About SAFLII
Databases
Search
Terms of Use
RSS Feeds
South Africa: South Gauteng High Court, Johannesburg
SAFLII
>>
Databases
>>
South Africa: South Gauteng High Court, Johannesburg
>>
2011
>>
[2011] ZAGPJHC 33
|
|
Donald and Richard Currie (Pty) Ltd v Growthpoint Properties (Pty) Ltd, Currie v Growthpoint Properties Limited (28568/2007, 28568/2007) [2011] ZAGPJHC 33 (29 April 2011)
SOUTH GAUTENG HIGH COURT,
JOHANNESBURG
REPORTABLE
CASE NO
:
28566/2007
DATE:
29/04/2011
In the matter between:
DONALD
AND RICHARD CURRIE (PTY) LTD
…................................
Plaintiff
and
GROWTHPOINT
PROPERTIES (PTY) LTD
.....................................
Defendant
AND
CASE NO: 28568/2007
In the matter between:
RICHARD ANTHONY JOHN
CURRIE
...................................................
Plaintiff
and
GROWTHPOINT PROPERTIES
LIMITED
........................................
Defendant
______________________________________________________________
J U D G M E N T
______________________________________________________________
MBHA, J
:
[1] The plaintiffs, Richard
Anthony John Currie and Donald Currie (“
Currie
”)
and Richard Currie (Pty) Ltd (“
the
company
”) sued
the defendant separately,
inter
alia
for an order:
1.1 declaring a contract between
the respective parties (“
the
acceptance form
”)
to be
pro non scripto
and a legal nullity,
1.2 declaring that the
plaintiffs are deemed to have elected to receive 264 505 and 85 450
Growthpoint linked units (“
the
linked units
”)
respectively, and
1.3 for specific performance
directing the defendant to deliver certificates reflecting the
plaintiffs’ ownership of the
said linked units and to pay the
plaintiffs amounts equivalent to the aggregate value of all dividends
declared that would have
been paid to the plaintiffs had they been
the duly registered holders of the said linked units.
[2] A consent order was granted
by this Court in terms of which the plaintiffs’ separate
actions under Case Nos 28566/2007
and 28568/2007 were consolidated.
[3] It is common cause that the
plaintiffs are the registered proprietors of 264 505 and 85 450
respectively, fully paid linked
units of one ordinary share of 10
cents each linked with one variable rate unsecured. A debenture of
456 cents each in Paramount
Property Fund Ltd.
[4] On 18 December 2007 the
defendant, by way of a document entitled “
CIRCULAR
TO PARAMOUNT LINKED UNIT HOLDERS AND B-DEBENTURE HOLDERS
”
(“
the offer
document
”)
addressed a written
mandatory offer to all certified Paramount linked unit holders and B
debenture holders of Paramount, which was
open from 18 December 2006
to 26 January 2007.
[5] In terms of the said offer,
the defendant offered to acquire all of Paramount linked units and/or
B debentures held by the
certified owners and which it does not
already own “…
for
one of the following alternate forms of the offer consideration:
for acceptance by Paramount
linked unit holders:
- a linked unit consideration
of 1 new Growthpoint linked unit for every 1.44 Paramount linked unit
held, rounded to the nearest
whole number; or alternatively
- a cash consideration of
R6,71 for every 1 Paramount linked unit held; and
- for acceptance by B
debenture holders:
A B debenture consideration
of 1 new Growthpoint linked unit for every 1,44 2007 B debentures
held and a new Growthpoint linked
unit for every 1,58 2008 B
debentures held rounded to the nearest whole number; or
alternatively
A cash consideration of R6,71
for every 2007 B debenture held and a cash consideration of R6,07
for every 2008 B debenture held.
”
[6] The offer document was
accompanied by a “
FORM
OF ACCEPTANCE SURRENDER AND TRANSFER
”
(“
the acceptance
form
”) which was
stipulated to be the specified mode by which certificated Paramount
linked unit holders were required to signify
their acceptance of the
offer by electing either to receive linked Growthpoint units or a
cash consideration as stipulated in the
offer. The duly completed
acceptance form had to be received by the defendant (offeree) by not
later than 12h00 on the closing
date.
[7] The offer document further stipulated that Paramount offerees
who did not wish to accept the offer, were not required to take
any
action, and would be deemed to have declined the offer, subject to
the defendant’s entitlement in terms of section 440K
of the
Companies Act 61 of 1973.
[8] It is common cause that the
plaintiffs reacted to the offer and that Currie completed the
acceptance forms for both himself
and the company.
[9] The plaintiffs aver that it
was at all material times the
bona
fide
intention of the
plaintiffs to accept and elect the linked unit consideration offer
and not the cash consideration but that when
Currie completed the
acceptance forms on behalf of the plaintiffs, he committed the
following errors:
9.1 Under Part A entitled
“
Election of
Offer Consideration
”
he erroneously entered the numbers 264 505 and 85 450 as B debentures
in the block entitled “
Number
of B-debentures in respect of which the linked unit consideration is
elected
” and
subsequently deleted the entry;
9.2 He thereupon erroneously and
in conflict with the plaintiffs’
bona
fide
intention,
completed the adjacent box entitled “
Number
of Paramount linked units in respect of which the cash consideration
is elected
”;
9.3 He failed to comply with the
mandatory stipulation required by the defendant as set out in
paragraph 8 of the accompanying
instruction of the offer, to sign any
alterations in full;
9.4 At the foot of the offer
document he mistakenly signed in the space designated for B debenture
holders which the plaintiff
most certainly were not and not Paramount
linked unit holders; and
9.5 In the case of the company, the resolution dated 12 January 2007
which purportedly accompanied the acceptance form, erroneously
described the 264 505 linked units as B debentures. The plaintiffs
submit that this misdirection in the resolution highlights
the
confusion that existed as it clearly does not authorise the cash
consideration option.
[10] The plaintiffs aver that
their intention not to elect a cash consideration is confirmed by the
following material facts:
10.1 In the space provided for
banking details in the acceptance form, for purposes of giving effect
to the cash consideration,
the entry by the plaintiffs “
N/A
”
signifies that the plaintiffs were not in quest of a cash payment;
10.2 the covering letter under
which the acceptance form and resolution, in respect of the company
was forwarded, makes no reference
to “
cash
consideration
”;
and
10.3 the substantially higher
value of the linked unit option at that time (26 January 2007) namely
R13,30 per unit compared with
R6,71 per unit for the cash
consideration offer, resulting in an aggregate value difference
between the two options of R215 833,00,
rendered the cash
consideration election markedly less probable.
[11] The plaintiffs allege that
the defendant had a duty through Computershare, its appointed
agent/transfer secretaries, to
inter
alia
carefully
scrutinise the acceptance form and accompanying documentation
submitted by the plaintiffs, ensure that the plaintiff’s
intention was unequivocally conveyed in such documentation and if
need be seek the plaintiffs’ clarification in the event
of any
uncertainty or ambiguity reflected in the documentation.
[12] The plaintiffs allege
further, that Computershare “
erroneously
interpreted the manifestly confused response
”
in the acceptance forms as constituting acceptance by the plaintiffs
of the cash consideration.
[13] The defendant pleaded that
the acceptance forms completed and returned by the plaintiffs
reflected an election for the cash
consideration rather than the
conversion of the linked units, and that the plaintiffs unambiguously
accepted the cash consideration
by filling in the block “
Number
of Paramount link units in respect of which the cash consideration is
elected
” the
written figures “
264
505
” and “
85
450
”
respectively, and leaving the block “
Number
of Paramount linked units in respect of which the linked unit
consideration is accepted
”
blank.
[14] The defendant submits that
the plaintiffs accordingly accepted the offer and elected to accept
the cash consideration in the
manner stipulated in the offer
document, thereby binding themselves and the defendant to settlement
of the plaintiffs’ acceptance
of the cash consideration as
directed in the offer document.
[15] The defendant accordingly
denies any error with respect to the election reflected in the
acceptance forms and that any error
that may have caused the
plaintiffs from making the election as specified in the offer
document has any relevance to the extent
to which the plaintiffs are
bound by the unambiguously exercised election according to the terms
of the offer document.
[16] Before considering the
merits, I need to briefly deal and dispose of what I would for the
sake of convenience call a “
preliminary
”
point raised by the defendant.
[17] The defendant asserts that
the plaintiffs’ case in each set of particulars of claim is
that the acceptance form contained
a “
manifestly
confused response
”,
that Computershare realised or should reasonably have realised that
the completion of the block in respect of the cash
consideration was
a mistake by the plaintiff, and that in the premises, the parties
lacked consensus
ad
idem
and the contract
is “
void ab
initio
”. The
defendant then complains that the plaintiffs’ case, as refined
in its further particulars and as presented during
the entire trial,
was instead based on “
justus
error
”.
[18] The thrust of the
complaint, essentially, is that whilst the plaintiffs’
identification of their case was one of voidness
for vagueness, this
was materially deviated from the case presented by the plaintiffs in
opening and in the course of evidence,
and was instead based on
“
justus error
”.
[19] In my view, the defendant’s
aforesaid complaint is without any basis. I say so for the following
reasons:
19.1 Paragraph 14 of the
particulars of claim sets out all the errors allegedly committed by
Currie when he completed the acceptance
forms;
19.2 Paragraph 18 of the
particulars of claim specifically state that the plaintiffs’
intention not to elect a cash consideration
“
is
confirmed
” by
the three reasons that were thereinafter listed. The contents of
this paragraph need to be read with what has been stated
in paragraph
14 where all the errors committed by Currie in completing the
acceptance forms are listed;
19.3 Paragraph 21 of the
particulars of claim specifically alleges that:
“
Having
regard to the specific and cumulative factors described above the
defendant and/or Computershare realised or should reasonably
have
realised that the completion of the block in respect of the cash
consideration was a mistake by the plaintiff.
”
[20] In my view the plaintiffs’
identification of their case as that of error,
justus
or otherwise, is sufficiently covered in their respective particulars
of claim.
[21] In any event, it is trite
law that pleadings are for the court and not the court for the
pleadings. This principle was laid
down authoritatively as long ago
as 1937 in the case of
Shill
v Milner
1937 AD 101
,
at 105 where de Villiers JA said:
“
This
preliminary portion of Mr Ramsbottom’s argument consists
largely of an examination of the ipsissima verba of the pleadings.
While listening to him however, I could not but ask myself what the
substantial issue was between the parties in the court below.
The
importance of pleadings should not be unduly magnified. ‘The
object of pleading is to define the issues; and parties
will be kept
strictly to their pleas where any departure would cause prejudice or
would prevent full enquiry. But within those
limits the Court has
wide discretion. For pleadings are made for the Court, not the Court
for pleadings. Where a party has had
every facility to place all the
facts before the trial Court and the investigation into all the
circumstances has been as thorough
and as patient as in this
instance, there is no justification for interference by an appellate
tribunal merely because the pleading
of the opponent has not been as
explicit as it might have been.’ Robinson v Randfontein
Estates GM Co. Ltd (19
25, AD 198).
In another case, Wynberg
Municipality v Dreyer
(1920, AD 443)
, an attempt was made to confine
the issue on appeal strictly to the pleadings, but it was pointed out
by Innes, C.J., that the
issue had been widened in the court below,
by both parties. ‘The position should have been regularised of
course’,
said he, ‘by an amendment of the pleadings’
;
but the defendant cannot now claim to confine the issue within
limits which he assisted to enlarge
”.
(my emphasis)
[22] This trial lasted over a
number of days and the defendant led witnesses rebutting the
plaintiffs’ case that there was
justus
error
on the part of
Currie when he completed the acceptance forms. At no stage did Mr
Snyckers, appearing for the defendant, complain
that the defendant
was in any way prejudiced or that any postponement would be sought to
enable the defendant to adequately prepare
in order to resist the
plaintiffs’ claim for
justus
error
. As I have
stated above, the defendant also pleaded that there was no error on
the part of Currie when he completed the acceptance
forms and that
plaintiffs’ election of a cash consideration was unambiguous.
[23] I am accordingly satisfied
that the plaintiffs’ case has been properly identified and
located in the realm of “
justus
error
”. I now
turn to consider the merits of this case.
[24] The plaintiffs submit that
they had desired and intended to acquire the Growthpoint linked units
and not the cash consideration
but that they, through Currie, made
mistakes when completing the acceptance forms.
[25] The plaintiffs submit that
the defendant, in its quest for certainly in the election process
issued strict instructions regulating
the completion of the
acceptance forms that were clear, detailed, descriptive and
peremptory and thus demanded a high standard
of clear legal precision
in the election process. Some of the instructions
inter
alia,
were that any
alteration to the form had to be signed in full and not initialled,
in the case of a juristic entity as in the case
of the company a
resolution authorising the signing of the form had to be submitted,
any person with doubts as to how to complete
the form was encouraged
to immediately consult a professional advisor, and so forth. The
plaintiffs submit that Computershare,
the defendant’s
authorised agent and/or transfer secretaries failed to live up to
such high standard of clerical precision
demanded by the defendant
when it accepted and processed the plaintiffs’ election forms.
[26] The plaintiffs also submit
that the defendant issued a series of instructions regulating the
completion of the acceptance
forms that were clear, detailed,
descriptive and similarly peremptory which were aimed at eliminating
any confusion and ensuring
that the relevant data and intention of
the offeree was accurately recorded. In the circumstances
Computershare in its capacity
as the defendant’s agent and/or
transfer secretaries, was bound to apply a high standard of care and
skill when it accepted
and processed the plaintiffs’ election
forms but failed to do so.
[27] The plaintiffs aver further
that the mistakes they made in completing the acceptance forms
amounted to such conflicting entries
that the plaintiffs’ true
intention was not discernible
ex
facie
the documents
and that in such circumstances Computershare ought to have:
27.1 sought supplementary
clarification from the plaintiffs; or
27.2 considered the completed
elections to be so confusing as to amount to a mistake and thus
pro
non scripto
with the
result that both plaintiffs would by automatic “
default
”,
have been awarded the linked unit consideration which, plaintiffs
claim, coincidentally would have accorded with their
true intention.
[28] The errors which the
plaintiffs allege were made as Currie completed acceptance forms are
specifically set out in paragraph
[9] above.
[29] The plaintiffs relied on the
evidence of Ms Sharon Hubner who testified that the five or six data
capturers known as processors
who are employed by Computershare to
scrutinise the election forms were not highly qualified personnel and
that they are essentially
clerical functionaries with a matric and
that their primary rule is data processing. Furthermore, when
scrutinising the election
form, they would only focus on whether
there was an election, whether the form was signed and that there
were any attachments,
for example share certificates and resolutions
accompanying the form.
[30] Reliance was also placed on
Ms Hubner’s testimony that within Computershare it was market
practice that election forms
would be processed even though
alterations were not initialled or signed. It was submitted that
this was in direct conflict with
the defendant’s express
directive that any alteration “
must
be signed in full and not initialled
”.
Reliance was placed on Ms Hubner’s concession that an unsigned
alteration on the election form ought to have caused
any processor to
take a step back and be careful.
[31] The plaintiffs also
criticised the processors for their treatment of the inscription
“
N/A
”
appearing in the bank account details box on the acceptance forms.
It was submitted that this particular inscription was
wrongly
interpreted by the processors as meaning that a cheque was required.
The processors concerned were particularly criticized
as plaintiffs
felt that notwithstanding the huge value of the linked units involved
in the transaction, the processors gave no
thought to:
31.1 the postal risks
associated with cheques;
31.2 the delay in clearing a
cheque; and
31.3 the safer EFT payment
method.
It was then submitted that the
commercially inconvenient an unsafe requisition for a cheque should
have reached cautionary concern
for the processors but that it
seemingly did not.
[32] The issues that have to be
determined in this case are:
32.1 Whether or not Currie made
mistakes in completing the acceptance forms;
32.2 Whether or not such mistake
was “
justus
”
or reasonable; and
32.3 If so, whether or not the
defendant through Computershare, ought reasonably to have realised
that there is a real possibility
of a mistake and accordingly had a
duty to speak and to acquire whether the plaintiffs’ expressed
intention as reflected
in the acceptance forms was the actual
intention.
[33] Before I can consider these issues, it is appropriate that I
first deal with the fundamental principles applicable to the
facts
and particular circumstances of this case.
[34] It is important to bear in
mind that what primarily is at issue in this case is a contract in
the form of the acceptance form
that was concluded between each
plaintiff and the defendant which arose out of a mass offer that was
issued by the defendant by
means of a circular, with respect to a
share transaction on the Johannesburg Securities Exchange comprising
an “
affected
transaction
” as
envisaged in section 440K of the Companies Act 61 of 1973.
[35] The circular stipulated a method of acceptance of the offer in
question, as follows:
“
If
you are a certified Paramount linked unit holder or B debenture
holder and you wish to accept the offer contained in this circular,
you must complete and return the form of acceptance, surrender and
transfer (blue) attached hereto in accordance with the instructions
therein and lodge it with, or post it to, the transfer secretaries,
Computershare Investor Services … which form, in order
to
constitute a valid acceptance, must be received no later than 12h00
on the closing date.
”
[36] It is common cause that
both plaintiffs were certificated Paramount linked unit holders and
accordingly offerees who were
advised in the circular that, to accept
the offer, they “
must
complete the attached form of acceptance, surrender and transfer
(blue) and return the same as soon as possible to the transfer
secretaries … together with the documents of title, so as to
be received by the transfer secretaries by no later than 12h00
on the
closing date
”.
[37] The relevant part of the
defendant’s offer was to acquire the relevant Paramount linked
unit from the offerees, and
gave the offerees an election with
respect to the consideration accepted by them in accepting the offer,
namely that they could
accept either linked units in the defendant at
a stipulated ratio of one new Growthpoint linked unit for every 1,44
Paramount linked
unit held or a stipulated cash consideration of
R6,71 for every one Paramount linked unit held.
[38] As can be seen from the
offer, the only steps that an offeree such as the plaintiffs was
required to take to indicate his
or its election in this regard was
to enter the number of linked units that he wished to surrender for
cash in the box on the form
of acceptance, surrender and transfer
headed “
Number of
Paramount linked units in respect of which the cash consideration is
elected
”, and to
enter the number of linked units that he or it wished to surrender
for linked units in the box on the form headed
“
Number
of Paramount linked units in respect of which the linked unit
consideration is elected
”.
Other than this, no other steps were required or relevant to
indicate the election of the consideration desired for the
surrendered unit.
[39]
Ex
facie
the acceptance
forms, each plaintiff accepted the offer by the stipulated method,
and each indicated an election by performing
the stipulated step for
doing so. Each plaintiff filled in the correct number of linked unit
held by it in the box on the form
headed “
Number
of Paramount linked units in respect of which the cash consideration
is elected
”.
[40] Currie, the plaintiffs’
main witness, conceded that it was quite clear that each form
reflects an election to accept
the cash consideration. Furthermore,
Currie caused each acceptance form thus filled in to be delivered by
hand to the defendant’s
transfer secretaries on 15 January 2007
which was before the closing date of the offer on 26 January 2007.
[41] As I have pointed out
above, the plaintiffs’ case is that the acceptance forms
contained a “
manifestly
confused response
”,
and that Computershare realised or should have reasonably realised
that the completion of the block in respect of the cash
consideration
was a mistake by the plaintiffs, that in the premises the parties
lacked consensus
ad
idem
and the contract
is void
ab initio
.
[42] Based on the facts set out
above, a contract clearly came into being between the defendant as
offeror, and each plaintiff
as offeree, when and immediately upon
compliance by each plaintiff with the stipulated method of acceptance
specified in the offer
contained in the circular. This contract was
concluded by the performance of a specified act of acceptance by each
plaintiff.
[43] On the conclusion of a
contract as aforesaid, there is no further room for the application
of principles such as “
mistakes
”,
justus
or otherwise that is applicable to the sphere of formation of the
contract.
[44] The apposite legal principles are those applicable to the
coming into being of contract when there is a stipulated method
of
acceptance in the offer as in this case.
[45] The relevant contract in
such cases is firmly and finally concluded the moment the stipulated
method of acceptance is performed.
[46] In
Driftwood
Properties (Pty) Ltd v McLean
1971 (3) SA 591
(A) an offer in respect of the sale of immovable
property had stipulated as follows:
“
This
offer is irrevocable and binding upon both parties until signature by
both parties on or before 17 May 1969, failing which
it shall lapse
if only signed by one party.
”
[47] One party signed the offer on 30 April 1969 and the other
signed it on 17 May 1969. The party who signed last posted the
accepted deed to the other party on 18 May 1969. The other party
never received the accepted deed. It was argued that the normal
principles of acceptance had to apply, namely that no acceptance was
effective until it had been effectively communicated to the
counterparty, and that, accordingly, as the acceptance had never been
effectively communicated to the offeror within the specified
time or
at all, there was no contract.
[48] The Appellate Division
disagreed holding that there was a clear stipulated mode of
acceptance, namely the mere act of signing,
which, without more,
immediately created a binding contract, whether communicated or not.
At 597D-G, Van Blerk JA said the following:
“
It
is trite that an offeror can indicate the mode of acceptance whereby
a
vinculum juris
will be created,
and he can do so expressly or impliedly. It was, however, argued on
behalf of the respondent that the words used
in the contract are
obscure, and that, in the absence of clarity, the presumption that
the contract will be completed when the
offeror comes to hear of the
offeree's acceptance, should prevail. That such a presumption in case
of doubt exists appears from
the following passage from Grotius,
de
Jure Pacis ac Belli
,
Bk. 2, chap. 11. para. 15, cited with approval in
Dietrichsen
v Dietrichsen
,
1911
T.S. 486
at p. 494, namely:
‘
... I may make an
offer in two ways. I can either make an offer and say that the
contract will be established by your mere acceptance;
or I can make
the offer and say that the contract will be completed when I come to
hear of your acceptance. And if there is a doubt
upon the matter, we
must always presume that the second was the case...’
The contract, however,
does not admit of such doubt. It does not contain the ordinary offer
which is silent as to the mode of acceptance.
The manner in which the
contract was to be concluded was prescribed and not left to be
governed by the legal principles applicable
to acceptance.
”
[49] In
Driftwood
a binding contract came into being the moment the deed was signed,
despite the fact that the offeror was unaware of this, and despite
the fact that the acceptance of the offer was never communicated to
the offeror. The moment the stipulated method of acceptance
was
employed, the act of contracting was over, and a binding contract was
in place. Clearly, there was no further room for any
principles to
apply relating to the formation of the contract, offer, acceptance,
consensus and dissensus. After that, all the
offeror could do was to
interpret the already binding contract for himself. However, his
interpretation could not alter its terms
or affect the question
whether there was a contract or not.
[50] The principle is clear that
where a stipulated method of acceptance of the offer is employed in
the offer, then, as soon as
that method is employed there is a
binding contract. Not only does this supersede the principles of
offer and acceptance that
would otherwise apply but it also renders
inapplicable the principles relating to the formation of a contract,
such as a mistake,
after the contract had already been concluded.
[51] In the instant case, the
above principle is aligned to its application in cases of mass offers
made to the public, where there
is in fact at no stage any
negotiation at all between the parties, and any number of persons may
create binding contracts with
the offeror merely by performing the
act stipulated as the act of acceptance. In such cases, specifically
where an offer has been
made to a large class of persons in the
public such as all the Paramount linked unit holders and B debenture
holders in this case,
there is no interaction between the contracting
parties other than the issue of the offer and the performance of the
stipulated
act of acceptance by those who wish to create a binding
contractual relationship.
[52] In all these cases, once
anyone of the public offerees like the Paramount linked unit holders
similar to the plaintiffs, performs
the stipulated act of acceptance,
there is immediately a binding contract, binding on the offeree and
on the offeror. This occurs
even if the offeror is unaware of the
fact that its offer has been accepted, or how many offerees accepted
it. No further act
of communication is required to create the
contract. Thereafter, all that is left is to interpret its terms.
There is no room
thereafter for the operation of the doctrine of
mistake, which operates with respect to the formation of a contract.
[53] In
Carlill
v Carbolic Smoke Ball Co
[1893] 1 QB 256
(CA), the company issued an advertisement in which it
offered to pay £100 to anyone using its product but still
contracting
influenza. Bowen LJ said, at p 286:
“
It
was also said that the contract is made with all the world - that is,
with everybody; and that you cannot contract with everybody.
It is
not a contract made with all the world. There is the fallacy of the
argument. It is an offer made to all the world; and
why should not
an offer be made to all the world which is to ripen into a contract
with anybody who comes forward and performs
the condition?
”
Christie in
The
Law of Contract in South Africa
5
th
edition at p 30 stated:
“
This
was obviously correct, and there is no doubt that by our law a firm
offer may be made to the public or to indeterminate persons
by
advertisement or by any other method, which will ripen into a
contract with anybody who accepts by the appropriate method.
”
[54] It is trite law that the
moment any offeree performs the stipulated act of acceptance, there
is a binding contract. Applied
to the facts of this case, the moment
the stipulated mode of acceptance and election of cash or linked unit
consideration was exercised
by each plaintiff, by filling in the
block for cash consideration, and delivering the acceptance form to
the transfer secretaries
before the closing date, there was a binding
contract between each plaintiff and the defendant, and there was no
room for any further
acts of contracting, irrespective of whether the
defendant or Computershare had yet become aware of the fact that
these contracts
had been concluded with it.
[55] In such cases there is no
room for mistake to operate after the contract is concluded, as the
private mental reservations
of the offeree who employs the stipulated
method of acceptance cannot alter the fact that the binding contract
came into being
the moment the stipulated method is employed. Nor
can any act of interpreting and/or processing the results on the part
of the
defendant or Computershare alter the binding contracts, which
has already been concluded.
[56] In my view this situation
can be likened to that applicable in an auction in a sale in
execution under the court rules where
the sale occurs “
upon
the fall of the hammer
”,
and there is no discretion on the part of the Sheriff accordingly “
…
Because of the lack of a discretion on the part of the Sheriff in
such circumstances, the scope of a justus error in the
context of a
sale in execution consequently becomes extremely narrow
”
(per Revelas J in
McCreath
v Wolmarans NO and Others
2009 (5) SA 451
(ECG) at para [27].
[57] The reason there is still
some very limited scope for the operation of the doctrine of mistake
in auctions is simply because
the stipulated act of acceptance still
carries with it an act of communication which is in the form of a
nod, or a hand raising
by the person making a bid, which is capable,
during the act of concluding a contract, of being reasonably known to
be mistaken,
so that the principles of
justus
error
could still
operate before the contract is finally concluded.
Maritz
v Pratley
[1894] 11 SC
345
is a case in point. Maritz was conducting an auction sale and
when he came to lot 1208, a mantelpiece, Pratley was the successful
bidder. Subsequently Pratley refused to pay because he thought he
had bought the mantelpiece together with a mirror which was
standing
on it. It turned out that the mirror was in fact a separate lot
1209. The court held that Pratley’s mistake was
reasonable
(
justus
)
so there was no contract.
[58] However, in a case like in
the present where the stipulated method of acceptance does not
require any communication such room
for the operation of the doctrine
of mistake simply does not exist.
[59] Each plaintiff in this case
employed the stipulated method of acceptance and by so doing acted in
such a way as to represent
to the defendant that they were consenting
to the terms of the contract on those terms, irrespective of any
private intentions.
This in my view, falls foursquare within the
theory of “
quasi-mutual
assent
” or
“
reliance theory
”
that was stated by Harms AJA in
Sonap
Petroleum (SA) (Pty) Ltd v Pappadogianis
[1992] ZASCA 56
;
1992 (3) SA 234
(E) at 238-239 as follows:
“
The
law, as a general rule, concerns itself with the external
manifestations, and not the workings, of the minds of parties to a
contract.
South
African Railways & Harbours v National Bank of South Africa Ltd
1924 AD 704
at
715-16. However, in the case of an alleged
dissensus
the law does have
regard to other considerations: it is said that, in order to
determine whether a contract has come into being,
resort must be had
to the reliance theory.
”
The learned Judge then went on to
quote the well-known
dictum
of Blackburn J in
Smith
v Hughes
[1871] LR 6
QB 597
at 607, namely:
“’
If,
whatever a man's real intention may be, he so conducts himself that a
reasonable man would believe that he was assenting to
the terms
proposed by the other party, and that other party upon the belief
enters into the contract with him, the man thus conducting
himself
would be equally bound as if he had intended to agree to the other
party's terms
.’
In my view, therefore, the
decisive question in a case like the present is this: did the party
whose actual intention did not conform
to the common intention
expressed, lead the other party, as a reasonable man, to believe that
his declared intention represented
his actual intention?
”
[60] As
can be seen from Harms AJA’s
dicta
,
the doctrine of mistake only operates during the formation of the
contract. It accordingly follows that where the parties do
not
negotiate with each other at all such as in this case, and where the
stipulated method of acceptance does not include any need
for
communication, then the sole question to be asked is did the party to
whom the offer was made perform the act required for
acceptance,
viewed objectively? If so, he and the offeror are bound immediately,
irrespective of intentions.
[61] The
case of a mass offer as in this case can be contrasted with the facts
in
Sonap
where there were direct negotiations between only two contracting
parties, and the court held there actually to have been discussions
about the possibility of a mistake before the contract was finally
concluded. The question in
Sonap
was whether the respondent, who was presented with an addendum to a
lease containing the mistake, knew or ought to have known there
was a
mistake in the act of accepting the offer. Harms AJA disbelieved the
respondent and felt that the respondent was “
snapping
up … a bargain
”
when he purported to accept the mistaken deed. The case has
distinguishable from the present and has nothing to do with
contracts
that are concluded by the performance of a stipulated act of
acceptance that does not entail any communication or interaction
between offeror and offeree other than lodging of the signed document
by the offeree with the agent of the offeror to complete
the
contract, such as in this case. The plaintiffs’ reliance on
Sonap
is accordingly misplaced.
[62] The
plaintiffs’ reliance on various cases for example
Pillay,
Steyn v LSA Motors
to
which I was referred to is also, similar to the
Sonap
case, misconceived. These cases are distinguishable and do not
involve mass offers as in the present case.
[63] Based
on what I have stated above, I am of the view that it is simply wrong
to ask questions about dissensus and consensus
with respect to the
processing of the forms on the part of Computershare after the
contract had already been concluded. The question
of mistake,
justus
or
otherwise, simply has no place and ought not to even be raised in
this case. On this basis alone the plaintiffs’ claim
must
fail.
[64] In
any event even if I were to find that the doctrine of
justus
error
could be applicable in this case even with respect to the period
after the contract had been finally concluded, it is clear that
on
the facts, it could not be heard that the reasonable reader of the
acceptance form namely the processors employed at Computershare,
would have realised that there was a mistake.
[65] I say
so because each plaintiff filled in the acceptance form and entered,
in the block headed “
Number
of Paramount linked units in respect of which the cash consideration
is elected
”,
a number corresponding to all the Paramount linked unit held by each
plaintiff. In the case of Currie this was 85 450 units
whilst in that
of the company it was 264 505 units.
[66] It is
common cause that the particular election in each case was clear and
unambiguous and as I already mentioned, Currie
in his testimony
conceded that each acceptance form clearly reflected an election for
the cash consideration.
[67] This
election for cash was the only election on each form that related to
a holder of Paramount linked unit such as each plaintiff
was.
Furthermore, this election was consistent with:
67.1 the
accompanying scrip of linked units that was surrendered by each
plaintiff;
67.2 the
filling in of the correct number of linked units held by each
plaintiff in the last part of Part A of each acceptance
form,
together with the correct certificate number; and
67.3 the
fact, verified on the Computershare system during the processing of
the forms, that each plaintiff held this number of
Paramount linked
units.
[68] The plaintiffs sought to
suggest various sources of “
confusion
”
or “
contradiction
”
resulting in a mistake with respect to the election, to suggest that
the reader of the election should have seen that there
had been a
mistake in the election. Firstly, the plaintiffs invoked the fact
that a number had initially been entered in the block
meant for the
holder of B debentures and had then been deleted. In my view this can
hardly serve as proof that Currie was confused
or committed an error
when he initially entered a number in the block meant for the holder
of B debentures and thereafter deleted
it. The deleted entry on each
form relates to someone surrendering B-debentures. Since each
plaintiff submitted only linked units
together with the form, and
since each plaintiff was the certificated holder of only linked units
and no B debentures, there was
no chance that the deleted entry could
possibly be a potentially correct election. This must also be viewed
against the backdrop
that when Currie made the initial entry was not
in possession of the scrip certificates reflecting that the
plaintiffs only possessed
linked units, his testimony was to the
effect that after he had made initial entries, and when the actual
scrip certificates were
brought by his messenger he correctly deleted
the initial entries relating to B debentures and then made fresh
entries on the blocks
meant for the exercise of the cash option.
[69] Most importantly, Currie
conceded, quite correctly in my view, that the deletion was
irrelevant in the form, as to understanding
what the election had to
be because the plaintiffs did not have B debentures at the time.
[70] Lastly, a cursory look at
the deletion reveals that it was very thoroughly done and in my view
this makes it clear that the
person who made the entry and thereafter
deleted it, did not want to make this election, and strengthens the
entry that was not
deleted as a deliberate choice.
[71] The plaintiffs criticised
the processors over the fact that they overlooked or ignored the fact
that the deletion had not been
initialled or signed while the
circular directed that alterations had to be signed in full. This
criticism is misconceived as
it was never suggested that the
defendant ought to have ignored the deletion and tried to give effect
to the deleted election,
as if the plaintiffs held B debentures. In
fact Currie conceded that this was untenable. In any event clause 8
on page 75 of
the circular stipulates that “
any
alteration may not be accepted by the offeror
”,
and the circular expressly reserves the right on the offeror to
condone, in its sole discretion, the non-observance by
any Paramount
offeree of any of the terms of the offer.
[72] As the evidence led by the
defendant shows, the important fact remained that if the deletion
gave any scope for pause, verification
by reference to the scrip
certificates submitted together with the forms and by reference to
the system, would have indicated beyond
a shadow of doubt that, as
neither plaintiff had any B debentures, there was no danger of any
confusion as to whether the deleted
election ought to have been given
effect to.
[73] The plaintiffs’
contention that the fact that each form was signed on the dotted line
meant for B debenture holders instead
of the line meant for linked
unit holders was a significant error does not hold water. I say so
because as neither plaintiff was
a B debenture holder, there could be
no room for error and accordingly, the location of the signature is
not important.
[74] The plaintiffs invoke the
fact that the block headed “
Submission
of banking details in respect of linked unit holders wishing payment
of the cash consideration to be made by way of electronic
transfer of
funds
” was
entered as “
N/A
”,
as somehow indicating an error. However, Currie conceded in
cross-examination that marking this box “
N/A
”
could as easily be an appropriate choice for someone who wanted cash
paid by cheque and not by EF transfer. Furthermore,
the form
specifically stated that “
Payment
to certificated linked unit holders and B debenture holders that do
not have an existing bank mandate with the transfer
secretaries will
be made by cheque posted at offeree’s own risk
”.
It is trite that the plaintiffs did not have an existing bank
mandate with Computershare and there was accordingly, no
error or
contradiction at all in respect of the cash election and the
designation “
N/A
”
in the box in question.
[75] The plaintiffs’
criticism of Computershare processors in this regard as being
incompetent is without justification.
The criticism is that the
processors gave no thought to the postal risks associated with
cheques, the delay in clearing cheques
and the safer EFT payment
method. Ms Hubner’s evidence that in the industry payment of
large amount of monies by cheque
is the norm was neither contradicted
nor disputed.
[76] The plaintiffs contend that
the resolution adopted on 12 January 2007 was submitted together with
the acceptance forms and
that this document should have detracted
from the clear election for the cash consideration found on the
acceptance form itself.
The plaintiffs further submit that this
resolution required careful scrutiny by the processors and that it
was negligent of them
to overlook its contents which expressly
authorised the acquisition of Growthpoint linked units. The
plaintiffs then submit that
the contents of the resolution should
have detracted from the cash consideration found on the acceptance
form itself.
[77] In my view the plaintiffs’
reliance on the resolution as aforesaid cannot succeed and I say so
for the following reasons:
77.1 Ms Hubner the defendant’s
witness who represents Computershare, testified that there was no
resolution in the file and
that all documents submitted by the
offerees were kept in the processing file of each. In her view,
there is no considerable reason
to think a document that did form
part of the documents submitted would have gone missing. She
tendered evidence of the procedures
followed for recording all
documents submitted together with acceptance forms in a logbook upon
receipt which was to the effect
that had the resolution accompanied
the forms, it would have been recorded therein. This evidence was
not effectively challenged;
77.2 The covering letter dated
15 January 2007 by Currie, which makes specific reference to what was
included in the documents
being submitted to Computershare, and which
specifically requested confirmation of “
receipt
of the above
”,
did not, significantly, mention the resolution at all.
Significantly, Currie conceded that the reason why the covering
letter listed the contents submitted with it and specifically sought
confirmation of “
receipt
of the above
”,
was precisely due to the anxiety that the recipient sign for receipt
of the documents referred to in the covering letter.
77.3 In my view, it is highly
unlikely that the resolution would have accompanied the forms but
would not have been featured as
a document in a covering letter.
77.4 The resolution in any event
was irrelevant to the acceptance and election in issue, because it
related to a resolution that
the company accept the offer to convert
264 505 B debentures in Paramount Property Fund. As the company had
no B debentures at
the time the offer was accepted, this resolution
was clearly incapable of being accorded meaning in the election even
if it were
to be expected to go outside of the stipulated method of
electing by filling in the correct box. Curry conceded under
cross-examination
that the resolution was irrelevant to anybody who
did not have B debentures like the company and the resolution was
therefore an
ineffective document when it came to the exercise of the
option Currie wanted to exercise. The focus of the resolution was to
convert B debentures. In my view this adds to the unlikelihood that
the resolution would have been included in the rest of the
documentation that was forwarded to Computershare. Significantly,
Currie testified that by the time the acceptance forms were
lodged,
he was fully aware of the fact that the company did not own B
debentures and he was at the time accordingly aware that
the
resolution relating to converting B debentures would have been
incorrect.
77.5 Curry testified that he was
in a hurry and under pressure on the day he completed the acceptance
forms and that he did not
apply his mind properly to the task at hand
when he filled in the wrong box in making his election. In my view,
this confusion
of absentmindedness on the day makes it even more
likely that he was mistaken about whether the resolution accompanied
the forms
that were submitted.
77.6 Even if the resolution had
in fact accompanied the forms, the only function could have served
was to indicate whether the
person completing and signing the
acceptance form was authorised to sign the acceptance form. The
resolution did indeed authorise
Currie to sign the form and so even
if it had accompanied the forms and even if it had been considered,
it would have been seen
to have fulfilled its function of indicating
Currie’s authority to sign.
[78] In the light of what I have
stated above, I am of the view that the resolution cannot play any
meaningful part in interpreting
the clear election that was made by
the plaintiffs.
[79] The acceptance form in each
case clearly reflected an election to accept the cash consideration,
and there was nothing about
the form or the accompanying
documentation to detract from this clear employment of the stipulated
method of indicating the election.
[80] In their quest to show the
inefficiency of Computershare’s personnel in accepting
acceptance forms generally, the plaintiffs
led the evidence of Sarah
Miller whose evidence was in my view hardly of assistance to the
plaintiffs’ case.
[81] In
Miller’s
case, this offeree
had both B debentures and linked units and, in indicating her
election, she:
81.1 merely ticked each box
indicating an election to receive linked unit consideration both for
debentures and for linked unit,
without indicating the number of
debentures or units at issue;
81.2 filled in the banking
details relevant to a person who elected to receive the cash
consideration; and
81.3 neglected to fill in the
details as to the number of units or debentures being surrendered and
the certificate numbers.
[82] In the circumstances it was
clear, as Ms Miller herself indicated, that had her form materially
contradicted itself in that
she ticked – without indicating the
numbers – an election for the linked unit consideration, but
furnished banking
details relevant only to those who elected to
receive cash. In my view Ms Miller’s case is not comparable to
that of the
plaintiffs at all.
[83] The plaintiffs submit that
the wisdom of accepting the cash consideration was so questionable as
to indicate a “
mistake
”
when this was done. In my view this defies common sense and logic. I
say so because there was clearly an election to be
made between cash
and shares and one can hardly invoke the mere wisdom of one of the
elections as a reason to suggest it could
never have been accepted
when what falls to be interpreted is precisely the choice between
these two alternatives.
[84] In any event, people have
many reasons why they may choose cash over something as uncertain as
a share. Currie conceded that
the value of the shares at issue
fluctuated depending on the fate of the offer and that if the offer
was a disaster for Growthpoint,
the value could “
nosedive
“.
Currie’s suggestion that a person wishing to have cash rather
than an uncertain share value could simply sell all
his shares in the
open market at market value completely ignored the fact that to
achieve this, one would first need to find a
buyer willing to buy all
one’s shares and if a number of sellers tried this this would
immediately put downward pressure
on the price due to the law of
supply and demand, and one might end up getting much less for the
shares as a result.
[85] Mr Isaacs who testified on
behalf of the defendant, pointed out that share prices were a matter
of great uncertainty, as the
global events of 2008 demonstrated, and
that there were many different reasons why offerees might prefer to
take cash even where
the linked unit consideration on the day was
valued higher than the cash consideration. In any event, other
offerees, including
one significant batch of 41 000 shares, also
accepted a cash consideration. Mr Kerr who also testified on behalf
of the defendant,
stated that there were always, in offers that had
an election, some choices that were surprising. Thus the mere fact
that one
of the election options appeared with hindsight to have
yielded a smaller value can hardly mean every person who made that
election
must have been taken to have made a mistake, which is really
what the plaintiffs’ submissions in this regard amount to.
[86] Accordingly, the plaintiffs
in each case simply cannot rely on a private intention conflicting
with the clearly expressed
intention, which expression of intention
led the defendant’s agent reasonably to believe that the
intention was as reflected
which was to accept the cash
consideration.
[87] The court noted that Currie
testified, quite tellingly saying “
It
is incredible that I could make a mistake like that
”.
This means that Currie himself who made the alleged mistake regarded
this mistake on his part as “
incredible
”.
It follows firstly that:
87.1 the mistake can never be
reasonable or
justus
on the part of the plaintiffs if it was “
incredible
”.
I refer in this instance to the authoritative case of
National
and Overseas Distributors Corporation Ltd v Potato Board
1958 (2) SA 473
(AD) where Schreiner JA said, at 479H:
“
At
least the mistake (
error)
would have to be
reasonable.
”
87.2 if it was incredible even
to Currie himself it can hardly be said that the other party ought to
have known of a mistake that
was inconceivable.
[88] Ms Hubner of Computershare
testified that the processing team was instructed to look for an
election in the relevant box,
to check the correct scrip surrender
forms, to see that the acceptance form was signed, and to validate
the surrendered scrip against
the system. In my view this was quite
reasonable considering that this was a high level exercise given the
bulk and limited time
available for processing so many forms. There
is nothing that suggests that the processing teams fell short in
carrying out those
instructions.
[89] As I have already pointed
out, the contracts between the plaintiffs and the defendant were
already concluded by the time the
processing team processed the
acceptance forms. The processors were not concluding contracts on
behalf of the defendant. The
plaintiffs as offerees had already
concluded the contracts by lodging their completed acceptance forms
as the stipulated mode of
acceptance. It follows then that how the
processing team fulfilled their processing role was accordingly
irrelevant to what the
contract was between the parties.
[90] The high watermark of the
plaintiffs’ case in this regard was the fact that Ms Hubner
conceded that, if she herself scrutinised
the forms, she might
possibly have stepped back to check further on that acceptance. In my
view this was as far as the evidence
went and when asked whether if
she had taken a step back and analysed the deletions on the forms,
she would have been able to action
any election on that form that
related to the deleted option, Ms Hubner confirmed she would not
have, as the deleted option related
to B debentures which the
plaintiffs simply did not have. Clearly, no amount of pausing and
stepping back would have yielded the
conclusion that the deleted
option ought to have been accepted, or could possibly have been the
option desired as that option was
incapable of applying to the
plaintiffs. It is clear that the only election on the form that was
in fact capable of being implemented
was the one for cash as this was
the only one that had not been deleted and the only one that actually
related to the correct security,
namely linked units and not B
debentures, and the correct number of units corresponding to the
correct scrip certificate numbers.
[91] The plaintiffs attempted to
suggest that there was confusion as to who held B debentures and who
held linked unit. However,
Mr Rowan appearing for the plaintiffs,
conceded that it could not be seriously suggested that Currie was
confused at the time he
submitted the forms whether he or the company
held B debentures or linked units. Clearly, Currie was at the
relevant time fully
aware that he and the company only held linked
units.
[92] In the light of all that I
have stated above, I find that there was no basis upon which the
defendant could in the circumstances,
reasonably have been expected
to have acted in any other way than to accept the binding election
which the plaintiffs themselves
conceded they had made clearly on
their acceptance forms which was opting for the cash consideration.
[93] The relief claimed by plaintiffs, especially specific
performance that they be provided with linked units – without
a
claim for damages in the alternative, has no legal basis at all and
is not capable of any implementation. I say so because:
93.1 The plaintiffs contend that
the acceptance forms must be treated as
pro
non scripto
and a
legal nullity;
93.2 This means that on the plaintiffs’ version, the
plaintiffs never accepted the offer at all;
93.3 If there is no contract at
all, it defies logic how the plaintiffs can accordingly claim any
entitlement to delivery of the
linked units.
The plaintiffs have not advanced any basis in fact or in law for the
relief they seek.
[94] I accordingly make the
following order:
The plaintiffs’ claims are dismissed with costs.
_____________________________
B
H MBHA
JUDGE OF THE SOUTH GAUTENG
HIGH COURT, JOHANNESBURG
COUNSEL FOR PLAINTIFF
INSTRUCTED BY
COUNSEL FOR DEFENDANT
INSTRUCTED BY
DATE OF HEARING
DATE OF JUDGMENT