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[2016] ZAGPJHC 115
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Oosthuizen v Metsep SA (Pty) Ltd (14824/2015) [2016] ZAGPJHC 115 (6 May 2016)
REPUBLIC OF SOUTH AFRICA
IN THE HIGH COURT OF SOUTH AFRICA
GAUTENG LOCAL DIVISION,
JOHANNESBURG
CASE NO: 14824/2015
DATE: 06 MAY 2016
In the matter between:
Oosthuizen, Kennith
Martin
....................................................................................................
Applicant
And
Metsep SA (Pty)
Ltd
.....................................................................................................
First
Respondent
Whelan, David Michesl
Joseph
................................................................................
Second
Respondent
Watchorn, Robert
Patrick
..........................................................................................
Third
Respondent
Miwac (Pty)
Ltd
........................................................................................................
Fourth
Respondent
JUDGMENT
Van der Linde, J:
[1]
This is an application for payment of a
portion of the purchase price that will become owing by the second
and third respondents
to the applicant in terms of a written
settlement agreement. That agreement provides, in the main, for the
sale by the applicant
of his shares in the first respondent to the
second and third respondents, to whom I shall refer simply as “the
purchasers.”
(I will therefore, to keep the reading coherent,
refer to the applicant as “the seller”).
[2]
The agreement provides for a mechanism
whereby the purchase price will be fixed. That mechanism has not yet
run its course; in fact,
the parties are agreed that the issue of the
determination of the purchase price payable should be referred to the
trial court.
Such an order is made at the end of this judgement.
[3]
At issue now is whether the seller is
entitled to payment of a portion of the purchase price which, on the
seller’s case,
is undisputed. The purchasers dispute this.
They say that for so long as the entire price for the shares has not
been determined,
no portion of it at all is due and payable.
They point to the written agreement and its Shifren
[1]
clause and they say there is no provision for part-payment, as is
effectively contended for by the seller.
[4]
The seller’s answer to this
contention is that his case is not founded on the written agreement;
rather, his case is founded
on the affidavits in this application,
from which it appears that it is undisputed that the purchase price,
undetermined as it
is, can never be less than R8 725 500. That
being so, according to the argument, the seller is entitled now to
judgment in
this amount, on account of the purchase price.
[5]
The issue in this application is whether
that argument is sound.
[2]
[6]
In principle, the seller’s argument
is unassailable. Parties have always been free to decide to perform
their obligations
in a particular way; and if they will have done so,
it is not open to the other side afterwards to contend that the
contract was
not strictly performed in accordance with its letter.
[3]
[7]
Moreover, Shifren is not offended if in
terms of a collateral agreement the purchaser decides to make to the
seller, on account
of the purchase price, a down-payment. The only
proviso is that the terms of the collateral agreement should not
offend the terms
of the written (main) agreement.
[8]
Our courts have often enforced undertakings
to pay in their terms, irrespective of whether there was an
enforceable underlying causa.
[4]
The undertaking itself becomes the causa, because it itself is held,
if the facts sustain it, to be a contract deliberately entered
into.
But is has to be a contract deliberately entered into by the parties
with the intention to be bound by its terms.
[9]
Cameron, J (writing for the Constitutional
Court) put the issue this way:
[5]
“
Did
the 2008 notice give rise to an enforceable undertaking?
[30] The
2008 notice clearly constituted an undertaking by the department to
pay the schools, to which the notice was directed,
the approximate
amounts set out in it. In argument, counsel for the respondents
confirmed that the undertaking was given with an
intention to honour
its terms. This is undoubtedly correct. The question is whether the
courts can enforce the undertaking, or
any part of it.
[31]
Courts enforce undertakings when parties agree by contract to be
bound by their terms; when the undertaking gives rise to a
legitimate
expectation and administrative fairness requires some measure of
their enforcement; or when any other legal principle
or rule requires
enforcement. In its affidavits, the applicant said its case was
that it relied purely on a promise or undertaking
to pay. It said
that it was 'neither here nor there' whether this derived from
administrative action or 'something akin to a contractual
obligation'. But the form of the applicant's case is important. If
enforcement is sought on the basis of administrative action,
the
proceedings should have been instituted under the Promotion of
Administrative Justice Act 8 (PAJA), in the form of a review,
and
(subject to condonation) within the 180-day period PAJA allows. None
of this was done.
[32] …
[33] …
[34] …
[35]
On what basis can the applicant claim enforcement of the undertaking?
I do not think that the undertaking is enforceable because
of an
agreement. A contract is an agreement between parties, entered into
with the intention of creating binding obligations, to
perform
according to the terms agreed…Our courts have indeed enforced
agreements concluded in response to circulars or notices
setting out
the terms on which governmental subsidies may be procured. But here
there was no contract. The undertaking was not
extended as part of a
bilaterally binding agreement, which is the hallmark of contractually
enforceable obligations.
[36] Nor
was there any intention on the part of the department, or indeed the
schools, to be contractually bound by a private agreement…
This is distinct from an intention to enter into legal obligations
for the purpose of concluding an enforceable contract.
[37]
Nevertheless, the setting in which the 2008 notice promised payment
to its recipients indicates that it was seriously given,
in the
expectation that it would be relied upon, and that payment in its
terms would indeed be forthcoming, subject only to the
possibility of
due revocation. These indications are set out in the ensuing
paragraphs.”
[10]
What this all tells us, in relation to the
seller’s case, is that the affidavits must be read to justify
the inference of
the existence of a new contract, collateral to the
written settlement agreement, not offending the latter’s
terms,
and reflecting a reciprocal meeting of minds to pay the R8 725
500 for which the seller contends.
[11]
The seller relies for the cause of action he
advances on paragraph 60 of his founding affidavit, but particularly
the nature of
the purchasers’ response to it. The paragraph
concerned states, with reference to the valuation
[6]
that the seller is disputing, as follows:
“
60.
I am advised and state that there is no possibility that he third and
fourth respondents could be liable to the applicant in
an amount of
less than R8 725 500.00 (eight million seven hundred and
twenty five thousand five hundred rand). There
is no reasonable
possibility that an adjustment of the first valuation to rectify the
manifest errors (referred to above) could
result in an amount lower
than R8 725 500.00 (eight million seven hundred and twenty five
thousand five hundred rand) being
owed by the respondents to the
applicant. Rectification of the errors can only result in a higher
amount being owed to the applicant
as illustrated above.”
[12]The
purchasers’ response to this paragraph is paragraph 73:
“
73.
Ad paragraphs 57 to 60 thereof
73.1 I
admit that the Respondents’ attorney sent the correspondence
dated 17 September 2014, attached to the founding papers
is (sic)
annexure ‘KO15’.
73.2 Given
the circumstances, I deny that the Respondents are liable to make
payment of any ‘minimum’ purchase price.
73.3
Either the Applicant’s position is that Mackinnon’s
valuation is binding or it is not. If it is binding, there
ought to
be no dispute, at least from the Applicant’s perspective, and
if it is not binding, he is not entitled to payment
on the basis
thereof.
73.4 The
remaining allegations are denied.”
[13]The
seller’s argument is that the purchasers have not, by their
response, issuably engaged the seller’s contentions
in
paragraph 60 of the founding affidavit, specifically the contention
that the purchase price could never be less than R8 725 500.
On this basis the seller argues that this court is able to arrive at
a factual finding on these papers to this effect; in other
words, to
the effect that the purchase price, even if the contested valuation
is set aside for containing manifest errors, will
never be less than
R8 725 500.
[14]The
purchasers dispute this. They argue that their response to the
seller’s paragraph 60 is being taken out of context;
and that
their answering affidavit, read as a whole (as it must), is a
detailed challenge to the seller’s contentions.
[15]I
will accept for the purposes of this judgment that the seller’s
contention concerning paragraph 60 is correct. However,
the
difficulty for the seller’s case is that all that that does, is
to take one to a factual finding that the purchase price,
once
determined, will never be less than R8 725 500. That is
still not evidence, let alone a finding, that the seller
and the
purchasers have actually agreed that the purchasers are now indebted
to the seller in the amount of R8 725 500,
and have agreed
to pay that amount to the seller now.
[16]Put
differently, for the seller’s argument to succeed, he would
have to show that the purchasers formulated paragraph
73 of their
answering affidavit
animus contrahendi
,
meaning with the intention of agreeing with the seller that they owe
the seller R8 725 500, and further, that they were
by their
paragraph 73 agreeing to pay that amount to the seller now. I do not
believe that that inference can be drawn either from
paragraph 73 of
the answering affidavit or from the purchasers’ affidavit, read
as a whole.
[17]Rather,
the purchasers’ contention in their affidavit is that for so
long as the valuations remain in dispute, the purchase
price will not
have been settled for purposes of the written settlement agreement.
It is an essential ingredient of an enforceable
agreement of sale
that there is either firm agreement on the
pretium
,
or alternatively on a mechanism for determining the
pretium.
In this case the alternative applies; the parties expressly agreed a
mechanism for determining the purchase price.
[18]No-one
has suggested, at least not thus far in these proceedings, that that
mechanism has failed, inevitably leaving the sale
agreement inchoate
for lack of firm agreement on the
pretium
.
[19]But
the purchasers have said that thus far there is no firm agreement on
the purchase price, and that is their contention; not
that there is
firm agreement on a portion of the purchase price. In other words, to
the extent that their affidavit does not dispute
that the purchase
price will not be less than R8 725 500,
[7]
all they are saying is that the ultimate determination will not be
less than this amount; they are not saying that they are agreeable
to
paying that amount to the seller now on account of the purchase
price.
[20]It
follows that all aspects of the disputes between the parties will
have to go to trial; there is no room for any carve-out
at this
stage. I agree that a fair costs order will allocate responsibility
for the costs relating to the set-down of the matter
on the opposed
motion court roll, and the costs of 4 May 2016, to the seller; but
that for the rest, the costs should be in the
cause.
[21]In
the result I make the following order:
(a)
The application is referred to trial, with
the notice of motion being deemed a simple summons.
(b)
The applicant is to file his declaration
within 21 days of this order.
(c)
The applicant is to pay the costs relating
to having set the application down on the opposed roll for this
hearing, as well as the
costs of 4 May 2016.
(d)
All other costs are in the cause.
WHG van der Linde
Judge, High Court
Johannesburg
For the applicant: Adv. MvR Potgieter, SC (083 600 0871)
Instructed by: Senekal Simmonds Inc
19 Riley Road
Bedfordview
Tel:
011 450 3084
Ref:
JH Senekal/dk/O107MAT3962
For
the first to fourth respondents: Adv. C Bothma (083 284 7267)
Instructed
by: Edward Nathan Sonnenbergs
150
West Street,
Sandton
Johannesburg
Tel:
011 269 7600
Ref:
Ms K Simpson/0346905
Date
of hearing: 04 May 2016
Date
of judgment: 06 May 2016
[1]
After SA Sentrale Ko-op Graanmaatskappy Bpk v
Shifren, 1964 (4) SA 760 (A).
[2]
I will not now consider whether it is permissible
to make out a case in motion proceedings based on what is said or
not said in
the answering affidavit. Normally, the courts have
insisted that the cause of action must be completed already when the
notice of motion is issued. Courts have however also held that they
have a discretion in this regard, particularly when at least
a part
of the cause of action already existed when the initiating process
was issued. In any event, the respondents did not argue
the point.
[3]
Van der Walt v Minnaar,
1954 (3) SA 932
(O),
referred to with apparent approval in Telcordia Technologies Inc v
Telkom SA Ltd, 2007 (3) SA 266 (SCA).
[4]
Minister of Home Affairs and Another v American
Ninja IV Partnership and Another,
[1992] ZASCA 164
;
1993 (1) SA 257
(A), esp at 269
per Nestadt, JA.
[5]
Kwazulu-Natal Joint Liaison Committee v MEC for
Education, Kwazulu-Natal and Others, 2013 (4) SA 262 (CC).
[6]
The written sale agreement provides that the
purchase price would be the appropriate fraction of the mean (p34 cl
4.4.6) of two
valuations, one to be obtained by the seller and one
by the first respondent (p33 cl 4.4.1 and cl 4.4.3). Two valuations
were
obtained, the one by the seller valuing the shares at
R44 804 000, and the one by the first respondent valuing
the
shares at R25 000 000. The seller disputes the lower of the
two, that obtained by the first respondent, and says that it
contains manifest errors. See, for a comparable case and the meaning
of “
manifest error”
,
JFH James v Micor Holdings Ltd and Another, case no. 87/23279,
unreported judgment handed down in the then WLD, on 26 November
1998.
[7]
This is on the assumption that I have made in
favour of the seller.