About SAFLII
Databases
Search
Terms of Use
RSS Feeds
South Africa: Supreme Court of Appeal
SAFLII
>>
Databases
>>
South Africa: Supreme Court of Appeal
>>
2015
>>
[2015] ZASCA 5
|
|
Ferrari and Others v Gunner (1063/2013) [2015] ZASCA 5 (9 March 2015)
Links to summary
THE
SUPREME COURT OF APPEAL OF SOUTH AFRICA
JUDGMENT
Reportable
Case
No: 1063/2013
In
the matter between:
Claudio
Ferrari
........................................................................................................
First
Appellant
Sietse
Remco Walma van der
Molen
..................................................................
Second
Appellant
Budget
Sheetmetal (Pty)
Limited
.........................................................................
Third
Appellant
and
Quintin
Gordon Thomas
Gunner
...............................................................................
Respondent
Neutral
Citation
:
Ferrari v
Gunner (1063/2013)
[2015] ZASCA 5
(9 March 2015)
Coram:
Lewis, Cachalia,
Majiedt and Pillay JJA and Meyer AJA
Heard:
20 February 2015
Delivered:
9 March 2015
Summary:
Defences of undue influence and
fraudulent misrepresentation, raised in application to compel
specific performance of a contract,
not proved by respondents in
motion proceedings in the high court: court able to determine matters
on application; no reason to
interfere with high court’s
exercise of a discretion to grant specific performance.
ORDER
On
appeal from:
High Court,
Gauteng Local Division, Johannesburg (Monama J sitting as court of
first instance)
The appeal is
dismissed with the costs, including those of two counsel.
JUDGMENT
Lewis
JA (Cachalia, Majiedt and Pillay JJA and Meyer AJA concurring)
[1]
Quintin Gunner, the respondent in this matter, entered into an
agreement with Claudio Ferrari and Sietse van der Molen, the
first
and second appellants, for the purchase of 20 per cent of the
member’s interest in a close corporation, subsequently
converted into a company, Budget Sheetmetal (Pty) Ltd (I shall refer
to both the close corporation and the company as Budget),
the third
appellant. They also concluded an association agreement. Both
contracts were signed on 23 July 2012. Gunner was employed
as a
design director by Budget and he commenced working for it on 1
September 2012.
[2]
Gunner paid the full purchase price of R4.67 million for the member’s
interest in tranches, the last on 22 November 2012.
In February 2013
the close corporation was converted to a company. On 6 March 2013,
before a shareholder’s agreement could
be signed, Ferrari and
his sister, Ketti, who was Van der Molen’s wife, advised Gunner
that they did not want to be bound
by the agreements. When Gunner
applied to the South Gauteng High Court for an order directing the
implementation of the agreements,
the appellants raised two
substantive defences: that the agreements had been induced by the
undue influence of Gunner’s wife,
an attorney, Maria D’Amico;
and that she had fraudulently misrepresented the meaning of a clause
in the sale agreement, thus
rendering the agreement void. D’Amico
had provided the funding for the purchase price.
[3]
The Gauteng Local Division of the High Court (Monama J) rejected
these defences and granted an order of specific performance:
Ferrari
and Van der Molen were directed to sign the documents necessary to
appoint Gunner as a director of Budget; to transfer
20 per cent of
the issued shares in Budget to Gunner and to appoint him as a
signatory to Budget’s bank accounts.
[4]
The appeal lies against this order with the high court’s leave.
At issue on appeal are whether the disputes of fact arising
from the
respective parties’ affidavits should have been decided in
motion proceedings; whether the alleged misrepresentation
made by
D’Amico rendered the agreement invalid; and whether the alleged
undue influence exercised by her had the same effect.
The appellants
did not argue at the hearing before this court that the elements for
actionable undue influence had been met, but
persisted with the
general argument that D’Amico had exercised considerable
influence over them, which had coloured the entire
transaction. The
appellants also contend that, even if the contracts are enforceable,
the order of specific performance made by
the high court was
inappropriate since Budget is a family-owned company and the
relationship between the parties had broken down.
The
factual history
[5]
I shall set out the broad factual matrix before turning to the issues
on appeal. Ferrari and Van der Molen, prior to 2012, each
owned a 50
per cent interest in Budget when it was a close corporation.
Their wives, Sigrid Ferrari and Ketti van der Molen,
worked in the
business of Budget. I shall refer to the Ferraris and the Van der
Molens collectively as ‘the family’,
to Mrs Ferrari as
Sigrid and to Mrs Van der Molen as Ketti.
[6]
For some 15 years, Maria D’Amico, Gunner’s ‘common
law wife’, had acted as the attorney for Budget and
for the
family members in both business and personal matters. Over the course
of time they had all become friends and met on a
social basis.
Gunner, an industrial designer, had over the years done work for and
with Budget.
[7]
At a social event in 2012, Van der Molen and Ketti advised Gunner and
D’Amico that they wanted to discuss business with
him. They
sent him an invitation to meet on 4 July 2012. He went to the
premises of Budget, and met Ferrari, Van der Molen and
Ketti. He was
advised that Ferrari and Van der Molen each wished to sell 10 per
cent of his member’s interest in Budget –
a total of 20
per cent. They had tried previously to sell an interest to an
employee, but he had not been able to raise the finance
for the
purchase price they were asking. They were not willing, they said, to
sell to just anyone, but were interested in selling
to him as his
skill and design expertise would add to the business. Gunner
expressed interest, and a number of meetings were held
subsequently
to negotiate the transactions contemplated, attended by Gunner,
D’Amico, Ferrari and Ketti.
[8]
D’Amico prepared various draft sale and association agreements.
The drafts were amended by Ferrari. The appellants contend
that
D’Amico was acting as attorney for all parties at these
meetings and when preparing agreements. Gunner alleges that
she was
acting for him alone, and produced evidence to this effect, to which
I shall revert. The agreements were signed and concluded
(as were
various addenda) on 23 July 2012.
[9]
They were then immediately implemented and over a seven-month period
Ferrari and Van der Molen signed the forms necessary to
appoint
Gunner as a 20 per cent member in Budget; Gunner paid the full
purchase price, as I have said, and started work as design
director.
The interest was not, however, transferred to him as it was agreed to
delay transfer until the close corporation was
converted to a
company. Ferrari undertook to appoint Gunner as a director when that
occurred. And, in anticipation of conversion,
Gunner nominated a
family trust (the Qmaro Investment Trust) to take transfer of the
shares. Shareholding through a trust is argued
by the appellants to
be at the centre of the dispute and I shall discuss it in more detail
later. It should be noted at this stage,
however, that Ferrari and
Van der Molen also established trusts for the purpose of holding
shares in Budget. Ketti advised D’Amico
of the names of the
trusts for the family shareholding to be inserted in the
shareholders’ agreement that she was drafting.
[10]
When the conversion took place in February 2013, the parties to the
sale agreement had to settle the terms of the Memorandum
of
Incorporation (MOI) for the company. On 27 February 2013 D’Amico
sent a draft shareholders’ agreement to the appellants
and the
following day sent an email to Ferrari and Ketti with comments on the
MOI, suggesting amendments requiring special or unanimous
resolutions
for various matters.
[11]
A meeting was scheduled to discuss the MOI and the shareholders’
agreement on 6 March 2013. But at the meeting, Ferrari
and Ketti told
Gunner and D’Amico that the family did not wish to proceed with
the implementation of the sale agreement and
would not appoint him as
a director. The reason they advanced at that stage for withdrawing
from the agreements was that, as they
saw it, Gunner would enjoy
certain rights as a minority shareholder under the
Companies Act 71
of 2008
and the family would have to give up control of the business,
which they did not want to do. They proposed that the investment made
by Gunner be converted to a loan to the company that would be repaid
over a period. Gunner rejected the proposal. He offered, however,
to
take transfer of the 20 per cent shareholding himself and to transfer
the shares to a trust at a later stage.
[12]
Ferrari sent a written offer to Gunner and D’Amico on 11 March
2013 formalizing the proposal that the purchase price
paid be
converted to a loan, repayable over a period, suggesting two
alternative methods of implementing this. Gunner replied rejecting
the proposal and requested that he be appointed as a director of
Budget; that the 20 per cent shareholding be transferred to him
and
that he be appointed as a signatory to Budget’s bank accounts.
D’Amico followed this up with a formal letter of
demand. She
advised that, should Ferrari and Van der Molen not comply within five
days, Gunner would approach the high court as
a matter of urgency to
seek an order compelling implementation of the agreements.
[13]
In March 2013, Ferrari asserted, he became aware of incidents of
misconduct on the part of Gunner. He allegedly was abusive
to
employees of Budget and required work to be done without following
the business’s procedures. On 18 March Ferrari
decided to
suspend him, and to arrange for a disciplinary enquiry into the
complaints of misconduct. An independent chairperson
was appointed
and an enquiry held. The chairperson recommended that Gunner be
dismissed and so he was in April 2013.
[14]
The family approached a firm of attorneys, Hoosen Wadiwala, for
advice on the agreements and a lengthy letter was addressed
to
D’Amico on 18 March 2013 by Mr H A Wadiwala. The gravamen of
the letter was that she had acted improperly in representing
both
Gunner and the appellants in negotiating the transaction and that she
had breached her fiduciary duties by acting in her own
interests
rather than those of the appellants. He also alleged that she had
exerted undue influence over them which resulted in
their reposing
trust in her to act in their best interests: she had acted in ‘an
unscrupulous and unprofessional manner in
order to prevail upon [the
appellants] to enter into the agreements drafted by you’.
[15]
Wadiwala alleged further that D’Amico had intentionally failed
to disclose certain facts – that she had ‘harboured
the
intention to insist on the interposition of trusts as shareholders in
[Budget] (principally in order to render yourself the
beneficial
shareholder in direct contradiction to the Mandate)’.
The
application
[16]
Gunner’s application to the high court was drafted in response,
at least to some extent, to what he perceived to be the
nature of the
defences that the appellants would raise. He asked for performance of
the obligations that arose from the two agreements.
And, no doubt
anticipating the defence that D’Amico had had a conflict of
interest and had represented both him and the appellants
in the
negotiations and in drafting the agreements, he quoted from a
transcript of a recording of the meeting held on 6 July 2012
where
D’Amico had made it clear to Ferrari and Ketti that she was
acting for Gunner and not for the appellants. He attached
the
transcript of the recording to his founding affidavit.
[17]
The significance of the recording, admittedly made by Gunner without
advising Ferrari and Ketti, who represented the appellants
at the
meeting, that he was doing so, is that D’Amico made it clear at
the beginning of the meeting, that she was representing
Gunner. The
appellants were not her clients for the meeting she said. Although
some attempt was made in the papers and at the appeal
hearing to
argue that she became the appellants’ attorney as well after
the meeting and for the remainder of the negotiations,
this
suggestion is plainly bizarre. Allegations that she was conflicted
must thus be rejected. Moreover, she made it quite plain
that the
family should feel free to consult another attorney for advice.
[18]
The defences raised in the appellants’ answering affidavit,
deposed to by Ferrari, were nonetheless that the agreements
were
voidable at their instance because of the undue influence exerted by
D’Amico during the course of the negotiations and
when the
agreements were drafted; and because she had misrepresented to them
the meaning of a clause in the sale agreement. The
family, he said,
had accepted her advice uncritically because of their long-standing
attorney-client relationship. Gunner, he said,
was complicit in her
conduct.
Undue
influence
[19]
As I have said, in argument in this court, the appellants’
counsel did not rely on the defence of undue influence.
I shall
accordingly deal with it only briefly. The elements of the defence
were plainly not met. The party claiming to have been
unduly
influenced must show not only that the other had an influence over
him or her, but also that it rendered his or her will
weak and
pliable and induced him or her to enter into a transaction, to his or
her prejudice, that would not otherwise have been
entered into. (See
Preller v Jordaan
1956 (1) SA 483
(A)
and
Patel v
Grobbelaar
1974 (1)
SA 532
(A).) Moreover, it was not alleged that Gunner himself, as the
party to the agreements, had exercised undue influence over the
family: at most he had been present when that influence was said to
have been exerted.
[20]
The family members were all astute and experienced business people,
and their wills had hardly been rendered weak and pliable.
On the
contrary, they broke off negotiations at one stage because of
discomfort about a draft D’Amico had prepared which
reflected
the purchaser of the member’s interest not as Gunner but
as trustees – Gunner and D’Amico for
a family trust,
Quadri. The use of a trust, where D’Amico might have control,
played a great role in the negotiations, and
formed the basis of the
defence based on fraudulent misrepresentation.
The
fraudulent misrepresentation: dispute of fact?
[21]
The fraudulent misrepresentation allegedly made by D’Amico
related to the meaning of a clause in the sale agreement.
Clause 3.7
read:
‘
It
is the intention of the Corporation to convert to a proprietary
limited company subsequent to the effective date, where the
shareholders shall be 40% each to Claudio and Sietse and 20% to the
Purchaser.
The parties may reflect their
shareholding in trusts.
The Sellers and
their spouses and the Purchaser shall become directors of such
company, namely there shall be 5 directors appointed.’
[22]
The sentence emphasized is the cause of complaint. D’Amico, the
appellants contended, had misrepresented to them that
the clause
meant that there had to be unanimous consent of all shareholders for
any one of them to hold their shares in a trust.
The
misrepresentation had been material and had induced them into
entering into the contract. They would not have done so if they
had
known that Gunner could unilaterally determine that his shareholding
would be held in a trust. They did not want anyone other
than Gunner
(in particular they did not want D’Amico) involved in a family
business.
[23]
The case for fraudulent misrepresentation was put thus in Ferrari’s
answering affidavit:
‘
Maria
explained clause 3.7 in the draft Sale Agreement to us as follows.
She said that there were significant benefits associated
with holding
shares in trusts. We needed to educate ourselves on the issue of
trusts and the benefits thereof and decide for ourselves
whether we
agreed that this was a good idea. If we, including the Applicant,
should decide in future that we wanted to use trusts
to own our
shares, the Sale Agreement should be flexible enough to accommodate
this without having to be amended. Therefore, the
wording of clause
3.7 was included in the draft agreement. Any decision that
shareholders would be entitled to transfer their shareholding
to a
trust would only be taken by unanimous agreement of all shareholders,
and if approved, all shareholders could then hold their
shares using
a trust. Maria repeatedly stated that we had nothing to worry about,
as we had an eighty percent majority, and nothing
could be done
without our agreement.
We
now realize that the clause provides that each shareholder has the
right unilaterally to transfer his shares to a trust. None
of us
realized this when we signed the Sale Agreement. If we had realized
we would not have signed. This was the very issue that
had caused
negotiations to fail previously, and we had never changed our
mind
on this point.’
[24]
D‘Amico’s ulterior motives for drafting the agreement as
she did are the bedrock on which the appellants rest their
case. She
wanted control, they said. The family, on the other hand, only wanted
Gunner involved in their business. Ferrari went
on to say:
‘
It
now appears that the advice given by Maria regarding trusts and the
conversion to a company was given primarily in order to further
her
own aims and to return us to the initial position of having the
Applicant’s shareholding held in a trust. . . .’
[25]
In order to understand the background to this assertion more fully I
shall turn to Gunner’s replying affidavit in which
he referred
to another recording of a meeting at which the family had allegedly
walked away from the proposed transaction because
of the
interposition of a trust. I shall then consider whether the
appellants proved that the fraudulent misrepresentation had
been made
at all.
[26]
In response to the allegation of fraudulent misrepresentation, raised
for the first time by the appellants in Ferrari’s
answering
affidavit, Gunner said that between 6 July 2012, when the proposed
agreements were first discussed, and 16 July 2012
when Ferrari and
Ketti explained why they were withdrawing from the negotiations, and
to which Ferrari alluded in the passage quoted
above, there were
several meetings and discussions between the parties. And D’Amico
produced several drafts of the proposed
agreements. In the first
draft of the sale agreement she had inserted, as purchasers, herself
and Gunner in their capacities as
trustees of the Quadri Trust. The
family had no objection to that when she asked for comments. On 15
July 2012, Gunner said, he,
D’Amico, Ferrari and Ketti had met
to discuss that draft and she had made manuscript notes on the draft
to reflect the changes
they wished to make. None were made in respect
of the identity of the purchaser.
[27]
But on 16 July 2012 Ferrari and Ketti advised Gunner and D’Amico
that the family did not wish to proceed with the sale
of a member’s
interest. They did not wish to have any encumbrance, they said.
Ferrari said expressly that the trust was not
the problem. The real
problem was that they did not want to have to resort to a majority
vote in the future. Thus while ‘it
was not easy to walk away
from four and a half million basically cash’ they had decided
to do so. They said that while they
wanted Gunner in the business,
they did not want him to need to consult on any decision to be made.
The implication, of course,
was that they did not want him to have to
refer back to D’Amico. Yet when D’Amico asked: ‘Is
there still a deal,
but you just don’t want to deal with the
trust? Or is there no deal and the trust is one of the problems?’
Ferrari
responded: ‘Yes. I would put it down that way.’
When pressed on the issue by D’Amico, he agreed that the
family’s
biggest concern was bringing a third party into the
business. Nonetheless he and Ketti indicated that they might resume
negotiations
in the future.
[28]
Two days later Ferrari sent an email to Gunner and D’Amico
saying they wanted to resume negotiations. Subsequently other
drafts
of the sale and association agreements were prepared. After
consulting a lawyer who specialized in trust work (who had formerly
been D’Amico’s candidate attorney, and to whom she
referred the family to create their trusts), Gunner decided not
to
put the shareholding in the family trust but in a business trust. As
it had not been formed yet, D’Amico changed the identity
of the
purchaser to Gunner and inserted the contentious clause 3.7. She sent
this draft to Ferrari and Ketti as an attachment to
an email on the
evening of 19 July 2012.
[29]
On 20 July 2012 Ferrari sent back the draft with various queries and
comments. Clause 3.7, which was obviously a new provision,
was shown
in red on D’Amico’s new draft, as a new insertion that
was tracked, but Ferrari did not comment on it. Eventually,
at a
meeting on 23 July 2012, the agreements were signed after handwritten
corrections were made at Ketti’s instance.
[30]
I return to the alleged fraudulent misrepresentation about the
meaning of clause 3.7. When was it made? Where? Was Gunner present?
Did he know that D’Amico was being untruthful? Was he
complicit? And if so, how does that square with their allegations
that D’Amico wanted control herself, and was thus not acting in
Gunner’s interests? The appellants do not say.
[31]
It is trite that a person claiming to have been misled by a
fraudulent misrepresentation, and who wishes to treat the contract
concluded as void, must aver and establish that a misrepresentation
as to an existing fact has been made, that the representation
was
false and that the party making it knew it was false, that it was
material in that it induced the contract in question, and
that had he
known the true facts he would not have entered into the
contract. The appellants’ case as set out in the
two paragraphs
of their answering affidavit to which I have referred do not
begin to make out a case of fraud against D’Amico,
much less
against Gunner.
[32]
Despite this they argued that the matter was not one that should have
been determined in motion proceedings: that there were
serious
disputes of fact that could be tested only where there was oral
evidence led, and the parties to the contracts cross-examined.
However, in my view, the only dispute of fact is whether D’Amico
made any misrepresentation at all. As I have said, its existence
and
effect were raised for the first time by the appellants in the
Ferrari answering affidavit. The high court, argued the appellants,
should have applied the rule in Plascon-Evans that where a factual
dispute emerges in application proceedings, the court must accept
the
version of the respondent on affidavit unless it raises fictitious
disputes of fact, is palpably implausible, far-fetched or
so clearly
untenable that the court is justified in rejecting it on the papers
alone. Bare and uncreditworthy denials will not
be considered. (
NDPP
v Zuma
[2009] ZASCA 1
;
2009 (2) SA 277
(SCA) para 26.)
[33]
But in this matter, the appellants alleged the fraudulent
misrepresentation as to the meaning of clause 3.7 in the sale
agreement
only in the Ferrari answering affidavit: Gunner did not
merely deny it. He gave a lengthy and plausible response, described
above.
There is no reason to reject his version.
[34]
In any event, there are various aspects of the appellants’
version that lead to the conclusion that it is far-fetched
and
fictitious. First, it is unlikely that Ferrari and Ketti, very
experienced business people, would have let clause 3.7 stand
had they
objected to Gunner acquiring the shareholding in a trust. The issue
of a trust had been raised previously: it was discussed
at the
meeting of 16 July 2012. Ferrari expressly said that it was not the
trust that had made them decide to withdraw from negotiations.
Indeed
after that meeting and after negotiations had resumed the family
consulted the trust lawyer and established their own trusts.
[35]
Second, when advised that Gunner wished to register his shares in a
trust the appellants did not demur, let alone object. On
29 August
2012 D’Amico wrote an email to Ferrari and Ketti asking whether
Budget had been converted to a company yet. She
said: ‘Once the
CC has been converted then your auditors must issue share
certificates to Claudio and Sietse
(or
their trusts if you are going down that road)
stating that they each own 40% shares in Budget Sheet an a share
certificate (showing 20%) to Quintin but in the name of The Qmaro
Investment Trust . . . , which is the new trust that we have
registered.’ (my emphasis.) There was no objection to this.
[36]
Ferrari attempted to explain the absence of objection in his anwering
affidavit by saying that they thought this was a request
to consider
holding shares in a trust, and not the communication of a decision.
‘[W]e remained of the view that a transfer
to trusts could only
happen by
majority
vote as contemplated in the Association Agreement.’ (My
emphasis, to show that on one version of the appellant, a majority
vote was required and on another a unanimous vote.)
[37]
But the email was not couched as a request. And another email sent by
D’Amico the following day, advising Ferrari that
it was not
wise to register the member’s interest in Budget when it was
still a close corporation in Gunner’s name
(for tax reasons),
with another reference to a trust, also elicited no objection. And
several months later, on 22 February 2013,
when D’Amico asked
for the names of the trusts in which the family’s shares would
be registered, Ketti responded naming
two trusts and giving their
registration numbers. Other correspondence about registration of
shareholding in trusts as late as
1 March 2013 also gave rise to no
objection.
[38]
Thirdly, when the family consulted Wadiwala and he wrote in response
to D’Amico’s letter of demand, no mention
was made of the
alleged fraudulent misrepresentation as to the meaning of clause 3.7.
The defence was raised for the first time
in the answering affidavit.
And finally, if there was any truth in the allegation that D’Amico
had misrepresented the meaning
of clause 3.7, and if the appellants
had really thought that unanimous consent was required for any of
Ferrari, Van der Molen or
Gunner to hold their shares in trusts, then
the proper remedy was for them to apply to rectify the agreement to
state that –
to reflect their continuing common intention.
[39]
Thus the inevitable conclusion is that the defence was an
afterthought – a construct to escape legal liability. The
appellants did not establish that any misrepresentation, let alone a
fraudulent one, was ever made to them by D’Amico. Accordingly
it is not necessary to consider whether Gunner was complicit in the
making of the misrepresentation, or any other requirement for
actionable misrepresentation.
[40]
I conclude, therefore, that the agreements signed by the parties were
not vitiated by either undue influence or fraudulent
misrepresentation, and the appellants are bound by them. The
remaining question is whether the order for specific performance was
appropriate.
Specific
Performance
[41]
An order of specific performance is the primary remedy available to
an aggrieved party where the other is guilty of breach
of contract.
That said, in various cases where hardship or inequity would result
from the enforcement of the contract our courts
have, in the exercise
of their discretion, refused to grant specific performance. (See
Haynes v Kingwilliamstown Municipality
1951 (2) SA 371
(A).)
Generally, an award of damages is sought in the alternative and where
specific performance is not ordered damages will constitute
appropriate relief.
[42]
The appellants argued that the order was inappropriate in this
matter. There was a complete breakdown of the relationship of
trust
that is necessary for the parties to work together in a family
business. That trust has been broken, they contend, because
of
D’Amico’s conduct and attempt to assume some control in
what was a small company in which the family has worked
together
closely for many years. That breakdown of trust was exacerbated, the
appellants argued, when Gunner secretly recorded
the two meetings in
July – and possibly others too. Although Gunner explained that
he had recorded the meetings so that he
could capture financial
information accurately, he did not explain why he had not disclosed
the fact that he was recording the
meetings upfront.
[43]
It was clear that Gunner could not work in the business, the
appellants argued, because of his misconduct towards staff: he
had
been found guilty of being abusive and not following business
procedures. An order to transfer shares to him and to appoint
him as
a director would cause hardship to the other shareholders and
directors.
[44]
Gunner contended, on the other hand, that the misconduct complaints
had been made only when the family wished to oust him from
the
business. They were trumped up and did not warrant dismissal. He did
not ask for reinstatement as an employee, and would have
only a
minority vote.
[45]
The high court held, when considering how the parties might
co-operate in the future, that as a minority shareholder, and one
of
five directors, Gunner would not be able to frustrate the business of
Budget, and would be constrained to exercise his fiduciary
duties. It
also found that the appellants’ reasons to resile from the
agreement were flimsy. It held that Gunner had complied
with his
obligations and as a stakeholder would advance the interest of
Budget.
[46]
This court will interfere with the exercise of the high court’s
discretion in granting specific performance only if it
was
capricious; or an unbiased mind has not been brought to bear on it;
or has not acted for substantial reasons:
Ex
parte Neethling
1951 (4) SA 331
(A) and
Benson
v SA Mutual Life Assurance Society
1986 (1) SA 776
(A) at 781H-J. In this matter the high court
considered the argument that specific performance would cause
hardship to the family
and Budget. But, said Monama J, their
allegations of undue influence and the reasons for resiling that they
manufactured were flimsy.
In the circumstances, he considered that he
ought not to refuse an order of specific performance in the exercise
of his discretion.
[47]
I see no ground on which to interfere with the high court’s
exercise of its discretion. It was exercised judicially and
after
careful consideration, was not biased and was for substantial reason.
As Gunner argued on appeal, the parties are experienced
business
people. He is willing to perform his obligations, and indeed has paid
a large sum for the shares in Budget. In
Diner v Dublin
1962
(4) SA 36
(N) Milne JP ordered the transfer of shares to the
plaintiff, and that he be appointed as a director. The parties were,
said the
court, hard-headed businessmen, and the defendant, having
received payment for the shares, would be able to manage ‘very
well’ with the plaintiff as a minority shareholder despite the
exchange of hard words between them.
Milne
JP, in the course of considering whether an order of specific
performance would cause hardship to the defendant said (at 40F-H):
‘
I
have come to the conclusion, after having seen each of the parties in
the witness box over a number of days and, having regard
to the
history of the matter in relation to the character of the parties,
that to order specific performance would not be to impose
any such
hardship on the defendant as would make it an improper exercise of
discretion to grant the decree. The plaintiff, after
all that has
happened, asks for the decree. He is the one who will be the minority
shareholder with all the consequences that that
entails. In spite of
those consequences he still asks for a decree after all that has
happened and after all that the defendant
has said and done, even
though the defendant will have the controlling interest in the
companies . . . .’
[48]
The same must be said of the parties in this case. Gunner has
performed, and in turn asks for specific performance despite
all that
has been said and done. I can see no justification for interfering in
the exercise of the discretion by the high court.
[49]
Accordingly the appeal is dismissed with costs including those of two
counsel.
_____________________
CH
Lewis
Judge
of Appeal
APPEARANCES
For
Appellant: CE Watt-Pringle SC, AJ Lamplough
Instructed
by: Hoosen Wadiwala Inc, Hyde Park
McIntyre & Van
der Post, Bloemfontein
For
Respondent: A Gautschi SC, F Strydom
Instructed
by: Stewart-Garden Attorneys, Bryanston
Lovius Block
Attorneys, Bloemfontein