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[2012] ZASCA 8
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Demetriades v Perivoliotis (231/2011) [2012] ZASCA 8 (14 March 2012)
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THE
SUPREME COURT OF APPEAL OF SOUTH AFRICA
JUDGMENT
Case No: 231/2011
Not Reportable
In the matter between:
CHRISTODOULOUS DEMETRIADES
…............................
APPELLANT
and
IOANNIS DEMETRIOS PERIVOLIOTIS
….....................
RESPONDENT
Neutral citation:
Demetriades
v Perivoliotis
(231/2011)
[2012] ZASCA 8
(14 March 2012)
Coram:
Mthiyane DP, Brand,
Cloete, Mhlantla JJA and Boruchowitz AJA
Heard: 17 February 2012
Delivered: 14 March 2012
Summary: Interpretation of an
agreement of sale of shares ─ whether it created reciprocity of
obligations ─ party seeking
to argue new case on appeal.
_____________________________________________________________________
ORDER
On appeal from:
North
Gauteng High Court, Pretoria (Legodi, Makgoka JJ and Ebersohn AJ
sitting as court of appeal):
1 The appeal is upheld with
costs, such costs to include the costs of two counsel.
2 The order of the court a quo is
set aside and replaced with the following:
‘
The
appeal is dismissed with costs, including the costs of two counsel.’
___________________________________________________________
JUDGMENT
MTHIYANE DP (BRAND, CLOETE,
MHLANTLA JJA and BORUCHOWITZ AJA CONCURRING)
[1] The appeal with leave from
this court is concerned with the interpretation of a written
agreement of sale of shares in a company
registered in Tanzania. In
terms of the agreement the respondent (the plaintiff) sold two
hundred fully paid-up shares to the appellant
(the defendant) for
R3.5million. A dispute arose between the parties concerning payment
of the purchase price and the initial question
that fell to be
determined in the high court and later by the full court was whether
the agreement is one to which the principle
of reciprocity applies.
[2] In an action in the North
Gauteng High Court (Seriti J) the question was answered in the
affirmative but on appeal to the full
court with this court’s
leave, Legodi J with Makgoba JJ and Ebersohn AJ concurring, held that
on a proper construction of
the agreement reciprocal obligations were
not created between the parties, dismissed the
exceptio non
adimpleti contractus
raised by the defendant and found that the
appellant was obliged to pay the balance of the purchase price in
terms of the contract.
[3] The appellant now appeals
that decision with leave from this court. It is convenient to refer
to the parties as they were in
the high court. It bears mention
however that in the appeal before us the plaintiff abandoned his
earlier arguments on whether
the agreement created reciprocal
obligations ─ in fact he now concedes that it did ─ and
disavows any reliance on the
judgment of the full court, which he no
longer supports. Notwithstanding his concession ─ which as will
appear later in the
judgment was well made ─ counsel considers
that he has found a way around it. He submits that because the
plaintiff tendered
performance and the defendant refused to accept
the tender, the plaintiff is entitled to succeed on appeal. He says
that although
the plaintiff’s case was not pleaded in these
terms, the defendant has no cause to complain because the so-called
new case
is capable of being raised on the papers as they stand and
the issue now raised was sufficiently traversed in the court below.
[4] The convenient starting point
is the agreement itself. On 17 September 2003 the plaintiff sold to
the defendant 200 fully paid
up shares in Thinamy Entertainment Ltd,
a company registered in Tanzania, comprising 20 percent of the
subscribed share capital
of the company. As I have already indicated
the purchase price of the shares was R3.5million.
[5] In terms of clause 8.2 of the
agreement the balance of the purchase price of R2,5million was
payable in twelve equal monthly
instalments of R208 333,33, on or
before the 7
th
of each month, the first instalment being
payable on or before 7 October 2003.
[6] In terms of clause 9 the
plaintiff undertook to ─ on or before 30 September 2003 ─
cause to be delivered to the
defendant or his nominee:
‘
9.1
The share certificates together with share transfer form signed by
the Seller;
9.2 Cession by the
Seller in favour of the Purchaser for the said loan account;
9.3 The resignation
of the Seller as director of the company;
9.4 A resolution
approving of the transfer of the shares from the Seller to the
Purchaser;
9.5 All books,
documents and records in the Seller’s possession relating to
the company or the business.’
[7] In the particulars of claim
the plaintiff alleges that the defendant breached the terms of
agreement as follows:
(a) he only paid R55 000 towards
the first instalment, being payable on or before 7 October 2003 as
already indicated above, leaving
an unpaid balance, on the first
instalment, of R153 333,33;
(b) he failed to make any further
payments;
(c) he is indebted to the
plaintiff in the sum of R1 819 999,00 plus interest at the rate of
15,5 percent per annum a tempore morae.
[8] In his plea the defendant
admitted:
(a) that he paid R55 000 towards
the first instalment on or before 7 October 2003 as required under
clause 8.2 of the agreement;
and
(b) that he had not made any
further payments.
The defendant denied further that
he was obliged to pay because the plaintiff had failed to perform his
part of the agreement by
not delivering the required documentation as
required in clause 9 of the agreement. Such failure amounted to a
repudiation of the
agreement, which he accepted. The defendant
pleaded that as a consequence he had cancelled the agreement.
[9] The defendant also filed a
counter-claim for the repayment of the R55 000 he paid towards the
first instalment of the purchase
price. In the counter-claim he
further alleged that:
(a) the plaintiff had breached
the terms of the agreement by failing to comply with clause 9 of the
agreement;
(b) the plaintiff repudiated the
agreement, which repudiation he had accepted; and
(c) if it was found that he had
not repudiated the agreement, the plaintiff would in any event not be
able to comply with clause
9 of the agreement.
[10] In his plea to the
counter-claim the plaintiff disputed the defendant’s
entitlement to the repayment of R55 000 alleging
that the payment of
the purchase price was not dependant upon the plaintiff fulfilling
any obligations in terms of the agreement.
The plaintiff further
averred that he had never had the intention to repudiate the
agreement. The plea to the counter-claim in
effect averred that the
agreement did not create reciprocal obligations and that the
defendant was not entitled to succeed in his
defence based on the
exceptio non adimpleti contractus
. As already indicated the
plaintiff has abandoned this position and correctly so.
[11] For reciprocity to exist
there must be such a relationship between the obligations to be
performed by the one party and that
due by the other party as to
indicate that one was undertaken in exchange for the performance of
the other (see eg
Mörsner
v Len
).
1
On a proper construction of the
agreement between the plaintiff and the defendant, especially if
regard is had to the paragraphs
dealing with the plaintiff-seller’s
obligation to deliver the share certificate and other documents on or
before 30 September
2003 (clause 9) and dealing with the
defendant-buyers’ obligation to pay on or before 7 October 2003
(clause 8.2), it is
clear that the intention was to create reciprocal
obligations. The relevant cases on the topic have emphasized that the
overriding
consideration is the intention of the parties as evident
from the agreement in conjunction with the relevant background
circumstances.
See
Man
Truck & Bus (SA) v Dorbyl Ltd t/a Dorbyl Transport Products and
Busaf
.
2
On that approach there can be no
question that the plaintiff had to deliver the documents by 30
September 2003 and the defendant
thereafter pay by 7 October 2003, in
exchange for the documents so delivered. It cannot be any clearer
than that. Accordingly the
finding of Seriti J that the agreement
gave rise to reciprocal obligations was correct. It must therefore
follow that the full
court erred in its conclusion that the agreement
did not create reciprocal obligations.
[12] One would have thought that
once reciprocity was conceded and the plaintiff accepted that it had
not delivered the share certificate
and the other documents as
required by clause 9, that would have put paid to all the issues in
the case. This because the defendant
in his pleadings had accepted
the plaintiff’s repudiation of the agreement, consisting in the
plaintiff’s refusal to
perform an important term of the
agreement. Whether the plaintiff subjectively intended no longer to
be bound by the agreement,
or whether he was actuated by a mistake of
law in thinking he was entitled to enforce the agreement as he sought
to do, is irrelevant:
Van
Rooyen v Minister van Openbare Werke
.
3
[13] Despite conceding
reciprocity that would suggest that the end of the road had been
reached in this litigation, counsel for
the plaintiff submitted that
he was entitled to argue a point that was not specifically pleaded.
Relying on the principle laid
down in
Shill
v Milner
,
4
he argued that a court was on
appeal entitled to permit a party to go beyond the pleadings where
the issue had been traversed in
evidence in the court below.
[14] The issue raised in this new
point is the following. The defendant is liable to pay the amount
claimed because the plaintiff
tendered performance and the defendant
refused to accept the tender. Furthermore the defendant failed to
attend a meeting at his
(the defendant’s) attorney’s
offices in 2004 where the defendant would have been given the
documents. The plaintiff
is to date in possession of the share
certificate and is still willing to deliver it to the defendant.
[15] As I see it there are two
insurmountable hurdles that the plaintiff has to overcome. The first
is that the agreement came to
an end upon the acceptance by the
defendant of the plaintiff’s repudiation. The second is that
the tender was withdrawn by
the plaintiff in his amended particulars
of claim where all reference to the tender was deleted. It is not now
possible for the
plaintiff to place reliance on a tender that was
withdrawn or to seek to put the clock back prior to the cancellation
of the agreement.
Accordingly the new point is without merit and
falls to be rejected.
[16] Accordingly the appeal must
succeed and the following order is made:
1 The appeal is upheld with
costs, including the costs of two counsel.
2 The order of the court a quo is
set aside and replaced with the following:
‘
The
appeal is dismissed with costs, including the costs of two counsel.’
______________________
K K MTHIYANE
DEPUTY PRESIDENT
APPEARANCES
For Appellant: AB Rossouw SC
(with him MS Janse van Rensburg)
Instructed by:
Grobler Levin Soonius Inc,
Pretoria
Naudes, Bloemfontein
For Respondent: EA Limberis SC
(with him BW Maselle)
Instructed by:
Kobus Burger Attorneys c/o
Phillip Venter Attorneys, Pretoria
Lovius Block Attorneys,
Bloemfontein
1
Mörsner
v Len
[1992] ZASCA 17
;
1992 (3) SA 626
(A) at 634A.
2
Man
Truck & Bus (SA) (Pty) Ltd v Dorbyl Ltd
t/a
Dorbyl Transport Products and Busaf
2004 (5) SA 226
(SCA) para 12.
3
Van
Rooyen v Minister van Openbare Werke
1978 (2) SA 835
(A) at
844H-846A.
4
Shill
v Milner
1937 AD 101
at 105.