hit b! a strike. /he municipalit! argued that his right to remuneration depended on his actuall! doing

work. /he 'ppellate *ivision found for the driver holding that as a proper construction of contract,


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the consideration for the pa!ment of wages was the mere tender b! the train driver to work. 1hat is

important is the tender for service, which is what the applicants did. /he! tendered their services,

stood read! to work, but were forced to take leave.

/here was also uncertaint! as to how long the closure would endure, thus making it

impossible for the applicants to mitigate their burden b! looking for temporar! emplo!ment as was

suggested in the ?/o whom it ma! concern= letter from the respondent=s human resources manager

dated "" 'pril +DD+ marked annex ''"5. It is pertinent to note that that letter was written over two

months after the closure of the abattoir. It is stated that closure is until further notice with no certaint!

in the circular of +D 7ebruar! +DD+. /he respondent also stated that ?we are looking at a minimum of

(5) months. /he situation will be reviewed at the end of -arch +DD+=. /here was no certaint! as to

when the abattoir would reopen. /hings remained Auite fluid. >

> /he applicants did not cease to be emplo!ees of the respondent. /he! tendered their

services, their contracts were not terminated, the respondent was obliged to pa! the applicants their

agreed wages in terms of their contracts of emplo!ment. /he nonpa!ment is in breach of s +"(") of

the mplo!ment 'ct.

In the nglish case of (urner v 2oldsmith J"%#"K " PB 4$$, the defendant, a shirt

manufacturer, had a five !ear contract with the plaintiff. ;ne of the things the plaintiff was to do was

to sell the various goods manufactured or sold b! the defendant. /he defendant=s manufacturingfacilit! burnt down and so the defendant did not continue to emplo! the plaintiff. /he plaintiff sued

for damages for breach of contract. ;n appeal the Court of 'ppeal allowed the appeal holding that the

plaintiff was entitled to substantial damages and that the defendant was not excused from fulfilling his

agreement [0#] b! virtue of the destruction of his manufacturing facilit! b! fire. Fis plea of visma8or failed, and the court made reference to another case (aylor v Caldwell ("%5) 5 B R & %+ at p

%55 where the court held9

?/here seems no doubt that, where there is a positive contract to do a thing not in itself

unlawful, the contractor must perform it or pa! damages for not doing it although in

conseAuence of unforeseen accident, the performance of his contract has become

unexpectedl! burdensome, or even impossible.=

ven though these decisions ma! not be binding, I find them nevertheless persuasive and

offering the correct legal position. /he rule is to appl! when the contract is positive and absolute, and

not subject to an! conditions express or implied. /he applicants= contract with the respondent is

positive and absolute. I have not been told of an! conditions express or implied, such as that the

applicants will not be paid in the event of disease outbreak resulting in the closure of the abattoir. /his

could have been a matter of agreement in the contract which once agreed and specified would have

been binding on the parties and these proceedings would never have commenced. >

> I thus find that the applicants were entitled to be paid their regular wages or salaries during

the closure of the abattoir in +DD+ and in +DD5.

Faving so found, the Auestion of salar! advances or loans can be decided without much

difficult!. *uring the period of closure of the abattoir, the applicants were told to do two things b! the

respondent9". /hose who had leave were to proceed on leave.

+. /hose who did not have leave were to proceed on unpaid leave.

B! implication, the! remained emplo!ees of the respondent.

/his is contained in the minutes of "# 7ebruar! +DD+. /he following da! (+D 7ebruar!) a

circular was addressed to the applicants stating, ?/he Botswana -eat Commission will therefore not

be able to pa! salaries and wages of emplo!ees.= 7lowing from this decision, an! staff member who

needed mone! was to appl! for a salar! advance or loan, this being eAuivalent to the staff member=s

gross monthl! salar! less deductions such as income tax, union dues, funeral polic! and others. /he

applicants were then reAuired to pa! back this loan or salar! advance upon resumption of duties over a

period of +$ months.

Could these pa!ments be termed loans which must be repaidM /he respondent=s [0]attorne! submits that this was at the instance of the applicants in terms of the minutes of +4 7ebruar!

+DD+ which reads, ?Lnion asked if emplo!ees could be given advance. -anagement agreed to salar!


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advances.= -r Boko for the applicants submitted that at that stage the applicants had no choice but to

survive. I agree. 7ive da!s prior to this meeting of +4 7ebruar! +DD+ the! had been told the! would

not be paid salaries. Fow else were the emplo!ees and their families to surviveM I would hasten to

ask if this affected managerial and other high ranking officials or were the applicants denied salaries

so that managers and bosses would be paidM I do not have an answer to this Auestion and I will not

seek one now.

/he decision is unlawful and immoral. /he onl! reason put forward b! the respondent was

that the! were having financial problems, their overdraft had escalated and the! had made huge

losses. B! implication, the applicants were being called upon to bear the brunt of such losses and

provide the necessar! cushion for same. 1as that their creationM

'dditionall!, if the pa!ments were advances, wh! the deductions for tax and othersM If the

applicants were not on dut! and thus not being paid salaries, wh! should the! be made to pa! tax and

the other deductionsM Income tax is paid out if income earned and not out of loans. /he pa!ments

made to the applicants during the closure were salaries and wages to which the! were properl!

entitled. In conseAuence, their being made to repa! it back is improper and unlawful. >

>

[0!] 7or those who were deplo!ed temporaril! to obatse, the! remained regular emplo!ees

entitled to remuneration and allowances. /he! did not have to forego their entitlements such asaccommodation because B-C had no mone! and because the! had no option to refuse. /he! needed

to survive, the! were in a panic situation. onpa!ment b! the respondent of these entitlements is

eAuall! unlawful.

I have thus come to the conclusion that the applicants must succeed in all respects. I therefore make

the following declarator! orders9

". /hat the decision b! the respondent to send off its emplo!ees at its 7rancistown

abattoir on forced unpaid leave and forced leave during the outbreak of the foot and mouth disease in

7ebruar! +DD+ and 7ebruar! +DD5 was unlawful.

+. /hat the respondent=s failure to pa! its emplo!ees= wages during the closure of the

7rancistown abattoir in +DD+ and +DD5 as a result of the outbreak of foot and mouth disease in the

7rancistown areas was eAuall! unlawful.

It is therefore ordered that9". 'll amounts paid to the applicants and treated as either loans or advances are not

loans or advances but salaries. In conseAuence all deductions made from the salaries of the affected

are to be repaid with immediate effect, and all further deductions should cease forthwith.

+. /hat all unpaid salaries and wages for the said periods are to be paid to the affected

applicants with immediate effect.

5. /hat all unpaid allowances and benefits due to those emplo!ees who were deplo!ed

to obatse temporaril! be paid with immediate effect.

$. 'll pa!ments due in terms of this order shall not bear interest, and shall be made not

later than +" da!s from the date of this order.

4. /he respondent is to pa! the applicant@s costs on the ordinar! scale.

'pplication granted.8

10. breach of contract

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