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28 Oct 2022

If the Municipality Rejects Your Building Plans, Consider PAJA

The Promotion of Administrative Justice Act (PAJA) gives muscle to our Constitutional right to fair, lawful and reasonable administrative action.

Considering how seriously bureaucratic decisions can impact us, not only financially but also in our personal lives, it’s important to know that PAJA is available to protect us whenever our rights are negatively impacted by such a decision.

Let’s have a look at how our courts can use PAJA to come to our assistance in a practical sense. We’ll refer to a recent High Court order against a municipality which had, through an “error in law”, rejected a service station’s building plans. We conclude with a warning to act quickly so as not to miss the time limits for taking action.

“The Constitution guarantees that administrative action will be reasonable, lawful and procedurally fair. It also makes sure that you have the right to request reasons for administrative action that negatively affects you.” (Department of Justice and Constitutional Development)

Bureaucratic decisions can and do have far-reaching consequences for us, both financially and in our personal lives. It’s good to know therefore that whenever your rights are affected by any such decision, you have access to the protections set out in PAJA (the Promotion of Administrative Justice Act).

In a nutshell, PAJA provides that “administrative decisions” by government departments, parastatals and the like must be fair, lawful and reasonable. Decision makers must follow fair procedures, allow you to have your say before deciding, and give you written reasons for their decisions when asked.

If a decision goes against you, your first step should be to use any internal appeal procedures. Ultimately you can go to court, although often a lawyer’s letter or two will solve the problem without the need for litigation.

A recent High Court decision illustrates one way in which PAJA can help you if all else fails –

A service station’s building plans rejected

  • A service station submitted to its local authority building plans for a proposed refurbishment.
  • After a series of meetings with the municipality and alterations to the plans as various issues were raised and resolved, the service station owners thought they were home and dry. But in the end the plans were not accepted on the basis that the application was for an extension of the service station which could not be approved in terms of the local Town Planning Scheme.
  • The High Court however found that factually there was no “extension” involved and that the municipality had therefore made an “error in law”.
  • That opened the door for the Court to review the municipality’s decision, which it duly set aside. In referring the decision back to the municipality for reconsideration, the Court directed it to make a decision within 21 days, and without regarding the proposed refurbishment as being an extension of the building.

A final thought – strict time limits apply with PAJA, so if a decision goes against you seek professional help without delay!

28 Oct 2022

Bond Clauses: Beware the Deadlines!

Buying and selling property is a big deal, and things can go wrong in the blink of an eye unless both buyer and seller understand exactly what their sale agreement says, and then either meet all deadlines or extend them as set out in the agreement.

We discuss the dangers of not doing so with reference to a recent High Court decision in which a seller and buyer came to blows over the R600,000 deposit paid by the buyer to the estate agent involved.

The buyer wanted his R600k back, the seller wanted it paid to him. The outcome of this dispute, and the Court’s reasoning in arriving at its decision, hold valuable lessons for us all.

“I love deadlines. I love the whooshing noise they make as they go by.” (Douglas Adams)

Here’s yet another reminder from our courts on the danger of not complying strictly with every provision in a property sale agreement. Don’t be like Douglas Adams and listen to the deadlines go whooshing by – missing a property sale deadline is a mistake, probably an expensive one. The deadline set by every bond clause is no exception…

Sale’s a dead duck. Who gets the R600,000 deposit?

  • A property sale agreement contained a standard “suspensive condition” in the form of a bond clause making the sale conditional upon the buyer obtaining R1.5m in bond finance by a specified date. The buyer could waive the benefit of this clause, and if it wasn’t fulfilled or waived by the deadline date the sale would become null and void – in which event the deposit, with interest, was to be repaid to the buyer within 5 business days.
  • The buyer paid the R600,000 deposit to the estate agent, but had difficulty in raising finance and (before the deadline expired) asked for more time to get the necessary bond approval. Both parties assumed that an extension of the deadline had been validly granted, but in fact there was never any compliance with the requirement in the bond clause that any extension be by “written agreement”. In other words, the sale had lapsed, but neither the seller nor the buyer realised that – they both thought they still had an agreement in place.
  • Two months later, thinking that the sale was still alive and well, the buyer signed a waiver giving up the benefit of the bond clause and stating that the agreement was no longer subject to the suspensive condition.
  • Another two months down the line the buyer told the seller he was no longer proceeding with the purchase (his wife had in fact bought another property in the interim). The seller took that as a repudiation of the contract and cancelled the sale.
  • The buyer demanded his deposit back. The seller wanted it forfeited to him. Off to the High Court they went.

The law, and the result

  • The general rule in our law is that no agreement comes into existence unless and until all suspensive conditions are fulfilled. So the seller has no claim against the buyer unless either the sale agreement provides for such a claim (unlikely) or “where the party has designedly prevented the fulfilment of the condition.”
  • That, in lawyer-speak, is the legal principle of “fictional fulfillment of a suspensive condition”. In lay terms – the law protects the seller and doesn’t allow the buyer to escape from the sale by deliberately ensuring that he doesn’t get a bond.
  • The seller argued that that was exactly what the buyer in this case had done; that he had breached the agreement and had deliberately frustrated the fulfilment of the bond clause.
  • On the facts however, the Court held that both seller and buyer had remained committed to the sale, blissfully unaware that in law the sale agreement was already a dead duck. The buyer only decided to get out of the agreement after it had already lapsed.
  • The buyer gets his deposit back with interest, and the seller is left with an unsold property and a large legal bill.

Buyers – your risk

As the Court put it, what saved the buyer in this case was a lack of evidence that the buyer had – by commission or omission – prevented the necessary finance from being granted. In other words, you risk being sued (which will put your deposit at risk) if you don’t make a genuine effort to get the necessary bond finance by the due date.

Sellers – keep an eye on the bond clause deadline

The seller on the other hand is left to lick his wounds after all the delay, cost and effort this dispute has caused him. He could have avoided all that pain by keeping an eye on the due date and ensuring that the deadline extension was agreed to in writing before it expired. As the Court pointed out “The contract was readily available to all involved and the requirements of clause 6.3 pertaining to an extension were available for all to read. A simple investigation would have revealed what was required.” (Emphasis added).

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