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[2011] ZAGPJHC 134
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O'Ehley NO and Others v Adzam Trading 197 (Pty) Ltd (2011/13797) [2011] ZAGPJHC 134 (23 September 2011)
NOT REPORTABLE
SOUTH GAUTENG HIGH COURT, JOHANNESBURG
CASE NO
:
2011/13797
DATE:
23/09/2011
In the matter between:
O’EHLEY, BAZIL BRUCE
N.O.
...................................................
First
Applicant
O’EHLEY, CYNTHIA
BEATRICE LESTELLA N.O.
...........
Second
Applicant
KEETON, ERROL NORMAN
N.O
.
.............................................
T
hird
Applicant
O’EHLEY, BAZIL
BRUCE
…...................................................
Fourth
Applicant
And
ADZAM TRADING 197 (PTY)
LIMITED
..........................................................................................
Respondent
J U D G M E N T
LAMONT, J
:
[1] The applicants representing
the BRC Investment Trust (hereafter the Trust) and the fourth
applicant personally brought these
proceedings. The Trust and fourth
applicant are hereafter referred to as the purchaser.
[2] The purchaser and the respondent entered into a contract in
terms whereof the sellers sold certain share equity and agreed
to
cede certain ceded loans to the respondent. The respondent was in
turn obliged to pay the purchase price in tranches. The
sale was
subject to a variety of conditions precedent which were to be
fulfilled by not later than 3 March 2009.
[3] Certain of the conditions could be waived by the seller and
certain by the respondent. Clause 2.4 of the agreement provides:
“
2.4
If any of the … conditions is not fulfilled by the 3
rd
… March 2009 or such later date as may be agreed to by the
parties, then, unless it is waived in writing by the party in
whose
favour it has been inserted in terms of this clause, the agreement
shall not take effect and neither party shall have any
further claim
against the other as a result thereof.
”
Clause 2.5 provided:
“
2.5
Should this agreement lapse for failure of any of the suspensive
conditions … then and in such event the status quo
ante shall
be restored.
”
[4] Certain persons including
the seller and others furnished the respondent a variety of
warranties and indemnifications. The
respondent submitted that the
parties who had furnished indemnities and warranties should have been
and had not been joined to
the proceedings. The current proceedings
are formulated on the basis of the failure of the suspensive
conditions and the rights
of the seller against the respondent to
treat the contract as unenforceable. The warranties and indemnities
play no role in and
the parties who gave them unaffected by the
current litigation. In my view such parties do not have the legal
interest required
for a compulsory joinder.
[5] The respondent submitted
that even if the suspensive conditions had not been fulfilled they
had been waived by it and/or the
seller was estopped from relying
upon the non-fulfilment thereof.
[6] The respondent’s
attorney on 2 March 2009 wrote a letter from which it appears that
the suspensive conditions 2.1.3,
2.1.4, 2.1.8 and 2.1.12 had not been
fulfilled. On 6 March 2009 the respondent’s attorney wrote
setting out that the respondent
was prepared to accept that the
suspensive conditions had been fulfilled and that the respondent
would make payments as if the
suspensive conditions had been
fulfilled in relation to two particular agreements. It is apparent
that as at that time there were
outstanding unfulfilled conditions.
The seller instituted proceedings against the respondent under Case
No. 2010/14604 claiming
payment and, duly represented, must have
signed a summary judgment affidavit as a summary judgment application
was brought. In
that affidavit the seller confirmed that the
suspensive condition had been fulfilled by way of referring to the
relevant paragraph
in the particulars of claim. The submission was
that an affidavit having been signed on behalf of the applicant
accepting the fulfilment
of the conditions an affidavit could not now
be signed on behalf of the applicant disavowing the existence of the
fulfilment.
[7] It appears that the suspensive conditions were not fulfilled
timeously
[8] The effect of the
non-fulfilment of the conditions is that the agreement lapsed. The
contract itself provides that in the event
of the failure of
suspensive conditions that the contract lapses and the
status
quo ante
is to be
restored (clause 2.5). The lapsing of the contract is in accordance
with the law. See
Trans-Natal
Steenkoolkorporasie Bpk v Lombaard en ‘n Ander
1988 (3) SA 625
(A) at 640. See also
Westmore
v Crestanello and Others
1995 (2) SA 733
(W).
[9] It is my view that if the
affidavit incorrectly referred to the conditions as having been
fulfilled, as the evidence in fact
establishes, that there was an
error. In my view there is no question of an election being made
neither is there evidence supporting
such an election. The effect of
the non-fulfilment of the conditions is that the agreement lapsed.
The contract itself provides
that in the event of the failure of
suspensive conditions that the contract lapses and the
status
quo ante
is to be
restored (clause 2.5). The lapsing of the contract is in accordance
with the law. See
Trans-Natal
Steenkoolkorporasie Bpk v Lombaard en ‘n Ander
1988 (3) SA 625
(A) at 640. See also
Westmore
v Crestanello and Others
1995 (2) SA 733
(W).
[10] It remains to consider
whether the respondent waived its rights concerning the fulfilment of
the suspensive conditions. The
waiver is contained in a letter dated
2 March 2009 written by the respondent to George the respondent’s
attorneys. It contains
a waiver of compliance with the suspensive
conditions. Attached to it is a resolution empowering a person other
than the signatory
to the letter referred to to act on behalf of the
respondent. Much was made of this. In my view the inference which
the applicant
seeks that I draw that the person who is authorised to
act originally is the only person who was so authorised cannot be
drawn.
In my view the letter must be treated as if it is a letter
from the respondent written by a person who had authority.
[11] There was no communication of the waiver to the seller either
within the time period or at all.
[12] In my view it is a
requirement that there be both communication and that the
communication be timeous. See the
Lombaard
case
supra
and the
Westmore
case
supra
.
[13] It was submitted, relying
on the authority of Cameron J in
Southern
Witwatersrand Exploration Co Ltd v Bisichi Mining plc
1998 (4) SA 767
(W) at 778G-780H that there need be no communication
timeously or at all and that it is sufficient in there is some
expression
or manifestation of it which is communicated to the debtor
or in some way brought to his knowledge.
[14] It appears to me that the
judgment intended to convey that the respondent in some way manifests
the waiver. This consideration
in my view relates to the mechanism
by which communication can take place rather than indication that at
some later date there
can be a manifestation consistent with a waiver
which is acceptable to establish communication. The date was
irrelevant in the
matter as the manifestation was prior to lapsing of
the condition (at 780 D) –H)
[15] In my view the case is distinguishable.
[16] In my view the authority strongly shows that the waiver
necessarily must take place and be communicated prior to the expiry
of the time period.
[17] Accordingly I find waiver
not to have been proven.
[18] The respondent raised the
question of estoppel submitting that the applicant by stating that
the proposed conduct of the respondent
in relation to the contract on
the basis of the fulfilment of the condition met with its approval.
In a letter dated 6 March 2009
the following was written:
“
Thank
you for your mail. The contents meet with our approval.
Regards.
”
The first answer is that the
response does not deal with all the outstanding suspensive conditions
and further that there is no
indication that the applicant would not
rely upon the non-fulfilment of the conditions.
The second is that there was no representation
[19] The claim that there was an
estoppel is founded upon an allegation that the response of the
seller to the respondent’s
letter dated 6 March 2009
constituted a representation. In the respondent’s letter of 6
March 2009 the respondent sets out
that the respondent proposes
making payments of certain amounts as if the suspensive conditions
had been fulfilled and that in
respect of two agreements to which the
payments related the respondent was prepared to accept that the
suspensive condition had
been fulfilled and would deal with such
other remaining parties in respect of the suspensive conditions. The
response of the seller
was “
Thank
you for your mail. The contents meet with our approval.
”
Upon a proper construction of the response there is no
representation that the conditions had been fulfilled or that the
seller would treat them as such. The sole message conveyed was that
if the respondent chose to take certain steps that the applicant
approved them.
[20] This in my view solves the
issue of the estoppel. I would however add that I query whether or
not an estoppel could ever be
raised to create a contract which had
lapsed. See
Westmore
supra
.
[21] It was submitted by the
respondent that it was “im
possible
to unscramble the egg
”.
The respondent submitted that as the contract was void the
appropriate remedy lay in unjust enrichment. In my view this
submission fails to have regard to the terms of the contract which
provide what is to happen in the event the suspensive conditions
are
not fulfilled. The contract provides that there is to be a
restoration of the
status
quo ante
. The simple
position is that what has been paid is to be recovered and what has
been received is to be restored. Complexities
concerning the affairs
of other companies and other entities which have taken steps on the
basis of the existence of the contract
are irrelevant to this issue.
[22] It follows that I am of the
view that the applicants are entitled to relief. I accordingly make
an order in terms of paragraphs
1, 2 and 3 of the Notice of Motion.
ORDER
[23]
23.1 The share sale agreement
entered into between the BRC Investment Trust Registration No.
IT66/09 together with the fourth applicant
and the respondent on or
about 16 February 2009 is declared void
ab
initio
.
23.2 The respondent is to
forthwith return to the Trust and fourth applicant all shares and
membership interests sold in terms
of the agreement of the target
companies and corporations listed in Annexure “X” hereto
against payment by the Trust
and fourth applicant to the respondent
of an amount of R2 350 000,00.
The respondent is to pay the costs of the application.
______________________________
C
G LAMONT
JUDGE OF THE SOUTH GAUTENG
HIGH COURT, JOHANNESBURG
Attorneys for Applicants :
Van Nieuwenhuizen, Kotze & Adam
Counsel for Applicants : Adv. Marais SC
Adv. Nieuwenhuizen
Attorneys for Respondent :
Michaelides Attorneys
Counsel for Respondent :
Adv. Kairinos
Date of hearing : 21 September 2011
Date of judgment :