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[2016] ZAGPPHC 1142
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Erf 338 Phalaborwa Ext 1 (Pty) Ltd v The Polo Estate Dullstroom (Pty) Ltd and Another (31900/2013) [2016] ZAGPPHC 1142 (21 December 2016)
REPUBLIC
OF SOUTH AFRICA
THE
HIGH COURT OF SOUTH AFRICA
GAUTENG
DIVISION, PRETORIA
21/12/2016
CASE
NO: 31900/2013
NOT
REPORTABLE
NOT
OF INTEREST TO OTHER JUDGES
REVISED
In
the matter between:
ERF
338 PHALABORWA EXT 1 (PTY) LTD Plaintiff/Excipient
And
THE
POLO ESTATE DULLSTROOM (PTY) LTD 1st
Defendant/Respondent
INVESTEC
BANK 2nd
Defendant
JUDGMENT
MPHAHLELE.
J:
[1]
The plaintiff took two exceptions to the first defendant's plea on
the grounds that the plea is vague and embarrassing, alternatively,
fails to disclose a defence to the plaintiff's claim. The plaintiff's
claim arises out of a deed of sale entered into between the
plaintiff
and the first defendant on 10 March 2005 concerning the sale of two
immovable properties and certain movables.
[2]
The purchase price was R7 500 000-00. As additional consideration
payable by the first defendant to the plaintiff the first
defendant
had to transfer to the plaintiff, one residential erf of average size
and value. The right to select such an erf vested
solely with the
first defendant, who was obliged to communicate its choice to the
plaintiff in writing within a reasonable period
after approval of the
general plan. Transfer of the properties to the first defendant would
be effected within a reasonable period
after fulfillment of the
suspensive conditions and compliance by the parties with their
obligations in terms of the deed of sale.
The
first exception
[3]
What gives rise to the first exception is in essence the manner in
which the first defendant couched its plea in response to
the
allegations made by the plaintiff concerning clause 11.1 and 11.3 of
the deed of sale. The clauses read as follows:
[3.1]
"11.1 From its authorised share capital, the company shall upon
demand by the seller, issue and allot in favour of the
seller, and
the latter shall subscribe to: shares equaling 10% of the company's
issued ordinary par value shares (existing on date
of incorporation),
at a subscription price of R100-00. The shares shall be issued and
allotted within a reasonable time after demand
by the seller but
which demand the seller shall not be entitled to make before
registration of transfer of the properties in the
name of the
company. Such shares shall moreover only be issued and allotted to
the seller after payment by the latter of the subscription
price."
[3.2]
"11.3 In the event that the seller elects not to subscribe for
the shares as set out in clause 11.1 of the deed of sale
and
consequently fails or refuses to make demand for such shares within a
period of 18 months after date of registration of transfer
of the
properties in the name of the company, then and in such event, the
company shall become liable to the seller for payment
of a cash
amount of RS 000 000-00 (five million rand) after expiry of a period
of 36 months calculated from date of registration
of transfer of the
properties in the name of the company."
[4]
Registration of transfer of the properties from the plaintiff to the
first defendant took place on 28 May 2007. On 21 April
2010, the
plaintiff formally informed the first defendant in writing that the
plaintiff had elected not to subscribe for the shares
described in
clause 11.1 of the deed of sale. The plaintiff further required
payment from the first defendant, of the cash amount
of R5 000
000-00, pursuant to clause 11.3 of the deed of sale.
[5]
By letter dated 28 May 2010, the plaintiff informed the first
defendant that the first defendant was in breach of its obligations
towards the plaintiff, in that it had failed to effect payment of the
amount of RS 000 000-00 on the date on which payment was
due and had
failed to transfer the residential erf into the plaintiffs name,
within a reasonable period after approval of the general
plan,
pursuant to clause 3.2 of the deed of sale.
[6]
Clause 7 of the deed of sale provides that should the first defendant
fail to make payment of the amount of R5 000 000-00 within
seven days
after receipt of the notice and should the first defendant fail to
present transfer documentation for the plaintiff's
signature, within
seven days after receipt of the notice, then the plaintiff would be
entitled to cancel the deed of sale. The
first defendant failed to
comply with the plaintiff's notice within seven days after receipt of
the notice. The plaintiff contends
that under the circumstances the
deed of sale was cancelled on or about 11 June 2010.
[7]
The first defendant, in its plea denies that the plaintiff had
elected not to subscribe for the shares described. The first
defendant avers that not later than 10 April 2005 Mr. Alberts, acting
on behalf of the first defendant, was verbally informed by
Mr.
Campbell and/or Mrs. Campbell acting on behalf of the plaintiff, that
the plaintiff had elected to subscribe to the shares
as envisaged in
clause 11.1 of the deed of sale.
[8]
The plaintiff submitted that the first defendant's averment that the
plaintiff made such an election, no later than 10 April
2005, is
contrary to the express provisions of clause 11.1 of the deed of
sale, which stipulates that the plaintiff shall not be
entitled to
make demand for the issue and allotment in favour of the seller of
the relevant shares before registration of transfer
of the properties
into the name of the first defendant.
[9]
The plaintiff contends that insofar as the first defendant avers that
the election was made by the plaintiff no later than 10
April 2005,
the relevant portion of its plea is vague and embarrassing,
alternatively, fails to disclose a defence as the election
upon which
the first defendant expressly relies, occurred prior to the date of
registration of transfer of the immovable properties.
[10]
The core of the first defendant's argument is that in terms of the
deed of sale it was competent for the plaintiff to elect
to subscribe
for the shares before registration of transfer; the plaintiff made
that election; the election is binding and enforceable.
[11]
Clause 11.1 among others, stipulates that the shares shall be issued
and allotted after demand by the seller but which demand
the seller
shall not be entitled to make before registration of transfer of the
properties. Clause 11.3 gives the plaintiff the
right to elect not to
subscribe for the shares, and in that event, to claim payment of R5
000 000-00 from the first defendant after
expiry of a period of 36
months calculated from date of registration of transfer of the
properties into the name of the first defendant.
Clause 11.3 does not
stipulate when the election not to subscribe for the shares must be
made.
[12]
The wording of clause 11.3 raises the question whether in terms of
the contract between the parties it was permissible for
the plaintiff
to elect to subscribe for the shares before registration of transfer.
The answer to this question rests on what the
court could find to be
a reasonable interpretation of the contract after hearing necessary
evidence. It is also clear from the
submissions made by the parties
that the first exception turns upon the interpretation of the deed of
sale.
The
second exception
[13]
In paragraph 9.5 of its plea, the first defendant avers, in the
alternative, that the plaintiff through its various forms of
conduct
signified its election to subscribe to the shares as contemplated in
clause 11.1 of the deed of sale. The first defendant
avers that ever
since the conclusion of the deed of sale the plaintiff's
representatives did not only act in a manner wholly consistent
with
the conduct of a shareholder, but were in fact always regarded as
such by the first defendant.
[14]
The plaintiff contends that all the alleged conduct by it relied upon
by the first defendant refer to events that occurred
prior to the
registration of transfer of the properties from the plaintiff to the
first defendant on 28 May 2007.
[15]
The plaintiff submitted that these averments that the plaintiff made
such an election by its conduct, prior to 28 May 2007,
is contrary to
the express provisions of clause 11.1 of the deed of sale, which
stipulates that the plaintiff shall not be entitled
to make demand
for the issue and allotment in favour of the sale of the relevant
shares before registration of transfer of the
properties into the
name of the first defendant. Accordingly, these averments render the
first defendant's plea vague and embarrassing,
alternatively, fail to
disclose a defence. It is my view that the basis for this exception
emanates from the same issue as the
first exception, namely, the
interpretation of the deed of sale.
[16]
Courts are reluctant to decide upon exception questions concerning
the interpretation of a contract. [See Sun Packaging (Pty)
Ltd v
Vreulink
[1996] ZASCA 73
;
1996 (4) SA 176
(SCA) at 186J].
Conclusion
[17]
An exception may only be taken where a pleading is vague and
embarrassing or lacks averments which are necessary to sustain
an
action or defence. In order to succeed with the exception the
plaintiff has to satisfy this court that upon every interpretation
which the pleading in question can reasonably bear, no defence is
disclosed. [See South African National Parks v Ras
2002 (2) SA 537
(C) at 534 A- B & Jowell v Bramwell-Jones and Others
1998 (1) SA
836
0/1/) at 899G) The plaintiff has failed to establish that upon
every interpretation which the first defendant's plea can reasonably
bear no defence is disclosed.
[18]
As a general rule a court will not allow an exception unless it is
satisfied that there is no arguable case on the pleading
as it
stands. I am of the view that the first defendant has an arguable
case that requires the issues between the parties to be
decided at
the trial. It is clear that the exceptions must fail.
[19]
In the result' the plaintiff's exceptions to the defendant's plea are
dismissed with costs.
MPHAHLELE
JUDGE
OF THE HIGH COURT OF SOUTH AFRICA
GAUTENG
DIVISION, PRETORIA
Counsel
for the plaintiff: T Ohannessian
Instructed
by: Stanley Brasg & Associates
Counsel
for 1st defendant: G M Young
Instructed
by: Froneman-Roux & Streicher Attorneys
Date
of judgment: 21 December 2016