VOETSTOOTS CLAUSES – NEW DEVELOPMENTS

IN OUR LAW?

ELLIS & ANOTHER V CILLIERS N.O

ZAWCHC 145 2015

(9 OCTOBER 2015)

In 1720 a legal jurist named Pothier wrote in his “Treatise on Contract

of Sale” the following:

“…Though the rules of good faith, in many of

the affairs in civil society, extends further than to prohibit falsehoods, but

the suppression of everything…”

WHERE DID VOETSTOOTS CLAUSES ORIGINATE?

HISTORY• Classification of contractual terms:

• 1. Essentialia – the essential contractual terms which makes that contract the specific contract that it is eg Contract of Sale – “A” sells his house to “B” (sale);

• 2. Naturalia – The natural contractual terms which will flow from the contract implied by law (ex lege) eg Contract of Sale –

“Voetstoots Clause” which excludes the implied warranty against defects;

• 3. Accidentalia – The other terms and conditions in a contract eg Jurisdiction clause that will affect the rights of an individual;

VOETSTOOTS – BUILDING BLOCKS1. BONA FIDE – TO ACT IN GOOD FAITH2. EX LEGE – OUT OF THE TYPE OF CONTRACT ENTERED INTO, WE

ACT IN GOOD FAITH (WE DON’T SELL SOMETHING THAT IS DEFECTIVE)

3. POTHIER – OUT OF CONTRACT, WE ACT IN GOOD FAITH AND DISCLOSE ALL DEFECTS

4. VOETSTOOTS – THE PURCHASER NOW INDEMNIFIES THE SELLER AGAINST ANY CLAIM FOR DAMAGES FROM THE PROPERTY PURCHASED AFTER A THOROUGH INSPECTION OF THE PROPERTY (THE “AS IS” CLAUSE) FOR DEFECTS IN THE PROPERTY NOT DISCLOSED

VOETSTOOTS?

WHAT CONSTITUES A DEFECT?• In terms the building blocks all defects should be brought to the attention

of the purchaser (out of the type of the contract – naturalia and bona fide dealings);

• Holmdene Brickworks (Pty) Ltd v Roberts Construction 1977: “…a defect may be described as an abnormal quality or attribute which destroys OR substantially impairs the utility of a THING for the purpose for which it has been sold…”;

• Odendaal v Ferraris 2009 (4) SA 313: “any imperfection in a THING may be seen as a defect (broad approach)” and “any imperfection preventing or hindering the ordinary or common use of the property”

• One must remember that what constitutes the use of a THING may differ from one thing to another… Each scenario will differ!

WHAT DEFECTS DOES ONE GET?Two different types of defects exist in South African law:

1) PATENT: Upon a reasonable (plain sight) inspection the defect will be discovered as it will be obvious to the purchaser (a hole in the living room floor);

2) LATENT: Upon further (more thorough) inspection the defect will be discovered by the purchaser (an unlevel floor / roof)

SO WHAT DOES A VOETSTOOTS CLAUSE ENTAIL FOR SELLERS?

• Where the seller(s) have knowledge with regards to latent defects / imperfections to their property;

• They are bound to inform the purchaser of it;

• Should it become evident that the seller has deliberately concealed the defect from the Purchaser in bad faith (male fide) the Voetstoots clause will not protect the Seller and the purchaser may claim damages from the seller.

ODENDAAL v FERRARIS• Important SCA case to confirm this test

• General Rule: Where the buyer had the opportunity to inspect the property and nonetheless buys it with the patent defect, he will generally have no recourse against the Seller (the Voetstoots clause will apply)

• Where a Purchaser wants to curtail the Voetstoots clause he needs to prove (1) Knowledge (2) Fraud

ELLIS V CILLIERS 2015 ZAWCHC• This case CONFIRMS Odendaal v Ferraris (above) and the following facts are

of importance:• The purchasers bought a wooden house in Cape Town;• The sellers did not inform them that the floors and roof were unlevel, the

stilts upon which the house was built were rotten and subsequently the property subsided 90mm on the northern side;

• Cement screed had been placed on the wooden flooring to create a more “level” floor and a fake ceiling to visually correct the “slope” created to the northern side;

• Two wooden wedges were used to raise the floor, and was concealed using “NUTEC”;

ELLIS V CILLIERS 2015 ZAWCHC• The Defendants then denied knowledge of the levelling treatment but

admit the cement screed placed on the wooden floors;• The Purchasers then raised the point that the Seller knew of these

defects and that it constituted defects that impaired the use of the property and that the Voetstoots Clause was not applicable;

• To succeed the Seller had to show that the Seller (1) knew of the latent defect and (2) did not disclose it WITH THE INTENTION TO DEFRAUD (DOLO MALO)!!

ELLIS V CILLIERS 2015 ZAWCHC• The Court made the following decision:1) The Sellers knew of the defects;2) The fact that the cement was placed on the floor, the roof inserted and

the house levelled from outside made it clear that it was material defects (affecting the use of the thing);

3) The Seller told half-truths and decided not to divulge the true state of the property which amounted to fraud;

4) The use (to live in and to renovate) of the thing (house) was interrupted by these defects and should have been disclosed;

5) The Voetstoots clause could not protect the Sellers;

ELLIS V CILLIERS 2015 ZAWCHC“It is clear to me that the Defendant’s never considered the significance of telling the Plaintiff this and that, as set out hereinabove, she should have done so. In my view her actions constituted the necessary intention to defeat the provision of the Voetstoots clause.”

NB – The Second Defendant (the wife of the Seller) did not testify and the Judge could only make the conclusion that she did not inform the Purchaser of the remedial work that was done to the property!

VOETSTOOTS CLAUSE• The PURCHASER hereby acknowledges that he has

thoroughly inspected the entire property and made himself familiar with the property, its nature, condition, extent, beacons, title deed conditions, building plans, vegetation and locality, the PURCHASER bearing the risk of satisfying himself fully in this regard. The PURCHASER also acknowledges that he has had sufficient opportunity to have the property inspected structurally and otherwise.

WHAT MUST YOU DO?1. Inspect the property;2. Have good knowledge about the possible defects;3. Always tell the Seller to be truthful;4. Have a Voetstoots clause in your agreement and make a list

of the defects that were brought to the Purchasers attention.