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2020
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[2020] ZAGPJHC 222
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Aarifah Security Services CC v Jakoita Properties (Pty) Ltd and Others (12994/18) [2020] ZAGPJHC 222; [2020] 4 All SA 730 (GJ); 2021 (5) SA 207 (GJ) (21 September 2020)
Links to summary
IN
THE HIGH COURT OF SOUTH AFRICA
GAUTENG
LOCAL DIVISION, JOHANNESBURG
CASE
NO: 12994/18
In
the matter between:
AARIFAH
SECURITY SERVICES CC
APPLICANT
and
JAKOITA
PROPERTIES (PTY) LTD
FIRST RESPONDENT
NU-LINE
ELEVATOR PRODUCTS (PTY) LTD
SECOND RESPONDENT
REGISTRAR
OF DEEDS JOHANNESBURG
THIRD RESPONDENT
NU-LINE
PROPERTIES (PTY) LTD
FOURTH RESPONDENT
JUDGMENT
[HEARD
REMOTELY VIA ZOOM PLATFORM 1 SEPTEMBER 2020]
SNYCKERS
AJ:
INTRODUCTION
1.
This application concerns the validity of an
asserted exercise of a pre-emptive right, or right of first refusal,
in respect of
the purchase of immovable property. It is in particular
concerned with the formal manner in which such a right is to be
exercised,
and when it can be said to have been exercised.
2.
By the time the matter came before me in motion
court, there were two contending agreements of sale concluded by the
first respondent
(Jakoita) as the seller of commercial immovable
property.
3.
One agreement of sale was a deed executed in
December 2017 with the second respondent (Nu-Line). There is a
dispute between the
parties whether the purchaser in the Nu-Line
agreement was the second respondent or the fourth respondent
(represented by the second).
This dispute was not addressed before me
and was not material to the issue I was called upon to decide. It may
or may not become
important in the outstanding disputes between the
parties. I make no finding in this regard. I refer to the purchaser
and the second
and fourth respondents as “Nu-Line”,
agnostic as to the question which of them is the purchaser to the
December 2017
deed.
4.
The other agreement was one executed in April
2018 with the applicant (Aarifah) as purchaser. This agreement
appears to have been
concluded between the deposing of the first
answering affidavit of Jakoita in April 2018 and the deposing of the
second answering
affidavit of Jakoita in May 2018, although it is not
referred to in the second answering affidavit. It is referred to in,
and attached
to, Aarifah’s replying affidavit.
5.
The validity of the April 2018 agreement
(referred to as ZK26), and the full circumstances of its execution,
are not before me.
This is a curiosity that arises from the
procedural route the application took. More about this below.
6.
At issue
before me was whether Aarifah had validly exercised a right of
pre-emption that had been conferred upon it in a lease agreement
relating to a portion of the property at issue, in relation to which
Aarifah was the tenant and Jakoita the landlord. The outcome
of this
dispute would apparently determine the consequences for Aarifah,
Jakoita and Nu-Line in relation to their contending agreements,
given
the doctrine
qui
prior est in tempore potior est in iure.
[1]
FACTUAL
CONTEXT AND PROCEDURAL HISTORY
7.
Jakoita, as owner of a commercial building,
marketed it for sale in 2017. Aarifah was a potential purchaser but
ended up executing
a lease as tenant of a portion of the building.
This was in September 2017. The lease was to run from 1 October 2017
to 1 October
2020. Clause 18 of the lease contained the following
right of pre-emption:
“
Should the
landlord want to sell the property 67 Voortrekker Edenvale the tenant
will have first option to buy and will be given
48 hrs to respond”.
8.
In December 2017, Jakoita executed a deed of sale
as seller with Nu-Line as purchaser. The purchase price was
R2,150,000 (two million
one hundred and fifty thousand rand). Agent’s
commission of R150,000 was said to be payable by the seller. A
deposit of R215,000
was payable and the period within which it was to
be paid left blank. The balance of R1,935,000 was payable within
fifteen days
of signature. Occupational rental by the party enjoying
possession without transfer in the amount of R15,000 per month was
agreed.
There was also a clause to the effect that “
Seller
to confirm if there are any suspensive conditions in the title
deeds”.
A clause that made the sale
conditional upon the vacation of the property by the existing tenant
had been deleted. The deed expressly
recorded that the property was
being let to tenants at R6,500 per month (this referred to Aarifah’s
lease).
9.
On 16 January 2018, Mr Robert Pereira (“Pereira”)
of Jakoita sent an email to Mr Zeyn Khan (“Khan”) of
Aarifah.
Khan describes himself as “
a
member
” of Aarifah. He was clearly the
principal, but it is not stated whether he was the sole or even the
main member as far as
members’ interest was concerned. This is
relevant to the dispute about the identity of the purchaser in the
Aarifah offer,
something considered below. Pereira and Khan were the
individuals acting as between Aarifah and Jakoita.
10.
The email of 16 January advised Khan of the
“offer” from Nu-Line (it was referred to as an OTP). The
Nu-Line OTP was
attached to the email. The email contained the
following, after confirming a discussion “yesterday”
about having received
this “offer” during the December
holidays:
“
I will further
request from all parties for a report on the buyers process and
therefor ability to proceed successfully with the
purchase as stated
in the OTP and will forward same to you timeously.
The rental agreement
entered into with Jakoita Properties does however allow you first
option to buy, as per clause 18. Of the lease
agreement.
[
sic]
This letter serves to inform you as per
clause 18 you may have a 48 hour period to indicate your intentions.”
11.
The email ended with “
Kind
Regards Rob Pereira”.
12.
Khan responded by email on 16 January 2018:
“
Thank you for
the time to meet with me yesterday to discuss the offer to purchase
that you have received for 67 Voortrekker Street,
Edenvale and our
options available.
As per our current
lease and the clause that we have inserted, it is admirable that you
have honoured this and allowed me the opportunity
to have the first
option to respond accordingly. This mail serves as confirmation that
l will definitely be willing to put forward
an offer and sign an OTP
in this regard to purchase the property.”
13.
The email ends off after “Kind Regards”
with a standard email “signature” of “
Mr
Zeyn Khan”
and some telephone numbers,
a web address, and an email address, followed by the logo “
Ewing
Security
”.
14.
The respective versions of Khan and Pereira on
the precise sequence of events surrounding the discussions and
submission of offers
from Khan are unfortunately somewhat obscure. In
paragraph 15 of the founding affidavit, Khan says the following:
“
Pursuant to the
e-mails and further discussions between Rob Pereira and myself,
representing the Applicant and the First Respondent
respectively, the
First Respondent requested me to put in an offer to purchase on the
same terms and conditions as per ZK3
[
the
Nu-Line OTP
]
save that
I should include a purchase price of R2 million and pay the
agents commission.”
15.
Khan proceeds to allege that he duly
completed an OTP, attached as “ZK4”, and sent it to
Pereira. He says he signed
it on 20 January 2018, and then proceeds
to refer to an email received from Pereira on 23 January 2018 to the
following effect:
Good Morning Zeyn,
As discussed I have
met with attorney yesterday and put forward all you docs and mine
[sic]
.
I am sorry but I am
still waiting for their reply. Please see attached. Maybe let's give
them till end then f business and then
get together tomorrow to
finalize everything.
We can't all be up in
air for this long. My apologies from r the delays
[sic]
16.
The obscurity enters because Pereira denies the
allegations in paragraph 15 of the founding affidavit, points out
that the OTP “ZK4”
was signed only on 29 January 2018,
and says it was emailed to him for the first time on 29 January 2018.
What “
all you docs
”
referred to in the 23 January email would then be was left obscure.
Be that as it may, there is no denial in reply that
the OTP “ZK4”
was first sent to Pereira on 29 January 2018, and this appeared to be
common cause before me.
17.
And so, on 29 January 2018, Khan sent a copy of
the OTP “ZK4” to Pereira by email, saying “
Please
find attached OTP as per our discussion this morning. Await your
soonest response in moving forward.”
18.
The OTP “ZK4” was a standard form
“
offer to purchase which constitutes a
deed of sale”
, on Hortors stationery,
signed by Khan. It offered to purchase the property for a purchase
price of R2m. It designated the purchaser
as “
Mr
Zeyn Khan 7803235155082 c/o Aarifah Security Services CC.”
It
designated Jakoita, properly described, as the seller. It described
the property and provided:
“
This offer
shall become a final and binding sale upon acceptance hereof by the
Seller on or before
28
th
February 2018
[
date
filled in in ink
] on the ________
Acceptance of this offer by the Seller shall be effected by the
Seller signing one copy of this agreement and,
before the date and
time mentioned above, either handing such copy to the Purchaser or
his authorised representative or else posting
such copy to the
Purchaser by prepaid registered post addressed to him at the address
appearing beneath his name at the commencement
hereof.”
19.
In this ZK4 OTP, a cash amount of R250,000 was
made payable on or before 10 February 2018 to be held in trust in an
interest bearing
account to the benefit of the Purchaser until
registration of transfer. The balance of R1,750,000 was to be paid on
registration,
to be secured by approved bank guarantee on or before
28 February 2018. Occupational rental was stated as “
to
be agreed upon”.
The term dealing with
agent’s commission was marked “N/A”. Under special
conditions, there was what appeared to
be an incoherent contracted
echo of the condition found in the Nu-Line OTP: “
N.B.
Seller to confirm if there are any suspensive deeds.”
20.
To this, Pereira replied on the 30
th
of January, also by email:
“
I have received
your OTP yesterday afternoon. I have taken a look and all seems to be
in line.
I will contact Cinzia
this morning to get feedback.”
21.
The reference to Cinzia was to Cinzia Bocchiola
of Jakoita’s conveyancing attorneys, Lazzara Leicher.
22.
Still on 30 January 2018, Pereira forwarded to
Khan an email received from the conveyancing attorneys. In this
email, various differences
between the ZK4 OTP and the Nu-Line OTP
were tabulated. The different purchase prices were stated. One was
told that the deposit
under the “existing offer” was
R215,000 payable within two days and that “
this
amount has been paid”,
whereas the
deposit under the “
offer from tenant”
was R250,000 payable on 10 February and “
this
amount remains payable”.
One was
referred to the balance of R1,935,000 being due in 15 days under the
existing offer, and “
this amount has
been paid”
and that under the tenant’s
offer the balance of R1,750,000 was payable by 28 February and
remained outstanding. The email
also stated that the commission was
R150,000 under the existing offer and R13,000 “
commission
to rental agent as per lease”
under the
tenant’s offer. The email from the attorneys asked for further
instructions.
23.
It may be noted that the reference to a deposit
being payable within two days in the Nu-Line OTP appeared to be
incorrect. The period
when the deposit was to be paid was left blank
in that deed (presumably as it had already been paid on signature).
24.
The founding affidavit does not indicate what
Khan’s response was to the last email of 30 January, or what,
if anything, happened
before Pereira sent Khan another email on 6
February.
25.
In the main answering affidavit deposed to by
Pereira (there was a shorter answer apparently filed in response to
the interdictory
relief urgently sought), Pereira states that, after
Khan sent him the email on 16 January intimating that an offer would
be forthcoming,
and no offer was forthcoming in the 48 hour period,
Jakoita “
thereafter accepted the second
respondent’s offer to purchase and instructed attorneys Lazzara
Leicher to attend to the transfer…”.
The
affidavit next deals with receipt of the ZK4 OTP on 29 January,
but before doing so says “
The further
discussions which took place between myself and Khan were not in
terms of the provisions of clause 18.”
26.
It is not clear what Pereira means by his
statement that Jakoita “
thereafter”
accepted the Nu-Line offer – it had
already been accepted in December 2017.
27.
Be that as it may, Pereira states that, when he
received the ZK4 OTP from Khan on 29 January, he advised Khan that he
had already
accepted the Nu-Line offer. Pereira then gives the
following account of what apparently occurred around 30 January:
“
I duly advised
the Applicant that I would not be accepting its offer to purchase. It
was at this point in time that Mr Kahn telephonically
contacted me
and proposed that I accept his lesser offer and he would settle that
balance of the monies in cash so as to avoid
paying a higher transfer
duty to SARS. I rejected his verbal proposal outright for reasons
which should be self-evident. Not only
would this expose me
contractually but I would also be a party to a fraud on the South
African Revenue Services ("SARS").”
28.
For his part, Khan’s version resumes on 6
February 2018, with an email from Pereira, which, according to Khan,
“
raised the issue of commission”.
The 6 February email reads:
“
Sorry I did not
get back to you yesterday regarding your offer.
As it turns out on the
lease agreement Mike from Property Coza has added a clause in our
lease agreement that states Property coza
must get a 7% commission if
I am to take your offer.
That 7% I think puts
us out of touch with what we are trying to achieve. Property coza has
already been in contact with the people
involved in my first offer.
Zeyn before I sit in a
position which is not favorable for [
sic
] I must inform you
that I must take the first offer from my line.
I will be informing
Cinzia to continue with the transfer and continue with my previous
offer.
I hope this mail finds
you well. I hope you understand.”
29.
Where precisely the reference to R13,000
commission in terms of the lease, mentioned in the attorneys’
comparison, came from,
was not made clear. It seems that the
impression that an offer from Aarifah exercising the clause 18 right
would not entail agent’s
commission was a mistake, as the lease
provided for commission for 7% payable in the event the tenant were
to purchase the property.
Bear in mind that Khan’s allegations
about agreeing to pay R2m and “paying the commission”
were denied by Pereira.
30.
In response to this email of 6 February, Khan
sent an email to Pereira on the same day, stating:
“
My apologies
but I do not fully understand what you are referring to below?
If Mike
(Property.co,za) has included this as a condition so be it and this
will have to be paid over by me in order to match the
current offer
on the table and I will need to adjust my OTP accordingly stating
this. This as per my calculation amounts to R140k.
Be that as it may, you
can decide in which way you would like to proceed.”
31.
To this Pereira replied, also on 6 February:
“
I have made my
intentions clear I would like you to purchase. I have signed and I am
legally obligated to the other offer unless
you can bring better OTP
then I have no option.
I am currently in
India but I will send rnario to mohamed the morning then we talk
through mario please”
32.
The reference to Mohamed was a reference to
Mohamed Randera of Aarifah’s attorneys of record. It is not
clear from the papers
who “Mario” was.
33.
Khan alleges that after the 6 February exchanges,
“
Further oral
discussions and meetings ensued between the First Respondent and
myself in which the First Respondent again undertook
to sign the
offer, ZK4”.
34.
This is denied by Pereira, who says:
“
It was at this
point in time that the Applicant telephonically contacted me and
advised me that he did not want to revise his offer
to purchase and
that I should accept same as is so that he could avoid paying
transfer duties to SARS on the full amount and use
cash to settle the
shortfall. As I would never be a party to any attempt to defraud any
party, let alone SARS, I rejected the offer
and advised the Applicant
that I was proceeding with the Second Respondent's offer to purchase
which I had already accepted.”
35.
In the replying affidavit, Khan denies the
allegations relating to cash and SARS and states the following:
“
I deny that I
offered to pay the amount in cash as stated and further that I
offered to pay the amount to avoid transfer duty or
to defraud the
South African Revenue Service (SARS). I simply offered to pay the
amount in the lease in respect of commissions.
The clause in the
lease is the clause pursuant to which commissions are payable. The
fact that I took this attitude is apparent
from the email sent by me
on the 6
th
February 2018.”
36.
This particular factual dispute seems incapable
of resolution on the papers, at least not in favour of an applicant.
It does seem
clear that no further OTP, including any commission
amount payable, was ever submitted (at least until ZK26 was executed
in April
2018).
37.
Attorneys stepped in in March 2018. On 15 March
2018, Attorney Mohamed Randera sent a letter of demand to Jakoita. It
recorded the
lease, the clause 18 right, and the fact that Aarifah
had been advised by Jakoita that it had sold the property to a third
party
and was offered the 48 hour opportunity to exercise its right
of pre-emption. The letter stated that “
our
client duly exercised its pre-emptive right to purchase the property
within the stipulated time frame.”
It
continued to assert that Aarifah’s right superseded that of the
third party, and to demand an undertaking that steps would
not be
taken to proceed with transfer to Nu-Line, threatening urgent court
proceedings if such steps were taken. A letter was also
directed at
Nu-Line, putting it on notice.
38.
Correspondence ensued with attorneys for Nu-Line,
who demanded proof and detail as to the timeous exercise of the
pre-emptive right;
a response was furnished simply asserting timeous
exercise.
39.
Jakoita and Nu-Line then set about proceeding to
instruct transfer when proceedings were launched urgently, on 3 April
2018, with
Part A and Part B relief. Part A was interdictory. Part B
was final. Part B sought an order declaring that a sale had been
concluded
between Aarifah and Jakoita on the same terms as the
Nu-Line OTP, and seeking transfer under it, alternatively,
cancellation of
the Nu-Line OTP and an interdict against any sale of
the property without compliance with clause 18.
40.
The Part A interdictory relief was granted on 10
April 2018, with costs in the cause of Part B.
41.
Part B proceeded, but spawned an application to
amend the relief sought and an application to strike. The amendment
sought to delete
the declarator of a deemed sale and now sought
transfer in terms of the agreement concluded between Jakoita and
Aarifah in April
2018. The application to strike concerned the
allegations relating to this second sale. In the meantime, the fourth
respondent
had been joined, given the contention that it was the
relevant Nu-Line purchaser.
42.
The application to amend the relief sought was
granted and the application to strike was dismissed. The respondents
were afforded
the opportunity to file further affidavits dealing with
the case based on the agreement ZK26 concluded in April 2018. Aarifah
was
ordered to pay the costs of the Nu-Line respondents in the
interlocutory application.
43.
The following orders formed part of the order of
18 October 2019 in the interlocutory application:
“
4. The filing
of further affidavits in the application are suspended pending
determination of the separated issue referred to infra.
5. The issue on the
papers, whether in January 2018 the Applicant validly exercised its
right of pre-emption in terms of clause
18 of the lease agreement, is
separated from and will be heard and determined prior to the
remaining issues in the matter.”
44.
What came before me was only this “issue on
the papers” that had been separated for prior determination in
the order
of 18 October 2019.
45.
As will appear below from the way the argument
developed, this created difficulties in properly adjudicating this
issue on the papers,
blind to the issues and potential issues
revolving around ZK26 in relation to which further affidavits are
still to be filed and
another determination might yet eventuate.
46.
The costs of the interlocutory application as
between Aarifah and Jakoita were reserved for the court determining
the separated
application. Counsel were agreed that, given that the
merits of the strike out and amendment were not before me, and given
that
the merits of the new case pursuant to the amendment, based on
ZK26, were also not before me, I was not in a position to determine
the costs of the interlocutory application as between Aarifah and
Jakoita. They were
ad idem
that such costs should be “
in the
cause
.” I assumed from this that they
meant in the cause of this application, rather than in the cause of
the application potentially
to be determined on ZK26. Particularly as
the further issues might become academic depending on the outcome of
this application,
it would be perilous to leave any cost orders
hanging.
CONTENDING
POSITIONS AND ISSUES
47.
It was Aarifah’s case in the papers, and at
least initially in argument before me, that the email communication
from Khan
to Pereira of 16 January 2018 constituted the exercise by
Aarifah of its right of pre-emption, upon the terms of the Nu-Line
OTP.
48.
Various contentions were advanced against this by
Jakoita and Nu-Line.
49.
The main theme was that Aarifah had not exercised
its right under clause 18 within 48 hours as required. There were
several sub-themes
to this.
50.
One
contention can be dismissed rather summarily. Jakoita argued that the
48 hour period had already commenced when the lease was
executed, as
it was clear from the papers that Jakoita was at that time “desiring
to sell” the property. I shall not
waste too much time and ink
on dealing with this contention, save to say that to me the wording
of clause 18 clearly contemplated
an eventuality that was still to
arise and some or other form of notification on the part of Jakoita
to Aarifah of its desire to
sell that would trigger the 48 hour
period. Furthermore, the conduct of the parties in implementing the
clause left little room
for any interpretation that the period of 48
hours commenced immediately upon the execution of the lease, a
consideration that
has lately assumed more prominent significance in
the construction of contracts than in years gone by.
[2]
In short, clause 18 would have looked very different if it had been
seriously intended to entail a need to exercise a right of
first
refusal within 48 hours of the execution of the lease in September
2017.
51.
More fundamentally, it was contended that the
email of 16 January suffered from various fatal defects as a
candidate for the exercise
of the clause 18 right. The following main
points were raised by the respondents:
51.1.
The email communication of 16 January 2018 did
not purport to make, or to accept, a clear offer on the terms of the
Nu-Line OTP;
at most, it indicated a willingness to make an offer,
which was to follow.
51.2.
The email communication of 16 January 2018 in any
event could not be a valid exercise of a right of pre-emption with
respect to
the sale of land, as it failed to comply with the
formalities of the
Alienation of Land Act 68 of 1981
.
51.3.
The offer that then did follow, ZK4, transmitted
on 29 January 2018, was made long after the expiry of the 48 hour
period.
51.4.
The offer that was made, namely ZK4, was made
designating Khan, not Aarifah, as purchaser.
51.5.
The offer that was made, ZK4, was on terms more
favourable to Aarifah than the Nu-Line OTP – especially as it
was made for
an amount of R150,000 less by way of purchase price (or,
if the equivalent value in the pocket of Jakoita were to be
considered,
without indemnifying Jakoita against agent’s
commission, which in the case of Nu-Line was R150,000 and in the case
of Aarifah
was R140,000). There were also the other differences in
relation to payment of the deposit and balance tabulated by the
attorneys
in the 30 January email (and the difference in respect of
occupational interest).
51.6.
Despite a clear demand from Jakoita on 6 February
for a “better OTP” with reference to the matter of the
missing commission,
and despite an indication of a willingness to pay
commission from Aarifah, there was never another offer submitted by
Aarifah that
made provision for commission.
51.7.
Aarifah must in any event be taken to have
abandoned or waived its pre-emptive right, to the extent it was still
extant, by its
responses to the emails of 6 February, in that –
51.7.1.
in response to the email of 15:08 advising that
Jakoita was constrained to proceed with the Nu-Line offer in light of
the commission
situation, Aarifah responded that it was willing to
pay the 7% commission but “[b]
e that as
it may, you can decide in which way you would like to proceed”;
and
51.7.2.
when this elicited the email, still on 6 February
2020, insisting that “
I have signed and
I am legally obligated to the other offer unless you can bring better
OTP then I have no option”
, no better
OTP was forthcoming; instead, the attorneys’ letter of 16 March
was sent, insisting that the right had been validly
exercised.
51.8.
Whatever the status of the interactions between
Aarifah and Jakoita from 29 January 2018 onwards, culminating in the
apparent agreement
executed in April, these were negotiations to
achieve a competing sale with that of Nu-Line, and could not be seen
as ways of exercising
the right of first refusal or pre-emption in
clause 18.
EXCURSUS
ON PRE-EMPTIVE RIGHTS AND FORMALITIES IN THE CONTEXT OF SALES OF
IMMOVABLE PROPERTY
52.
Pre-emptive rights, or rights of first refusal,
come in many shapes and forms. A common variant is the bland, vague
and standard
unelaborated right, mainly negative in character, to
prohibit the grantor of the right from selling the object of the
right to
a third party without first having given the grantee (or
holder) of the right the opportunity to purchase on terms that are no
less favourable than the terms on which the grantor seeks to sell to
the third party. I put several terms here as neutrally as possible,
given the many interesting questions that have arisen around their
precise import over the years.
53.
The first
important aspect of a right of pre-emption, as opposed to an option
properly so-called, is that, unlike an option, it
is an enforceable
right with respect to a sale despite the absence of any determination
of the price or terms on which it is to
be exercised. It is this that
makes a right of pre-emption in the bland and general terms of clause
18 a perfectly valid and enforceable
right, whereas, had it purported
to be an option, flowering into a sale upon its mere exercise without
more, it would have been
void for not containing the
essentialia
of a
contract of sale.
[3]
54.
The
primarily negative character of the right at issue has over the
decades given rise to several long-standing debates, that raged
in
the highest courts. In a series of decisions,
[4]
the nature of the right was extensively addressed. This included the
degree to which the holder’s remedies were purely negative
or
included positive remedies, and in particular, whether the holder
could compel the grantee to “make an offer” by
way of a
decree of specific performance of the “right to an offer”
entailed by the pre-emptive right, a proposition
that had found
favour with Ogilvie-Thompson JA, but was ultimately the object of
“
grave
doubt
”
(“
sterk
twyfel
”)
on the part of the majority decision in
Oryx
.
[5]
55.
In
Oryx
,
[6]
a case that concerned the right in the context of the sale of
movables (intangible shares), the seminal “stepping into the
shoes” remedy was established, as an endorsement by the then
highest court of the kind of positive right that the holder
did enjoy
– where a grantor, in violation of a right of pre-emption, sold
the object to a third party without allowing the
grantee the
opportunity first to buy, the grantee could, by a “
unilateral
declaration of will
”
(“
eensydige
wilsverklaring
”)
adopt the third party’s sale as if an offer had been made to it
on the terms of the third party’s sale.
56.
The effect
of
Oryx
was
addressed and explained in
Hirschowitz
v Moolman.
[7]
Hirschowitz
ultimately
decided a narrow question, namely whether the covenant that embodied
the pre-emptive right needed to comply with the
statutory formalities
of the sale in relation to which it was granted. This question was
answered in the affirmative in
Hirschowitz
.
In the process of doing so, Corbett JA for a unanimous court pointed
out that
Oryx
had
itself left open the question whether the remedy of a unilateral
declaration of will provided for in
Oryx
was
available in the context of agreements of sale that were subject to
bilateral statutory formalities, such as sales of immovable
property.
Although Corbett JA was prepared to assume that such a remedy was
capable of being exercised in respect of such agreements,
he did
express the following thoughts in this regard:
[8]
“
There
are certain difficulties. It is true that the appellant's [
holder
]
declaration of intent was written and signed by him. Even if this be
regarded as the acceptance of an offer, which by operation
of law was
deemed to be made to appellant when the option was granted to
Dorstfontein [
third
party]
,
it is arguable that what the Formalities Act requires (where the
contract consists of a separate offer and acceptance) is
an offer and
acceptance in the ordinary contractual sense, ie a written and signed
offer in fact (and not merely notionally) made
by one party and a
written and signed acceptance by the person to whom it was directed.
It is also true that first and second respondents
[
grantors]
signed
the written lease containing the option to Dorstfontein, but the
offer contained in this option was in fact made to
Dorstfontein and
not to the appellant. It is not necessary, however, to decide this
question for there is, in my opinion, a more
fundamental difficulty
confronting the appellant, viz the fact that the contract granting
the right of pre-emption was not signed
by one of the persons
against whom appellant seeks to enforce the right of pre-emption.”
57.
Two
decisions critical to the instant case followed on
Hirschowitz
.
They are the decision of Swain J in
Van
Aardt
[9]
and the
decision of the Constitutional Court in
Mokone
.
[10]
58.
Van Aardt
took up
Corbett JA’s misgivings set out above and held that for a valid
sale of immovable property to come about pursuant
to the purported
exercise of the
Oryx
remedy,
there needed to be both an offer and an acceptance, tailored to the
sale by the grantor to the holder, both complying with
the statutory
formalities.
59.
Mokone
overruled
the requirement established in
Hirschowitz
that
the covenant embodying the pre-emptive right, with respect to a sale
of land, had to comply with the formalities. However,
an important
part of the reason for this finding on the part of the majority was
that there was nothing that precluded the perfection
of the right,
including the exercise of the remedy contemplated in
Oryx
,
to be concluded by way of bilateral compliance with the
formalities:
[11]
[54]
Now, let us have a close look at that reasoning. The fundament of the
reasoning is that inexorably the holder of the right
of pre-emption
can become a purchaser in terms of the right only through means that
fall foul of the formalities. It is this that
gives rise to the
anomaly to which the court is referring. I do not see why —
upon the occurrence of the contingencies that
trigger an entitlement
to exercise the right — the holder cannot exercise it in a
manner that complies with the requisite formalities.
The holder
may simply make a signed written offer to purchase. If the grantor
accepts the offer in writing under signature, a sale
that meets the
formalities will come into being. If she or he does not, the holder
of the right may seek a declarator by a court
that she or he is
entitled to the exercise of the right and a mandamus requiring the
grantor to accept the offer in writing. If
the relief is warranted,
it must be granted. That is nothing more than holding the grantor to
the parties' agreement.
[55]
It may happen that the sale by the grantor to a third party may be in
terms that do not correspond with those in which the
right
of pre-emption was granted. The question arises as to whether
the written offer by the grantee must be in the terms
on which the
grantor sold to the third party or in those on which the right was
granted. That question was not argued before us.
I think it prudent
not to decide it.
[56] In
the event that the conduct of the grantor of the right of pre-emption
has culminated in the sale of land to a third
party, it seems
necessary to understand the import of the so-called Oryx
mechanism. This was expressed thus:
'In
the event that a seller concludes a contract of sale with a third
party in breach of a right of pre-emption, the [holder of
the right
of pre-emption] may, through a unilateral declaration of intent,
step into the position of the third party. A contract
of sale is then
deemed to have been between the seller and the holder of the right of
pre-emption.'
[57]
I see no reason in principle why the notion of the holder of the
right 'step[ping] into the position of the third party'
cannot
be achieved in a manner that does not bypass the requisite
formalities. That may be achieved either consensually or through
coercion by court. The idea of a 'unilateral declaration of intent'
is understandable in the circumstances. It is consonant with
the
notion that, subject to whatever the law may be held to be on
ordering or not ordering specific performance, the grantor of
the right is liable to coercion.”
60.
In my view, the effect of these decisions is that
the law, in the relevant respect, is now the following:
60.1.
One should distinguish the covenant embodying the
pre-emptive right, and acts that turn it into an agreement of sale
between the
grantor and the grantee.
60.2.
The covenant embodying the pre-emptive right,
even in respect of the sale of land, need not comply with the
formalities. It is binding
if it is proved as a contract deliberately
concluded, conferring a personal right.
60.3.
The only way in which the pre-emptive right can
become an agreement of sale between grantor and grantee is if both
execute it in
writing, in compliance with the formalities. There must
accordingly be an offer and an acceptance, both in writing and
signed.
60.4.
The holder may enforce its pre-emptive right by
submitting an offer that complies with the formalities if it were
accepted, and
compelling the grantor to countersign it, or having the
registrar or some other official authorised to countersign if the
grantor
fails to do so, in the event that the grantor fails to
countersign the holder’s offer.
61.
For present
purposes it is important to find that the current law after
Mokone
is that
the way the holder exercises the right of pre-emption in the context
of sales of land is by submitting a signed offer to
the grantor (on
terms no less favourable to the grantor than the contending offer, or
on whatever terms the right allows) that
complies with the
formalities. Further remedies then depend on whether the grantor
signs such offer or not. Should the grantor
decline to do so, the
holder cannot adopt the attitude that it is without more entitled to
transfer as if it has a sale –
it must first achieve the
completion of the sale by compelling the grantor to accept the offer
in conformity with the formalities.
This conclusion, apart from
arising from paragraph 54 of
Mokone,
appears
to me to flow also from
Van
Aardt
[12]
and from the endorsement of
Hartsrivier
[13]
in
Rogers
v Philips
,
[14]
the latter itself endorsed in the majority decision in
Mokone
.
[15]
APPLYING
THE PRINCIPLES TO THE FACTS
(a)
The 16 January email from Khan
62.
Counsel for Aarifah was constrained to concede
two propositions:
62.1.
Any offer made by Aarifah in exercising its
pre-emptive right had to comply with the formalities of the
Alienation of Land Act.
62.2.
Because
of
section 13(1) of the Electronic Communications and Transactions Act
(ECTA),
[16]
the email of 16
January 2018 could not be said to comply with the
Alienation of Land
Act.
63.
Section
13(1)
of ECTA requires a special designated electronic signature for
any document to comply with a statutory requirement that something
be
executed in writing. A “normal” signature, such as one
finds at the foot of an email, whilst it might suffice for
a
formality requiring a signature laid down in contract, cannot suffice
if the signature is required by statute.
[17]
More fundamentally, however,
sections 4(3)
and
4
(4) read with
Schedules 1 and 2 of ECTA make it clear that its provisions can in
any event not be employed to validate deeds of
sale under the
Alienation of Land Act.
[18
]
64.
On the
principles set out above, then, the principal submission of Aarifah,
that its 16 January 2018 email must be regarded as the
effective
exercise of its right of pre-emption, cannot be sustained. It matters
not, for purposes of this conclusion, whether the
email must be
tortured into an offer to purchase on the terms of the Nu-Line offer,
as contended for by Aarifah, despite its express
terms referring to
an intention to make an offer, followed by the offer ZK4, in
different terms, that expressed itself as an offer
that would be
accepted by the Seller in a certain way within a certain period.
[19]
65.
Nor does it matter for this conclusion whether,
as contended for by Jakoita, the offer
and the
written acceptance of the offer by Jakoita
had
to have occurred within the 48 hour period for Aarifah to have
exercised its pre-emptive right. I return to this submission
below.
66.
Without some fancy footwork, that would be the
end of the issue I was called upon to decide.
(b)
The Attorney’s letter of 16 March
2018
67.
There was, however, fancy footwork.
68.
Counsel for Aarifah submitted that, by the latest
on 16 March 2018, an offer complying with the formalities had been
made, in the
attorneys’ letter of demand of 16 March, signed in
the conventional fashion, asserting that Aarifah had exercised its
right.
69.
Jakoita and Nu-Line understandably objected that
this was not the case they were called upon to meet. Even the
separation order
framed the issue as whether the pre-emptive right
had been exercised in January 2018. Nevertheless, if a sustainable
case on this
basis was made out in the papers, it would deserve some
attention. For the time being, I assume in favour of Aarifah that it
was
open to it to advance this case in argument.
70.
I leave
aside the complication that the letter was scanned and emailed to
Jakoita, and that there was no proof of “submission”
to
Jakoita of an offer complying with the formalities.
[20]
If a holder of a pre-emptive right were to sign an offer within the
prescribed period for exercising the right, and then telephone
the
grantor to advise it of the offer, even of the fact that it was
signed, but the offer itself were not delivered or at least
despatched to the grantor within the relevant period, I have
difficulty seeing how this would amount to “making the offer”
that complied with the formalities within the period set for
exercise. It would seem to me that it would not. The tenor of the
judgments considered above would suggest that this would not suffice.
71.
Fundamentally, however, the 16 March letter was
sent long after the 48 hour period expired, if this period was
triggered by the
notification on 16 January 2018 that Jakoita had
received the “offer” (signed the deed of sale) from
Nu-Line. The same
would apply to ZK4, which, albeit signed in the
conventional way, was also scanned and emailed, but for the first
time on 29 January
2018.
72.
If clause 18 required Aarifah, in order to
exercise its right of pre-emption, to take the first step of making a
compliant written
offer within 48 hours, then, if the 48 hour period
commenced on 16 January, the 29 January offer and the 16 March letter
would
both be too late to serve as an exercise of the right.
73.
It is also highly artificial to regard the letter
as constituting an offer to purchase, made by the attorneys on behalf
of Aarifah,
with the requisite authority to do so, as required by the
Act. For one thing, this was the furthest thing from their
contemplation
or that of Aarifah. For another, what were the terms?
Was it the terms of the Nu-Line OTP? This is difficult to accept
given the
intervention of ZK4 and the email exchanges in February
about the commission. Was it ZK4, but with R140,000 added by way of
commission?
74.
And what is one to make of the not insignificant
problem that ZK4 designated Khan himself as the purchaser?
75.
These puzzles are a good illustration of the
social and legal purpose served by the principles established in the
cases set out
above – that the exercise of a pre-emptive right
in relation to the sale of land must be attended by the formalities
that
attend the sale of land.
76.
I do not, however, agree with counsel for Jakoita
that, for the valid exercise of the right, Aarifah was required, not
only to despatch
its compliant offer within the 48 hour period, but
also to achieve the execution of its offer by Jakoita. This would
entail the
rather startling result that the holder would lose its
right, even if it sent the compliant offer within the period required
for
its exercise, but did not manage to compel the grantor to
countersign the offer “
in time”.
I think this goes too far, and Nu-Line, correctly, in my view, did
not make common cause with this submission. One must distinguish
the
steps required to be taken for a valid exercise of a pre-emptive
right, on the one hand, from the further steps that are required
to
be taken to make the exercise of the right capable of creating a deed
of sale. The fact that the latter requires bilateral compliance,
whether voluntarily or coerced by a court, does not mean the former
does as well.
(c)
“
respond
”
77.
We have arrived at the point where it must be
accepted that, if the right under clause 18 had to be exercised
within 48 hours of
the email received from Jakoita on 16 January,
advising of the Nu-Line OTP, then it was not effectively exercised,
whatever happened
between Aarifah and Jakoita after that.
78.
But this leaves an issue I debated with counsel,
namely what was to be made of the decree in clause 18 that Aarifah
had to “respond”
within 48 hours?
79.
Pre-emptive rights may, as I have said, assume
several forms. Some regulate in some detail the steps that must be
taken to trigger
them. Others stipulate nothing more than that
someone has a right of first refusal. This one requires the tenant to
“respond”
within 48 hours. In fact, it states that,
should there be a desire to sell, the tenant will have the first
option to buy and will
be “
given 48
hours to respond”.
80.
I put to counsel that this may well simply
require an informal response, along the lines of the 16 January
email, which would then
attract an obligation on the Seller to engage
with the tenant in relation to the exercise, within a reasonable
time, of the option
to buy.
81.
This, as Jakoita submitted, was not Aarifah’s
case. It is fair to say it was common cause that the “48 hours
to respond”
referred to a period for the exercise of the
pre-emptive right. But that is not necessarily fatal for this being
the correct interpretation
of the clause.
82.
Nevertheless,
on reflection, I think the parties were correct to proceed from the
common assumption that the period in question
was to be fit into the
recognised rubric of a fixed period for the exercise of the
pre-emptive right. This, as counsel for Nu-Line
submitted, made
commercial sense of the clause, a significant element in favour of an
interpretation.
[21]
83.
The clause did not, as counsel for Nu-Line
pointed out, give rise to an entitlement to commence negotiations. It
gave rise to an
entitlement to exercise a pre-emptive right, and to
do so within a fixed period. This must mean to do that which the law
now requires
be done by the holder in the case of sales of land –
submit a compliant written offer.
(d)
No 48 hours until Seller made an offer
–
Van Deventer
84.
There was more fancy footwork.
85.
Counsel for Aarifah submitted that, in order for
Jakoita to trigger the pre-emptive right, it was obliged to make an
offer to Aarifah
on the terms of the Nu-Line offer, complying with
the formalities of the
Alienation of Land Act.
86.
This
would mean that the occurrence of the
contingency provided for in clause 18 was insufficient for the 48
hour period to commence,
and even notification of the occurrence of
the contingency was insufficient, because Aarifah was entitled to
expect an offer from
Jakoita, which it, Aarifah, then had 48 hours to
accept. Applying
Van Aardt
and
Mokone
, then, and with
hints of the “obligation to make an offer” that
Ogilvie-Thompson JA had held was capable of being exacted
by specific
performance, but the majority in
Oryx
strongly
doubted was so capable, the onus was on Jakoita as grantor to make
the offer.
87.
There is
concededly some suggestion of such an obligation in the passages from
Lubbe quoted with apparent endorsement in
Mokone
.
[22]
88.
But, as counsel for Jakoita pointed out, the
strong doubt expressed in
Oryx
has
not been dispelled in any subsequent decisions. The cases strongly
support the notion that the holder wishing to enforce its
right must
make an offer, not that there is no right to exercise until an offer
has been made to it. One must distinguish the vexed
question whether
an offer can be exacted from the grantor from the different question
whether the right need not be exercised unless
and until such an
offer has been forthcoming.
89.
I am not aware of any authority to the effect
that even the
coming into effect of the
contingency giving rise to the right to exercise the pre-emption
must itself comply with the formalities in the event that the
contract in question contemplates notification of the holder for
the
contingency to be triggered, as this one concededly appears to do.
90.
Aarifah
relied heavily on the decision in
Van
Deventer
[23]
in this regard.
91.
The relevant aspects of this decision are
somewhat bedevilled by the ghost of Ogilvie-Thompson JA’s right
to specific performance
to exact an offer, and the agnosticism
expressed about the existence of this right by the unanimous court in
Hirschowitz
after the
strong doubts in this regard from the majority in
Oryx
.
92.
In
Van Deventer
the
third party, to whom an option had been granted contrary to a
pre-emptive right over a farm, brought proceedings to compel transfer
in terms of his option. The seller and the holder were brothers. They
communicated with each other only through attorneys. The
seller’s
farm had been bequeathed to him subject to a pre-emptive right held
by his brother to buy the farm “at a Land
Bank valuation”.
The seller wanted to sell the farm to IST, and granted IST an option
to purchase the farm. He asked his
brother to waive his right, saying
that, in the event of refusal, he would be compelled to cancel the
option to IST. The brother
refused. The Land Bank was unwilling to
offer valuations, and this necessitated a journey to court, all the
way to the Supreme
Court of Appeal, as the seller adopted the
attitude that this meant the right of first refusal had fallen away
for being impossible
to implement. The Supreme Court of Appeal did
not agree with the seller. He was stuck with the pre-emptive right.
Eventually, he
sold the farm to his brother, ostensibly pursuant to
the pre-emptive right. There, as in this case, there were then
contending
sales, and whether the pre-emptive right had been validly
exercised determined priority. IST contended that the brother’s
right to exercise his pre-emptive right had prescribed, as he had
purported to exercise it more than three years after the relevant
trigger event had arisen.
93.
Back to the Supreme Court of Appeal went the
matter. The relevance for Aarifah’s argument in the present
case was the finding
that the holder brother’s right (or debt)
to exercise the pre-emptive right had not prescribed, because, in
order for the
holder brother to have been able to sue on his right,
he would first have needed to have received an
offer from the seller brother
.
94.
At first
blush, this appears to support Aarifah’s argument. It is,
however, against the grain of the authority cited above.
What seems
clear from the decision, however, is that it was essentially a matter
of interpreting the specific wording of the right
at issue in that
matter. The right was expressed as follows, as translated by
Nugent JA in the first appeal:
[24]
“
'If
[Johannes] after the death of the survivor, decides to sell
[Dartmouth] then our son Christoffel [the appellant] . . . must
be
given the first option to purchase the said property at the Land Bank
valuation as established at the time of the sale.
The option
must be exercised in writing within a period of 60 (sixty) days after
the option has been given.”
95.
Schoeman
JA, for a unanimous court, held as follows:
[25]
“
[36]
In Hirschowitz Corbett JA said the following with regard to the
exercise of a right of pre-emption and specific performance:
'It
seems to me that in order that the holder of a right of pre-emption
over land should be entitled, on his right maturing and
on the
grantor failing to recognise or honour his right, to claim specific
performance against the grantor (assuming that
[h]e has such a
right), the right of pre-emption itself should comply with the
Formalities Act. Were this not so, the anomalous
situation would
arise that on the strength of a verbal contract the grantee of the
right of pre-emption could, on the happening
of the relevant
contingencies, become the purchaser of land. This would be contrary
to the intention and objects of the Formalities
Act.'
[My
emphasis.]
[37]
Specific performance can only be ordered if the holder of such right
had been presented with a written offer which had then
been accepted.
According to the wording of the right as contained in the title deed
and its context, it is clear, viewed objectively,
that an option had
to be given which complied with the formalities as prescribed in
s 2(1)
of the
Alienation of Land Act 68 of 1981
. If such an offer was
not presented the appellant would not have been able to exercise his
right, or claim specific performance.
[38]
Therefore, the appellant did not have a complete cause of action
for specific performance, as Johannes did not make a
written
offer to the appellant to exercise his right of pre-emption.”
96.
The first problem seems to be that two different
kinds of “specific performance” were at issue in these
passages. The
first “specific performance” in the quote
from
Hirschowitz
was
that assumed agnostically in that case to exist, namely of a right to
compel the grantor
to make an offer
.
The second specific performance referred to in paragraph 37, was
specific performance to enforce the sale which would have occurred
pursuant to an offer and acceptance of the offer.
97.
Paragraph 37 of
Van
Deventer
seems to be authority only for the
proposition that there was no right to specific enforcement of the
latter kind unless and until
there had been an offer in terms of the
pre-emption right, which was then accepted by the holder, and that
this meant the relevant
debt in question had not prescribed.
98.
Be that as it might, paragraph 39 does appear on
the face of it to support Aarifah’s reasoning:
“
[39]
In the premise I am of the view that the respondent failed to show
that there was a trigger event that initiated the running
of
prescription. The trigger event, according to the wording of the
clause, would be the granting of a written option, and
in that
event the right to purchase, if not exercised, would lapse in 60
days.”
99.
But the
critical point here was that the right in question obliged Johannes
to give his brother an option to buy at the Land Bank
valuation, and
that his brother would then have 60 days “
after
the option has been given”
[26]
to exercise his right. The “
giving
of the option
”
was to make an offer at the Land Bank valuation.
100.
It was clear in
Van
Deventer
that the mechanism prescribed in the
right envisaged a step to be taken by the seller brother to “give
the option at the Land
Bank valuation”. This was held to entail
the furnishing of a valid offer. Without this, the period of 60 days
had not started
running, nor could the claim prescribe.
101.
The case does not lay down the general principle
contended for by Aarifah – that, in order to trigger a
pre-emptive right
that must be exercised within a given time period
after a contingency arises, the seller must in fact first make a
valid offer
consistent with the pre-emptive right.
102.
Nor do the words of clause 18 in the instant case
demand a reading similar to that adopted in
Van
Deventer
. Here, there was no specified
pricing mechanism (like a Land Bank valuation) at which the option
was to be “given”,
nor, more importantly, was the 48 hour
period formulated with reference to the step of giving the option.
What was to be “given”
here was a period (48 hours), i.e.
an opportunity, not the option itself – the tenant was said to
“have” such
option once the seller desired to sell.
103.
In any event, this case based on
Van
Deventer
led Aarifah, and this application,
into choppy waters. I asked counsel where the grantor’s offer
was in the instant case.
Counsel was constrained to argue that the
first offer from Jakoita that triggered the right was made on 12
April 2018, when ZKS26
was signed, which was then signed in
acceptance five days later by Aarifah.
104.
There are several difficulties with this.
105.
First, we have moved far from the case advanced
in the papers. In fact, as counsel for Nu-Line pointed out, the
application asserting
that the right of pre-emption had been
exercised, and seeking relief based on this, was launched on 3 April
2018, some weeks before,
according to this argument, the right was
even triggered for the first time.
106.
Second, it is difficult in the circumstances to
decide what to make of what was going on in January and February
2018, with the
email exchanges on the 16
th
and 23
rd
, followed
by ZK4 and the interactions about better offers, culminating in the
demand in March, if the window period for exercising
the right of
pre-emption had not even opened yet.
107.
Third, Aarifah would now have moved to a point of
asking this court to find, on the “separated issue”, that
the right
of pre-emption had in fact been exercised by means of the
execution of the deed of sale, ZK26, in relation to which the parties
were still to file affidavits. I would have to make a finding in the
teeth of the separation order that the incomplete evidence
in
relation to ZK26 was sufficient to constitute exercise of the
pre-emptive right.
108.
Fourth, Aarifah’s acceptance of ZK26 did
not occur within 48 hours of the offer on 12 April 2018, but only
five days later.
If Nu-Line were entitled to say the attempts in
January or March were too late, why can it not say so with respect to
the attempt
in April?
109.
It is true that, after
Mokone
,
nothing stops the parties from concluding, or amending, a pre-emptive
right in respect of the sale of land informally. But the
terms of the
lease contained a no variation except in writing clause. If the
execution of ZK26 amounted to a tacit written variation
of the 48
hour period, this would have occurred after the period had expired,
something the third party could validly invoke.
110.
For the several reasons set out above, the
submission in respect of the window period falls to be rejected.
(e)
Invoking ZK26 as subsequent conduct
?
111.
Aarifah had another point on ZK26.
112.
It was argued that ZK26 was good evidence by way
of subsequent implementing conduct, of what the parties intended in
respect of
the right of pre-emption, and that this resurrected the
argument considered above on what was meant by “respond”.
ZK26
confirmed that the parties did not intend the right of
pre-emption to have been properly exercised within 48 hours –
but
that as long as an intimation was given within 48 hours, they
were free to finalise the resulting contract even months later, in
formalising the exercise of the pre-emptive right.
113.
Reliance was placed on the wording of clause 20
of ZK26 to the following effect:
“
This agreement
is a formalization of the agreement concluded between Aarifah
Security Services CC
and Jakoita
Properties (Pty) Ltd
”
.
114.
This handwritten clause appears to bear the
initial of one of the parties only (apparently the Aarifah
representative), whereas
the previous handwritten clause, in a
different handwriting, bears the initials of both. This is some
indication of the perils
of deciding this application on the contents
of ZK26 when further affidavits are still to be filed about it.
115.
Be that as
it may, it appears to me that, where a contending purchaser’s
rival rights are at issue, the subsequent conduct
of the parties to
the pre-emptive covenant must be approached with caution when it
comes to the question whether the pre-emptive
right was properly
exercised. This is not quite the situation that gave rise to the
proposition laid down in
Aussenkehr
Farms
[27]
that a
third party could not set up its own interpretation based on the
wording of a contract the contracting parties to which agreed
on a
different meaning.
116.
It can hardly be the case that the period for the
exercise of the pre-emptive right could expire, and the seller and
grantor could
thereafter agree amongst themselves that it had in fact
not expired, for the rival third party purchaser to be non-suited in
its
contending right based on this re-creation of history by the
grantor and holder. In
Van Deventer
,
the court did not suggest it was not open to the third party to
challenge the exercise by the brother of his pre-emptive right
merely
because the brothers had proceeded to conclude a sale.
117.
It should also be borne in mind that, unlike the
situation in
Aussenkehr,
in
the instant case it is Jakoita’s case, as one of the parties to
the contract, that the right of pre-emption had
not
been exercised. For reasons that appear
obscure and in relation to which enlightenment was not forthcoming,
Jakoita is apparently
contending that the sale to Nu-Line enjoys
priority, apparently leaving it exposed to a claim by Aarifah on the
ZK26 sale, should
it prevail in this contention, whereas, if Aarifah
were to prevail on the present dispute, it would seem unlikely that
the execution
of the Nu-Line deed in December 2017 would create a
liability on the part of Jakoita, as Nu-Line was apparently aware of
the terms
of the lease. I must not be taken to make findings in this
regard. I merely point to further reasons why it is perilous indeed
to base any findings in this round of litigation on the contents of
ZK26.
(f)
Stringing along
?
118.
The case is disquieting in some respects.
119.
It appears that, on 16 January 2018, Aarifah was
intending to exercise its pre-emptive right, and the parties then
acted towards
each other as if the to and fro that ensued in January
and February was a way of having the pre-emptive right perfected, or
at
least of trying to do so. And then, after the interdict, they
concluded a sale. Can the grantor of a pre-emptive right give notice
of the trigger event, receive notification of an intention to
exercise the right, co-operate in negotiating terms with the holder,
and then turn around and say the period for exercise is over if a
proper compliant offer had not been received in the specified
period?
120.
I suppose there are several answers to this.
121.
First, this is in principle no different to
engaging orally with someone for the sale of land and then at the
last moment pulling
out. A pre-emptive right to the sale of land is a
formal animal that, like a sale of land itself, must be exercised
according to
its terms, given the potential of creating rights
in
rem
and the kinds of contending successive
sales that may arise such as in these cases. The cases discussed
above relating to the formalities
required for perfecting the right
would make little sense if the right could nevertheless be held to be
validly exercised to bind
the seller in some way, without actually
being validly exercised.
122.
It is
possible that cases may arise where a right is frustrated by the
conduct of the seller, or someone is fraudulently misled
to his
detriment, and fictional fulfilment or something akin to it may be
asserted.
[28]
No such case was
made out here.
123.
Second, however, in the instant case it must be
borne in mind that, even if, contrary to the findings above, Aarifah
were entitled
to rely on Jakoita’s conduct after the 16 January
email, to the effect that Jakoita would await a formal offer from
Aarifah
to perfect its pre-emptive right, this could never be a right
to commence a series of negotations, which, if ultimately yielding
a
sale, must be taken to be the implementation of the pre-emptive
right. ZK4 on 29 January 2018 was not good enough, as, even leaving
aside its other deviations from the Nu-Line offer, it was based on
the mistaken view that it could offer R150,000 less than Nu-Line
because no commission was payable, when in fact commission was
payable.
124.
Third, after Aarifah was confronted with the need
to make a better offer, it failed to do so. The furthest it went was
to write
an equivocal email in which it expressed a willingness to
pay an additional R140,000 by way of commission, but then also told
Jakoita
“
Be that as it may, you can
decide in which way you would like to proceed”.
125.
It is inexplicable, from Aarifah’s point of
view, why the 6 February exchanges were not followed up with a better
offer before
the demands were issued in March. It must be remembered
that Jakoita’s version on oath, via Pereira, is that Khan
refused
to increase his offer and wanted instead to pay the
commission by way of cash and not to reflect this on the offer. This
is a respondent’s
version in motion proceedings for final
relief, and is at least consistent with the non-eventuation of any
better offer from Aarifah.
CONCLUSION
126.
I am grateful to all three counsel for the high
calibre of their submissions and the quality of the debate, which
assisted me greatly
in deciding some difficult questions.
127.
The answer to the separated issue on the papers,
with some slight revision to the question so as not to restrict it to
the month
of January 2018, is accordingly the following:
“
The applicant did
not exercise its right of pre-emption in terms of clause 18 of the
lease concluded in September 2017”.
128.
Given the way the notice of motion has been
amended with the deletion of the original prayer (a), the import of
which I had to glean
from the heads of argument in the amendment
applications, there is no specific prayer at issue before me in the
notice of motion
to grant or to dismiss. I am instead merely to
answer the question posed for determination as a separated issue in
this application
by the order of 18 October 2019.
129.
I accordingly make the following order by way of
a determination of the separated issue:
1.
It is declared that the applicant did not
exercise its right of pre-emption in terms of clause 18 of the lease
concluded in September
2017.
2.
The applicant is directed to pay the costs
of the first, second and fourth respondents, this to include the
costs of the first respondent
in the interlocutory application that
yielded the order of Keightley J on 18 October 2019.
Frank
Snyckers
Acting
Judge
21
September 2020
Date
of Hearing: 1 September 2020 [Zoom]
Judgment
Delivered: 21 September 2020
APPEARANCES:
On
Behalf of the Applicant: M Smit
Instructed
By: Mohamed Randera & Associates
Johannesburg
On
Behalf of First Respondent: WG Pretorius
Instructed
By: Botoulas Krause & Da Silva Inc
Bedfordview
On
Behalf of Second and Fourth
Respondents:
IC Bremridge SC
Instructed
By: C & A Friedlander Attornyes
Cape
Town
[1]
See for example
Ingledew v
Theodosiou
2006 (5) SA 462
(W).
[2]
See for example
Unica Iron
& Steel (Pty) Ltd and Another v Mirchandani
2016 (2) SA 307
(SCA) para 21.
[3]
See
Soteriou v Retco
Poyntons (Pty) Ltd
1985
(2) SA 922 (A).
[4]
Oswianick v African
Consolidated Theatres (Pty) Ltd
1967
(3) SA 310
(A);
Associated
South African Bakeries (Pty) Ltd v Oryx & Vereinigte Bäckereien
(Pty) Ltd en Andere
1982
(3) SA 893
(A);
Hirschowitz
v Moolman & Others
1985
(3) SA 739
(A).
[5]
Associated South African
Bakeries (Pty) Ltd v Oryx & Vereinigte Bäckereien (Pty) Ltd
en Andere
1982 (3) SA 893
(A) at 919H.
[6]
Associated South African
Bakeries (Pty) Ltd v Oryx & Vereinigte Bäckereien (Pty) Ltd
en Andere
1982 (3) SA 893
(A).
[7]
1985 (3) SA 735
(A), particularly as summarised at 762.
[8]
At 763H-764A. The case was decided on the legislation preceding the
Alienation of Land Act, but
on the basis that the principles were
the same.
[9]
Van Aardt and Another v
Weehuizen and Others
2006
(4) SA 401 (N).
[10]
Mokone v Tassos Properties
CC and Another
2017 (5) SA
456 (CC).
[11]
Paragraphs 54 to 57; see also paras 59 and 60.
[12]
Para 14.
[13]
Hartsrivier Boerderye
(Edms) Bpk v Van Niekerk
1964
(3) SA 702 (T).
[14]
1985 (3) SA 183
(E) at 187E: “
This
case, however,
[i.e.
Hartsrivier
]
lays
down that the pre-emptor, in order to bind the owner who wishes to
sell land, must make an offer in writing so that a valid
written
contract can result
.”
[15]
Paras 49 and 50.
[16]
Act 25 of 2002.
[17]
See
Spring Forest Trading
CC v Wilberry (Pty) Ltd t/a Ecowash & Another
2015
(2) SA 118
(SCA).
[18]
Spring Forest
para
16 read with footnote 8.
[19]
The submission of ZK4 after the 16 January email goes a long way
towards confirming the proper interpretation of the 16 January
email
as doing no more than to intimate that something like ZK4 was
coming. As counsel for Nu-Line correctly submitted, if Aarifah
wanted to have its 16 January email taken as an offer on the terms
of the Nu-Line OTP, or even more radically, an acceptance
of an
offer deemed to have been made to it on the terms of the Nu-Line
OTP, it should have made this unequivocal, even without
consideration for the problem of formalities.
[20]
See s4(3) and 4(4) of ECTA.
[21]
Natal Joint Municipal
Pension Fund v Endumeni Municipality
2012
(4) SA 593
(SCA), para 18.
[22]
Para 62.
[23]
Van Deventer v Ivory Sun
Trading (Pty) Ltd
2015 (3)
SA 532 (SCA).
[24]
Para 5 footnote 2.
[25]
Paras 36 to 38.
[26]
“nadat sodanige opsie gegee is”.
[27]
Aussenkehr Farms (Pty) Ltd
v Trio Transport CC
2002
(4) SA 483
(SCA) paras 25 and 26.
[28]
See, for example, cases such
as
Du Plessis NO v Goldco Motor & Cycle Supplies (Pty) Ltd
2009
(6) SA 617
(SCA).