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[2009] ZAGPPHC 316
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Xantium Trading 250 (Pty) Limited v Vaalbend Estate (Pty) Limited and Another, In Re; Vaalbend Estate (Pty) Limited v Xantium Trading 250 (Pty) Limited and Others (35127/2009,) [2009] ZAGPPHC 316 (25 September 2009)
IN
THE HIGH COURT OF SOUTH AFRICA
(NORTH
GAUTENG, PRETORIA)
Case
No: 35127/2009
Date
heard: 22/09/2009
Date
of judgment: 25/09/2009
Not
reportable
Not
of interest to other judges
In
the matter between:
XANTIUM
TRADING 250 (PTY) LIIMITED
…………………………………
Applicant
And
VAALBEND
ESTATE (PTY) LIMITED
…………………………………
1
st
Respondent
REGISTRAR
OF DEEDS, FREE STATE
PROVINCE
………………………………………………………………
2
nd
Respondent
CASE
NO: 35127/2009
In
the counter-application of
VAALBEND
ESTATE (PTY) LIMITED
……………………………
.………….
Applicant
and
XANTIUM
TRADING 250
(PTY)
LIIMITED
………………………
..…..
1
st
Respondent
NTSU
BOERDERY CC
……………………………………………………
.
2
nd
Respondent
ABSA
BANK LIMITED
……………………………………………………
.
3
rd
Respondent
NEL,
HENDRIK
……………………………………………………………
..
4
th
Respondent
REGISTRAR
OF DEEDS, FREE STATE
PROVINCE
…………………………………………………………………
.
5
th
Respondent
JUDGMENT
DU
PLESSIS J:
Under
case number 35127/09 Xantium Trading 250 (Pty) Ltd launched an urgent
application against Vaalbend Estates (Pty) Ltd as first
respondent
and the Registrar of Deeds, Free State as second respondent. Only the
first respondent opposed the application.
The
first respondent launched a counter application citing Xantium as the
first respondent in therein. In the counter application
Vaalbend
cited certain further respondents who did not oppose the counter
application. Xantium, however, opposes the counter application.
In
the result the only parties that appeared in these proceedings are
Xantium to whom I shall refer as the applicant and Vaalbend
to whom I
shall refer as the respondent.
It
is common cause that on 1 April 2008 (or possibly in June 2008) the
applicant and the respondent entered into a written agreement
in
terms whereof the respondent sold the farm Knopfontein to the
applicant. On 27 November
2008
the parties signed a written addendum to the contract of sale,
thereby varying the latter. I shall refer to the two documents
collectively as “the final contract”.
In
its application the applicant seeks an order aimed at compelling the
respondent to transfer to it the farm Knopfontein against
payment of
the purchase price in terms of the final contract. The applicant
seeks further relief in the alternative but it is unnecessary
now to
give details thereof.
In
the counter application the respondent essentially seeks an order
setting aside the final agreement. The respondent seeks certain
ancillary orders but at this stage detailed reference thereto is
unnecessary. As regards the further parties that the respondent
cited
in the counter application, I am not convinced that they were
properly cited. As they did not oppose the application no more
need
to be said about that. It is convenient to deal first with the
application and thereafter with the counter application.
The
final contract was entered into in the following factual context. At
all relevant times until sometime between 2004 and 2008,
the
controlling minds of the applicant was the late Mr Jacobus Kits and
his brother Tinus. Thereafter, until January 2009 it was
only the
late Mr Kits. He passed away in January 2009 The controlling mind of
the respondent is Mr RM Joubert. The late Mr Kits
was an accountant
and had for many years been employed by a company in which
Mr Joubert was the major role
player. There is some dispute as to the exact nature of their
relationship, but it may be accepted
that the two men became friends.
In the middle nineties Mr Kits became involved in another business
venture and resigned his employment.
The men remained friends.
In
2003 the company through which Kits and his brother were conducting
business needed farm land. Kits approached Mr Joubert and
the company
leased the farm Knopfontein from the respondent with an option to
purchase it. Against the background of the lease
and the option, the
applicant, being Kits’s company, purchased the farm in January
2004. (I shall refer to this contract
as “the first sale”).
The purchase price in terms of the first sale was R4 155 446,26 of
which the applicant had to
pay a deposit of R1 million. The balance,
for which the applicant was to register a bond over the property in
the respondent’s
favour, was payable in 120 monthly instalments
commencing on 1 February 2004. The balance was to bear interest at a
rate 4% less
ABSA Bank’s prime lending rate.
Although
the first sale provided that the applicant would take transfer of the
property against payment of the deposit and registration
of the bond,
this did not happen. The property remained registered in the
respondent’s name and the applicant continued to
pay the
monthly instalments and the interest.
The
applicant apparently had difficulty to pay the transfer duties on the
first sale. In January 2008 its attorney suggested to
the
respondent’s attorney
that
a new contract of sale be drafted in terms whereof the purchase price
would be the balance owing under the first sale and in
terms whereof
the farm would be sold to the applicant as a going concern, zero
rated for purposes of Value Added Tax. (Whether
this scheme can in
fact result in a reduction of duties payable is something that the
South African Revenue Services will determine.)
It is as a result of
these suggestions and negotiations that followed thereon that the
sale agreement of 1 April 2008 (“the
second sale”) was
concluded.
In
the course of the negotiations leading up to the second sale, the
parties discussed the bottling of pure water found on the property.
Following that discussion the following clause 12 forms part of the
second sale:
“
As
die partye sou besluit om ‘n besigheid te begin deur
ondergrondse water te bottel en bemark, sal die VERKOPER ‘n
50%
(vyftig persent) aandeel in die besigheid, en die KOPER ‘n 50%
(vyftig
persent) aandeel in die besigheid hê”
Under
the first sale the respondent was to retain the mineral rights to the
farm. In view of the provisions of the
Mineral
and Petroleum Resources Act, 28 of 2002
this was also discussed. Resulting from these discussions the
following clause 13 forms part of the second sale:
“
Indien
die VERKOPER mineraalregte wil ontgin, sal die KOPER sy aansoek cm
sodanige mynregte te bekom, ondersteun, aangesien die
eiendom
oorspronklik sou verkoop gewees het met behoud van mineralregte en
die KOPER sal in die gees daarvan optree, al het die
hele
mineraalregte bedeling intussen verander.
In
2008, after the second sale had been signed, the late Mr Kits needed
R1 million which the respondent, after negotiations between
Kits and
Joubert, lent to the applicant. The applicant was to repay this
amount together with precalculated interest on 27
July 2011. The
amount so repayable was R1 568 550,95. The parties agreed to
structure the loan as an increase of the purchase price
in terms of
the second sale, and to structure the repayment thereof as payment of
the purchase price. This was reflected in a written
addendum to the
second sale which was signed on 27 November 2008. (There are obvious
typing and drafting errors in the addendum.
Although the applicant
initially sought rectification in respect thereof, the respondent
does not dispute that the errors that
the applicant identifies are
such and the applicant did not persist in the claim for
rectification.)
After
the death of Mr Kits, his widow was appointed the sole director of
the applicant. For reasons that are relevant only to the
question of
urgency, Mrs Kits felt constrained to sell the property. The
applicant’s attorney phoned the respondent’s
attorney and
asked whether the respondent (Mr Joubert) had any objection to the
resale of the property. The parties exchanged correspondence
and had
discussions. Ultimately the respondent objected to the applicant’s
resale of the property and hence this application.
It
is common cause that the second sale and its addendum (the final
contract) novated the first sale. It follows that the applicant’s
entitlement to transfer of the property into its name must be
determined by interpreting the terms of the final contract in their
factual context. The intention of the contracting parties must be
determined from the ordinary meaning of the language used in
written
documents comprising the final contract. If the written terms of the
contract, or any part thereof, are found to be ambiguous,
the
interpreter may have regard to evidence of the full context wherein
the contract was concluded. The purpose of such evidence
is not to
vary or add to the terms of the written contract, but to shed light
on what the parties probably meant when they used
the written words
in the contract. Evidence that varies or adds to the terms of the
written contract is inadmissible: the intention
of the parties must
be determined from the words they chose to use in the contract.
(
Delmas Milling
Co Ltd v Du Plessis
1955 (3) SA 447
(A) at 454F to 455C; KPMG
Chartered Accountants (SA) v Securefin Ltd and Another
2009 (4) SA
399
(SCA)
at
para. 39.)
In
the papers Mr Joubert, who deposed to the answering affidavits on the
respondent’s behalf, raised a number of defences
to the
applicant’s claim for transfer of the property. Mr Venter, who
appeared for the respondent, however, did not persist
with all these
defences. In brief, Mr Venter argued that clauses 12 and 13 of the
second sale are indivisible parts of the second
sale and thus of the
final contract. Those clauses, counsel argued, are ambiguous and
incapable of interpretation as they stand.
Accordingly, the court
must have regard to evidence of the circumstances surrounding the
conclusion of the final contract. Doing
that, the argument went on,
the court must find that, as to clauses 12 and 13, the written
contract does not reflect consensus
between the parties. The court
must find that the parties in fact did not agree or reach consensus
on the subject matter of clauses
12 and 13. Counsel submitted that,
at best for the applicant, the parties laboured under a common
mistake as regards the subject
matter of clauses 12 and 13 or that
the respondent (Mr Joubert) laboured under a material unilateral
mistake. Moreover, counsel
argued, the parties had agreed that the
respondent would have a right of first refusal in the event of the
applicant deciding to
sell the property. It is common cause that the
respondent was not afforded such right of first refusal. Finally,
counsel submitted
that the applicant has repudiated its obligations
under the contract. In the course of argument, counsel abandoned the
latter argument.
In essence counsel abandoned the argument based on
an alleged repudiation because it was predicated on the correctness
of his argument
that the contract does not reflect the true consensus
of he parties. If the court finds against him on that argument, then
the
applicant did not repudiate its obligations under the contract.
Conversely, if the court finds for the respondent on the consensus
issue, reliance on repudiation is unnecessary.
Mr
Joubert’s answering affidavit runs into no less than 162 pages.
It deals with events from the inception of his relationship
with the
late Mr Kits to events that happened after this application had been
launched. I do not propose to traverse all that evidence
as most of
it is irrelevant to the correct interpretation of the final contract.
I have already sketched the contractual setting
wherein the final
contract was entered into. As for further evidence of the
circumstances surrounding the conclusion of the final
contract, that
will only be admissible if it is found that the terms of the final
contract, clauses 12 and 13 in particular, are
ambiguous. I shall
nevertheless briefly summarise Joubert's evidence regarding the
negotiations pertaining to the conclusion of
the final contract. I do
that because such a summary will be conducive to a better
understanding of counsel’s argument.
In
his answering affidavit Mr Joubert states that he has “some
recollection” that, after the applicant’s request
for a
new agreement, he had a discussion with the late Mr Kits. Mr
Joubert’s recollection is that he told Mr Kits that, as
a
prerequisite to a new agreement, such agreement must provide for
Vaalbend's entitlement in due course to construct a water bottling
plant on the farm in which venture the respondent would be prepared
to allow the applicant a 50% interest. Joubert elaborates on
this,
but this evidence is the essence of Joubert’s explanation for
the presence of clause12 in the agreement.
During
the same discussion Joubert required that the applicant must agree
“insofar as may be necessary, to support Vaalbend
in its
attempt to secure mineral prospecting rights”. According to
Joubert he required a term to that
effect
in a new agreement and he told Kits as much. This evidence is the
essence of Joubert’s contention as to the background
of clause
13.
In
a letter to the applicant’s attorneys the respondent’s
attorneys confirmed that Joubert and Kits had agreed on the
water
bottling and mineral rights issues and the applicant’s
attorneys then proceeded to draft the second sale.
According
to Mr Joubert, the late Mr Kits seemed to regard the successive
contracts more as a lease than as a sale. Kits did not
seem to have
any intention for the applicant to take transfer of the property.
According to Joubert, when he discussed the mining
rights and the
water bottling venture with K
:
ts, the latter must have
understood that “he no longer could deal with Knopfontein in
any which way he wanted, as an owner
would have done”. In
addition, Joubert states that although “it was not discussed,
there was a non-negotiable understanding
between us that in the
unlikely event, which at that stage was not even discussed, of
Xantium taking transfer that Vaalbend would
have a right of first
refusal in the event of Xantium intending to resell the farm. It was
so obvious that it required no mention”.
That
the applicant did not intend to and would not take transfer of the
property is a recurring theme in Joubert’s affidavits.
He does
not articulate it in so many words, but if regard is had to his
contentions and also those of the
respondent’s
counsel, Joubert probably intended to convey the following:
Despite
the sale of the property to the applicant, the respondent in the long
term intended to establish a water bottling plant
thereon. The
respondent also intended to establish mining operations on the
property. When he was asked to enter into a new agreement
(the second
sale) Joubert agreed on the express condition that the respondent’s
rights to the bottling and mining projects
be recognised and
protected in the new agreement. As those rights entail a long term
relationship between the applicant, as purchaser
or owner of the
property, and the respondent, it necessarily follows that the
respondent cannot sell the property without recognition
of the
respondent’s rights with respect to the bottling and mining
projects. Apart from other considerations, it would be
unconscionable
for the applicant now to take transfer of the property and on-sell it
without first offering the property for sale
to the respondent.
I
must now first interpret the final contract with particular reference
to clauses 12 and 13. It is convenient to start with clause
13.
In
my view the wording of clause 13 is unequivocal: It puts on the
applicant the contractual obligation to support (“ondersteun”)
the respondent’s application to obtain mining rights (die reg
om minerale te ontgin). This obligation of the applicant is,
however,
conditional. It will in terms of the agreement only arise if and when
the respondent decides to exercise mineral rights
on the property
(“indien die verkoper nineraalregte wil ontgin”). Not
only is
clause 13 in
my view unambiguous. Even if regard is had to the evidence of
Joubert, though inadmissible, the clause accurately reflects
what
Joubert now contends the agreement was.
In
terms of clause 13 the respondent has long term rights that might
have been compromised if the applicant were allowed to take
transfer
of the property and to on-sell it without somehow protecting the
respondent’s said rights. I say the rights “might
have
been compromised" because, on the respondent’s own
evidence, it has already secured the prospecting rights. Joubert
dedicates many pages to an explanation of how he went about to secure
those rights. I do not summarise that evidence as counsel
agreed that
the essence thereof is that the respondent has secured the rights. In
the circumstances the applicant’s support
as provided for in
clause 12 is no longer relevant. Interesting as it might have been,
it is no longer necessary to decide how
the applicant’s
obligation would have affected its right to transfer and to on-sell
the property. In a nutshell, the clause
is unambiguous, accurately
reflects whet the respondent contends the agreement was and is in any
event at present of no more than
academic interest.
I
turn to clause 12. In my view this clause is also unambiguous. It
gives each of the parties the right to a 50% share in a business
that, if established, was to bottle and market underground water on
the property. Those rights, however, are subject to a condition
that
is dependant on the will of each party: the rights only arise if both
parties decide to start such a business (“as die
partye sou
besluit o mom ‘n besigheid te begin ...). It follows that no
evidence is necessary to interpret the term. Even
if it could be said
that the term is ambiguous, it cannot in my view mean what Mr Joubert
contends was agreed: That the respondent
would have the right to
construct a water bottling plant on the farm in which venture the
respondent would be prepared to allow
the applicant a 50% interest.
In the circumstances Mr Joubert’s evidence seeks not to clarify
but to vary the terms of the
second sale and is inadmissible.
Clause
12 does give to the respondent a long term interest with respect to
the property and for that reason the respondent’s
rights in
terms of clause 12 might have affected the applicant’s right to
alienate the property. The applicant has made it
clear, however, that
it does not intend to start a water bottling business. It follows
that the condition to which the applicant’s
rights was subject
has failed. It is true that the applicant might change its corporate
mind but by selling the property its decision
not to start a water
bottling business on the property has become irreversible. The
condition, potestative as it is, has finally
failed.
For
the above reasons the contention that the final contract does not
reflect the parties’ consensus must fail. The contention
that
the parties laboured under a common mistake must also fail. As for a
unilateral material mistake on the part of Mr Joubert,
he does not in
his evidence say that he laboured under such a mistake. It follows
that there is no evidence as to what the unilateral
mistake was. The facts show that
the applicant’s attorney drafted the agreement, including
clause 12, on the applicant’s
instructions. In the
circumstances it is difficult to see how Mr Joubert could have made a
mistake. In any event, there is no evidence
whatsoever that the late
Mr Kits was aware or should have been aware of any mistake on the
part of Joubert or that he somehow induced
such a mistake. In the
circumstances, even if the applicant laboured under a unilateral
mistake, such mistake cannot avail it to
avoid the contract.
Also
for the reasons set out the contention that the agreement is void for
vagueness must fail.
I
have pointed out that Joubert contends that a right of first refusal
in the applicant’s favour must be inferred from the
facts. I
cannot agree that the facts that the applicant relies on give rise to
the inference that the respondent was granted a
right of first
refusal. While clauses 12 and 13 give to the respondent certain long
terms rights in respect of the property, a
right of first refusal is
by no means the only or even an obvious way of protecting those
rights. Such rights could, for instance,
if necessary have been
protected by way of an appropriate provision in the contract whereby
the applicant sold the property. For
reasons already given, such a
provision is not at this stage necessary. In addition, the right of
first refusal that the respondent
seeks to rely on cannot be read
into the final contract by way of a tacit term because clause 8 of
the second sale
expressly
provides that the second sale is the exclusive agreement between the
parties and that it could only be varied in writing
(and not
tacitly).
There
is on the evidence no reason why the applicant should not be entitled
to transfer of the property against it fulfilling its
obligation to
pay the purchase price. In the result the application must succeed.
The
counter application is aimed at setting aside the final contract on
the same bases as those already dealt with. Predicated on
its
contention that the final contract is unenforceable, the respondent
also sought to set aside the contract whereby the applicant
on-sold
the property as well as certain ancillary contracts. It follows that
the counter application must fail.
On
behalf of the applicant Mr Subel submitted that the respondent’s
defences are so devoid of merit that a special costs order
is
warranted. The mere fact that a party raises a poor defence is not in
my view a ground for a special costs order. Both parties
were
represented by two counsel and no objection against the award of the
costs of two counsel was raised.
The
following order is made:
1.
The first respondent is
ordered within 10 days from date of this order to sign all documents
required and to take all steps necessary
in order to effect transfer
of the immovable property described as the Farm
Knopfontein “A” 215,
district Viljoenskroon, Free State Province (“the property”)
from the first respondent
to the applicant, against payment of the
purchase price in terms of the agreement of sale between the parties
being Annexure X13
to the applicant’s founding affidavit and
the addendum thereto (Annexure A14).
2.
Failing compliance by the
first respondent with the order set out in paragraph 1 above, the
Sheriff of the High Court is authorised
and directed to sign all
documents required and to take all steps necessary in order to effect
transfer of the property from the
first respondent to the applicant,
against payment of the purchase price in terms of the agreement of
sale between the parties
being Annexure X13 to the applicant's
founding affidavit and the addendum thereto (Annexure A14).
3.
The first respondent’s
counter application is dismissed.
4.
The first respondent is
ordered to pay the applicant’s costs, including the costs of
two counsel.
B.R.
du Plessis
Judge
of the High Court
On
behalf of the applicant: Van Zyl, Le Roux & Hurter Attorneys
(In
the main application First Floor, Block 3
and
in the counter Monument Office Park
application
as the Cnr Steenbok Avenue and Elephant
first
Respondents) Road
Monument
Park Pretoria
Adv:
A Subel SC Adv: J. Pretorius
On
behalf of the Respondents Awie Wright Attorneys
(In
the main application c/o
Le
Grange Attorneys
and
in the counter 555 Walker Street
application
as the Muckleneuk
applicant)
Pretoria
Adv:
P.J. Venter Adv: A. Louw