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[2011] ZASCA 174
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Laeveld Trust 2001 (Pty) Ltd and Others v Blue Fire Properties 115 (Pty) Ltd (795/10) [2011] ZASCA 174 (29 September 2011)
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THE
SUPREME COURT OF APPEAL OF SOUTH AFRICA
JUDGMENT
Case No: 795/10
In
the matter between:
LAEVELD
TRUST 2001 (PTY) LTD
…............................................................
First
Appellant
SAAMSTAAN
BELEGGERS (PTY) LTD
…...............................................
Second
Appellant
INDUSIT
BELEGGINGS (PTY) LTD
…..........................................................
Third
Appellant
LEGOGOTE
EIENDOMME (PTY) LTD
…...................................................
Fourth
Appellant
FRANNEMANS
BELEGGINGS (PTY) LTD
…................................................
Firth
Appellant
TWIN
CITY MALELANE 2001 (PTY) LTD
….................................................
Sixth
Appellant
ERF
4 MALELANE (PTY) LTD
….............................................................
Seventh
Appellant
and
BLUE
FIRE PROPERTIES 115 (PTY) LTD
…....................................................
Respondent
Neutral
citation:
Laeveld Trust 2001 v Blue Fire Properties 115
(795/10)
[2011] ZASCA 174
(29 September 2011)
Coram:
CLOETE, MALAN AND THERON JJA
Heard:
2 September 2011
Delivered:
29 September 2011
Summary:
Contract – Interpretation – period
within which the purchaser is entitled to request documents relevant
for due diligence
investigation – purchaser thereafter entitled
to decide which properties are not viable and exclude from the sale–
completion of due diligence period postponed because of the seller’s
breach - purchaser not limited to documents in existence
at time of
agreement.
_________________________________________________________________
ORDER
_________________________________________________________________
On appeal from:
North
Gauteng High Court, Pretoria, (Rabie J sitting as a court of first
instance):
The appeal is dismissed
with costs.
_________________________________________________________________
JUDGMENT
_________________________________________________________________
THERON
JA (CLOETE AND MALAN JJA concurring)
[1] On 24 June 2005 the
parties concluded a written agreement of sale in respect of which the
appellants sold certain commercial
properties (the properties) in
Mpumalanga to the respondent for the sum of R128, 6 million. Clause 8
of the agreement provided
as follows:
‘
8.1
The Purchaser shall, for a period of 7 [SEVEN] WORKING DAYS after the
date of signature of this agreement by the Seller, be
entitled to
conduct a due diligence investigation in relation to all matters
pertaining to the property which the Purchaser, in
its discretion,
regards as being material to its purchase thereof. For the purpose of
such due diligence investigation, the Seller
undertakes forthwith to
make available to the Purchaser upon request, all documentation and
information (which the Purchaser shall
keep strictly confidential)
relating to the property which may be material to a purchase of the
property and the Seller [shall]
allow the Purchaser and its
representative:
8.2.1 to inspect and make
copies of all lease agreements relating to all the occupants of the
property, the title deeds of the property
... and all agreements
relating to the property (including but not limited to, agreements
relating to the provision of services
to the property);
8.2.2 to inspect and make
copies of all financial and other records relating to the property,
including, but not limited to, all
records relating to the income and
expenditure of the property.
8.2.3 The Purchaser shall
advise the Seller in writing within 2 [TWO] DAYS after completion of
the investigation that it has completed
the due diligence
investigation to its satisfaction and of fulfilment of the suspensive
condition;
8.2.4 If in the course of
the Purchaser’s inspections it is deemed by the Purchaser that
certain properties are not viable,
then these properties will not
form part of this agreement and the parties thereby agree that the
purchase price will be pro-rata
amended to reflect same.
8.3 The Purchaser
obtaining a first Mortgage Bond from a registered lending institution
for an amount of not less than R104 000 000.
00 [ONE HUNDRED AND
FOUR MILLION RAND] ... within 21 days from due diligence by the
Seller.
8.4 In the event of the
conditions not being met or fulfilled within the times provided for
... this agreement shall be null and
void and of no further force or
effect, unless the conditions are so waived in writing by the
relevant beneficiary.’
[2] The respondent was
therefore entitled, in terms of clause 8, to conduct a due diligence
investigation in respect of the properties
over a seven-day working
period. This seven-day period would in the ordinary course have
expired on 5 July 2005. During the due
diligence period the
respondent could request access to documentation and information that
it, in its discretion, regarded as material
to the purchase of the
properties. In terms of clause 8.1 the appellants were obliged to
make available ‘forthwith’
documents properly requested
by the respondent.
[3] On 1 July 2005, the
respondent requested certain specified documents from the appellants.
The appellants failed to make all
the documents requested, in
particular, the annual audited financial statements, available to the
respondent. The appellants subsequently
denied that the respondent
was entitled to them. The dispute between the parties was referred
for arbitration. On 12 January 2010
the arbitrator’s award was
made which declared that the respondent was entitled to the documents
requested. The appellants
were ordered to allow the respondent to
inspect and make copies of the audited annual financial statements
which existed in respect
of each of the appellants as at 30 June
2005. The arbitrator also declared that from the date when the said
documents were made
available, the respondent would have two working
days to complete the due diligence investigation, whereafter it would
have a further
two days within which to inform the appellants which
properties it intended purchasing.
[4] In terms of a letter
dated 13 January 2010, the respondent was advised that the requested
documents would be available that
afternoon. It follows, in terms of
the arbitrator’s award, that the respondent was required to
complete its due diligence
investigation on or before 15 January
2010. On 13 January, the respondent requested further documents in
order to update the information
relating to the properties to 2010.
The documents specified in the arbitration proceedings related to the
period prior to July
2005. The appellants refused to make available
any documents not in existence as at July 2005. The respondent then
approached the
North Gauteng High Court, Pretoria, for an order
compelling the appellants to make available the more recent documents
requested,
extending the period for the due diligence investigation
and interdicting the appellants from disposing of the properties.
Rabie
J granted the order applied for. The appellants appeal to this
court, with the leave of the high court.
[5] The appellants
concede that they were obliged, in terms of the agreement, to provide
information to the respondent in order
to enable the latter to
conduct a due diligence investigation in relation to the properties.
It was, however, argued that they
were not obliged to provide
documents that had not been in existence at the time of the
conclusion of the agreement. It was submitted
that
having
regard to the limited time frame within which the due diligence
investigation had to be concluded, and the other terms of
the
agreement, the parties could not have envisaged that the respondent
would be entitled to documents not in existence during
the period of
seven days within which the due diligence investigation had to be
completed. It was argued that it was contemplated
by the parties that
the respondent would have made its decision about the viability of
the properties within nine days of the conclusion
of the agreement.
[6] The appellants’
argument loses sight of the fact that the delay was due to their
breach of contract. The consequence of
the breach was that the due
diligence period was extended. During that period the respondent was
entitled to call for documents
to enable it to exercise its right to
exclude properties from the sale because it deemed them not to be
viable. The documents could
only be those relevant to the exercise of
this right at the time the respondent was entitled to exercise it.
That must have been
the intention of the parties as any other
conclusion would be at odds with commercial reality. It was not
submitted that the documents
which the respondent called for during
the extended due diligence period, were irrelevant. The conclusion is
inescapable that in
refusing to provide the documents requested, the
appellants again breached their obligation and that the due diligence
period has
in consequence again been extended. The respondent would
accordingly, even now, have the right to call for documents relevant
to
the decision it is still entitled to make.
[7] At the hearing of the
appeal, the further argument was raised that the respondent was
precluded from claiming documents that
were more recent than June
2005 as the award by the arbitrator rendered the respondent’s
entitlement to documents
res
judicata
.
The requirements for
res
judicata
are
that the proceedings must be between the same parties, the grounds
for relief (
causa
petendi
)
must be the same in both cases and the same relief must be sought in
both cases.
1
The defence of
res
judicata
cannot
successfully be raised in this matter. The relief sought by the
respondent in the arbitration proceedings related to documents
in
existence at June 2005 while the relief sought in the high court,
although similar in that it was also a request for documents,
related
to different documents – it was for the production of documents
that only came into existence after June 2005. Thus
the relief sought
in the arbitration proceedings and in the high court was not the
same.
[8] The appeal is
dismissed with costs.
_______________
L V THERON
JUDGE OF APPEAL
APPEARANCES:
APPELLANTS:
J P VORSTER SC with H J STEYN
Instructed by Du Toit - Smuts &
Mathews Phosa Inc,
Nelspruit
Symington & De Kok, Bloemfontein
RESPONDENT: C PUCKRIN SC
Instructed by Gildenhuys Lessing
Malatji Inc,
Pretoria
Vermaak & Dennis Inc, Bloemfontein
1
See
National Sorghum Breweries Ltd (t/a Vivo African Breweries) v
International Liquor Distributors (Pty) Ltd
[2000] ZASCA 159
;
2001 (2) SA 232
(SCA) at 239F-H.