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23 August 2014
   
 
 
 
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A recent decision has provided long-awaited certainty by confirming that the doctrine of repentance does form part of South African law.

The judgment in Sandown Travel (Pty) Ltd v Cricket South Africa [2012] GSJ was handed down in the South Gauteng High Court on 7 December 2012 by Judge Wepener.

Background

The plaintiff, a travel agency, and the defendant, Cricket South Africa, entered into a written travel management agreement (the Agreement) in 2009. The Agreement required the plaintiff to render travel services to the defendant for a fee of ZAR 97 000.00 plus VAT per month; and was scheduled to continue for a period of two years, from 1 October 2009 to 30 September 2011.

In terms of the Agreement, the parties were required to give written notice of an intention to terminate the Agreement at least six months before the end of the Agreement (i.e. notice was to be given on or before 30 March 2011). If the written notice was not given as aforesaid, the contract would automatically renew for another year, on the same terms and conditions, subject to the same six months' notice process applying to the new period.

On 6 April 2011 the defendant informed the plaintiff in writing that it wished to terminate the Agreement on 30 September 2011. The plaintiff replied, informing the defendant that since it had failed to give a minimum of six months' notice as required in the Agreement, the Agreement had been automatically renewed for a further year.

Despite the defendant's attitude, the plaintiff continued to provide travel services to the defendant to the end of September 2011, when the defendant refused to allow it to continue to do so. On 10 October 2011 the plaintiff notified the defendant that its termination letter (of 6 April 2011) and the defendant's refusal to utilise the plaintiff's services constituted a repudiation of the Agreement, which repudiation the plaintiff accepted.

The claim

As a result, the plaintiff sought damages from the defendant in the sum of ZAR 1.64 million.

The defence

The defences relied upon by the defendant at the trial were that:

  • the plaintiff was not entitled to cancel the Agreement by virtue of the plaintiff having previously, during April 2011, elected to enforce compliance of the Agreement and not to cancel it; and
  • following the defendant's repudiation of the Agreement on 25 June 2011, the plaintiff made an election to enforce compliance of the Agreement and not to cancel it on 30 June 2011.

Submissions at the trial

The defendant argued at the trial that the plaintiff may not 'approbate' and 'reprobate' (i.e. it may not keep the contract in existence and then have a change of heart and cancel it). Once the plaintiff elected to keep the contract 'alive' after the repudiation thereof by the defendant, the plaintiff was bound by its choice and limited to enforce remedies against the defendant based on the election. The plaintiff was consequently precluded from claiming damages based on the cancellation.

The findings

The Court found that the conduct of the plaintiff indicated a clear intention to keep the contract alive as all correspondence (from 6 April 2011 to shortly before 10 October 2011) showed that the plaintiff elected to treat the defendant's repudiation as incompetent and as being of no force or effect. After referring to a number of court cases, the Court reaffirmed the position as follows:

"The legal position regarding the remedies available for an innocent party in the circumstances where the other commits an anticipatory breach [i.e. breach of the agreement before the date on which performance is due] or repudiation of an agreement has been set out in a number of decided cases. He or she must elect either to treat the contract as binding or terminate it. Once an election has been made, however, that person is bound by that election. He or she is bound to enforce the remedies available to him or her pursuant to the election and he is not at liberty to seek redress against the defaulting party by way of remedies inconsistent with the election."

Applying the above principle, the Court held that the plaintiff would ordinarily be bound by its election to enforce the Agreement and it could therefore not later cancel the Agreement; unless there is another ground upon which the plaintiff could rely. The Court then considered whether such ground existed in this case, and held that:

"There are decided cases, which have held that, despite an election to keep a contract alive, the innocent party may, in the case of anticipatory breach, reconsider its position when the time for performance arrives."

By Raynold Tlhavani, associate, Webber Wentzel

Edited by: Creamer Media Reporter
 
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