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[2012] ZASCA 114
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Donald & Richard Currie (Pty) Ltd v Growthpoint Properties Ltd (572/11) [2012] ZASCA 114 (13 September 2012)
THE SUPREME COURT OF APPEAL OF SOUTH AFRICA
JUDGMENT
Case no
: 572/11
Not reportable
In
the matter between:
DONALD
& RICHARD CURRIE (PTY) LTD
...........................................
First Appellant
RICHARD
CURRIE
.............................................................................
Second
Appellant
and
GROWTHPOINT PROPERTIES LTD
..........................................................
Respondent
Neutral citation:
Donald & Richard Currie
(Pty) Ltd v Growthpoint Properties Ltd (572/11)
[2012] ZASCA 114(13
September 2012)
Coram:
Lewis, Mhlantla, Bosielo, Leach and Tshiqi JJA
Heard:
24 August 2012
Delivered
13 September 2012
Summary:
Where offer to convert equities in a
company is made to holders by another entity, and offeree completes
acceptance form in required
manner, he cannot rely on his own errors
in completing the form to avoid the contract that is concluded on the
ground of reasonable
mistake.
ORDER
On appeal from South Gauteng High Court, Johannesburg
(Mbha J sitting as court of first instance).
The appeal is dismissed with costs.
JUDGMENT
LEWIS JA ( MHLANTLA, BOSIELO, LEACH AND TSHIQI JJA
concurring)
[1] Mr Richard Currie owned equities in Paramount
Property Fund Ltd (Paramount). So did a company in which he and
members of his
family held the shares and of which he was a director,
Donald and Richard Currie (Pty) Ltd (the company). On 18 December
2006 Growthpoint
Properties Ltd (Growthpoint) made an offer by
circular to all Paramount Linked Unitholders and B Debenture Holders
to exchange
what they held in Paramount for either linked units in
Growthpoint, or for cash. I shall deal with the precise details of
the offer
in due course. The transaction fell within the definition
of an ‘affected transaction’ in s 440K of the Companies
Act
61 of 1973, and as such was governed by the Securities Regulation
Code on Takeovers and Mergers. (Nothing turns on the provisions
of
the code.)
[2] Currie filled in the forms attached to the circular,
intending to accept the mass offer both for himself and for the
company.
The completed forms indicated that Currie and the company
accepted the offers for their equities and the consideration they
elected
to take was the cash amount stipulated per unit. When Currie
received cheques for the amounts payable for his and the company’s
units he immediately sought to change what he had elected and
insisted that he had really wanted linked units instead. He did not
bank the cheques. When he was unable to persuade Growthpoint to
reverse the transactions, he and the company instituted separate
actions for declarations that the acceptances had been ‘pro non
scripto’, and for delivery of the linked units that
had been
offered and the dividends that would have accrued had the linked
units been transferred to them at the relevant time.
[3] The basis of the claim pleaded was that the forms as
completed by Currie had been vague and manifestly confused, and that
Computershare
Investor Services (Pty) Ltd (Computershare), the agent
(transfer secretary) of Growthpoint, which had attended to the
receipt and
processing of acceptances, should have realized this and
not taken Currie and the company’s election to take a cash
consideration
at face value. Growthpoint pleaded that it was Currie
who had carelessly filled in the forms; that Computershare could not
have
known that Currie had intended to accept linked units instead of
cash; and that Currie and the company were bound by Currie’s
election.
[4] The actions were consolidated at the start of the
trial. The high court (per Mbha J) found that Currie and the company
were
not entitled to the linked units: they had claimed that their
acceptances were null because of the errors made in their completion
and that they could thus not claim performance since there were no
contracts. Leave to appeal to this court was granted by the
high
court.
[5] The grounds of appeal are multiple. The essence of
the argument on appeal was, however, that the acceptance of the mass
offer
was not void: that only the election to accept cash was
affected by iustus error (that of Currie), and that it was, or should
have
been plain to Computershare, that Currie had elected, for
himself and the company, to accept the offer of linked units in
Growthpoint.
The issues are thus considerably narrower on appeal.
The background to the claim
[6] Both Currie and the company had been the holders of
Paramount B debentures. In 2005 these were converted to linked units.
When
Currie received the certificates of registration for linked
units he noticed that there were certain errors on them (spelling
mistakes)
and he returned the certificates to Computershare for
correction. Corrected certificates were not delivered to Currie until
12
January 2007, despite repeated requests made by him. He had been
particularly anxious to obtain the corrected certificates before
accepting the mass offer made in December 2006, which had to be
accepted by Friday 26 January 2007. That was because he was uncertain
whether he and the company held linked units or debentures.
Nonetheless, he filled in the acceptance forms before receiving the
certificates, on the assumption that he and the company owned
debentures. And the company took a resolution to accept the offer
for
its debentures and authorized Currie to sign on its behalf. It was in
any event not necessary as Currie had general authority
to bind the
company. I shall return to the resolution.
[7] In his haste to sign the acceptance forms before a
weekend when he was going away (although two weeks before the closing
date
for acceptance), Currie signed the election forms in the space
for debenture holders to sign. And he filled in the block indicating
that he wished to exchange the debentures for linked units. When he
then received the certificates and discovered that he and the
company
held linked units and not debentures, he deleted what he had written
in that block – 264 505 debentures for
the company and
84 450 for himself – and wrote the same numbers in the
block for linked shares. But instead of putting
the figures in the
block indicating that they wished to acquire the offered linked units
(as he alleged he had intended to do),
Currie placed them in the
block electing a cash consideration. And that is what he and the
company received.
[8] Before dealing with the errors that he made in
completing the forms (which he conceded were negligent, and indeed
‘incredible’)
I shall set out the pertinent terms of the
offer and the layout of the election form.
The terms of the offer
[9] The introductory section of the circular in which
the offer was made to all Paramount debenture and linked unit holders
stated
that it was important and required immediate attention. If
such holders wished to accept the offer being made, they had to
complete
the acceptance, surrender and transfer forms and deliver
them to Computershare by the closing date. The last sentence of the
introduction
read: ‘If you do not wish to accept the offer you
need not take any action.’ Clause 4 in the offer document set
out
the financial consequences of the different elections.
[10] Paramount linked unit holders who accepted would
receive, for each unit, one new Growthpoint linked unit. On the
average price
of Growthpoint units before the circular was issued,
the offeree would receive a premium of 10.03 per cent. On the other
hand,
the cash consideration would be R6.71 for every Paramount
linked unit. The financial consequences of accepting an offer for
debentures
were also spelled out. If offerees elected to do nothing,
in terms of s 440K, provided that 90 per cent of offerees made an
election
to accept Growthpoint linked units, then there would be a
compulsory acquisition of the units or debentures of the remaining
Paramount
holders, who would then be in the position they would have
been had they elected to take the linked units.
[11] Clause 4 also provided that Growthpoint reserved
the right, in its discretion, to treat as invalid acceptances that
were not
accompanied by documents of title (the certificates) and to
require proof of authority that the person who signed the acceptance
form was authorized to do so. It stated further that all acceptances
were irrevocable. If acceptances were only ‘partial’,
in
the sense that the offeree did not indicate whether it wanted to
receive linked units or cash, the offeree would receive linked
units
as a ‘default consideration’. The notes stated also that
any alteration on the reverse side should be signed
in full and not
simply initialled, and that ‘Any alteration may not be accepted
by the offeror’.
The election form
[12] The form on which a Paramount equity holder who
wished to accept the offer of Growthpoint linked units was printed on
the reverse
of the acceptance, surrender and transfer form. The front
page required the offeree to indicate the number of Paramount linked
units, or debentures, held by it. An asterisk next to the block for
the figure referred to the term of the offer that if no number
were
specified the offeree would be deemed to have accepted the offer in
respect of all units or debentures owned. Currie did not
complete the
first page.
[13] Part A of the reverse page (the election form)
required details of names, addresses and telephone numbers of the
offeree/acceptor.
This was followed by a heading (‘Election of
offer consideration’). Below that the form stated:
‘
I/We elect to receive the following offer
consideration (please indicate in the appropriate box the number of
Paramount linked units
and/or B debentures in respect of which you
wish to choose either the cash consideration or the linked unit
consideration, if applicable).
[14] This was followed by a table of four blocks, each
with its own heading which indicated whether the offeree was a linked
unit
holder or a debenture holder, and whether a linked unit or cash
was elected as consideration.
The first block was headed: ‘Number of paramount
linked units in respect of which the linked unit consideration is
elected.’
Currie left this block blank on both the forms that
he filled in, the one for himself and the other for the company.
The second block was headed: ‘Number of Paramount
linked units in respect of which the cash consideration is elected.’
It was this block that Currie filled in for himself and the company,
inserting the number of Paramount units that he and the company
held
respectively.
The third block was headed: ‘Number of B
debentures in respect of which the linked unit consideration is
elected.’ Currie
filled in this block before he received the
certificates on 12 January 2007. He obviously thought then that he
and the company
held debentures. He later deleted the number in this
block, but did not initial, let alone sign, the deletions.
The fourth block was headed: ‘Number of B
debentures in respect of which the cash consideration is elected.’
Currie
left this block blank on both forms.
[15] Further instructions followed the four blocks. They
included the following:
‘
Payment to certificated linked unitholders
and B debenture holders that do not have an existing bank mandate
with the transfer secretaries
will be made by cheque, posted at the
offeree’s own risk.’
Below the election blocks were further blocks to be
filled in by offerees who held linked units and who wished to provide
bank details
so that payment of the cash consideration could be
effected by electronic transfer. Currie wrote N/A in this section.
Then followed
the acceptance statement:
‘
I/we hereby surrender and enclose the
linked unit certificates, certified transfer deeds and/or other
documents of title, details
in respect of which are set out in the
table below, in respect of my/our holding of Paramount linked units
and/or B debentures.’
Currie filled in his and the company’s names on
the two forms, and inserted the certificate numbers and the number of
linked
units held. And as I have indicated he signed both forms in
the space for debenture holders.
The alleged errors made by Currie that rendered the
election void
[16] Currie contended, first, that he erroneously filled
in the blocks for debenture holders when in fact he and the company
held
linked units. That is why he deleted the figures in these
blocks. But he testified that he had filled in these blocks because,
before he received the certificates on 12 January 2007, he thought
that he and the company held debentures. His choice was thus
deliberate. And when he realized that that choice was not possible,
he changed it.
[17] Second, he argued, he had erroneously filled in the
block electing a cash consideration for the linked units, which was
contrary
to the company resolution that he was authorized to convert
debentures in Paramount to linked units in Growthpoint, and contrary
to his own intention. The resolution, taken at a meeting of directors
of the company on 12 January 2012, authorized Currie to accept
the
offer to ‘convert’ debentures in Paramount to units in
Growthpoint. Currie testified that he had sent the acceptance
form
for the company together with the certificates, and the resolution.
He had a distinct memory (not even a shadow of doubt)
of putting the
resolution in the envelope that was delivered to Computershare.
[18] Despite this, in the covering letter, dated 15
January 2007, sent with the forms and the certificates, Currie made
no mention
of the resolution. He stated that he enclosed the forms
for the company and himself and three certificates in respect of
linked
units. Computershare, which stamped the letter to indicate
receipt, had no record of the resolution in its file. And if it had
received one, it may well have questioned why the resolution referred
to debentures when neither the company nor Currie held any.
Given the
failure to refer to the resolution in the covering letter, and the
fact that Computershare did not have it on file, it
is likely that
the resolution was not sent. Nothing turns, however, on the
discrepancy between the company form and the resolution.
[19] The third mistake alleged was that Currie failed to
sign the deletions on the forms. This factor is also of no
consequence
in my view. The offeror was entitled to demand signature
of alterations but did not have to. The form expressly stated that
any
alteration ‘may’ not be accepted by the offeror.
[20] Fourth, Currie argued that his signature in the
block for debenture holders, and not unit holders which was adjacent
to it,
was an obvious mistake. But he had signed in that space
because at the time of completing the form he thought that he and the
company
held debentures. That he did not sign in the correct block
when he received the certificates is a failure that was not
satisfactorily
explained. Moreover, since both Currie and the company
held only linked units and not debentures, he was clearly signing
for, and
as, a linked unit holder.
[21] Currie argued in the fifth place that the fact that
he had entered N/A in the section relating to banking details and
electronic
transfers showed that he had been mistaken since he did
not want the cash consideration. But he conceded that he could also
have
shown, through this choice, that he did not want a transfer to
his bank account. Indeed, a witness for Growthpoint (an employee
of
Computershare) testified that many people were reluctant to provide
their banking details and preferred to receive payment by
cheque.
[22] It will be apparent from the allegations of mistake
made that Currie initially sought to argue that Computershare should
have
realized, because of the cumulation of errors on the form, that
he was confused and mistaken. The scrip auditors (the employees
of
Computershare who processed the acceptance forms) ought to have
contacted him to enquire what it was that he really wanted.
They
could not reasonably have believed that he elected to receive money
for the Paramount units rather than Growthpoint units.
He argued that
they should have realized this all the more because the election to
receive cash was not a wise one: the Growthpoint
shares were worth
considerably more than the cash consideration. Indeed, the moment
Currie received the cheques for the units he
tried to reverse the
transactions.
[23] On the level of fact, the argument is a poor one.
The election to receive a cash consideration was one offered to all
debenture
and linked unit holders. There is no reason to believe that
every person who chose to receive cash was mistaken, simply because
it was not a financially wise decision. The value of the linked units
turned out to be considerably greater than was the cash
consideration. There are many reasons why a shareholder may wish to
realize shares. It was not for Computershare employees to second
guess Currie’s choice.
[24] The legal argument is also not sound. In order to
avoid a contract, the person seeking to escape what appears to be a
binding
contract (in this case Currie) must show reasonable reliance
on the other party’s conduct in making the mistake. The now
classic authority on this is
Sonap Petroleum (SA) (Pty) Ltd v
Pappadogianis
[1992] ZASCA 56
;
1992 (3) SA 234
at 239I-241E. The decisive
question, said Harms AJA, was whether ‘the party whose actual
intention did not conform to the
common intention expressed, lead the
other party, as a reasonable man, to believe that his declared
intention represented his actual
intention . . .’. This entails
a three-fold enquiry: was there a misrepresentation as to the
non-mistaken party’s intention?
Who made the misrepresentation?
And was the other party misled?
[25] Thus the enquiry suggested by Currie in this matter
would be: did Computershare realize, or should it reasonably have
realized,
that Currie had not intended to elect the cash
consideration? Did it have a duty to make enquiries about what Currie
really wanted?
The argument presupposes that it was Computershare
that was mistaken. But that would not give Currie the right to
resile. It was
his mistake upon which he wished to rely. And in any
event, the forms, even with the unsigned deletions, were not
misleading. It
was quite clear on the face of the forms that Currie
elected to exchange his units in Paramount for cash. That is what he
stated.
[26] Currie argued also, though before this court did
not press the argument, that it was he who had been mistaken, and his
mistake
had been the result of Computershare’s failure to
furnish the corrected certificates timeously. The facts do not bear
out
the argument. Currie received the certificates two weeks before
the closing date. He had ample time in which to complete the forms
properly. He was not mistaken about anything. He deliberately filled
in the block electing to exchange debentures in Paramount
for linked
units in Growthpoint; he deliberately signed in the block for
debenture holders and he deliberately deleted the incorrect
information. Nothing misled him into writing the number of linked
units in the block electing to exchange them for cash. It was
his
mistake. And in his words, it was ‘incredible’ that he
could have made such a mistake. It was simply not reasonable.
Was the acceptance of the mass offer unequivocal?
[27] Growthpoint argued that even if there had been some
error on the part of Currie (or even Computershare, for that matter)
there
was no room for the application of the reliance theory of
contract in determining whether an offer had been accepted. The offer
made by it had to be accepted in one of two ways. The offeree could
submit the acceptance form with one of two elections –
exchanging units or debentures for cash, or exchanging them for
linked units in Growthpoint. Once the form was submitted (that
is,
the stipulated mode of acceptance was complied with) the contract was
concluded. (It relied in this regard on
Driftwood Properties (Pty)
Ltd v McLean
1971 (3) SA 591
(A), as did the high court.) There
was then no need for any enquiry as to whether the parties were
misled or mistaken. Thus the
high court had correctly found that the
conduct of employees of Computershare was not relevant to any enquiry
as to the validity
of the contract.
[28] I agree that Computershare’s function was
only to determine whether the acceptances were unequivocal. They
played no
part in concluding any contract. That this was so is borne
out by the evidence led to show that Currie had been treated
differently
from his daughter. She too had held linked units in
Paramount and she also had debentures. She also wished to exchange
them. On
her form she ticked the blocks for both debentures and
linked units in Paramount, signifying that she elected to take the
linked
units in Growthpoint. But she did not indicate how many of
each she wanted to exchange. And she filled in her banking details
despite
not electing to take any cash consideration. The scrip
auditor who checked her form was justly confused. She phoned Ms
Currie (Miller)
and asked for clarification, noting on the form that
the election was to take Growthpoint units.
[29] Although the evidence was led in order to
demonstrate that there was room for confusion, and that Computershare
did make enquiries
when a form was not correctly filled in, it
demonstrated also what a truly equivocal acceptance was. The scrip
auditor did not
have the power to determine whether or not to
conclude a contract. She was required only to check what election had
been made and
that it had been properly made. In Ms Currie’s
case, it was impossible to tell how many units or debentures she
wished to
exchange. In effect, when clarifying this, Computershare
completed her acceptance for her.
[30] On the other hand, they did not have to make
enquiries about Currie or the company’s forms: both held only
linked units,
and the number held had been clearly filled in in the
block indicating that they wanted the cash consideration. Since
Growthpoint
did not have to insist on a signature next to a deletion,
there was nothing for them to ascertain. The deletion was clear. And
as they did not hold debentures there was no reason to ask whether
Currie had signed as a unitholder or a debenture holder. Currie
acted
in such a way as to lead Computershare (as agent for Growthpoint) to
consider that he had elected to take cash for his and
the company’s
linked units. There was no reason to doubt his election and his
unexpressed intention, whatever that may have
been, was of no
consequence.
[31] In my view, Currie accepted the offers made to
himself and to the company, electing a cash consideration instead of
linked
units. The election was not severable from the acceptance, as
Currie attempted to argue. The election was nothing more than
acceptance
in one of two stipulated modes. His mistakes, if they were
mistakes at all, were far from reasonable. They were of his own
making.
Computershare, in processing the forms on behalf of
Growthpoint, did no more than process the acceptance forms submitted
by Currie,
and act in accordance with his election. The high court
correctly held that Currie and the company were bound by their
acceptances
of the mass offer.
Order
[32] The appeal is dismissed with costs.
______________
C H Lewis
Judge of Appeal
APPEARANCES:
For
first and second appellants: PAC Rowan SC
Instructed
by Mooney Ford Attorneys, Durban
EG
Cooper Majiedt Inc
Bloemfontein
For
respondent: FA Snyckers SC
Instructed
by Glyn Marais Inc
Sandton
Lovius Block
Bloemfontein