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[2011] ZASCA 144
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Eldacc (Pty) Ltd v Bidvest Properties (Pty) Ltd (682/10) [2011] ZASCA 144 (26 September 2011)
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THE SUPREME COURT OF APPEAL OF
SOUTH AFRICA
JUDGMENT
Case No: 682/10
In the matter between:
ELDACC
(PTY) LTD
….................................................................................
Appellant
and
BIDVEST
PROPERTIES (PTY) LTD
…....................................................
Respondent
Neutral
citation:
Eldacc (Pty) Ltd v Bidvest Properties (Pty) Ltd
(682/10)
[2011] ZASCA 144
(26 September 2011).
Coram:
CLOETE, VAN HEERDEN, CACHALIA and SERITI
JJA
and PLASKET AJA
Heard:
12 SEPTEMBER 2011
Delivered:
26 SEPTEMBER 2011
Summary:
Contract: stipulatio alteri: legal
relationship between parties, discussed.
______________________________________________________________
ORDER
______________________________________________________________
On appeal from:
South Gauteng High Court
(Johannesburg) (Van der Linde
AJ sitting as court of first instance):
The appeal is dismissed with costs including the costs
of two counsel.
______________________________________________________________
JUDGMENT
______________________________________________________________
CLOETE JA (VAN HEERDEN, CACHALIA and SERITI JJA and
PLASKET AJA concurring):
[1] The appellant, Eldacc (Pty) Ltd, entered into a
written agreement of lease in terms of which it let commercial
property to Rennies
Distribution Services (Pty) Ltd for a period of
ten years. Clause 35 of the agreement contained an option to purchase
the leased
property. That clause began with the heading: 'OPTION TO
PURCHASE THE LEASED PREMISES'. It comprised two parts. The first
part,
after the sub-heading 'OPTION', read as follows:
'35.1.1 The LESSOR hereby
irrevocably grants to the LESSEE or its nominee being any subsidiary
of the Bidvest Group Limited in existence
as at the date of signature
hereof (hereinafter referred to as the LESSEE only for the purposes
of this clause 35) an option to
purchase the PROPERTY from the LESSOR
on the terms and conditions contained in this clause. This clause
constitutes a stipulatio
alteri in favour of the aforesaid nominee,
the benefits of which the nominee may accept at any time, subject to
the provisions
of clause 35.1.2 below.
35.1.2 If the LESSEE wishes to
exercise the option, it shall do so by written notice to that effect
given to the LESSOR on or before
1 June 2007 at the LESSOR'S ADDRESS.
Should the LESSEE not exercise the option to purchase so afforded it
on or before 1 June 2007,
then the option shall lapse.
35.1.3 In the event that LESSEE
exercises the option, then the resulting sale will be on the terms
contained in this clause 35.'
There followed a number of clauses which set out these
terms, under the sub-heading 'SALE', which comprised the second part
of the
clause.
[2] Counsel for Eldacc accepted that the provisions of
clause 35 quoted above did indeed constitute a stipulatio alteri, and
he
cannot be fauIted for doing so:
Trever
Investments (Pty) Ltd v Friedhelm Investments (Pty) Ltd
1982 (1) SA 7
(A) at 16D. In addition, it was common
cause that Rennies orally nominated the respondent, Bidvest
Properties (Pty) Ltd (then known
by another name); that Bidvest was a
subsidiary of the Bidvest Group Ltd and was in existence at the date
the lease agreement was
signed; and that Bidvest, within the time
period laid down in clause 35.1.2, sent a letter signed on its behalf
to Eldacc exercising
the option contained in clause 35.
[3] Eldacc purported to cancel the resulting agreement.
Bidvest brought motion proceedings in the South Gauteng High Court
for specific
performance and ancillary relief. Van der Linde AJ
granted the relief sought and refused leave to appeal, which was
subsequently
granted by this court.
[4] The only argument persisted in on appeal by Eldacc
was based on clause 30 of the agreement between Eldacc and Rennies,
which
provided:
'No variation of the Agreement
and of this clause 30 and no agreed cancellation of the Agreement
shall be of any force or effect
unless reduced to writing and signed
by the authorized representatives of the Parties.'
Eldacc's argument was that its undertaking to Rennies
comprised two parts:
(a) an offer to sell the property on defined terms to
Rennies or its nominee; and
(b) an agreement to keep the offer open for acceptance
until the date specified.
So far the argument is sound: this is the basis upon
which Prof R G McKerron explains the stipulatio alteri in his article
'The
Juristic Nature of Contracts for the Benefit of Third Persons'
(1929) 46
SALJ
387.
1
But the argument continued that acceptance by Bidvest of
the offer could not take place until it had acquired Rennies' right
to
have the option kept open; the acquisition of that right required
it to be substituted for Rennies in clause 35 of the agreement
between Eldacc and Rennies; and as that substitution involved a
variation, it had to be in writing and signed by at least Eldacc
and
Rennies because of the provisions of clause 30.
[5] The argument is unsound in law. Rennies had the
right to compel Eldacc to abide by its undertaking to keep the offer
open in
favour of its nominee, both before and after the nomination:
African Universal Stores Ltd v Dean
1926 CPD 390
at 395. But the right that Bidvest had to
accept the offer was independent of such right. For that very reason,
it was unnecessary
for Bidvest to acquire Rennies' right to protect
the offer before Bidvest exercised its right to accept the offer.
Acquisition
of the former was not a precondition for the exercise of
the latter.
[6] Eldacc's counsel repeatedly submitted that once the
third party (Bidvest) accepted the benefit (the offer to sell), the
third
party 'stepped into the shoes' of the stipulator (Rennies) in
the latter's agreement with the promisor (Eldacc). This analysis is
also unsound. There have been cases in which this court has said that
by accepting the promise made by the promisor, the third
party
'becomes a party to' the contract between the stipulator and the
promisor:
McCullogh v Fernwood Estate Ltd
1920 AD 204
at 205-6 (summarising the effect of the
decision in
Tradesmen's Benefit Society v Du
Preez
(1887) 5 SC 269)
;
Joel
Melamed & Hurwitz v Cleveland Estates (Pty) Ltd; Joel Melamed &
Hurwitz v Vorner Investments (Pty) Ltd
[1984] ZASCA 4
;
1984
(3) SA 155
(A) at 172E, 172I-in fine and 173B;
Total
South Africa (Pty) Ltd v Bekker NO
[1991] ZASCA 183
;
1992 (1)
SA 617
(A) at 625F-G;
Pieterse v Shrosbree NO
& others; Shrosbree NO v Love & others
2005
(1) SA 309
(SCA) para 9. But it has never been suggested that the
third party succeeds to the rights of the stipulator. On the
contrary, this
court has made it clear repeatedly that the
vinculum
iuris
or legal bond created upon acceptance
of the benefit by the third party, is between the third party and the
promisor.
[7] Innes CJ said in
McCullogh
at 206:
'The third person having once
notified his acceptance and thus established a
vinculum
juris
between himself
and the promisor would be liable to be sued, as well as entitled to
sue.'
[8] Schreiner JA said in
Crookes
NO & another v Watson & others
1956
(1) SA 277
(A) at 291B-F:
'[I]n the legal sense, which
alone is here relevant, what is not very appropriately styled a
contract for the benefit of a third
person is not simply a contract
designed to benefit a third person; it is a contract between two
persons that is designed to enable
a third person to come in as a
party to a contract with one of the other two
2
(
cf
Jankelow v Binder, Gering and Co
1927
TPD 364)
. . . [T]he typical contract for the benefit of a third
person is one where A and B make a contract in order that C may be
enabled,
by notifying A, to become a party to a contract between
himself and A. What contractual rights exist between A and B pending
acceptance
by C and how far after such acceptance it is still
possible for contractual relations between A and B to persist are
matters on
which differences of opinion are possible; but broadly
speaking the idea of such transactions is that B drops out when C
accepts
and thenceforward it is A and C who are bound to each other.'
(Although contained in a minority judgment, the passage
quoted is not inconsistent with the majority judgment; it has been
generally
accepted as a correct statement of the law; and it has
twice been approved by this court, in the
Joel
Melamed & Hurwitz
case at 172D-F and in
the
Total
case at
625E-F.)
[9] Ponnan AJA said in the
Pieterse
case in paragraphs 9 and 10:
'9. In such a case, the policy
holder (the
stipulans
)
contracts with the insurer (the
promittens
)
that an agreed offer would be made by the insurer to a third party
(the beneficiary) with the intention that, on acceptance of
the offer
by that beneficiary, a contract will be established between the
beneficiary and the insurer. What is required is an intention
on the
part of the original contracting parties that the benefit, upon
acceptance by the beneficiary, would confer rights that
are
enforceable at the instance of the beneficiary against the insurer,
for that intention is at the "very heart of the
stipulatio
alteri
" (Ellison
Kahn "Extension Clauses in Insurance Contracts"
(1952) 69
SALJ
53
at 56). Thus the beneficiary, by adopting the benefit, becomes a
party to the contract (see
Total
South Africa (Pty) Ltd v Bekker NO
[1991] ZASCA 183
;
1992
(1) SA 617
(A) at 625D-G).
10. On the death of the insured,
provided that the nomination has not been revoked during the
insured's lifetime, any claim to the
policy proceeds by the
beneficiary against the insurance company would be based on the
contract of insurance between the deceased
and the insurance company.
It is to the insurance company and no one else that the beneficiary
would have to look for payment.'
[10] In truth, there was no variation whatever of the
agreement between Eldacc and Rennies. What happened was exactly what
was envisaged
in clause 35: Rennies nominated Bidvest, a subsidiary
of the Bidvest Group Ltd that was in existence as of the date of
signature
of the agreement; Bidvest accepted the offer made by
Eldacc; and there was a resulting sale by Eldacc to Bidvest on the
terms contained
in clause 35.
[11] The appeal is dismissed with costs including the
costs of two counsel.
_______________
T D CLOETE
JUDGE OF APPEAL
APPEARANCES:
APPELLANTS: R du Plessis SC (with him T Ohannessian)
Instructed by Pagel Schulenburg Inc, Bryanston
Symington & De Kok, Bloemfontein
RESPONDENTS: M Kuper SC (with him W le Grange)
Instructed by Coetsee Van Rensburg Inc, Bryanston
E G Cooper Majiedt Inc, Bloemfontein
1
Prof
McKerron's explanation has stood the test of time, as pointed out by
Prof J C Sonnekus, 'Enkele opmerkings om die beding
ten behoewe van
'n derde'
1999
TSAR
594
at 611 in fine.
2
See
Mpakathi v Kghotso Development CC &
others
2003 (3) SA 429
(W) paras 15
and 16. The SCA on appeal made no finding on the conclusion reached
by the court a quo applying this dictum:
2005 (3) SA 343
(SCA) paras
6 and 7.