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[2016] ZAWCHC 140
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Davids and Others v Louw and Others (A525/2015, 4832/2014) [2016] ZAWCHC 140 (27 October 2016)
Republic
of South Africa
IN
THE HIGH COURT OF SOUTH AFRICA
[WESTERN
CAPE DIVISION, CAPE TOWN]
IN
THE HIGH COURT OF SOUTH AFRICA
(WESTERN
CAPE DIVISION, CAPE TOWN)
APPEAL CASE NO.
A525/2015
CASE
NO.
4832/2014
In
the matter between:
ASHRAF
DAVIDS
First
Appellant
SHEREEN
MATHIR
Second Appellant
MOEGAMAT
ALIE
DAVIDS
Third Appellant
MINISTER
OF AGRICULTURE, FORESTRY & FISHERIES
Fourth Appellant
COMPANIES
& INTELLECTUAL PROPERTY COMMISSION
Fifth Appellant
MEERMIN
VISSERYE
CC
Sixth Appellant
and
LYA
LOUW
First Respondent
MARIA
JOHANNA ATKINS
Second
Respondent
MARIA
BLANKENBERG
Third Respondent
MARIA
MAGDALENA
BOOYSEN
Fourth Respondent
MAGRIETA
KAMFER
Fifth Respondent
JOHANNA
KAMFER
Sixth Respondent
PATRICK
LEONARD N.O
Seventh
Respondent
GEORGE
RUDOLPH WHITTLE
N.O
Eighth Respondent
SABINA
SWARTZ
Ninth Respondent
JOHANNA
SUSANNA
TAYLOR
Tenth Respondent
Judgment
Delivered: 27 October 2016
LE GRANGE, J:
[1] This is an appeal against the
whole judgment and order of Cossie AJ, which was delivered on 7
October 2014. The First to Third
and Sixth Appellants (“The
Appellants”), after petitioning the Supreme Court of Appeal,
was granted leave to appeal
to the Full Bench of this Division.
[2]
At the heart of this case is the order by the court a quo
cancelling
an agreement of sale in respect of the members’ interest in the
Sixth Appellant, Meermin Visserye CC (“the
CC”), which
was concluded on 8 July 2012 between the Respondents and First and
Second Appellants, respectively. The court
a quo ordered, inter alia,
that the Appellants’
take
all necessary steps to transfer the shares in the CC to the
Respondents in equal shares; to provide full details to the
Respondents
in respect of the 2013 and 2014 catch under the small
pelagic fishing permit held by Meermin Visserye (Pty) Ltd; and to pay
the
proceeds of the said 2013 and 2014 catch to the Respondents’.
[3]
The salient facts underpinning this matter briefly stated are the
following. The late Antjie Leonard and Catherine Johanna Adams
(whose
executors are the Seventh and Eighth Respondents respectively),
including the remaining Respondents, were awarded a small
pelagic
fishing permit for quotas of 383.11 tons of Pilchards and 2348.49
tons of Anchovy. The permit was issued to the CC.
The members’
interest in the CC was held in equal shares by the Respondents. The
surviving Respondents are all elderly women
hailing from the
West Coast fishing town of Lamberts Bay who had been engaged in a
variety of capacities in the fishing industry
for some time, but had
never previously possessed or operated their own fishing permit. Soon
after the CC was awarded the fishing
permit, it became apparent that
the Respondents would be unable to harvest the relevant quotas
themselves due to a number of reasons
and were prepared to sell their
members’ interest in the CC. The selling of fishing rights and
quotas in this manner appears
not be an uncommon feature in the
fishing industry.
[4]
According to the Respondents, the husband of the Second Appellant and
a former official of the Department of Sea Fisheries,
approached them
regarding the sale of the fishing permit. On 8 July 2012, the
Respondents eventually concluded a sale of
the entire members’
interest in the CC to the First and Second Appellants for a purchase
price of R 4-million. The principal
asset of the CC was the said
small pelagic fishing permit. In terms of the agreement
of sale, the purchase price was
payable in a lump sum of R 400 000
to each of the Respondents.
[5]
An addendum to the sale agreement was concluded on 25 November 2012
which essentially amended the payment provisions in the
sale
agreement. According to the Addendum, the Respondents were to receive
an amount of R 50 000 payable from ‘February 2012
to May 2012’.
The Addendum also made provision for the pro rate deduction of monies
owed to K Cookson and a certain firm
of attorneys.
[6]
The Appellants also rely on a further oral agreement between the
parties. According to the Appellants, by early May 2013, it
became
apparent that a number of the Respondents were spending the R 50 000
payments within one or 2 weeks of receiving such payments.
According
to the Appellants it was then agreed that smaller payments should be
made to the respective Respondents. In this regard,
the Appellants
stated in the answering affidavit that the First Respondent requested
more than 20 ad hoc payments between
16
July 2013 and 14 January 2014. These payments apparently amounted to
a total of R 63 900 resulting in an overpayment in the amount
of R 2
900 to the First Respondent. According to the Appellants none of the
Respondents took issue with the revised payment period
option.
[7]
There is some dispute as to whether the First and Second Appellant’s
husband convinced the Respondents to sell their members’
interest in the CC. According to the Appellants, the Respondents were
actively looking for a buyer since February 2012. They initially
approached other interested parties.
[8]
According to the Appellants, the Second Appellant’s husband
acquiesced to meet the CC’s members after repeated advances
by
them. The Appellants also stated that it was only after a meeting
with all the members of the CC in July 2012 that the Respondents
resolved to sell their
interests
to the Appellants. Moreover, five of the Respondents’ according
to the Appellants were assisted by a professional
financial advisor
in their dealings with the Appellants and the assertion that the
Respondents were taken advantage of, due to
their advanced age, is
unfounded.
[9]
It is not in dispute that the CC’s only asset, at the time, was
a fishing right granted in terms of the provisions of
s 18 of the
Marine Living Resources Act, 18 of 1998 (“the MLRA”) for
a small pelagic fishery, to exploit anchovy and
pilchard. Annual
permits are issued in terms of the provisions of s 13 of the MLRA
which detail the specific quantities a fishing
right holder may catch
in a particular fishing season. It is not in dispute that in 2012 the
CC had a quota for 383.11 tons of
pilchards and 3248.49 tons of
anchovy.
[10]
Whatever the dispute might be as to who started the negotiations
between the parties, what is evident on the papers filed of
record,
is that the Respondents were unable to harvest from the sea the CC’s
quota on their own. They willingly entered into
the sale agreement
with the Appellants on 8 July 2012, whereby they sold the entire
members’ interest in the CC, as it then
was, to the First and
Second Appellants in terms of a written agreement of sale (“the
sale agreement”). The entire
member’s interest in the CC
was thereafter, on 10 September 2012, transferred to the Third
Appellant.
[11]
The material terms of the sale agreement can be summarised as
follows:
11.1 The purchase price was to be R4 000 000.00
payable in equal amounts of R400 000.00, less set-off of any
liabilities of the CC, to each of the Respondents.
11.2 The purchase price was payable on the
effective date, being the date on which the Fourth Appellant (“the
Minister”) issued to the CC its annual small pelagic fishing
permit for the 2013 fishing season.
11.3 100% of the members’ interest in the CC
was to be transferred to the purchasers by the sellers.
[12] It is not in
dispute that in November 2012 all the Respondents signed a form for
the authorisation of the transfer in terms
of s 21 of the MLRA. The
Department of Fisheries in the interim apparently simplified the
relevant forms and as a result did not
process the completed
authorisation form. In January 2014, the Respondents again assisted
the Appellants to complete the form as
required by s 21 of the MLRA.
[13] According to
the Respondents when the full amount of the purchase price became due
and payable during November 2012, the First
Appellant approached
them, where it was apparently suggested by the First Appellant that
if the Respondents were to take the purchase
price in a lump sum they
could be exposed to a substantial tax liability. The Respondents aver
they were persuaded by the First
Appellant to accept payment of the
purchase price in installments of R50 000 per month until June 2013
to avoid such tax liability.
As a result, t
he
parties on 25 November 2012 signed an addendum agreement, which
changed the payment structure.
[14]
The addendum recorded the advance payments made, being R 212 165,
to the Respondents and the deductions for amounts owing
to creditors,
namely Cookson and to the Respondents Attorneys. According to the
Addendum (as recorded in paragraph 3), payments
were to be made as
follows: (a) immediate payment of R 50 000 less the advanced amounts,
and a pro-rata contribution to settle
the debt to Ms. Cookson; (b) on
20 December 2012, R50 000 each, less a pro-rata contribution to
cover 50% of the debt to the
Attorneys of the Respondents; (c) on 15
January 2012 (sic), the same as the previous months; and (d) from 15
February 2012(sic)
to 15 May 2012(sic) (four months), R50 000
each per month. (
It is
evident that the date 2012 as reflected in the Addendum in paragraph
3.4 to 3.5 should have read 2013
).
[15] T
he
Respondents in the Founding Affidavit, premised the relief sought in
the court a quo on the following material averments, namely,
that
the Appellants had breached the sale
agreement and
defaulted on
their obligations by underpaying them in terms of the Addendum; the
members’ interest in the CC was transferred
to the Third
Appellant on 10 September 2012, at which time the full purchase price
had not been paid; the approval of the Fourth
Appellant was a
condition precedent to the sale becoming binding which had not been
complied with; and that the First and Second
Appellants caught the
fishing quota for the 2013 season without any authorisation which
resulted in the fishing permit being revoked
by the Fourth Appellant
(“the Minister”).
[16] In
paragraph [29] of the Founding Affidavit, the Respondents aver that
the Appellants failed to make the full payment of R
400 000 to each
of them as stipulated in the addendum agreement and only made the
following payments to them during the course
of 2012-2014:
First Respondent
- R 281 090.10 (27 November 2012 to 2 November 2013)
Second Respondent
- R 222 655.05 (15 January 2013 to 9 November 2013)
Third Respondent
– R 248 650.10 (15 December 2012 to 14 December 2013)
Fourth Respondent
– R 269 155.05 (27 November 2012 to 15 January 2014)
Fifth Respondent
– R 250 655.05 (27 November 2012 to 20 September 2013)
Sixth
Respondent
–
R
274 655.05 (29 November 2012 to 24 December 2013)
Seventh Respondent
– R 254 755.05 (27 November 2012 to 20 December 2013)
Eight Respondent
– R 181 600.00
Ninth Respondent
– R 286 705.95 (27 November 2012 to 14 January 2014)
Tenth Respondent
– R 244 255.10 (27 November 2012 to 13 December 2013)
[17]
The Appellants in disputing the relief sought, raised a number of
defences. Firstly, the Appellants denied that they were fishing
unlawfully in 2013, and without a permit. According to the
Appellants, the CC was issued with a valid fishing permit by the
Minister
in February 2013. It was attached to the Answering
Affidavit. The Appellants disputed the actual amounts owing to the
Respondents
and claimed some of the Respondents had in fact been
overpaid. According to the Appellants, they were entitled to withhold
payments
in terms of clause 5.1.6 of the sale agreement when it came
to light that the Respondents had caused the permit of Meermin
Visserye
for 2014 to be revoked
by the Minister. (
Clause
5.1.6 of the sale agreement essentially provides that each Respondent
shall immediately cease to involve themselves in any
way in the
business of the CC and shall cease to hold themselves out as members
of the CC. Furthermore, if any of the Respondents
breach the
provision or in any way prejudice the agreement or act in a way that
may threaten the issue of the CC’s permit,
the Appellants shall
be entitled to withhold any payments that may be payable to the
Respondents
).
[18]
The First Appellant also tendered payment of any part of the purchase
price still outstanding although it suggested that such
amount (if
any) was never quantified by the Respondents. The Appellants also
aver that the Respondents signed the necessary documentation
including the CK2 amendment forms to allow for the change in
membership of the CC
to occur.
Accordingly the agreement of sale did not provide a date by which
this should happen and as such there was nothing untoward
about the
Third Appellant becoming the sole member on 10 September 2012. The
Appellants further aver that they were never notified
of an alleged
breach of the agreement of sale nor were they placed in
mora
.
[19]
It is evident that there are a number of common cause facts between
the parties but equally seriously disputed facts. The following
are
not in dispute: the resignation of the Respondents as members of the
CC and the signature by them on the relevant CK2 forms
was not
subject to receipt of the purchase price or any other condition; all
the Respondents had signed the relevant documents
for transfer of a
fishing right as required by s 21 of the MLRA in November 2012 and
assisted the Appellants again in January 2014
to complete the form in
this regard.
[20]
It is also evident that the averment by the Respondents of illegal
fishing by the Appellants in 2013 was erroneous. The CC
was issued
with a valid permit to fish in 2013. Furthermore, in terms of
the
Addendum, the Appellants were authorized to represent the CC in
dealings with the Department of Fisheries, mainly for the purpose
of
seeking authorization for the sale transaction in terms of the
provisions of s 21 of the MLRA.
[21] The
central dispute between the parties is whether the Appellants
breached the sale agreement and Addendum by underpaying the
Respondents at the time the monies were due and owing, and if found
that there was such a breach whether it was material to allow
the
Respondents to cancel the sale agreement. The Respondents also
alleged the sale agreement was subject to the provisions of
s 21(2)
of the MLRA.
[22] The
court a quo pronounced that ‘
the
agreement of sale is subject to the provisions of section 21(2) of
the Act and that compliance with the provisions of this section
is a
term of the agreement ex lege.’
[23]
It is perhaps convenient to consider firstly whether the sale
agreement was indeed
ex
lege
subject to the
provisions of s 21(2) of the MLRA.
[24]
The provisions of s 21 (2) of the MLRA require that an application to
transfer a commercial right be submitted to the Minister
and that
“
subject to the
provisions of the MLRA and any applicable regulation”
the Minister may in writing approve the transfer of the right.
[25]
It is not
in dispute that the s 21 application was lodged with the Department
of Fisheries for approval by the Minister. That
application has
not been determined. It has neither been granted nor rejected.
[26]
The Acting Director-General (“Acting D-G”) in the
Department of Fisheries deposed to an affidavit on behalf of
the
Minister. The Acting D-G, opined that
as
a matter of law approval was required under its General Policy and
under its Transfer Policy for the transfer of a commercial
fishing
rights and as result, according to the Acting D-G, the sale agreement
was subject to s 21 of the MLRA.
[27]
I will accept that the purpose of s 21(2) of the MLRA, read with the
General Policy and Transfer Policy of the Department of
Fisheries, is
to ensure that substantive transformation within the fishing industry
is not undermined by allowing untransformed
applicants gaining access
to fishing rights where otherwise they would have been excluded.
[28]
T
he
sale agreement, in casu, clause 5.1.5, provides that “
on
the Signature Date, the Sellers shall - complete all forms and
documents required for the purposes of satisfying any regulatory
requirements by the Fisheries Branch of the Department, including
signing a s 21 transfer application form in terms of the
Marine
Living Resources Act, 18 of 1998
.”
[29]
In
National Joint
Municipal Pension Fund v Endumeni Municipality
2012
(4) SA 593
(SCA) at 603, at para [18], the Supreme Court of Appeal
reiterated the present state of our law regarding interpretation of
documents,
be it legislation, or contracts. It held that ‘
[Whatever]
the nature of the document, consideration must be given to the
language used in the light of the ordinary rules of grammar
and
syntax; the context in which the provision appears; the apparent
purpose to which it is directed and the material known to
those
responsible for its production. Where more than one meaning is
possible each possibility must be weighed in the light of
all these
factors. The process is objective, not subjective. A sensible meaning
is to be preferred to one that leads to insensible
or unbusinesslike
results or undermines the apparent purpose of the document. Judges
must be alert to, and guard against, the temptation
to substitute
what they regard as reasonable, sensible or businesslike for the
words actually used. To do so in regard to a statute
or statutory
instrument is to cross the divide between interpretation and
legislation; in a contractual context it is to make a
contract for
the parties other than the one they in fact made. The “inevitable
point of departure is the language of the
provision itself”,
read in context and having regard to the purpose of the provision and
the background to the preparation
and production of the document. ‘
[30]
In the present instance, the Acting D-G, is absolutely correct that
the transfer of a commercial fishing rights must be subjected
to the
MLRA’s General Policy and Transfer Policy before approval by
the Minister. The only difficulty is on a proper reading
of the
contract between the parties, in this instance, such statutory
approval was not an express or an implied suspensive condition
to the
sale agreement. Moreover, there is no basis to suggest that
s
21(2)
of the MLRA, properly interpreted, specifically requires that
an application under that section is obligatory when an interest in
a
close corporation, as in this instance, is sold. At best the section
merely stipulates that an application for the transfer of
a
commercial fishing right must be submitted to the Minister and that
such an application must be approved in writing. Moreover,
on a
careful reading, the MLRA is silent as to
s 21(2)
obligatory nature
in instances where an interest, as in this case, is transferred. To
suggest otherwise would in my view be to
cross the divide ‘
between
interpretation and legislation’
and
to ‘make
a
contract for the parties other than the one they in fact made
‘
. See
Endumeni, supra at 603 at paragraph [18].
[31]
The Department of Fisheries is however not powerless. If
s 21(2)
is
not complied with it can take action under s 28 of the MLRA. In
instances where the interest in a close corporation is transferred
and
s 21(2)
is not complied with,
section 28
authorizes the
Department of Fisheries to call for an explanation as to why it
should not revoke, suspend, cancel, alter or reduce
the appropriate
fishing right.
[32]
In my view
s 21(2)
of the MLRA at present has no bearing on the sale
of the member’s interest in a close corporation, and
non-compliance with
the provisions of the MLRA cannot affect the
validity of the sale of an interest in a close corporation holding
commercial fishing
rights. It follows the court a quo’s
finding that (‘
the
agreement of sale is subject to the provisions of section 21(2) of
the Act and that compliance with the provisions of this section
is a
term of the agreement ex lege’)
cannot
be sustained.
[33]
Turning to the issues whether all the Respondents were underpaid at
the time the monies were due and payable and if so whether
such
underpayment by the Appellants amounted to a material breach that
justifies cancellation of the sale agreement.
[34] It
is common cause that the parties on 25 November 2012 signed an
addendum agreement, which changed the payment structure.
[35] It
is not in dispute that five of the Respondents appointed a financial
advisor to assist them. The financial advisor apparently
pointed out
certain inaccuracies in the Addendum, amongst others that there was a
shortfall of one payment in the restructuring
of the payments. The
last payment of the remaining amount should have been in June 2013.
According to the Appellants, both
parties accepted the omission
in the Addendum and a payment was added for June 2013, without being
reduced to writing.
[36] The
Appellants deny the Respondents were entitled to the full payment in
the amount of R 4, 000,000. The Appellants took serious
issue with
the fact that the Respondents failed to mention the liabilities of
the CC which amounted to
R
875 514.15 that
had to
be set-off against the total purchase price. Furthermore, according
to the Appellants, the Respondents received payments
during the
period July 2012 and November 2012, and failed to mention it.
[37]
According to the Appellants, by April 2013 each of the Respondents
received a total amount of R 300 000, inclusive of the amounts
forwarded to pay the debts of the CC as provided for pro-rata in
terms of the sale agreement and Addendum.
[38] The
Appellants further alleged that the Respondents, in particular the
First and Ninth Respondent who would normally speak
on behalf of all
the Respondents, orally agreed in May 2013 to a further restructuring
of the remaining R 100 000 payments to an
increased payment period
option of R 10 000 per month. In this regard, it was recorded in the
answering affidavit that the First
Respondent was paid a total amount
of R 63 900 between July 2013 and January 2014 resulting in her being
paid some
R 2 900
more than the total purchase price agreed to, for her 10% members’
interest.
[39]
According to the Appellants the First, Seventh and Ninth Respondents
had been fully paid by February 2014 and the remaining
Respondents
were owed a total amount of R 160 000. It was also during the same
period that the Appellants became aware that the
Department had been
approached by the Respondents to cancel the fishing permits of the
CC. According to the Appellants, the conduct
of the Respondents in
having the permits cancelled was a breach of clause 5.1.6 of the sale
agreement and therefore they were entitled
to withhold payments to
the Respondents. The Appellants also tendered to pay these amounts if
it was found that they were not entitled
to withhold it.
[40] The
Respondents in their replying affidavit denied that an oral agreement
was entered into to extend the payment option beyond
June 2013.
Moreover, they denied that the full purchase price was paid by the
Appellants by the effective date as agreed in the
sale agreement and
Addendum. It was also specifically denied that the First, Seventh and
Ninth Respondents were paid in full.
[41]
It is now trite in our law that
motion
proceedings, ‘unless concerned with interim relief, are all
about the resolution of legal issues based on common cause
facts.
Unless the circumstances are special they cannot be used to resolve
factual issues because they are not designed to determine
probabilities. It is well established under the
Plascon-Evans
rule that where in motion proceedings disputes of fact arise on the
affidavits, a final order can be granted only if the facts
averred in
the applicant’s affidavits which have been admitted by the
respondent together with the facts alleged by
the latter,
justify such order. It may be different if the respondent’s
version consists of bald or un-creditworthy denials,
raises
fictitious disputes of fact, is palpably implausible, far-fetched or
so clearly untenable that the court is justified in
rejecting them
merely on the papers.’ (
See
Plascon-Evans Paints Ltd v Van Riebeeck Paints (Pty) Ltd
[1984] ZASCA 51
;
1984 (3) SA 623
(A) at 634-635
;
Fakie
NO v CCII Systems (Pty) Ltd
[2006] ZASCA 52
;
2006 (4) SA 326
(SCA) paras 55 and 56;
Thint
(Pty) Ltd v National Director of Public Prosecutions and others; Zuma
v National Director of Public Prosecutions and ot
hers
[2008] ZACC 13
;
2008 (2) SACR 421
(CC) paras 8-10.)
[42]
Counsel for the Respondents, Mr. D Potgieter SC, conceded that the
court a quo erred in ordering the proceeds of the 2013 and
2014 catch
be paid to the Respondents as the actual relief sought was that the
proceeds be paid to the CC and not the Respondents
individually. It
was argued on behalf of the Respondents that on the Appellants’
own version there was a material breach
of the sale agreement and
the Addendum. It was contended that by the end of April 2013 an
amount of R 100 000 per members’
interest was still outstanding
and it was never paid in terms of the addendum agreement by end of
June 2013. According to Mr. Potgieter,
the material breach occurred
during the period May 2013 and a right to cancel the sale agreement
accrued to the Respondents which
they were entitled to exercise. It
was further contended that the allegation of an oral agreement is
far-fetched and untenable
and was correctly rejected by the court a
quo. An argument was also advanced that even if payments were made
after June 2013 to
February 2014, the Respondents were still
underpaid and such indulgence did not detract from the breach and
entitlement to cancel
the contract.
[43]
Counsel for the Appellants, Mr. Borgström, assisted by Mrs. Z
Titus, argued that the factual dispute regarding the amounts
paid to
the Respondents should be decided on the version advanced by the
Appellants. It was contended that the First, Seventh and
Ninth
Respondent by February 2014 were fully paid b
y
the date that the Court a quo cancelled the agreement and the
remaining Respondents were owed small amounts that ranged between
R
20 000 to R 27 000 each. Moreover, it was argued that the Appellants
were lawfully entitled to withhold the said monies under
clause 5.1.6
of the sale agreement but despite that it tendered payment thereof
and as a result cancellation of the contract was
not just and
equitable in these circumstances.
[44]
In the present instance, the Appellants’ version that there was
an oral agreement to further regulate the payments beyond
the dates
stipulates in the Addendum cannot be regarded as far-fetched or
untenable, despite the non-variation clause in the sale
agreement.
The Respondents on their own version at paragraph [29] of the
Founding Affidavit, placed reliance on payment dates beyond
what is
claimed by them as the effective date of payment. It is also not in
dispute that the Addendum to the sale agreement contained
certain
errors as to the date and times of payments. This was seemingly not
rectified in writing but varied orally. The Respondents
in excepting
monies beyond the stipulated date in the Addendum and them assisting
the Appellants to apply for approval under s
21 of the MLRA in
January 2014 is also at odds with the suggestion that no oral
agreement existed to regulate further payments.
In fact it rather
demonstrates that the effective date of payment could not have been
as stipulated in the Addendum. If the converse
is correct and strict
adherence is to be given to the sale contract and Addendum than the
last payment of R 50 000 should have
occurred on 15 May
2012 and not in 2013 as accepted by all. The effective date of 15 May
2012 in any event in the present
circumstances would
lead to ‘insensible and
unbusinesslike’ results. It would also undermine the purpose of
the sale agreement.
[45]
But even if it is accepted, on the Respondents’ version, that
the date of May 2013 was the specific time fixed for the
final
payment then the Respondents did not exercise their right to cancel
the sale agreement with Appellants
in
clear and unequivocal terms
within
a reasonable time.
[46]
The Respondents on their own version accepted further payments from
the Appellants until January 2014. In fact, at the
time that
the matter came before the Court a quo, the Respondents had still not
cancelled the contract. It was indeed the Court
a quo who cancelled
the contract.
[47]
It is now trite in our law of contract that if
a
material breach occurs, the innocent party has an election of whether
to abide by or cancel the contract. See:
Culverwell
and Another v Brown
1990 (1) SA 7
(A) at 16J - 17A. Furthermore,
if
the innocent party elects to cancel, this election must be
communicated to the guilty party, by words or deeds, in clear and
unequivocal terms and no cancellation takes effect until this has
been done.
Swart
v Vosloo
1965 (1) SA 100
(A) at 104H – 105A;
Datacolor
International (Pty) Ltd v Intamarket (Pty) Ltd
[2000] ZASCA 82
;
2001 (2) SA 284
(SCA) at 299E – 301 H;
Kragga
Kamma Estates CC and Another v Flanagan
[1994] ZASCA 137
;
1995
(2) SA 367
(A) at 373F -374F.
Moreover,
if the innocent party does not exercise its right of cancellation
within a reasonable time, the inference arises that
the party has
elected not to cancel, as stated in
Mahabeer
v Sharma NO and Another
1985
(3) SA 729
(A) at 736.
[48]
Similarly, a failure to cancel in a reasonable time, and the
acceptance of payments, indicates an election to abide by the
contract (see
Kragga
Kamma Estates
CC
supra at 373 E-F) and if
the
election has been made to abide, the innocent party is bound by its
election and cannot change its mind (see
Curlverwell
supra at 17A).
[49]
On these stated principles, in the present instance the fact that the
Respondents failed to cancel the contract within a reasonable
time
and willingly accepted monies until January 2014, is indicative that
they elected to abide by the contract. The indulgence
clause upon
which some reliance was placed by the Respondents, can therefore not
arise in this case.
[50]
The Appellants’ view that they were entitled to lawfully
withhold the monies from the Respondents as a result of their
interference in the issuing of the 2014 permit by the Department of
Fisheries, is not without substance. But even if they were
not
entitled to withhold the monies, the Appellants tendered payment.
[51]
The issue now is whether in these circumstances, where more than two
thirds of the Respondents monies were indeed paid, whether
the breach
to withhold the monies was so material to justify cancelation of the
sale agreement.
[52]
In
Singh
v McCarthy Retail Ltd t/a McIntosh Motors
[2000] ZASCA 129
;
2000
(4) SA 795
(SCA) at 803 F-G, the SCA held that: “
The
test, whether the innocent party is entitled to cancel the contract
because of the malperformance by the other […] entails
a value
judgment by the Court. It is, essentially, a balancing of
competing interests – that of the innocent party
claiming
rescission and that of the party who committed the breach. The
ultimate criterion must be one of treating both parties,
under the
circumstances, fairly, bearing in mind that rescission, rather than
specific performance or damages, is the more radical
remedy. Is
the breach so serious that it is fair to allow the innocent party to
cancel the contract and undo all its consequences?”
[53]
In my view, on a conspectus of all the evidence, I am not convinced
that in treating both parties fairly and equitable and
where more
than two thirds of the purchase price had been paid, cancellation of
the sale agreement and Addendum was justified.
In this regard see
also
Botha and Another v
Rich N.O. and Others
2014
(4) SA 124
(CC) at 145 E.
[54]
For these stated reasons it follows that the Court a quo’s
order should be set aside and that the appeal should succeed
with
costs.
[55]
In the result, I would make the following order.
The Appeal succeeds with costs. The
court a quo’s order is set aside and substituted with the
following: “The Application
is dismissed with costs”
_____________
LE GRANGE, J
I
agree
_______________
STEYN, J
[56]
Saldanha J. I agree with the judgment of Le Grange J and with
the proposed order. I would however, in the circumstances
of this
matter be remiss if I did not record the following observations I’ve
made with regard to the conduct of the parties.
The record in the
proceedings resembles the oft repeated narrative of the
disempowerment of women and in particular those in fishing
communities who due to historical poverty and marginalization have
not been able to fully benefit from policies and programs in
new
order legislation. That, the respondents had to resort to the sale of
their interests in the close corporation as a result
of their
inability to fully exploit for themselves the awarded fishing quotas
reflects on the empowerment program of the Department
of Fisheries.
[57]
Moreover, the rather patronizing attitude in which the appellants
dealt with the respondents who they considered to have been
squandering the payments that they received is deprecated.
[58]
The failure of the true empowerment of the respondents is in my view
indicative of a blight on the progressive and well intentioned
transformation initiatives in the fishing industry and the Department
(on behalf of the Fourth Appellant) is urged to pay closer
attention
to the conditions and the capacity of recipients of fishing quotas in
historically impoverished and disadvantaged communities.
______________
SALDANHA, J