The recent Supreme Court judgment in the matter of Christopher Charles Hughes v Nicolas
Gargassoulas and Others reinforces a test for the determination of a valid waiver. The issue
to be determined occurs regularly in most sale of residential property agreements.
In this matter, Mr Hughes and Mr Green entered into a sale agreement. Mr Green purchased
the property for his daughter and her life partner and a deposit of R1 000 000 was paid.
The agreement included a suspensive condition to the effect that if the Purchaser was not
able to obtain a loan against the security of a mortgage bond, the agreement would become
null and void and the deposit and interest thereon would be repaid in full to the Purchaser.
Just to reiterate, this is a standard clause in sale of residential property agreements where
the transaction is “suspended” pending the loan approval.
This agreement, furthermore, included a clause requiring that any additions and variations to
the agreement be done in writing and signed by both parties.
During the Covid-19 pandemic, the Seller was advised by the conveyancing attorney that the
Purchaser was considering paying the purchase price in cash. The Seller believed that this
constituted a waiver of the said suspensive conditions. The loan was not approved by the
due date.
The Purchaser’s daughter and her partner vacated the premises due to there being no
approved plans for the property which rendered their proposed renovations illegal.
The Seller argued that the Purchaser repudiated the agreement and as such he was entitled
to cancel and claim damages because, according to him, the Purchaser had waived
fulfilment of the suspensive condition.
At the heart of this matter was the question of whether the Purchaser had in fact waived
fulfilment of the suspensive condition and as such, also waived his right to the deposit and
the interest thereon.
The court found in favour of the Purchaser on the basis that the party claiming waiver (i.e.
the Seller) must show that the person waiving:
a) knew of the relevant facts; and
b) intended to waive the right.
It was not clear whether the conveyancing attorney had full knowledge of the rights allegedly
waived by the Purchaser and there was no proof of an unequivocal intention on the
Purchaser’s part to waive his rights.
In addition, a valid waiver:
a) must be in writing and signed by both parties and
b) must take place prior to the expiry date of the suspensive condition.
This matter emphasises the importance of understanding the waiver conditions and ensuring
they are valid.
