The Scope of a Voetstoots Clause: Does the Absence of Statutory Approval Constitute a Latent Defect Thus Covered Under the Voetstoots Clause?

This issue was extensively considered in the landmark judgement of Odendaal v Ferraris (422/2007) [2008] ZASCA 85 (1 September 2008) by the Supreme Court of Appeals (SCA) as follows:

Facts of the case

The respondent purchased a property from the appellant in 2006. After taking occupation of the property, he discovered multiple defects in the property which were not disclosed to him during the inspection and conclusion of the sale agreement.  

These defects included the following:

• the jacuzzi was faulty and the swimming pool leaked despite the estate agent’s assurances to the contrary;
• the roof over one of the bedrooms leaked;
• the wood panelling in the dining room had borer beetle in it which caused dust to accumulate on it daily
• the municipality had not authorised the building of the outbuilding over a sewer;
• the carport contravened the Municipality Zoning Scheme Regulations.

The respondent after discovering these defects refused to pay the purchase price citing he needed to investigate the extent of the defects as well as the costs to be incurred in repairing them. Needless to say, the appellant invoked the voetstoots clause in their agreement to absolve her from being held liable for the defects.

The appellant cancelled the agreement on the basis of repudiation thereof by the respondent when he refused to pay the purchase price. She then sought to evict him from the property.

Legal principles applied

In the SCA, the respondent argued that the voetstoots clause does not protect the appellant from her failure to obtain statutory approval for the construction of the carport and the outbuilding. He relied on many decided cases, one which was of Ornelas v Andrew’s Café and Another 1980 (1) SA 378 (W) at 388G-390C where the plaintiff purchased a Café as a going concern, however later discovered that the Café did not have the required license to operate. This defect was held to be absolutely necessary for the purpose for which the property was sold for, as such, a valid license to operate was pivotal to the sale and thus could not be covered under the voetstoots clause.

The SCA found the facts relied upon in Ornelas to be different from the present case on the basis that in Ornelas the absence of a license to operate the premises as a restaurant meant that buyers could not use it for the express purpose for which it had been purchased. On the one hand, the absence of statutory approvals for building alterations or other authorisations that render the property compliant with prescribed building standards such as in the present issue do not render the property unfit for the purpose for which it was purchased.

The SCA further went on to state that the respondent in this case did not allege that the absence of these approvals rendered the property unfit for habitation, nor does he allege that the municipality proposes to enjoin him from living on the property or that he is incapable of acquiring the permissions necessary to render the alterations compliant with statutory provisions. It stated that “the appellant did not deliver to him ‘something different from what was bought’ as in Ornelas”.

The appellant argued that the respondent had not established a case of fraud against her and that the court of first instance erred in finding that the respondent could avail himself of the aedilitian remedies despite the voetstoots clause.

The SCA ultimately held that the respondent had not established that the appellant deliberately concealed the defects from him. It held that all the defects, including the lack of statutory authorisation for the outbuilding and the carport’s construction of the Municipal Regulations, were in fact latent defects, and fell within the ambit of the voetstoots clause.

Conclusion

It is correct that each case will be decided based on its own facts, however, it is extremely important that buyers conduct due diligence in property transactions.

Should it be revealed at a later stage that there are certain defects in the property which render the property completely incapable for the purpose it was sold for, the buyer must allege and prove this allegation. A litigant who undertakes the burden to establish fraud must ensure that both his allegations and the facts on which he relies to underpin them are clear and specific.

If the defects are such that the buyer can utilise the property for the purpose it was sold for, the court will likely find that the defect falls within the ambit of voetstoots clause. It is therefore equally important to note that the court’s decision will also depend on the nature of the defect in order to arrive at whether the said defect constitutes a defect that is covered by the voetstoots clause or not.

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