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[2020] ZAGPJHC 227
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Steenkamp NO and Others v Mashava and Others (36141/2019) [2020] ZAGPJHC 227 (12 August 2020)
REPUBLIC
OF SOUTH AFRICA
IN
THE HIGH COURT OF SOUTH AFRICA
GAUTENG
LOCAL DIVISION, JOHANNESBURG
Case
No.: 36141/2019
In
the matter between:
ALWYN
JOHANNES PETRUS STEENKAMP
N.O. First
Plaintiff
ALWYN
STEENKAMP
N.O. Second
Plaintiff
MAGDALENA
JOHANNA ELIZABETH DICK
N.O. Third
Plaintiff
LYNETTE
STEENKAMP
N.O. Fourth
Plaintiff
and
LYBORN
MASHAVA First
Defendant / Excipient
BENNIE
KEEVY
N.O. Second
Defendant
MMAPULA
JOHANNAH MOSIKARI
N.O. Third
Defendant
AKATA
INTEGRATED MINING SOLUTIONS (PTY)
LTD Fourth
Defendant
JUDGMENT
Gilbert
AJ
1.
The first
defendant as excipient has taken two exceptions to the plaintiffs’
amended particulars of claim. The notice of exception
describes the
complaints as the plaintiffs having failed to make out a cause of
action. The excipient in heads of argument
sought to expand on
the basis of the complaints to include the relevant allegations being
vague and embarrassing. Although this
is not what the notice of
exception provides and notice to remove cause of complaint had not
been provided as provided for in Uniform
Rule 23(1) in relation to a
complaint of vague and embarrassing, plaintiffs’ counsel during
argument stated that the plaintiffs
do not raise any procedural
objections as the plaintiffs’ opposition to the exceptions is
in any event advanced on the merits
in response to both species of
causes of complaint. This is also apparent from the plaintiffs’
heads of argument.
2.
The
plaintiffs plead, in that part of their amended particulars of
claim that is relevant to the exceptions, that pursuant
to an oral
agreement the plaintiff trusts sold and transferred certain of their
shares in two companies Renlyn Mining Services
(Pty) Limited (“RMS”)
and Akata Integrated Mining Solutions (Pty) Limited (“Akata”)
to
the first defendant so as to constitute the first defendant a
majority shareholder in each of those companies.
3.
The
plaintiffs plead as terms of the oral agreement that:
3.1.
“
the
first defendant would pay (to the trust) the fair market value for
the shares
”
(paragraph 23.3 of the particulars of claim);
3.2.
“
the
fair market value will be determined by the auditors of RMS and
Akata, P C Grobler and Associates
”
(paragraph 23.4 of the particulars of claim).
4.
The
plaintiffs then plead that “
the
auditors of RMS and Akata inter alia determined the fair value of the
shares to be R7,765,949.52 with a copy of the valuation
annexed as
“POC3”
.
A document is annexed to the amended particulars of claim as “POC3”.
5.
The
plaintiffs’ claims that then follow, in the alternative, are
directed at obtaining return of the shares sold by them to
the first
defendant.
6.
The first
claim is based upon the agreement being void for vagueness and as a
consequence of which the plaintiffs allege they are
entitled to the
return of the shares.
7.
The second
claim, in the alternative to the first, and which is predicated on
the sale agreement not being void for vagueness, is
that the first
defendant repudiated the agreement in various pleaded respects and
that consequent thereupon the plaintiffs were
entitled to, and did
cancel the agreement and so are entitled to the return of the shares.
The
first exception
8.
Particularly
relevant in relation to the first grounds of exception is the
allegation by the plaintiffs in paragraph 26.2 of their
particulars
of claim by the plaintiffs why the agreement is void for vagueness:
“
26.2 The
agreement is void for vagueness, inter alia, in that the parties were
not in agreement on:
26.2.1 the manner in
which fair value would be determined; and
26.2.2 the accounting
methods that would be applicable to the determination of fair value;
and
26.2.3 on how
disagreements on fair value (or the determination of fair value)
would be resolved.
”
9.
The first
exception that is taken by the first defendant is that as the
plaintiffs have alleged that the fair market value of the
shares
would be determined by the auditors and then further plead that
pursuant to the agreement the auditors did determine the
fair value
of the shares, “
it
is contradictory and illogical for the plaintiffs to proceed to
allege in paragraph 26 that the agreement was then incapable
of being
implemented and that the agreement is void for vagueness on the basis
set out therein.
”
10.
Bearing in
mind the trite principle that a benevolent reading of pleadings is
called for on exception, the plaintiffs’ pleaded
first claim,
stated favourably in favour of the plaintiffs, is:
10.1.
although
the parties
did
agree:
10.1.1.
that the
first defendant as purchaser would pay fair market value for the
shares; and
10.1.2.
that the
auditors would determine the fair market value,
and
that:
10.2.
the
auditors
did
determine the fair market value;
10.3.
the
agreement is nonetheless still void for vagueness because the parties
did
not
agree on
10.3.1.
the manner
in which fair value would be determined; and
10.3.2.
the
accounting methods that would be applicable to the determination of
fair value; and
10.3.3.
how
disagreements on fair value (or the determination of fair value)
would be resolved.
11.
The first
difficulty that arises for the plaintiffs on their pleading of their
first claim is that what they plead the parties did
not
agree on conflicts with what they had already pleaded in their
amended particulars of claim that the parties did agree on. The
plaintiffs expressly pleaded in paragraph 23.4 of their amended
particulars of claim that the parties the auditors would determine
the fair market value. Having so pleaded, the plaintiffs cannot then
subsequently plead in paragraph 26.2.1 that the parties did
not agree
on the manner in which fair value would be determined. Fair value
would, as already pleaded by the plaintiffs, be determined
by the
auditors.
12.
Rather what
emerges from the plaintiff’s argument is that what was intended
by the pleading in paragraph 26.2 of what the
parties had not agreed
upon is that the parties had not agreed on the parameters in which
the auditors would determine the fair
market value, i.e. that the
parties had left the auditor’s determination of fair market
value open-ended by not agreeing
on the parameters described in
paragraph 26.2.
13.
But it is
not at all clear that what the plaintiffs argued is consistent with
what is pleaded in paragraph 26.2. The plaintiffs
do not qualify in
paragraph 26.2 that the non-agreement related to the parameters of
the determination of fair value by the auditors.
14.
But
assuming in favour of the plaintiffs a benevolent reading of
paragraph 26.2 and that what is pleaded therein is a failure to
agree
on the parameters of the determination of fair value by the auditors,
the question that then arises, to put it colloquially,
is “so
what?”
15.
So what, if
the parties did not agree the parameters of the determination of fair
value by the auditors?
16.
It is not
axiomatic that if the parties did not agree on the parameters of the
determination of fair value by the auditors, the
agreement is void
for vagueness.
17.
Whether the
failure of the parties to agree the parameters of the determination
of fair value by the auditors renders the agreement
void for
vagueness cannot be an issue detached from the rest of the pleadings.
The remaining allegations in the amended particulars
of claim must be
considered as that would inform the issue whether the failure of the
parties to agree the parameters of the determination
of fair value by
the auditors renders the agreement void for vagueness
18.
And one of
those allegations is that the auditors
did
determine fair value, and that they did so in an amount of R7, 765,
949.52. The plaintiffs go further and attach a copy of that
valuation
to their amended particulars of claim as “POC3”.
19.
The
auditors having determined fair value, and in the absence of the
plaintiffs challenging that fair value determination in their
particulars of claim, the purchase price for the shares has been
determined. And that determination is in accordance with the oral
agreement as pleaded by the plaintiffs, namely that the auditors
determine the price. It is trite that the parties can delegate
to a
third party the responsibility of fixing certain terms, including
price
(Southernport
Developments (Pty) Ltd v Transnet Ltd
2005 (2) SA 202
(SCA) at 206H).
20.
Should the
plaintiffs wish to contend that the auditors’ fair value
determination, as pleaded by them, is flawed for some
or other
reason, then they must so plead. On the present pleadings, the
plaintiffs do not so plead. Should the plaintiffs so plead,
the issue
may arise whether the basis they pleaded for vitiating the fair value
determination is sustainable, whether on exception
or at trial, as
the case may be. But as that has not been pleaded, the court need not
now make a determination in relation thereto.
21.
The
plaintiffs submitted in argument that what they wanted determined at
trial is whether a sale agreement that contains a clause
referring
the price determination to a third party, absent agreement on those
parameters described in paragraph 26.2 of their amended
particulars
of claim, is void for vagueness. The plaintiffs further submitted
that such a determination should not be made at exception
stage as
evidence may be lead, especially as the relevant sale agreement was
oral, that may impact upon that determination.
22.
The
difficulty with this submission is that it calls for decision on an
issue that does not arise on the plaintiff’s pleadings
as they
presently stand. Because a fair value determination has been made by
the auditors, and has been pleaded, there is certainty
as to the
purchase price – it is R7, 765, 949.62, as pleaded in paragraph
24.3 of the amended particulars of claim. And so
there is no scope
for contending that the oral sale agreement is void for vagueness. An
essential term, the purchase price, has
been determined.
23.
Absent a
properly pleaded challenge to the pleaded fair value determination,
that fair value determination stands.
24.
Should the
plaintiffs wish to challenge the fair value determination, such as on
the basis that it was made without there being
certain agreed
parameters in place, then that is what they should plead, thereby
squarely placing in issue the validity of the
fair value
determination, and so the determination of the purchase price. The
plaintiffs would also then have to place in issue
whether the pleaded
parameters are necessary, on the facts of this matter, for there to
be a fair value determination. But in such
instance, the latter issue
will be with reference to a pleaded challenge to the validity of the
fair price determination and not
in a vacuum detached from the rest
of the pleadings.
25.
By way of
example, perhaps it may be, without making any finding, that if a
dispute arose as to the auditor’s determination,
and no
agreement had been reached by the parties on what was to happen in
that instance (as pleaded in paragraph 26.2.3), that
sufficient
uncertainty may arise as a consequence that the agreement is rendered
void for vagueness. But if no dispute arose in
relation to the
auditor’s determination, then it would be of no consequence
that the parties did not agree on what would
happen if there was such
a dispute. For the failure to have agreed on what would happen if
there was disagreement on the auditor’s
determination to be
relevant, then such a failure to disagree would have to be pleaded,
and then as a basis for vitiating the auditor’s
fair price
determination.
26.
The
plaintiffs referred me to the decisions of
Letaba
Sawmills (Edms) Bpk v Majovi (Edms) Bpk
[1992] ZASCA 195
;
1993 (1) SA 768
(A) and
Southernport
above.
But in my view these cases do not support the plaintiffs in their
propositions.
27.
Southernport
at paragraph 7 reiterates
the long accepted principle that parties to an agreement may delegate
to a third party the responsibility
of fixing certain terms. And that
it is precisely what the plaintiffs have pleaded: the parties agreed
to delegate the responsibility
of determining the purchase price of
the shares to the auditors as a third party.
28.
Neither
Letaba
Sawmills
nor
Southernport
are authority for a general proposition that if the determination of
an essential contractual term is delegated to a third
party
unbounded by parameters that such delegation is bad and so renders
the agreement void for vagueness. The plaintiff did not
refer to any
authority in support of such a proposition. Rather,
Letaba
Sawmills
appears to be the contrary. In that matter the Appellate Division
found at 774A that if the determination of rental was delegated
to an
arbitrator, that delegation would be good even if untrammelled by any
parameters as to how that rental was to be determined
by the
arbitrator.
29.
This is not
to say that in all instances a delegation untrammelled by any
parameters would be free of difficulty. Such a delegation
may,
depending on the facts, result in the determination of the essential
term being vitiated and so result in the relevant agreement
being
void for vagueness. But, as described above, the plaintiffs on their
present particulars of claim do not challenge the auditor’s
fair value determination or make any averment that would render any
of the pleaded failures to agree in paragraph 26.2 relevant
.
30.
In any
event, it is not for this court, on the present pleadings, to decide
as a matter of law whether the delegation of a determination
of an
essential contractual term to a third party unbounded by parameters
is bad and so renders the agreement void for vagueness.
For the
reasons as stated above, that decision does not now arise for
consideration. Should the plaintiffs amend their particulars
of claim
to render such a decision relevant, it may be that such a decision is
best be made at trial, rather than on exception,
as the plaintiffs
contend, but that is not something that should, and can, be decided
by this court at this stage on the present
pleadings.
31.
I am
comforted that I am not making a decision at exception stage on
whether the oral agreement is void for vagueness because of
what is
pleaded in paragraph 26.2. Our courts are reluctant to decide whether
an agreement is void for vagueness on exception (
Lewis
v Oneanate (Pty) Limited
[1992] ZASCA 174
;
1992
(4) SA 811
(A) at 818F to 819A). Rather, my finding is that such
issue is not relevant on the pleadings as they stand, and the first
defendant would be prejudiced by having to plead to an issue that is
not relevant.
32.
In the
circumstances, the plaintiffs’ amended particulars of claim
lack averments that are necessary to sustain an action
rendering the
oral sale agreement void for vagueness on the basis as pleaded in
paragraph 26.2.
33.
The first
defendant’s first exception is well-taken, and is to be upheld.
The
second exception
34.
The
plaintiffs plead that in their amended particulars of claim that:
“
24.3 The
auditors of RMS and Akata inter alia determined the fair value of the
shares to be R7,765,949.52 with a copy of the valuation
annexed as
“POC3”.
35.
The first
defendant as excipient raises the ground of complaint that if regard
is had to the document annexed as “POC3”
to the amended
particulars of claim, it is addressed to an entity Akata Group (Pty)
Limited, it does not purport to set out a valuation
of the shares in
RMS and/or Akata and that the sum of R7,765,949.52 appears nowhere in
that document. So, the first defendant complains,
no cause of action
is made out.
36.
To restate
the first defendant’s ground of complaint on a conceptual
basis, the document annexed as “POC3” does
not support,
and in fact conflicts, with the plaintiff’s averment that it is
the determination by the auditors of fair value
pursuant to the oral
agreement.
37.
The
plaintiffs’ counsel readily, and justifiably, conceded that
“POC3” did suffer from various deficiencies. The
submission however continued that “POC3” can be
disregarded as surplusage, and in any event can be explained in
evidence
at trial.
38.
As to the
submission that “POC3” can be disregarded as surplusage,
I disagree. Whatever is to be made of “POC3”,
that is the
document that the plaintiffs, for good or for bad, have elected to
attach to their amended particulars of claim and
which is pleaded as
a copy of the valuation. Whilst it might be that such valuation can
be explained in evidence in due course
at trial, in respect of which
I express no view, that does not render the document surplusage.
39.
But is does
not follow that if the document is not to be disregarded as
surplusage that the second exception is well-taken by the
first
defendant.
40.
Whether the
document annexed as “POC3” as the valuation is
sustainable as a third-party determination of the fair value
of the
shares, whether it is compliant with whatever may be required of a
determination in terms of the oral agreement or even
whether it is a
valuation at all is not something to be decided on exception. The
plaintiffs have chosen to assert that that document
is the valuation.
This might have consequences for the plaintiffs down the line as they
may be confined to this valuation, warts
and all. Again, no
determination need be made now by this court on that aspect.
41.
In
Small
v Herbert
1914
CPD 273
the court on appeal from the magistrate’s court upheld
an exception taken to a summons as vague and embarrassing and
disclosing
no cause of action where the appeal court found that a
document annexed to the summons was “
absolutely
meaningless
”.
The approach taken by the appeal court at page 275 was to take the
summons, with its allegations, and the document itself,
for the
purpose of construction and then ascertain whether by any possible
mode of interpretation the document could be said what
it was alleged
to be in the summons. On the other hand, if a document was capable of
an interpretation that corresponded with what
was said in the
summons, then it would be open for the parties to proceed to trial to
elucidate the document by evidence. In a
similar vein, if the
document is capable of more than one interpretation, and if on one of
these interpretations is alleged
in the summons, the summons is not
excipiable as the meaning of the document itself may be put in issue
on the pleadings for decision
at the trial, and extrinsic evidence
adduced to assist in the interpretative exercise.
42.
I do not
read “POC3” to be “
absolutely
meaningless”
,
notwithstanding its deficiencies. Upon a generous reading of the
document, which approach I am required to adopt at exception
stage,
the document might constitute a determination of the fair market
value of the shares.
43.
By way of
example, and without making any definitive finding, in giving the
document a benevolent reading, and disregarding who
is reflected in
the document as the shareholders of RMS and Akata or as the addressee
of the document (both which may in any event
be irrelevant to the
fair value determination), if 100% of the shares in the two companies
is valued at R15,227,352, then
51% of those shares would equate
to R7,765,949.52, which is the amount pleaded in paragraph 24.3 of
the particulars of claim as
the fair market value of the shares.
44.
What is
required is an interpretation of “POC3”, which is best
done after hearing evidence at trial and where the possibility
exists
that evidence may be led to supplement or explain what is set out in
“POC3”. The first defendant did not submit
that it would
be improper for such evidence to be led and considered by a trial
court, such through the operation of the parole
evidence rule, which
would be applicable to an agreement that is intended to be the sole
memorial of the agreement between the
parties, and not to the
valuation, at least in the manner as presently pleaded.
45.
It is also
not clear what prejudice the first defendant will suffer in having to
plead to paragraph 24.3, containing as it does
the averment that a
copy of the auditor’s valuation is annexed as “POC3”.
Should the first defendant wish to
deny that “POC3” is
the valuation, he can do so. Should the first defendant wish to admit
that “POC3” is
the valuation, he can do so. In the latter
event, the first defendant can in addition plead, should he wish to
so, that the
valuation is bad for one or more reasons, and that
he is not bound the valuation.
46.
As stated,
it may be that the plaintiffs in so pleading that the valuation is
that as reflected in “POC3” may be limiting
the scope for
them to go beyond that document at trial. But that is the plaintiffs’
choice of pleading, and in respect of
which I need not now make an
definitive finding.
47.
It is also
so that to the extent necessary the first defendant can seek trial
particulars in due course to clarify any uncertainty
that he may have
as to the interaction between the averment in paragraph 24.3 of the
amended particulars of claim and the document
annexed as “POC3”.
48.
I therefore
conclude that the second exception is not well-taken and is to be
dismissed.
49.
For the
purposes of taxation of costs and in my discretion, an equal
allocation is to be made in relation to the time spent in the
opposed
hearing on 6 August 2020 in relation to each exception.
50.
Accordingly,
an order is made as follows:
50.1.
the first
defendant’s first exception is upheld, with costs, such costs
to be paid jointly and severally by each of the Klein
Gescheft Trust
and the Frieheit Trust as represented by the plaintiffs;
50.2.
the
following portions of the plaintiffs’ amended particulars of
claim are struck out in relation to claim 1: (a) paragraphs
25 and
26; (b) that part of prayer (i), which reads “
an
order declaring the agreement concluded on 27 September 2017 to be
void, alternatively”
;
50.3.
the
plaintiffs are granted leave to amend their particulars of claim
within 20 (twenty) days of date of this order;
50.4.
the first
defendant’s second exception is dismissed, with costs.
______________________
Gilbert AJ
Date
of hearing: 6 August 2020
Date of judgment: 12
August 2020
For
the Excipient (First Defendant): K Van Huyssteen (Attorney)
Instructed
by: Fluxmans Inc
For
the Plaintiffs: A J Daniels SC
Instructed
by: Richter Attorneys