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[2023] ZAECMKHC 92
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Buntibiz (Pty) Ltd v Quest Retail Company (Pty) Ltd (1176/2021) [2023] ZAECMKHC 92 (31 August 2023)
SAFLII
Note:
Certain
personal/private details of parties or witnesses have been
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IN
THE HIGH COURT OF SOUTH AFRICA
[EASTERN
CAPE DIVISION – MAKHANDA]
CASE
NO.: 1176/2021
In
the matter between:-
BUNTIBIZ
(PTY) LTD
PLAINTIFF
And
QUEST
RETAIL COMPANY (PTY) LTD
DEFENDANT
JUDGMENT
NORMAN
J:
[1]
This is an action brought by Buntibiz (Pty) Ltd (Buntibiz) against
Quest Retail Company (Pty)
Ltd (Quest Retail). Both companies are
duly registered in terms of the laws of this country. Buntibiz
seeks against Quest
Retail, a refund of the purchase price paid in
respect of the business dealt with more fully below. It also seeks
interest and
costs of suit.
[2]
It is common cause that on 5 June 2018, Buntibiz and Quest
Retail concluded a sale agreement
in respect of a business which was
sold as a going concern. The business consisted of an automotive fuel
filling service station,
a convenience shop, a food takeaway outlet
and a car wash on the property situated at Erf 5404, Gelvandale,
Gqeberha
. The business is commonly referred to
by the parties as Quest Gelvandale.
The
effective date was 1 July 2018. The business sold comprised of fixed
assets, stocks and goodwill.
The
purchase price was the sum of R2,5 million (two million five hundred
thousand rand) excluding VAT, plus an amount equal to the
cost price
of the stocks.
Buntibiz was represented by Mr
Gotz Edel Gunther Von Westernhagen (Gotz) and Quest Retail by Ms
Liesel Bezuidenhout.
[3]
There were suspensive conditions that Buntibiz as a purchaser was to
be approved by Quest Petroleum as a customer
and it was to enter into
two relevant agreements, namely, a lease agreement and a supply
agreement (relevant agreements) with Quest
Petroleum. The two
relevant agreements were concluded on the same day as the sale
agreement and Buntibiz was approved as
a customer. It is common cause
that those conditions were fulfilled.
Issues
[4]
The parties identified issues for determination as follows:
(a)
Whether the tacit term can competently be imported into the sale
agreement between Buntibiz and Quest
Retail (the tacit term issue);
(b)
If so, whether the resolutive condition created by the tacit term
should be deemed to have been fictionally
fulfilled because Buntibiz
deliberately and intentionally sabotaged their own retail licence
application (the resolutive condition
issue);
(c)
If the tacit term can competently be imported into the sale agreement
and that Buntibiz is held not
to have deliberately and intentionally
sabotaged its own licence application, then whether Buntibiz
adequately performed under
the sale agreement to justify it being
refunded the R2.5 million by Quest Retail in terms of the tacit term
(the restitution issue).
Relevant
pleadings
[5]
I deem it necessary to record the pleadings that are relevant to the
issues. Buntibiz
alleged in the particulars of
claim that:
“
5. There was a
tacit term of the sale agreement:
5.1
That Plaintiff shall apply for a retail licence in terms of the
Petroleum Products Act 120 of 1977
, and, in the event of such licence
not being granted, the sale agreement would become null and void and
the purchase price would
be repaid.”
[6]
Clause 26 in the lease agreement reads as follows:
“
26.
LICENCING AND COMPLIANCE WITH THE LAW
26.1.
The lessee shall, within 7 (seven) days of the signature date, apply
for its retail licence,
it being agreed that if it is not granted a
retail licence by
the Department of Energy, it will not be
able to operate the business and will accordingly be refunded the
amount it paid as a right
to trade.
26.2
The lessee shall ensure that at all times during subsistence of this
agreement that
the retail licence, as provided for in the Act,
remains valid.
26.3
The lessor shall provide all reasonable assistance to the lessee for
the prosecution
of the application as set out in 26.1 and the
maintenance thereof in terms of the 26.2”
[7]
Buntibiz alleged in paragraphs 11 to 17 as
follows:
“
11.
Plaintiff applied for a retail licence in terms of the
Petroleum
Products Act 120 of 1977
.
12.
A temporary licence was issued, which allowed the Plaintiff to trade
pending the determination
of the application for the retail licence.
13.
Plaintiff’s application for the retail licence was refused on
13 December 2019.
14.
Plaintiff appealed the refusal of the retail licence in terms of
section 12A(1)
of the Act.
15.
The Minister dismissed the appeal on 12 December 2020.
16.
On the dismissal of the appeal the tacit term pleaded above resulted
in the sale agreement
became
null and
void of no force and effect and Defendant being required
to
refund the purchase price.
17.
On 12 January 2021 plaintiff informed Quest Petroleum (Pty) Ltd of
the dismissal of the
appeal and made demand for the repayment of the
purchase price, being R2 500 000.00 and tendered the return
of the business.
17.1
This letter was addressed to and received by attorneys acting for
both defendant and Quest Petroleum
(Pty) Ltd.
17.2
Such letter accordingly served as notice to and demand on defendant.”
[8]
Quest Retail pleaded to the above
allegations as follows:
“
6.
AD PARAGRAPHS 11 TO 15 THEREOF
6.1
The Defendant has been advised by the Plaintiff that it applied for a
retail licence, that
a temporary licence was issued allowing the
Plaintiff to trade pending the determination of the application for a
retail licence,
that the application was refused, that the Plaintiff
appealed the refusal of the licence, and that the Minister dismissed
the appeal.
6.2
The defendant has not yet had sight of the application, the decision
thereon, the appeal
or the reasons given by the Minister for the
dismissal of the appeal (or the decision), and thus makes no
admissions concerning
the aforegoing, and the Plaintiff is put to the
proof thereof.
7.
AD PARAGRAPH 16 THEREOF
7.1
These averments are denied.
7.2
In the event that it is held that the Plaintiff proceeded as alleged
in the paragraphs 11
to 15 of the particulars of claim, and that the
Minister dismissed the appeal, and further that the tacit term
pleaded by the Plaintiff
applied to the sale agreement (or a tacit
term having the effect pleaded), all of which is denied, then the
Defendant pleads that
such a tacit term would amount to a resolutive
condition, and that the Plaintiff deliberately and intentionally
frustrated the
fulfilment of the condition, in one or more of the
following respects:
7.2.1
The Plaintiff failed to present an application for a retail licence
that met the requirements for
the issue of such a licence; and/or
7.2.2
The Plaintiff failed to submit and pursue an appeal which the
Minister could and/or should have upheld;
and/or
7.2.3
The Plaintiff failed to pursue a review of the decision of the
licencing authority, alternatively
the Minister on appeal,
alternatively both, in respect of their failure to issue the licence
and/or uphold the appeal (whichever
the case may be), and to pursue
such review for purposes of securing a licence; and/or
7.2.4
The Plaintiff failed to amend its application and/or the terms
thereof, and/or to institute a fresh
application for retail licence,
once any concerns of the licencing authority and/or the Minister on
appeal, were known to it and
to thereby ensure that a retail licence
was granted; and/or
7.2.5
The Plaintiff failed to pursue its application and/or appeal with
diligence and care, such as would
have enabled it to succeed in its
application for the issue of a retail licence.
7.3
In the event that it is held that the Plaintiff deliberately and
intentionally prevented
the fulfilment of the said condition in one
or more of the respects set out above, the Defendant pleads that the
condition shall
be deemed to have been fulfilled as against the
Plaintiff and the sale agreement will in such circumstances not be
null and void
or of no force and effect.”
Buntibiz evidence
Mr Kevin Niel
McLoughlin
McLoughlin
testified on behalf of the plaintiff as follows:
[9]
Buntibiz is 60% controlled by Gotz and 40%
by himself. During 2018 they were looking for investments
when they
were introduced to Quest Gelvandale. During the negotiations for the
acquisition of the business McLoughlin was dealing
with Mr Adriaan
Jacobus Le Roux (Le Roux) from Quest, who was negotiating on behalf
of Quest Retail.
[10]
Before Buntibiz paid the purchase price McLoughlin
received a call from one Mr Norman LeGrange, the previous
owner of
Quest Gelvandale who informed him that he was the rightful owner of
the business and any application for a licence would
be objected to.
He was concerned because that meant that they would not get the fuel
licence. He reported this threat to Le Roux.
[11]
Le Roux indicated that there was no risk in them
not getting the licence. McLoughlin requested Le Roux to
reduce that
into writing. Le Roux wrote a letter dated 17 July 2018 to the effect
that if there was a problem their money would
be refunded. Le Roux
mentioned that this was common law.
Le Roux
also told him that he was an attorney.
[12]
He confirmed that the business consisted of a filling station, a
convenient store and a car wash. When asked
by his Counsel “
Is
there a clause that regulates what would happen if you do not get the
licence?”
His answer was “
not that I could
recall.”
[13]
He testified in relation to the lease agreement between Buntibiz and
Quest Petroleum. He is the one who negotiated
the lease on behalf of
Buntibiz and Le Roux was negotiating on behalf of Quest Petroleum. He
was referred to clause 26.1 of the
lease agreement. His understanding
of that clause was that if Buntibiz did not get the retail licence it
would be refunded R2.5
million. He stated that there were numerous
talks about this issue with Le Roux. There was no distinction drawn
between the companies,
namely, Quest Retail and Quest Petroleum.
[14]
In his mind he had no doubt that they would get the licence. As far
as he was concerned there was only one
company
Quest
and Le Roux himself never made the distinction between the
companies. He understood that he would get three separate contracts.
His understanding of the supply agreement was that he could only buy
fuel from Quest unless Quest did not have it. All these contracts
were signed on the same day on 5 June 2018.
[15]
In so far as the application for a retail licence is concerned he
testified that one Mr Earle Cloete (Cloete)
worked with his office in
compiling the applications. He was not directly involved. A temporary
licence was granted on 12 September
2018. Buntibiz took control of
the assets and the business
from
September 2018
. After three months of trading they realized
that trading was difficult. They conveyed this to Quest, they agreed
that they had
to revamp the business. Quest revamped the pumps and
canopy and Buntibiz refurbished the convenient store, tiled, painted
and bought
refrigeration. In this regard Buntibiz incurred costs that
were in excess of R1 million.
[16]
During renovations the filling station was shut for about three
months. After the renovations they reopened
the filling station and
business improved slightly but still they were not able to reach
their targets. They were informed in December
2018 that the
application for a permanent licence had been refused. They were
advised by Cloete that the HDSA requirement was not
necessary. They
had no inclination that the 25% rule was applicable and that it was a
requirement.
[17]
It was suggested that they should put in their wives as shareholders
to meet the 25% rule. He, together with
Gotz, were not willing to do
so because their wives are not involved in their businesses. They
were not prepared to dilute the
shareholding. Buntibiz lodged an
appeal against the decision refusing licence. The appeal was
unsuccessful. In the motivation for
the appeal, Cloete put in that
Buntibiz would restructure its shareholding. That was not an
instruction from Buntibiz and as a
result McLoughlin demanded that
Cloete withdraw that statement, which he did. The appeal was then
submitted to the Minister. They
received the Minister’s
decision on 6 January 2021. The Minister refused the appeal by
Buntibiz on 12 December 2020.
[18]
It is common cause that the reason for the refusal of the appeal was
based on the 25% rule. Whilst awaiting
the outcome of the licence
Buntibiz continued to trade. It was able to meet its commitments for
rentals, fuel supply even though
it did from time to time fall into
arrears.
[19]
Thereafter this witness was taken through a number of emails and
letters on the basis that they were relevant
to the issues at hand.
Quest objected to that on the basis that those documents were not
relevant to the issues before court. The
court ruled that they would
be provisionally admitted. It was only at the end of the matter
during argument that Mr Hopkins SC
conceded that, bar one letter
(“Exhibit A”), all the other documents were irrelevant. I
shall revert to this issue
later.
[20]
It is worth-mentioning that most of those letters related to
settlement negotiations between Quest Petroleum
who is not a party in
these proceedings, and Buntibiz. It is also common cause that Quest
Petroleum sold
the business
to Maguta
Properties (Pty) Ltd. In his evidence -in -chief McLoughlin testified
that the same business was sold to Maguta for R2.5
million. Later
in his evidence -in -chief when asked by counsel in reference to a
letter dated 6 May 2020, “Exhibit
K”:
Q:
What were your instructions to your attorney?
A:
In the lease agreement we said if we don’t get the licence we
will get our money
back”.
[21]
When asked about the employees he stated that they
had to retrench them but they are all still working for
the business
at the Gelvandale site. Under cross-examination when asked who
Buntibiz was McLoughlin responded that it was
Gotz and himself. He
could not recall why clause 26.1 was in the lease agreement. He said
he could not recall that he had asked
for it to be put in the lease
agreement. It was put to him that Le Roux would say when he testified
that he, McLoughlin, had requested
it to be put in the lease
agreement. He confirmed that the agreements were sent to him by email
and he and Gotz would suggest changes
in manuscript. He accepted that
Buntibiz did not plead that Quest Retail and Quest Petroleum were the
same company. He read the
sale agreement. He and Gotz, who resided in
East London, would meet at least once a week to discuss the
agreements. When he read
the agreements he understood that there were
two companies involved.
[22]
He stated that “
they put the part of the refund in another
agreement into a company that was not the seller of the business.”
He assumed that everything was interlinked.
[23]
He conceded that a reasonable reader would see the
seller and the lessor as two different companies. He
also understood
that reference to ‘relevant agreements’ in the sale
agreement does not mean the same agreement. He
conceded that a
licence was not part of the business. He also understood that
ownership and risk would pass to Buntibiz on 1 July
2018 being the
date of takeover of the business. He also conceded that Quest Retail
fell out of the picture after Buntibiz took
over the business.
[24]
Contrary to what he had stated in his evidence in chief, under
cross-examination, he agreed with Quest’s
version that after he
and Le Roux had a discussion, Le Roux sent the amended drafts on 28
May 2018 and he inserted clause 26 as
he had requested. He later
changed and said that it was put into the wrong agreement. He also
conceded that when Buntibiz bought
the business it was operating and
when it left the business, the business was closed and not operating.
He testified that
the R2,5 million was for the goodwill and
assets. He conceded that he understood that once they paid the
business will be
that of Buntibiz. He also conceded that the sale
agreement was not amended. He accepted that he was confused
about the dates
when Le Grange called him. It was not before they
paid the purchase price but it was at a stage when Buntibiz was
already trading.
[25]
He contradicted himself when referred to Exhibit “A”, a
letter dated 17 July 2018. In his
evidence in chief he stated
that in that exhibit there was an undertaking to refund Buntibiz if
it did not get a licence. He conceded
that was not what was recorded
in the letter. As aforementioned this is the only letter that was
relevant to the issues as it made
reference to Quest Retail as well.
I shall record its contents below:
“
17 July 2018
Buntibiz (Pty) Ltd
Port Elizabeth
Per email:
k[...]@wgproperties.co.z
a
Dear Kevin,
RE: NORMAN LE GRANGE
(THE 5404 STANDFORD ROAD TRUST)
1.
I refer to our discussion yesterday. I write to you on behalf
of Quest, Quest Retail Company and PropT Solutions.
2.
You reported receiving a telephone call from Norman Le Grange
alleging that he had an option over the business. I set out herein
after some context.
3.
The 5404 Standford Road Trust (“the Trust”),
represented by Le Grange, is the erstwhile owner of Erf 5404,
Gelvandale
(“the property”) and the business operated
therefrom at that time.
4.
Propt Solutions (Pty) Ltd (formerly known as Quest Petroleum
Free State (Pty) Ltd purchased the property from the Trust. The deed
of sale had included in it an option to repurchase the property (not
the business), only if the Trust was not indebted to the purchaser
nor in default of its lease agreement with the purchaser.
5.
The Trust breached the lease agreement which was subsequently
cancelled and accordingly the Trust is in perpetual breach of the
lease agreement. It therefore can never exercise the option to
repurchase the property.
6.
I reiterate that the Trust had no option in relation to the
business, and in fact the Trust vacated the property willingly.
7.
If for any reasons the Trust succeeds in its attempt to
activate its option (which it has not done in any shape or form) then
you
will be refunded the full purchase price as well as your
expenditure on site.
8.
I trust that this is in order.
Yours faithfully,
Adriaan Le Roux
Quest Petroleum (Pty)
Ltd”
[26]
He testified that he and Gotz were not told upfront about the 25%
rule, and they were not willing to do it
for that reason. They did
not want outside people to be involved in their business, he said. He
struggled to deal with the questions
relating to the 25% rule. First,
he stated that he was advised about it but was told it was not
enforced. Later that changed to
Le Roux told them that they did not
need HDSA ownership. Later that changed to “
they said it
will not be an issue we will get our licence”
. He later
conceded that nothing prevented Buntibiz from changing its
shareholding but it was not prepared to do so.
[27]
He conceded that Cloete told him that if Buntibiz complied with the
transformation requirement it would get
the licence. He was also told
that if it did not do so, it will not get the licence. He conceded
that he had an option to comply
with the 25% rule. He also conceded
that the closure of the filling station and the financial distress of
the business were not
related to the application for a retail
licence. He did not dispute the fact that a temporal licence was for
six months and that
Buntibiz continued to trade pending the permanent
licence and also continued to trade pending the appeal. He testified
that Buntibiz
traded the filling station until March 2021. He agreed
that Quest Petroleum in its correspondence with him was attempting to
resolve
the problem. At that point Buntibiz did not demand a refund
because of the licence issue.
[28]
The attorneys of record of Buntibiz at some point communicated that
they were going to apply for rectification
of the agreement but that
did not occur. In his evidence -in- chief he created an
impression that Quest Petroleum wanted
to sell the business in order
for it to refund Buntibiz. However, when confronted with
correspondence dated 7 May 2020, Exhibit
“Z”, wherein
Buntibiz indicated that it wanted a purchase price of R3 million for
the business, his evidence changed.
It became clear that it was
Buntibiz that would be the seller and not Quest Petroleum. It was
Buntibiz that wanted R3 million in
order for it to recoup some of the
expenses incurred towards renovations of the business.
[29]
Later when being questioned on the issue of the
refund, he changed his evidence and stated that he effectively
wanted
a refund. He conceded that in the correspondence (‘Exhibit
Z’) there was no mention of a refund at all.
He conceded
that the issue about the refund by Quest Petroleum was based on
certain conditions which were not met. He agreed that
there was a
dispute between Quest Petroleum and Buntibiz.
[30]
It transpired in evidence that all the attempts and proposals to
resolve the dispute between Quest Petroleum
and Buntibiz failed. He
did not recall that he asked Le Roux to put the clause in the lease
agreement but he said it was
highly likely. The following question
was put to him:
“
Q -
His evidence would be that there was no need to put clause in the
sale agreement because you had a
right against Petroleum.
A -
He is right.”
[31]
He conceded that clause 26 in its present form could not be contained
in the sale agreement because there
would be a contradiction in the
agreements. He also conceded that Buntibiz removed some of the
expensive equipment from the premises.
He further agreed that the
correspondence between the parties did not indicate that the three
agreements were to be treated as
one. He testified that the
people that they engaged in relation to the license did not raise the
fact that they had to ‘dilute’
Buntibiz. He conceded that
in the particulars of claim there were no allegations of
misrepresentation.
Mr
Earle Cloete
[32]
The next witness for Buntibiz was Mr Earle Cloete. He is a petroleum
consultant. His expertise in this regard
was not challenged. He had
worked previously for the Department of Minerals and Energy. He left
the department in 2017 to start
his own business. He knew Quest and
was dealing with Le Roux.
He confirmed
that he had put in applications for both the temporal and permanent
licences for Buntibiz. He confirmed that the temporal
was granted and
the permanent licence was refused because Buntibiz did not comply
with the 25% rule. This rule comes from the Petroleum
Charter which
has been in existence since 2000 but was not implemented. It was only
implemented at the end of the year 2018.
[33]
He also confirmed that he also prepared and lodged an appeal after
the application for a licence was refused.
In the provisional appeal
that he prepared he put in a statement that Buntibiz would
restructure its shareholding because that
was the only way it would
be able to succeed in the appeal. He conceded that he did not have a
mandate from Buntibiz to put in
that statement. McLoughlin was not
satisfied with that statement and instructed him to withdraw it and
he obliged. He believed
that application would succeed but because of
the change in the implementation of the law, some applicants
including Buntibiz,
suffered the same fate.
[34]
Under cross-examination he stated that if Buntibiz had restructured
its shareholding it would not have had
a problem. He conceded
Buntibiz was unwilling to restructure. Plaintiff closed its
case.
[35]
Defendant applied for the absolution from the instance which was
refused for the reasons set out in that
judgment.
Quest
Retail evidence
Mr
Adriaan Jacobus Le Roux
[36]
Le Roux testified for the defendant. He stated that in 2018 he was
the retail sales manager of Quest Petroleum
now known as Petrofuel.
He is not employed by Quest Retail. He represented both Quest Retail
and Quest Petroleum in the transactions.
He drafted the agreements.
He then sent them to McLoughlin by email. There were proposed
amendments by Buntibiz. There was
a discussion around the
licensing issue and what would occur if the licence was not obtained.
It was agreed that Quest Petroleum
would come to the assistance of
Buntibiz. Before inserting the clause he would have gone to the board
of Quest Petroleum and obtained
an instruction to do so. Mr Jurgen
Smith was the founder and a director of Quest Petroleum. He
also signed the agreements.
[37]
The director of Quest Retail was Ms Liesel Bezuidenhout. He testified
that Quest Retail was an enabling company
which only sold the
business and then walked away. The party that attended to the lease
and supply of fuel was Quest Petroleum.
After the takeover date of
the business by Buntibiz, Quest Retail was never involved in the
business again. He testified that the
R2.5 million was for fixed
assets, stock and goodwill.
[38]
If he had been requested to put in clause 26 in the sale agreement he
would have had to approach Quest Retail
for consent. He was confident
that Quest Retail would have told him to look for another buyer. The
reason for that was because
Quest Retail was an enabling entity.
Quest Retail would have told Buntibiz that it bought a functioning
business as a going concern
and after the sale it had moved away from
it.
[39]
He testified that anything that needed to be paid would be paid by
Quest Petroleum. He confirmed that Quest
Petroleum tried to get a
buyer for the business for continuity sake. They found a buyer who
offered R2.5 million but Buntibiz wanted
R3 million. He stated that
the attitude of Quest Petroleum was that Buntibiz was unwilling to
comply with the law and therefore
they could not come to its
assistance. The 25% was a requirement in terms of the law. He denied
that Quest Retail intended to refund
the R2.5 million to Buntibiz if
they did not get the licence. He stated that the agreements were
three distinct agreements and
it was never their intention that they
should be seen as one.
[40]
Under cross-examination he testified that although the sale agreement
makes reference to relevant agreements
they should not be seen as
linked. He testified that Maguta Properties (Pty) Ltd did not
purchase the same business as the one
sold to Buntibiz because there
were no fuel pumps functioning.
Maguta did not
receive what Buntibiz bought. Quest Petroleum tried to get a third
party to buy the business from Buntibiz. He
testified that
because Quest Petroleum was the operator it made sense that if
Buntibiz had done everything in its power to obtain
the licence, but
did not succeed, that it should be refunded. Quest Petroleum had to
ensure that the operator was able to operate.
He testified that
Liesel Bezuidenhout has since left Quest Retail and is now a director
in Simply Nest. He did not expect McLoughlin
to know the internal
workings of Quest Retail and Quest Petroleum. He believed that
Buntibiz would get a licence. He did not believe
that Quest Petroleum
is liable to pay Buntibiz. The option that related to Mr De Lange
related to the property and not the business
and it had nothing to do
with the retail licence. He confirmed that he was asked to put clause
26 into the lease agreement by McLoughlin
for recordal purposes.
[41]
It was suggested to him that one would get a refund from the person
he paid the money to. He disputed this
on the basis that it would
depend on the context. He testified that the right to trade was
not defined as an amount. He disputed
that Buntibiz paid R2,5 million
for a right to trade. He stated that that amount was for a going
concern. He disputed that the
right to trade was reference to the
goodwill which Buntibiz acquired in terms of the sale agreement.
He testified that McLoughlin
had approached them and stated that he
wanted to get out of the business. His attitude was that he could
stay in the business,
or sell or close it. If Buntibiz had done
everything that the department told it to do inorder for it to get
the licence,
but was still refused, then he could invoke clause 26.
He described the right to trade amount as “the
key
money, the right to do business and the right for you to operate”
.
Quest Retail closed its case.
Legal
submission by the parties
[42]
Mr Hopkins submitted that this court should make use of the innocent
bystander test adopted from English
law. He relied on,
inter
alia,
Reigate
v Union Manufacturing Company (Ramsbottoms)
[1]
for the contention that the court must imply a term if it is
necessary in the business sense to give efficacy to the contract.
If
it is such a term that you can be confident that if at the time the
contract was being negotiated someone had said to the parties?
What
will happen in such a case? and they would have both replied “
of
course so and so but we did not trouble to say it because it is
clear
”.
[43]
He submitted that the court may import the tacit term if it is
satisfied that the facts and the circumstances
give rise to a
reasonable inference that Quest Retail and Buntibiz intended for the
tacit term to apply and that the tacit term
makes good business
sense. He submitted that because Ms Liesel Bezuidenhout, the only
director of Quest Retail did not give evidence
at the trial, this
court does not have direct evidence from her to suggest that she
would have answered the innocent bystander
on behalf of Quest Retail
negatively. He submitted that Le Roux did not ask Liesel Bezuidenhout
whether she would have agreed to
put the refund clause into the sale
agreement. He submitted that the court should reject the evidence of
Le Roux that McLoughlin
specifically asked him not to put the refund
clause in the sale agreement.
[44]
He submitted that this court viewing the suite of the three contracts
as a single transaction concluded with
a single Quest entity, the
version of McLoughlin is more probable. He also relied on Le Roux’s
concession that he never told
McLoughlin that there were two separate
Quest entities and therefore McLoughlin would have had no reason to
select a specific agreement
within which to put the refund clause.
Once Le Roux’s evidence is rejected, he argued, the court will
be left with circumstantial
evidence. Relying on the undertaking by
Quest Retail and Quest Petroleum in response to the Norman Le Grange
threat of his intended
objection to the licence application, this
court must infer that that undertaking by the exercise of inferential
reasoning, would
lead to the conclusion that Quest Retail would have
consented to the tacit term.
[45]
He submitted that the court in giving true meaning
to paragraph 7 of Exhibit “A” dated 17 July
2018 must
adopt the broader context in its approach as was adopted in the
Natal
Joint Municipal Pension Fund v Endumeni Municipality
[2]
.
He
submitted that Le Roux was not a good witness. He was evasive and
obfuscatory because he could not even explain to the court
what right
to trade meant although he had used the term in the contract which he
drafted. He submitted that the tacit term made
absolute business
sense. He submitted that Buntibiz would have answered the innocent
bystander question positively. He also submitted
that the tacit term
should be imported and incorporated into the sale agreement.
[46]
Dealing with the resolutive condition he submitted that the Liquid
Fuel Charter did not have the force of
law. He submitted that the 25%
was applied in December 2019. The resolutive condition does not
postpone the operation of the obligation
meaning that the contract
comes into effect immediately but will terminate if some future
uncertain event transpired. Relying on
Van
der Merwe et al
[3]
he submitted that the adoption of fictional fulfilment does not mean
that the contracting parties need to go out of their way to
interfere
with the normal course of events. He accepted that if Western Gruppe
who held 100% of shares in Buntibiz had sold 25%
of those shares to
an HDSA, Buntibiz would have received its retail licence. He
submitted that an active restructuring of the holding
company would
amount to an interference in the normal flow of events. In this
regard, the restructuring of the company takes the
company out of the
realm of fictional fulfilment. He further argued that the adoption of
fictional fulfilment cannot be used to
keep a contract in place in
order to countenance an unlawful agreement. In this regard, he relied
on
Premier
of the Free State v Firechem Free State (Pty) Ltd
[4]
.
[47]
In addressing the restitution issue, he submitted that, Quest
Retail’s submission that if the tacit
term is established and
the resolutive condition is met Quest Retail has no obligation to
make restitution until Buntibiz also
makes restitution. He submitted
that Quest Retail has not communicated to Buntibiz why it alleged
non-performance. In this regard,
he relied on
Telcordia
Technologies Inc. v Telkom SA Ltd
[5]
.
On these bases, he submitted that the court should find for Buntibizz
with costs including reserved costs relating to the absolution
from
the instance application.
[48]
Mr Niekerk, on the other hand, submitted that a tacit term cannot be
imported into any contract where the
parties applied their minds to
that contract. In this regard, he referred the court to
Robin
v Guarantee Life Assurance Company Ltd
[6]
.
He
further submitted that there was deliberate intent on the part of
Buntibiz not to fulfil the condition of the retail licence.
He
relied, in this regard, on
Lekup
Prop Company v Wright
[7]
.
He contended that on the evidence it is clear that McLoughlin
understood that the proposal to pay the R2.5 million was from Quest
Petroleum and not from Quest Retail as expressly agreed between the
parties. He submitted that, on that basis alone, there would
be no
basis for this court to import a similar term already agreed to in
the lease agreement into the sale agreement.
[49]
Mr Niekerk referred to
City
of Tshwane Metro v Brooklyn Edge
[8]
for the submission that the court must first look at the terms of the
contract, the surrounding circumstances and the facts of
the case. He
argued that the court must find that clause 26 was put in the lease
agreement only. He further contended that the
sale agreement itself
had a non-variation clause. If clause 26 were to be imported into the
sale agreement, as suggested by Buntibiz
that would vary the sale
agreement which has a non- variation clause. He further submitted
that because McLoughlin had conceded
in evidence that the term was
not necessary for it to be put in the sale agreement because there
was the protection in clause 26
of the lease agreement, therefore the
cause of action of Buntibiz is against Quest Petroleum.
[50]
He submitted that on the objective bystander test there are no
prospects that the tacit term existed and
if the tacit term did exist
Buntibiz failed to establish that term. He submitted that the mere
fact that the clause was put in
the lease agreement mitigates against
the suggestion that it should have been in the sale agreement. He
submitted that the court
cannot infer that it should have been part
of the sale agreement because to do so would amount to the court
contracting for the
parties, contrary to the caution made in
the
City of Tshwane
matter. He further submitted that should
it be necessary for Buntibiz to prove the resolutive condition, it
should prove that it
was unable to obtain the licence not that it was
unwilling to change ownership. He submitted that on this ground
too, Buntibiz
must fail because its evidence is that of unwillingness
to embrace the transformation imperatives of the Charter.
[51]
He submitted that the court must find that
McLoughlin’s evidence was not reliable as he vacillated
in his
evidence. He submitted that the concessions he made under
cross-examination demonstrated that he knew that he was dealing
with
different companies and not with one company as he wanted the court
to believe when he gave his evidence in chief. He submitted
that the
court should accept the evidence of Le Roux that Buntibiz was not
willing to comply with the law and on that basis alone
he
deliberately sabotaged the licensing approval. He further submitted
that after the sale was concluded, Quest Retail went away,
as
testified by Le Roux and had no further dealings with Buntibiz in its
operations of the business and therefore it would make
no business
sense to include the proposed term in the sale agreement. He relied
heavily in his submissions on
Cash
Converters Southern Africa (Pty) Ltd v Rosebud Western Province
Franchise (Pty) Ltd
[9]
for his submission that once the sale agreement was concluded it had
served its purpose and there can be no question of a refund
of the
purchase price.
[52]
He further submitted that on the bystander principle Le Roux had
testified that Quest Retail would have simply
told him to look for
another buyer if he had conveyed to it that the refund of the
purchase price should be paid to Buntibiz should
it not obtain a
trading licence. That, he submitted, is sufficient to refuse the
importation of the tacit term proposed by Buntibiz.
[53]
On the issue of restitution, he submitted that Buntibiz was sold a
business as a going concern. When it was
handed over to it on the
effective date it was functional, the filling station was pumping
fuel and the business was operative.
However, when he handed
the business back, the business was not operational and the pumps
were not pumping any fuel. He submitted
that any order directing
payment of the purchase price in those circumstances would be
prejudicial to Quest Retail who honoured
the terms of the sale
agreement between the parties in full.
Evaluation
of evidence
[54]
I have already made certain observations in relation to the
evidence of Mr McLoughlin. He testified that
it is highly
likely that he requested that clause 26 be put in the lease
agreement. In this regard he corroborated the evidence
of Le
Roux. This court must accordingly accept Le Roux’s evidence.
[55]
He also testified that he was aware that there were three agreements
and there were two companies involved.
This goes against his evidence
in chief that there was one commercial transaction and his assumption
that he was dealing with one
company. Again, Le Roux’s
evidence in this regard that these agreements are distinct and so are
the companies
involved must be accepted.
[56]
There is a fundamental difficulty with Mc Loughlin’s
evidence where it seeks to rely on
both clause 26 and on the tacit
term in paragraph 5.1 of the particulars of claim. In his evidence
-in - chief he testified that
clause 26 should have been placed in
the sale agreement. That evidence does not support the tacit
term contended for.
This means that his evidence does not
support the pleaded case in paragraph 5.1 of the particulars of
claim.
[57]
The tacit term pleaded is different from clause 26
in material respects. First, there is a time frame in
clause 26.1 set
for the application for a licence, namely,
within
7 days of the date of signature.
In the pleadings the
consequence of the non- approval of the licence would render the sale
agreement null and void. That is what
is envisaged in paragraph 5.1
of the claim.
[58]
Second, in clause 26, Quest Petroleum acknowledged
that once the retail licence is not approved Buntibiz
will not be
able to operate the business. There is no acknowledgement relating to
the operation of the business in the sale agreement.
[59]
Third, paragraph 5.1 of the claim provides that
the purchase price would be repaid. On the other hand, clause
26
provides for a refund of the amount that Buntibiz paid
as a right
to trade.
[60]
Fourth, there is no amount, either in the lease or
the sale agreement that was agreed on in relation to
the right to
trade.
[61]
Fifth, in paragraph 5.1 the proposed tacit term
makes reference to a refund of the purchase price. The sale
agreement
makes reference to the purchase price of R2,5 million. However, that
purchase price is apportioned as follows:
“
7.2.1 Fixed
Assets
fair market value;
7.2.2
Stocks
cost price or the net realizable value;
7.2.3
Goodwill
the balance.”
[62]
All of these items do not stipulate in monetary
terms what the fair market value is for fixed assets, cost
price for
stocks or their realizable value and what the balance for goodwill
would be. Buntibiz operated the business from the
effective date 1
July 2018 until March 2021. In order for it to succeed there
must be evidence that having operated the business
for that period of
time, it would make business sense to refund it the R2,5 million
despite lack of the market value; cost price
of stocks and with no
knowledge whatsoever of the balance for goodwill. The purchase
price provided for the R2,5 million
plus an amount equal to the cost
price of the stocks calculated in terms of clause 8. Interestingly,
clause 8 sets out,
inter
alia,
the method of evaluating stocks, and the dispute mechanisms relating
to stocks. After the payment of the R2,5 million Buntibiz
became the owner of the business
[10]
.
There is no evidence whatsoever tendered by Buntibiz to support the
tacit term and the refund of R2,5 million in the light
of the
apportionment of the purchase price.
[63]
McLoughlin continuously made reference to the R2,5
million being a refund for the right to trade. The reference
to the
“right to trade ‘is contained in clause 26 of the lease
agreement and not in the proposed tacit term contended
for in
paragraph 5.1 of the particulars of claim. He also relied
on the proposed tacit term by making reference to
‘the purchase
price’. I have already highlighted the material differences
between the proposed tacit term and the expressed
term in clause 26
of the lease agreement. McLoughlin relied on both in evidence which
made his evidence contradictory and thus
unreliable.
[64]
The sale agreement is the only agreement that was signed by Buntibiz
and Quest Retail. If one has regard
to that agreement, it only makes
reference to the thing that was sold and the purchase price which are
matters relevant to this
action. It makes no reference to the retail
licence needed to operate the business. First, were this court
to import the
tacit term it would be introducing a new aspect, not
contemplated by the parties to the sale agreement, namely, a retail
licence.
[65]
Second, contrary to the express terms in the sale
agreement, it would be introducing a new term that the
sale would be
null and void in the event of the retail licence not being granted.
In this regard, by so doing, this court
would be creating a contract
that would be at variance with what the parties agreed to in clauses
23 and 24 of the sale agreement,
that:
“
23.
ENTIRE AGREEMENT
This agreement,
together with all annexures annexed thereto represents the entire
agreement between the parties and supersedes all
other agreements or
understandings, written or verbal, that the parties may have had with
respect to the subject matter of this
agreement.
25.
VARIATION
No addition to,
variation or consensual cancellation of any provision in this
agreement including this provision, shall be of any
force or effect
unless reduced to writing and signed by or on behalf of both
parties.”
[66]
It is common cause that these terms were never varied by the parties.
The fact that, it was agreed in the
sale agreement that the
conclusion of the lease and the supply agreements constituted
suspensive conditions to the sale agreement,
does not make all three
agreements interlinked. Performance in relation to each
agreement is distinct.
It is common cause that
these suspensive conditions were fulfilled and to that extent the
sale agreement came into effect and became
binding on the parties.
[67]
When McLoughlin dealt with the shareholding of Buntibiz, he was
adamant that he controlled 40% whilst Gotz
controlled 60% of
Buntibiz. Contrary to the submissions made by counsel he did not
refer to the restructuring of Western Gruppe
instead he limited the
views on that issue to Gotz and himself. Therefore, the restructuring
of Buntibiz in order to meet the 25%
rule should be viewed in the
context of his evidence and not on speculation as to what Western
Gruppe was expected to do.
[68]
He had testified and this was confirmed by Cloete that Cloete had
indicated that the company would restructure
and that company was
Buntibiz and upon him having become aware of that he instructed
Cloete to withdraw that statement because
the company was not willing
to do so.
[69]
On the facts, McLoughlin conceded that the closure of the filling
station and the financial distress of the
business were unrelated to
the application for the retail licence. He also conceded that the
closure of the fuel pumps was also
unrelated to the retail licence.
Although the licence application and the appeal was dismissed by
December 2020 Buntibiz continued to trade until
March 2021.
He also conceded that as at 7 April 2020 when a
letter from Le Roux was written where Quest Petroleum was attempting
to resolve
the problem between itself and Buntibiz at that point
there was never a mention by Buntibiz of the fact that if it could
not get
a licence it wanted a refund.
[70]
In weighing up the evidence in its totality,
the importation of the tacit term is not supported by the evidence,
including the plaintiff’s
evidence. It would vary the sale
agreement in a manner that would be inconsistent with its agreed
material terms and its purpose
and would thus lead to unbusinesslike
consequences. It follows that the evidence of Le Roux must be
preferred as reliable over
that of McLoughlin. The evidence of Cloete
confirmed that the only reason for the refusal of the licence was as
a result of the
unwillingness of Buntibiz, against his advice, to
restructure inorder to comply with the transformation imperatives as
prescribed
by law. I also accept the evidence of Le Roux as a
representative of Quest Retail in the sale agreement that it would
have
told him to get another buyer if he sought its consent on the
tacit term,because his authority in this regard was not impugned.
The
Law
[71]
Buntibiz bore the onus to prove its case. In the
City of Tshwane
matter with specific reference to paragraph 16 the Supreme Court
of Appeal stated:
“
A tacit term is
an unexpressed provision of a contract. It is inferred primarily from
the express terms and the admissible context
of the contract. A court
will not readily infer a tacit term, because it may not make a
contract for the parties. The inference
must be a necessary one,
namely that the parties necessarily
must have or
would
have agreed to the suggested term. A relevant fact in this regard is
whether the contract is efficacious and complete or whether,
on the
other hand, the proposed tacit term is essential to lend business
efficacy to the contract. ‘The celebrated bystander
test
constitutes a practical tool for the determination of a tacit term.
To satisfy the test the inference must be that each of
the parties
would inevitably have provided the same unequivocal answer to the
bystander’s hypothetical question. Even if
the inference is
that one of the parties might have required time to consider the
matter, the tacit term would not be established’
”
(footnotes omitted).
[72]
Brand JA in
City
of Cape Town (CMC Administration) v
Bourbon-Leftley
NNO
[11]
reiterated the principle that a tacit term is not easily inferred by
the Court, and stated:
“
[19]
As stated in these cases, a
tacit term is based on an inference of what both parties must
or
would necessarily have agreed to, but which, for some reason or
other, remained unexpressed. Like all other inferences, acceptance
of
the proposed tacit term is entirely dependent on the facts. But, as
also appears from the cases referred to, a tacit term is
not easily
inferred by the courts. The reason for this reluctance is closely
linked to the postulation that the courts can neither
make contracts
for people, nor supplement their agreements merely because it appears
reasonable or convenient to do so (see eg
Alfred
McAlpine & Son (Pty) Ltd v Transvaal Provincial
Administration
1974
(3) SA 506
(A)
at 532H). It follows that a term cannot be inferred because it would,
on the application of the well-known 'officious bystander'
test, have
been unreasonable of one of the parties not to agree to it upon the
bystander’s suggestion. Nor can it be inferred
because it would
be convenient and might therefore very well have been incorporated in
the contract if the parties had thought
about it at the time.
A
proposed tacit term can only be imported into a contract if the court
is satisfied that the parties would
necessarily
have
agreed upon such a term if it had been suggested to them at the time
(see eg
Alfred
McAlpine
supra
at 532H-533B and
Consol
Ltd t/a Consol Glass
supra
para 50).
If
the inference is that the response by one of the parties to the
bystander’s question might have been that he would first
like
to discuss and consider the suggested term, the importation of the
term would not be justified.
”
(my
underlining).
[73] I
have had regard to the authorities relied upon by the parties. In the
Firechem
matter, the Supreme Court of Appeal stated at
paragraph 29:
[29]
But I do not think that the case is to be decided upon the basis of
Mr Pillay’s views. To do
so would be to ignore the parol
evidence rule in a fundamental way. It is not for him to tell us what
the Board intended, when
the Board has expressed its intentions in
words that are capable of ready interpretation. One must ask
oneself what was expressed
to be intended when the acceptance
referred to ‘a contract…. signed by the province and
Firechem.’This expression
must be read together with the
statement that: ‘This letter of acceptance constitutes a
binding contract…’ If
the contract brought into being by
this acceptance was to bind, then the further contract envisaged
could not be one which contradicted
it. …”
[74]
I have already indicated that the tacit term
proposed will be contrary to what the parties expressed in
the sale
agreement and thus fall foul of the caution expressed in the
Firechem
case.
In any event, the parties applied their minds to the sale agreement
and had made provision in the contract in relation to
the terms that
would result in a valid agreement. Any tacit term that is in
contradiction of those express terms, cannot be imported.
[12]
[75]
The fact that there is clause 26 in the lease agreement does not lead
to a justifiable inference that a similar
term was in the
contemplation of the parties when they concluded the sale agreement.
I find that on the facts before this court
there is no room for the
importation of the tacit term for which the plaintiff contends. I
do not deem it necessary to traverse
the two other issues, namely,
the resolutive condition and the restitution issue as they both flow
from the tacit term issue. It
follows therefore that the
plaintiff’s claim must fail.
Costs
[76]
The general rule on costs is that costs follow the result. I have no
reason to depart from that rule.
Something must be said about
the leading of evidence and production of documents that were, as
conceded by counsel for Buntibiz
in the end, that except for one
letter: “Exhibit A”, all the other documents were
privileged and or not relevant to
the issues at hand. This was a call
that Buntibiz ought to have made earlier. By so doing it would have
avoided the unnecessary
leading of irrelevant evidence in relation to
those documents. This court spent hours going through the
documents and provisionally
admitting them on the basis that they
were relevant, as contended on behalf of Buntibiz, despite numerous
objections from Quest
Retail. Those costs cannot fall within the
ordinary party and party cost order. As a mark of this court’s
disapproval
of the conduct of Buntibiz in this regard, it must pay
costs relating to all the privileged and/or irrelevant documents
handed
in and provisionally admitted as exhibits, at its request, on
an attorney and client scale.
ORDER
[77]
In the circumstances I make the following Order:
1.
The plaintiff’s claim is dismissed with costs.
2.
Plaintiff is directed to pay costs associated with the evidence in
relation to the privileged and/or
irrelevant documents, handed in as
exhibits at the trial, on an attorney and client scale.
T.V.
NORMAN
JUDGE
OF THE HIGH COURT
Matter
heard on:
31
July 2023 , 01 August 2023 , 02 August 2023 ,
03
August 2023 & 04 August 2023
Judgment
Delivered on :
31
August 2023
APPEARANCES:
For
the PLAINTIFF:
ADV
HOPKINS SC
Instructed
by:
BAX
KAPLAN RUSSELL INC.
Clevedon
House
2
Clevedon Road
Selborne
EAST
LONDON
Tel
: ( 043) 706 8400
Email
:
jason@bkr-inc.co.za
C/O
HUXTABLE ATTORNEYS
26
New Street
MAKHANDA
TEL
: ( 046) 622 2692
Email
:
owen@huxattorneys.co.za
REF
: Mr O.J.Huxtable / 02B021056
For
the DEFENDANT:
ADV
NIEKERK
Instructed
by:
PAGDENS
ATTORNEYS
C/O
CARINUS JAGGA INC.
Defendant’s
Attorneys
67
African Street
MAKHANDA
Email:
juanita@cjlaw.co.za
(Ref
: J Jagga)
[1]
118 LT 479
at 483.
[2]
2012 (4) SA 593
(SCA) PARA 16.
[3]
At page 267 and 268.
[4]
2000 (4) SA 413
(SCA) at 431 – 432.
[5]
[2006] ZASCA 112
;
2007 (3) SA 266
(SCA) at para 163.
[6]
[1984] ZASCA 72
;
[1984] 2 ALLSA 422
(A) at 567.
[7]
(2012) ALLSA 136 (SCA).
[8]
City
of Tshwane v Brooklyn Edge
2022
(2) ALLSA 334 (SCA) 16.
[9]
(238/2001)
[2002] ZASCA 66
(2002) 3 ALLSA 435
(A) 31 May 2002 at
para 23.
[10]
See:
Clause 16 of the sale agreement. “
The
Business is sold subject to the condition that it shall remain the
absolute property of the Seller until such time as the
full purchase
price has been paid to the Seller.”
[11]
2006 (3) SA 488
(SCA) at para 19, 494 H – 495 A.
[12]
Absa Bank Ltd v SA Commercial Catering & Allied Workers Union
National Provident Fund (under curatorship)
2012 (3) SA 585
(SCA) at
para 33; See also Union Government (Minister of Railways &
Harbours) v Faux Ltd
1916 AD 105
at 112.