About SAFLII
Databases
Search
Terms of Use
RSS Feeds
South Africa: Supreme Court of Appeal
SAFLII
>>
Databases
>>
South Africa: Supreme Court of Appeal
>>
2008
>>
[2008] ZASCA 159
|
|
Pillay and Another v Shaik and Others (006/08) [2008] ZASCA 159; 2009 (4) SA 74 (SCA) ; [2009] 2 All SA 435 (SCA) (27 November 2008)
Links to summary
THE
SUPREME COURT OF APPEAL
REPUBLIC
OF SOUTH AFRICA
JUDGMENT
Case No:006/08
SELVIN PILLAY First Appellant
MAKGALA SOLOMON MOTLANTHE Second Appellant
and
IQBAL SHAIK First Respondent
EDWARD JOHN HAMMOND Second Respondent
MAURICE LESLIE WENHAM Third Respondent
LUCA GIOVANNI LIVIERO Fourth Respondent
AHMED SAEED VAWDA Fifth Respondent
MICHAEL HUGH BLAKE Sixth Respondent
SWALEDALE 9 INVESTMENTS CC Seventh Respondent
MTR TRADING CC Eighth Respondent
MOONEY FORD ATTORNEYS Ninth Respondent
DUSKY DOLPHINS
SHAREBLOCK (PTY) LTD Tenth Respondent
THE REGISTRAR OF COMPANIES AND
CLOSE CORPORATIONS, PRETORIA Eleventh Respondent
THE REGISTRAR OF DEEDS,
PIETERMARITZBURG Twelfth Respondent
Neutral citation:
Pillay v
Shaik
(006/08)
[2008] ZASCA 159
(27 November
2008)
Coram:
FARLAM, LEWIS, JAFTA,
MAYA JJA et KGOMO AJA
Heard:
3 NOVEMBER 2008
Delivered:
27 November 2008
Summary:
Contract
– formalities – whether agreements of sale between
parties invalid because prospective seller did not sign
–
application of doctrine of quasi-mutual assent.
______________________________________________________________
ORDER
On appeal from:
the
Pietermaritzburg High Court (Nicholson, K Pillay and Madondo JJ
sitting on appeal from a judgment of the Durban High Court (Balton
J))
The following order is made:
A The appeal against the order of the court
a
quo
is upheld with costs including the costs
of two counsel.
B The order of the court
a quo
is
set aside and replaced by an order in the following terms:
'1 Subject to the order made in
paragraph 2, the appeal is dismissed with costs, including the costs
of two counsel.
2 The order made in the court
a
quo
is set aside and
replaced by an order in the following terms:
"(a) The following order is
made in case no 690/2004:
1. An order is granted declaring
the agreement between the first to sixth defendants ("the
sellers") and the plaintiff
("the purchaser") for the
purchase of the entire members' interest in and to the seventh
defendant to be of full force
and effect and binding between the
parties, with terms as set out in the document annexed as annexure
"A" to the plaintiff's
declaration with the seventh
defendant being reflected as the close corporation referred to in
that document, the sellers' acceptance
of the agreement having taken
place by conduct, instead of signature.
2 An order is granted directing
the sellers to comply with their obligations under the sale
agreements and in particular, they are
ordered and directed to
deliver and hand over to Mooney Ford Attorneys in trust, the
documents set out in paragraphs 8.1.1.1 to
8.1.5 (inclusive) of the
sale agreement in respect of the seventh defendant.
3 An order directing the sellers
to bring about the state of affairs warranted in clauses 9.1 to 9.6
(inclusive) of the sale agreement
(in particular by ensuring that the
sectional title unit referred to in the sale agreement is owned by
the seventh defendant at
the date of transfer of the members'
interest to the purchaser).
4 In the event of the sellers'
failing to comply with the order contained in paragraphs 2 and 3
hereof, or any one of those paragraphs,
then the purchaser is given
leave to deliver an application to this court, on the same papers,
supplemented in so far as may be
necessary, for an order:
(a) declaring the sellers to be
in contempt of court;
(b) for their committal to
prison for contempt of court.
5 In addition, in the event of
the sellers' failing to comply with paragraphs 2 and 3 of this order,
the Sheriff of Durban is authorised
to do all things necessary, in so
far as the sellers are concerned, to cause the actions contained
therein to be fulfilled.
6 In the event of the sellers'
failing to comply with the orders contained in paragraphs 2 and 3
hereof, and the purchaser's failing
to obtain the transfer
contemplated in paragraph 5 hereof within a reasonable period of time
from the granting of this order, then
the sellers shall be liable,
jointly and severally, the one paying the other to be absolved, on
application by the purchaser, on
the same papers supplemented in so
far as may be necessary, to pay damages in an amount to be determined
by the court, together
with return of the deposit paid by the
purchaser together with interest thereon at the legal rate of 15.5%
per annum
from
due date to date of payment.
The sellers are ordered to pay
the purchaser's costs of suit.
(b) The following order is made
in case no 19979/04:
1 An order is granted declaring
the agreement between the first to sixth defendants ("the
sellers") and the plaintiff
("the purchaser") for the
purchase of the entire members' interest in and to the seventh
defendant to be of full force
and effect and binding between the
parties, with terms as set out in the document annexed as annexure
MM2 in the application papers
(in the form referred to in the
Plaintiff's replying affidavit) with the seventh defendant being
reflected as the close corporation
referred to in that document, the
sellers' acceptance of the agreement having taken place by conduct,
instead of signature.
2 An order is granted directing
the sellers to comply with their obligations under the sale
agreements and in particular, they are
ordered and directed to
deliver and hand over to the eighth defendant in trust, the documents
set out in paragraphs 8.1.1.1 to
8.1.5 (inclusive) of the sale
agreement in respect of the seventh defendant.
3 An order directing the sellers
to bring about the state of affairs warranted in clauses 9.1 to 9.6
(inclusive) of the sale agreement
(in particular by ensuring that the
sectional title unit referred to in the sale agreement is owned by
the seventh defendant at
the date of transfer of the members'
interest to the purchaser).
4 In the event of the sellers'
failing to comply with the order contained in paragraphs 2 and 3
hereof, or any one of those paragraphs,
then the purchaser is given
leave to deliver an application to this court, on the same papers,
supplemented in so far as may be
necessary, for an order:
(a) declaring the sellers to be
in contempt of court;
(b) for their committal to
prison for contempt of court.
5 In addition, in the event of
the sellers' failing to comply with paragraphs 2 and 3 of this order,
the Sheriff of Durban is authorised
to do all things necessary, in so
far as the sellers are concerned, to cause the actions contained
therein to be fulfilled.
6 In the event of the sellers'
failing to comply with the orders contained in paragraphs 2 and 3
hereof, and the purchaser's failing
to obtain the transfer
contemplated in paragraph 5 hereof within a reasonable period of time
from the granting of this order, then
the sellers shall be liable,
jointly and severally, the one paying the other to be absolved, on
application by the purchaser, on
the same papers supplemented in so
far as may be necessary, to pay damages in an amount to be determined
by the court, together
with return of the deposit paid by the
purchaser together with interest thereon at the legal rate of 15.5%
per annum
from
due date to date of payment.
The sellers are ordered to pay
the purchaser's costs of suit."'
______________________________________________________________
JUDGMENT
FARLAM JA
(Lewis, Jafta,Maya
JJA et Kgomo AJA concurring)
[1] During 2002 the first to sixth respondents, Messrs
Shaik, Hammond, Wenham, Liviero, Bowda and Blake (whom I shall call
in what
follows 'the developers'), marketed to members of the public
interests in a sectional title property development, known as the
Lazy Lizard, situated at Umdloti on the North Coast of KwaZulu-Natal.
Each unit in the development was to be owned by a close corporation.
The member's interests in each of these close corporations were
offered for sale. The developers caused standard form documents
to be
drawn up for completion by prospective buyers and they also prepared
a schedule setting forth the prices at which the interest
in each
close corporation was to be sold. The prices fixed varied, depending
on the unit which each close corporation was to own.
Although all six
developers were to be parties to the contracts of sale, the first to
fifth respondents were at all times represented
by the sixth
respondent, Mr Michael Hugh Blake.
[2] Goldprop Umhlanga CC, a firm of estate agents
trading as Pam Golding Properties, were appointed together with
another firm of
estate agents to market the development. The ninth
respondent, Mooney Ford, a firm of attorneys, acted at all times as
the developers'
attorneys. (Although Mooney Ford was cited as a
respondent in the applications which were referred for trial no
relief was given
against it and it did not participate in the appeals
to the full bench or to this court.)
[3] The first appellant, Mr Selvin Pillay, and the
second appellant, Dr Makgala Solomon Motlanthe, decided to buy into
the development.
On 18 June 2002 Mr Pillay signed one of the standard
form agreements and offered to buy for R699 000 the member's interest
in the
close corporation to which unit 402 was to be allocated. On 22
April 2002 Dr Motlanthe signed a standard form agreement and offered
to buy for R709 000 the member's interest in the close corporation to
which unit 502 was to be allocated.
[4] Subsequently, after unit 402 had been allocated to
the seventh respondent, Swaledale Investments CC, and unit 502 to the
eighth
respondent, MTR Trading CC, disputes arose between the
developers and Mr Pillay and Dr Motlanthe as to whether the offers
made
by them had been accepted on behalf of the developers.
[5] On 26 January 2004 Mr Pillay brought an application
against the developers, Swaledale Investments CC, Mooney Ford, the
eleventh
respondent (the Registrar of Companies and Close
Corporations) and the twelfth respondent (the Registrar of Deeds,
Pietermaritzburg).
In this application he sought orders,
inter
alia,
interdicting and restraining the
registration and/or transfer of the membership interest in and to
Swaledale Investments CC to any
person and/or entity apart from
himself, interdicting and restraining the transfer of unit 402 in the
development to any person
and/or entity apart from himself or
Swaledale Investments CC, and declaring that the agreement allegedly
concluded between the
developers (as sellers) and himself (as
purchaser) for the purchase of the entire member's interest in and to
Swaledale Investments
CC to be of full force and effect.
[6] On 28 January 2004 an interim order was granted
interdicting and restraining the respondents from transferring any
membership
interest in Swaledale Investments CC and from registering
transfer of proposed unit 402 to any person or entity pending the
final
determination of the application. Thereafter an opposing
affidavit was filed on behalf of the developers and Swaledale
Investments
CC and a replying affidavit on behalf of Mr Pillay.
[7] On 31 May 2004 the matter was referred to trial on a
date to be arranged with the registrar and it was ordered that the
interim
order granted on 28 January 2004 was to remain operative
pendente lite.
It was
further ordered that the application was to stand as the summons and
the opposing affidavit as the appearance to defend.
Mr Pillay was
directed to file a declaration within a certain period and the
developers directed to file a plea within a further
period after
service of the declaration. The order also provided that the
pleadings would be deemed to be closed if Mr Pillay failed
to file a
replication within a certain period after service of the plea.
[8] In December 2004 an application similar to that
brought earlier by Mr Pillay was brought by Dr Motlanthe against the
developers,
MTR Trading CC, Mooney Ford, the registrars who had been
cited in Mr Pillay's application and the tenth respondent, Dusky
Dolphin
Shareblock (Pty) Ltd, the owner of the land on which the Lazy
Lizard scheme was being developed. This application related to the
member's interest in MTR Trading CC, which Dr Motlanthe alleged had
been sold to him by the developers, and unit no 502.
[9] An interim interdict was granted on 22 December
2004. Thereafter an answering affidavit was filed on behalf of the
developers
and MTR Trading CC and a replying affidavit on behalf of
Dr Motlanthe. Subsequently an order was made by consent referring the
matter to trial, providing that the founding papers were to stand as
a single summons and directing that a declaration, plea and
replication should be filed within certain periods, that a Rule 37
conference be held on a fixed date and that the parties make
discovery by a date 15 days thereafter.
[10] The applications brought by Mr Pillay and Dr
Motlanthe were consolidated and the consolidated trial proceeded
before Balton
J in the Durban High Court. She gave judgment in favour
of Mr Pillay and Dr Motlanthe. There is an error in her judgment
because
after stating that she was granting judgment in their favour
she proceeded in the paragraphs following to make orders only in
respect
of the relief sought by Mr Pillay and made no orders relating
to the relief sought by Dr Motlanthe.
[11] No relief was granted against Dusky Dolphins
Shareblock (Pty) Ltd, the Registrar of Companies and Close
Corporations, and the
Registrar of Deeds, Pietermaritzburg, and they
also did not participate in the appeals to the full bench or to this
court.
[12] The developers and the two close corporations
appealed to the Full Bench of the Pietermaritzburg High Court which
allowed the
appeal, with costs and made certain ancillary orders
relating to costs which it is unnecessary to detail. The judgment of
the full
bench was delivered by Nicholson J, with whom K Pillay and
Madondo JJ concurred. The learned judge found that as the alleged
agreements
of sale on which Mr Pillay and Dr Motlanthe relied were
not signed on behalf of the alleged sellers, the developers, they
were
not binding. He came to this conclusion because he found that it
was the intention of the parties that the agreements would be binding
only when signed by the sellers. This finding rendered it unnecessary
for him to consider the question on which the judgment of
Balton J
was based, namely whether on the application of the doctrine of
quasi-mutual assent the agreements in question were binding.
[13] The present appeal is before us with special leave
granted by order of this court.
[14] During the course of the trial it became clear that
the material facts are not in dispute and I shall endeavour to
summarise
them as briefly as possible.
[15] The copies of the standard form agreement signed by
Mr Pillay and Dr Motlanthe were handed to representatives of Pam
Golding
Properties. In July 2002 Mr Pillay arranged, with the consent
of Mooney Ford, for his deposit of R104 850 to be paid to them by
a
firm of attorneys in Pretoria who were handling another property
transaction for him. By letter dated 19 November 2002 Mooney
Ford
acknowledged receipt of the deposit. Dr Motlanthe's deposit of R106
350 was paid into Mooney Ford's trust account on 23 April
2002, the
day after he signed the standard form agreement.
[16] The standard form agreement, which as I have said
was drawn up for the developers, was headed 'Agreement for the
Purchase of
a member's interest in a Close Corporation (owning a
sectional Title Unit).'
[17] Clause 5.1 provided for the deposit to be paid to
Mooney Ford within seven days 'of signature hereof by the parties to
this
agreement'.
[18] Clause 8 provided that the sellers would as soon as
reasonably possible 'after the date of signature of this Agreement'
deliver
to Mooney Ford in trust, pending fulfilment by the purchaser
of his obligations to pay the full purchase price, certain documents.
[19] Clause 15 provided as follows:
'15.1 This agreement constitutes
the sole and exclusive memorial of the agreement between the Seller
and the Purchaser and no alteration,
variation, deletion or
consensual cancellation hereof shall be binding on either the Seller
or the Purchaser unless reduced to
writing and signed by both
parties;
15.2 No waiver by either party
of any of such party's rights under this agreement shall be binding
on such party unless such waiver
is reduced to writing and signed by
the party effecting such waiver;
Any dispute arising from this
contract notwithstanding that the amount of the dispute may exceed
the jurisdiction of the Magistrates'
Court may be referred to the
Magistrates' Court having jurisdiction over the parties and by
their signature hereto the parties
give their consent in writing
to submit to the jurisdiction of the Magistrates' Court.'
[20] At the end of the document there was provision for
the parties and their witnesses to sign, separate demarcated
positions being
made available for the signatures of the purchaser
and the seller.
[21] On 24 April 2002, that is the day after Dr
Motlanthe paid his deposit, Pam Golding Properties wrote to him
stating that they
had pleasure in enclosing for his records a copy of
the agreement of sale in respect of unit 502, confirming receipt of
his deposit,
calling for guarantees for the balance of the purchase
price and thanking him for purchasing the property.
[22] On 26 April 2002 Mooney Ford wrote to Dr Motlanthe
confirming that they held the deposit of R106 350 which would be
invested
in an interest bearing account on his behalf and requesting
him to arrange a guarantee in their favour for R359 000 for the
balance
of the purchase price.
[23] As the signed offer which Dr Motlanthe had sent by
telefacsimile transmission to Pam Golding Properties was illegible
(because
their fax machine was malfunctioning) he re-signed the
agreement on 30 April 2002 and sent it by telefacsimile transmission
to
Mooney Ford, who wrote to him on 12 May 2002 confirming that they
had received the re-signed agreement and requesting a guarantee
for
the balance of the purchase price.
[24] On 15 May 2002 Mooney Ford wrote to the sixth
respondent, Mr Blake, attaching a copy of the latest schedule
reflecting details
of the purchasers of member's interests in close
corporations to which units were to be allocated and confirming that
the funds
held by them by way of deposits paid by the purchasers
totalled R1 933 102. The schedule reflected the name of Dr Motlanthe
as
a purchaser who had paid his deposit and indicated that the
guarantee was still outstanding.
[25] On 28 June 2002 Mooney Ford wrote to Mr Pillay
forwarding two pages of the agreement as replacement pagesfor
initialling and
return.
[26] On 16 July 2002 Mooney Ford sent Mr Blake a copy of
a letter under cover of which they sent ABSA Bank Limited, the
financiers
of the development, an updated schedule of sales. The
attached schedule listed,
inter alia,
unit
402 as having been sold to Mr Pillay and unit 502 as having been sold
to Dr Motlanthe.
[27] On 24 July 2002 Mooney Ford wrote to Mr Pillay,
confirming having requested him to fax a copy of the agreement signed
by him
and confirming that he would let them have payment of the
deposit of R104 850.
[28] On 13 August 2002 Mooney Ford wrote a letter to Mr
Pillay and advised him that Swaledale 9 Investments CC, the seventh
respondent,
was the close corporation to which his unit had been
allocated.
[29] On 29 November 2002 Mooney Ford wrote to Dr
Motlanthe confirming that they were in receipt of 'a copy of the
signed agreement'
and acknowledging receipt of his deposit of R106
350, which had been invested. They also stated that they had received
confirmation
from his investment advisers that they held funds
sufficient to cover the balance of the purchase price. He was asked
to provide
copies of his identity document and marriage certificate.
These documents were clearly required, as the heading to the letter
indicated,
for the opening of the sectional title register of the
development and the transfer of the member's interest in MTR Trading
CC,
the eighth respondent (to which unit 502 had been allocated),
from the developers to him.
[30] On 6 January 2003 Mooney Ford wrote to Mr Blake
attaching 'the latest schedule': this schedule included the sales to
Mr Pillay
and Dr Motlanthe, with details given of the purchase
prices, the units, the close corporations to which they had been
allocated
and the deposits received.
[31] Copies of further schedules reflecting sales to Mr
Pillay and Dr Motlanthe were sent to Mr Blake on 23 January 2003 and
3 February
2003.
[32] On 24 June 2003 Mooney Ford wrote to Dr Motlanthe
stating that in terms of the contract signed by him the developers
had requested
them to address him in relation to the finishes of the
fittings in unit 502 and that the provisional sum had been adjusted,
based
on the final prices received by the suppliers. They requested
him to make arrangements for payment of the sum of R23 530 directly
into their trust account.
[33] On 17 July 2003 Mooney Ford wrote to Dr Motlanthe
confirming that they required a guarantee in the sum of R602 650 with
the
guarantee to be expressed as payable upon registration of the
opening of the sectional title register and transfer of the member's
interest concerned to Dr Motlanthe.
[34] Two days later, on 19 July 2003 Mooney Ford wrote
again to Dr Motlanthe referring him to 'clause 13 of the agreement of
sale
entered into by you' and calling upon him to furnish guarantees
within 14 days, failing which 'the seller shall be entitled to cancel
the agreement without further notice to you'. A copy of this letter
was sent to Mr Blake.
[35] On 21 July 2003 Dr Motlanthe's bankers, the
Standard Bank Ltd, sent the requisite guarantee to Mooney Ford's
bankers, First
National Bank Ltd.
[36] On the same day, at a meeting attended by the
attorney acting for Mr Pillay and Dr Motlanthe, the estate agents
concerned and
Mr Blake, Mr Blake indicated that the developers were
not bound by the purported agreements between them and Mr Pillay and
Dr Motlanthe.
He had not signed the offers signed by Mr Pillay and Dr
Motlanthe and when asked by the estate agents to sign he refused.
[37] On 23 July 2003 Mooney Ford wrote a letter to Pam
Golding Properties which read as follows:
'It has become apparent,
following on from the meeting that was held at Mr Blake's offices on
Monday that the offers to purchase
units 402 and 502 Lazy Lizard,
which were submitted . . . by your office, have not been accepted.
In the circumstances, our client
has decided that it will not accept these offers by Mr S Pillay and
Dr Motlanthe respectively.
If they are interested in increasing the
offering price, our client may be prepared to consider their offers.
We are making arrangements for
the deposits to be refunded to these two purchasers together with the
interest which has accrued
thereon.'
[38] On 4 August 2003 Mooney Ford wrote to Dr Motlanthe
advising him that his offer to purchase unit 502 had not been
accepted by
the seller and that they were making arrangements for the
deposit paid by him to be refunded to him, with interest. On 5 August
2003 a similarly worded letter was sent by Mooney Ford to Mr Pillay.
[39] A dispute then arose between Mr Pillay and Dr
Motlanthe on one hand and the developers on the other as to whether
valid agreements
of sale had been concluded in terms of which the
member's interest in Swaledale 9 Investments CC had been sold to Mr
Pillay and
the member's interest in MTR Trading CC had been sold to
Dr Motlanthe.
[40] As I have said, Balton J gave judgment in favour of
Mr Pillay and Dr Motlanthe. Following the decision of Goldin J in
Rhodesian Business and Property Sales (Pvt)
Ltd v Henning
1973 (1) SA 214
(R) at 217H
where it was held that the sale of shares in a company, even if the
company owns only land and the shares are purchased
for that reason
only, is not a sale of land, the learned judge came to the conclusion
that the agreements in question in this case
did not have to be in
writing and that
s 2(1)
of the
Alienation of Land Act 68 of 1981
did
not apply.
[41] She held that Mr Pillay and Dr Motlanthe had
succeeded in proving that the conduct of the developers had led them
to believe
that valid agreements had been entered into with them and
that the agreements were binding and of full force and effect between
the parties.
[42] Her judgment on this part of the case was based
squarely on the doctrine of quasi-mutual assent. In this regard she
relied
on the well-known statement of Blackburn J in
Smith
v Hughes
(1871) LR 6 QB 597
at 607, which is
quoted in para 55 below and which has been frequently cited with
approval in this court and in other courts in
South Africa (see, eg,
Sonap Petroleum (SA) Pty Ltd v Pappadogianis
1992 (3) SA 324
(A) at 239F-H, where
references are given to some of the other cases).
[43] On appeal to the full bench, as indicated earlier,
the court found it unnecessary to deal with the quasi-mutual assent
point
because it held that the parties' intention had been that there
would be no binding agreements between them unless they were signed
by or on behalf of the buyers and the sellers. It is important to
stress that it accepted, as counsel on both sides had accepted,
that
'(t)he
Close Corporations Act 69 of 1984
does not require the sale of
a member's interest to be in writing even if it relates to immovable
property.' Reference was made
to the
Rhodesian
Business and Property Sales
case on which
Balton J had relied. I take it that by the phrase 'even if it [ie,
the sale of the member's interest] relates to immovable
property' the
learned judge meant 'even if the close corporation in which the
interest was sold only owns immovable property and
the interest was
purchased for that reason only', to adapt the dictum of Goldin J to
which I referred earlier.
[44] In coming to the conclusion to which he did,
Nicholson J endeavoured to apply the law as set out in a series of
decisions of
which the leading one is
Goldblatt
v Fremantle
1920 AD 123.
The passage cited by
him in his judgment appears at pp 128-9 of the report and reads as
follows:
'Subject to certain exceptions,
mostly statutory, any contract may be verbally entered into; writing
is not essential to contractual
validity. And if during negotiations
mention is made of a written document, the Court will assume that the
object was merely to
afford facility of proof of the verbal
agreement, unless it is clear that the parties intended that the
writing should embody the
contract. (
Grotius
3.14.26 etc.) At the
same time it is always open to parties to agree that the contract
shall be a written one (see
Voet
5.1.73.
V.
Leeuwen
4.2.,
sec. 2
,
Decker's
note);
and in that case there will be no binding obligation until the terms
have been reduced to writing and signed. The question
is in each case
one of construction. In the present instance the learned Judge, after
considerable hesitation, dealt with the matter
on the basis that the
parties were bound by their verbal agreement, but that it was a
condition of that agreement that it should
be executed in writing
within a reasonable time by both of them. Such a condition he
regarded as a concurrent one, which there
was a reciprocal obligation
to perform. The point of construction is not easy; but in my opinion
the better view is that there
was no contract until its terms had
been confirmed by both parties in writing. For it was definitely
agreed that the particulars
arranged would be reduced to writing by
Fremantle, and should be confirmed in writing by Goldblatt. The
former was to formulate
under his own signature what he considered to
be the result of the interview, and the latter was to confirm in
writing, also under
his signature, the result thus submitted. That
amounted, in my opinion, to an agreement that the contract should be
concluded not
verbally, but in writing. And a written contract
involved the signature of both. Such a contract, in the words of
Maasdorp J (
Richmond v
Crofton
15 SC at page
189) "cannot be said to have been fully executed until the
consent of the parties has been expressed by the signature
upon the
document or documents constituting the written contract."'
[45] Nicholson J was influenced in coming to the
conclusion he did by what he called 'the form of the contract'
presented to the
prospective purchasers by Pam Golding Properties. He
pointed to its heading (which I have quoted in para 16 above), the
references
to signature in clause 5.1 (quoted in para 17 above),
clause 8 (quoted in para 18 above) and clause 15 (quoted in para 19
above),
and the fact that there was provision at the conclusion of
the document for the signatures of the parties.
[46] He also found support for his views in a passage in
the judgment of Snyman J in
Meter Motors (Pty)
Ltd v Cohen
1966 (2) SA 735
(T) at 736C-737G.
That case was an action brought against a person who had signed as
surety for the obligations of a company which
was allegedly liable as
purchaser under a hire purchase agreement. Exception was taken to the
declaration on the ground that the
hire purchase agreement sued on,
which was annexed to the declaration, was not signed by the seller,
although it was clear from
the document that the parties thereto had
intended it to be the only agreement between the parties and that it
had to be signed
to be binding. The court, however, came to the
conclusion that the document had been signed on behalf of the seller
and the exception
was dismissed.
[47] In the passage in
Meter
Motors,
quoted extensively by Nicholson J in
the court a
quo,
despite
its being obiter, Snyman J considered, as a result of a reading of
clauses in the document, that for a contract to be concluded
in that
case, a document had to be signed by both parties. The key sentence
in this part of his judgment appears at 737 B where
the following was
said:
'. . . if
on
this document
it
appears that the parties intended the document to be the very
agreement between the parties, then that document must be signed.'
(The emphasis is mine.)
[48] This statement was made after references to
Wessels,
The Law of Contract in South Africa,
2 ed, vol 1, and part of the extract from
Goldblatt v Freemantle
quoted
above.
[49] After quoting from the
Meter
Motors
case, Nicholson J said that it seemed
to him that in the present case there were even more features which
pointed to the fact that
the agreement was to be binding on the
parties only when both had signed.
[50] I do not agree with the court
a
quo's
conclusion that there could be no
binding contracts between the parties unless each was signed by or on
behalf of the buyers and
the sellers. In my opinion it is clear from
Goldblatt v Freemantle, supra,
and
the authorities cited therein that, in the absence of a statute which
prescribes writing signed by the parties or their authorised
representatives as an essential requisite for the creation of a
contractual obligation (something that does not apply here), an
agreement between parties which satisfies all the other requirements
for contractual validity will be held not to have given rise
to
contractual obligations only if there is a pre-existing contract
between the parties which prescribes compliance with a formality
or
formalities before a binding contract can come into existence. That
this is so is clear, for example, from C W Decker's annotation
on Van
Leeuwen's
Roman Dutch Law
4.2
sec 1
(not
sec 2
as Innes CJ says at 129) where he pointed out
(Kotzé's translation, 2 ed, vol 2, p 12) that we no longer
uphold the distinction
drawn in Roman law between real, verbal,
literal and consensual contracts because all contracts with us are
made with consent.
With regard to written contracts he referred to an
observation by Samuel Strykius (
Modern Pandect
2.14.7) as follows:
'. . . we must regard the
written
contracts
as distinct, in so far as we should bear in mind that although the
writing does not constitute the essentiality of the
contract, which
is contained in the mutual consent of the parties, they may
nevertheless agree that their verbal agreement shall
be of no effect
until reduced to writing, in which case the agreement cannot before
signature have any binding force, although
there exists mutual
consent; and it cannot be said that the writing served not in
perfecting the transaction, but only as proof
thereof . . ., since
here it is agreed that the consent should not operate without the
writing, which must be observed as a legitimate
condition.'
[51] The passage in
Wessels
cited in the judgment in the
Meter
Motors
judgment supports this approach. The
learned author refers to
Institutes
3.23.
pr, and says that '[t]he plain meaning of this passage seems to be
that if the parties agree to have their contract of sale
in writing,
then until a document is drawn up there is no
vinculum
juris
and therefore no actionable contract.
This is the interpretation which Voet (18.1.3) gives to this passage
and it seems difficult
to justify any other.'
[52] In the present case there were clearly no
agreements between the parties that the mutual consent between them
would not operate
in the absence of a document embodying its terms
signed by both buyer and seller. There were in fact no negotiations
between the
parties before Mr Pillay and Dr Motlanthe signed their
offers. It follows that I am satisfied that the basis on which the
case
was decided by the full bench cannot be upheld. It follows also
that the passage in the
Meter Motors
case
on which Nicholson J relied, in so far as it is inconsistent with
what I have said, is incorrect. I think that it is more correct
to
say on the facts of the present case that these offers prescribed a
particular form of acceptance (
cf Driftwood
Properties (Pty) Ltd v McLean
1971 (3) SA 591
(A) at 597 D),
Withok Small Farms (Pty) Ltd v
Amber Sunrise Properties Ltd
(664/07)
[2008]
ZASCA 131
(21 November 2008) and E Allan Farnsworth,
Contracts,
2ed, 53.13, pages 151-2).
[53] This raises the question as to whether the doctrine
of quasi-mutual assent can be applied in circumstances where
acceptance
does not take place in accordance with a prescribed mode
but the conduct of the offeree is such as to induce a reasonable
belief
on the part of the offeror that the offer has been duly
accepted according to the prescribed mode. Viewed in the light of
basic
principle, the question must surely be answered in the
affirmative because the considerations underlying the application of
the
reliance theory apply as strongly in a case such as the present
as they do in cases where no mode of acceptance is prescribed and
the
misrepresentation by the offeree relates solely to the fact that
there is consensus.
[54] It is now necessary to consider whether on the
application of the doctrine of quasi-mutual assent Mr Pillay and Dr
Motlanthe
have established their entitlement to the relief sought.
[55] The approach to be adopted in a case such as this
was set out in
Sonap Petroleum (SA) (Pty) Ltd
v Pappadogianis, supra,
at 239F to 240 B, as
follows:
'If regard is had to the
authorities referred to by the learned Judges (see
Logan
v Beit
7 SC 197
at
215;
I Pieters and
Company v Salomon
1911
AD 121
at 137;
Hodgson
Bros v South African Railways
1928
CPD 257
at 261;
Van
Ryn Wine and Spirit Co v Chandos Bar
1928
TPD 417
at 422-4;
Irvin
& Johnson (SA) Ltd v Kaplan
1940
CPD 647
and, one could add,
Collen
v Rietfontein Engineering Works
1948
(1) SA 413
(A) at 430-1), I venture to suggest that what they did was
to adapt, for the purposes of the facts in their respective cases,
the
well-known
dictum
of Blackburn J in
Smith v Hughes
(1871)
LR 6 QB 597
at 607, namely:
"If, whatever a man's real
intention may be, he so conducts himself that a reasonable man would
believe that he was assenting
to the terms proposed by the other
party, and that other party upon the belief enters into the contract
with him, the man thus
conducting himself would be equally bound as
if he had intended to agree to the other party's terms."
In my view, therefore, the
decisive question in a case like the present is this: did 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? Compare
Corbin on
Contracts
(one volume edition)
(1952) at 157. To answer this question, a three-fold enquiry is
usually necessary, namely, firstly, was there
a misrepresentation as
to one party's intention; secondly, who made that representation; and
thirdly, was the other party misled
thereby? See also
Du
Toit v Atkinson's Motors Bpk
1985
(2) SA 893
(A) at 906C-G;
Spindrifter
(Pty) Ltd v Lester Donovan (Pty) Ltd
1986
(1) SA 303
(A) at 316I-317B. The last question postulates two
possibilities: Was he actually misled and would a reasonable man have
been misled?
Spes Bona
Bank Ltd v Portals Water Treatment South Africa (Pty) Ltd
1983
(1) SA 978
(A) at 984D-H, 985G-H.'
[56] The answers to the questions set out in that
passage, when applied to the facts of this case, are clear: the party
whose actual
intention did not conform to the common intention
expressed (ie, that there were contracts on the terms set forth on
the standard
form) was Mr Blake, acting for himself and the other
developers. He led Mr Pillay and Dr Motlanthe, as reasonable men, to
believe
that the declared intention represented his actual intention.
With regard to the three-fold enquiry: (a) there was a
misrepresentation
as to his intention; (b) made by his agents (in the
various letters sent by Mooney Ford to Mr Pillay and Dr Motlanthe
which unmistakably
represented that the offers had been accepted and
binding contracts had come into existence); and (c) Mr Pillay and Dr
Motlanthe
were actually misled as reasonable men in their position
would have been.
[57] It is clear on the evidence that Mooney Ford had
authority to call for and receive deposits paid under contracts for
the sale
of member's interests in the close corporation to which
units were to be allocated; to call for guarantees under the
contracts;
to allocate close corporations, from the list made
available to them by Mr Blake's accountants, to particular units; to
call for
copies of identity documents and marriage certificates so as
to be able to open the sectional title register and transfer member's
interests; to write to the buyers regarding the finishes of the units
and to ask for additional payments occasioned by changes
thereto; and
to give notices under clause 13 of the standard form contracts
threatening cancellation.
[58] All these acts, which they were authorised to
perform on behalf of Mr Blake and his fellow developers, amounted in
my view
to a clear representation that the offers made by Mr Pillay
and Dr Motlanthe had been duly accepted.
[59] Although the acceptance by the developers of the
Pillay and Motlanthe offers did not comply with the prescribed mode
of acceptance
they conducted themselves in such a manner as to induce
the reasonable belief on the part of Mr Pillay and Dr Motlanthe that
the
developers were accepting the offers according to the prescribed
mode.
[60] It follows in my view that Balton J correctly held,
on the basis of the doctrine of quasi-mutual assent, that the
developers
were bound by the agreements in respect of units 402 and
502.
[61] The following order is made:
A The appeal against the order of the court
a
quo
is upheld with costs including the costs
of two counsel.
B The order of the court
a quo
is
set aside and replaced by an order in the following terms:
'1 Subject to the order made in
paragraph 2, the appeal is dismissed with costs, including the costs
of two counsel.
2 The order made in the court
a
quo
is set aside and
replaced by an order in the following terms:
"(a) The following order is
made in case no 690/2004:
1. An order is granted declaring
the agreement between the first to sixth defendants ("the
sellers") and the plaintiff
("the purchaser") for the
purchase of the entire members' interest in and to the seventh
defendant to be of full force
and effect and binding between the
parties, with terms as set out in the document annexed as annexure
"A" to the plaintiff's
declaration with the seventh
defendant being reflected as the close corporation referred to in
that document, the sellers' acceptance
of the agreement having taken
place by conduct, instead of signature.
2 An order is granted directing
the sellers to comply with their obligations under the sale agreement
and in particular, they are
ordered and directed to deliver and hand
over to Mooney Ford Attorneys in trust, the documents set out in
paragraphs 8.1.1.1 to
8.1.5 (inclusive) of the sale agreement in
respect of the seventh defendant.
3 An order directing the sellers
to bring about the state of affairs warranted in clauses 9.1 to 9.6
(inclusive) of the sale agreement
(in particular by ensuring that the
sectional title unit referred to in the sale agreement is owned by
the seventh defendant at
the date of transfer of the members'
interest to the purchaser).
4 In the event of the sellers'
failing to comply with the order contained in paragraphs 2 and 3
hereof, or any one of those paragraphs,
then the purchaser is given
leave to deliver an application to this court, on the same papers,
supplemented in so far as may be
necessary, for an order:
(a) declaring the sellers to be
in contempt of court;
(b) for their committal to
prison for contempt of ourt.
5 In addition, in the event of
the sellers' failing to comply with paragraphs 2 and 3 of this order,
the Sheriff of Durban is authorised
to do all things necessary, in so
far as the sellers are concerned, to cause the actions contained
therein to be fulfilled.
6 In the event of the sellers'
failing to comply with the orders contained in paragraphs 2 and 3
hereof, and the purchaser's failing
to obtain the transfer
contemplated in paragraph 5 hereof within a reasonable period of time
from the granting of this order, then
the sellers shall be liable,
jointly and severally, the one paying the other to be absolved, on
application by the purchaser, on
the same papers supplemented in so
far as may be necessary, to pay damages in an amount to be determined
by the court, together
with return of the deposit paid by the
purchaser together with interest thereon at the legal rate of 15.5%
per annum
from
due date to date of payment.
The sellers are ordered to pay
the purchaser's costs of suit.
(b) The following order is made
in case no 19979/04:
1. An order is granted declaring
the agreement between the first to sixth defendants ("the
sellers") and the plaintiff
("the purchaser") for the
purchase of the entire members' interest in and to the seventh
defendant to be of full force
and effect and binding between the
parties, with terms as set out in the document annexed as annexure
MM2 in the application papers
(in the form referred to in the
Plaintiff's replying affidavit) with the seventh defendant being
reflected as the close corporation
referred to in that document, the
sellers' acceptance of the agreement having taken place by conduct,
instead of signature.
2. An order is granted directing
the sellers to comply with their obligations under the sale agreement
and in particular, they are
ordered and directed to deliver and hand
over to the eighth defendant in trust, the documents set out in
paragraphs 8.1.1.1 to
8.1.5 (inclusive) of the sale agreement in
respect of the seventh defendant.
3 An order directing the sellers
to bring about the state of affairs warranted in clauses 9.1 to 9.6
(inclusive) of the sale agreement
(in particular by ensuring that the
sectional title unit referred to in the sale agreement is owned by
the seventh defendant at
the date of transfer of the members'
interest to the purchaser).
4 In the event of the sellers'
failing to comply with the order contained in paragraphs 2 and 3
hereof, or any one of those paragraphs,
then the purchaser is given
leave to deliver an application to this court, on the same papers,
supplemented in so far as may be
necessary, for an order:
(a) declaring the sellers to be
in contempt of court;
(b) for their committal to
prison for contempt of court.
5 In addition, in the event of
the sellers' failing to comply with paragraphs 2 and 3 of this order,
the Sheriff of Durban is authorised
to do all things necessary, in so
far as the sellers are concerned, to cause the actions contained
therein to be fulfilled.
6 In the event of the sellers'
failing to comply with the orders contained in paragraphs 2 and 3
hereof, and the purchaser's failing
to obtain the transfer
contemplated in paragraph 5 hereof within a reasonable period of time
from the granting of this order, then
the sellers shall be liable,
jointly and severally, the one paying the other to be absolved, on
application by the purchaser, on
the same papers supplemented in so
far as may be necessary, to pay damages in an amount to be determined
by the court, together
with return of the deposit paid by the
purchaser together with interest thereon at the legal rate of 15.5%
per annum
from
due date to date of payment.
The sellers are ordered to pay
the purchaser's costs of suit."'
……………
..
IG FARLAM
JUDGE OF APPEAL
APPEARANCES:
FOR APPELLANT: G D HARPUR SC
U LENNARD
Instructed by: Lutge Magigaba
Inc
Durban
Hill, McHardy & Herbst
Bloemfontein
FOR RESPONDENT: L C A WINCHESTER
SC
Instructed by: Mooney Ford
Attorneys
Durban
Lovius Block, Bloemfontein