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[2008] ZAWCHC 87
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Pentabod (Pty) Ltd v Hazelden and Others (10169/04) [2008] ZAWCHC 87 (23 July 2008)
IN THE HIGH COURT OF SOUTH AFRICA
(Cape of Good Hope Provincial
Division)
Case
No: 10169/04
In the matter between
PENTABOD
(PTY)
LTD
APPLICANT
and
GEORGE THOMAS
HAZELDEN
1st RESPONDENT
DERRICK
DELSON
2nd RESPONDENT
EDWARD
STUART DELSON
3rd RESPONDENT
FRANK
THEODORE
VLOK
4th RESPONDENT
JULIAN
WEIL
5th RESPONDENT
Being the Trustees for the time
being
of the Somerset Park Business Trust
JUDGMENT (delivered on 23 July
2008)
DESAI, J
This
matter relates to the sale of certain immovable property in Somerset
West. On 17 July 2000 the parties to this dispute concluded
a deed of
sale in terms of which the applicant company, Pentabod (Pty) Ltd,
purchased from the Somerset Park Business Trust ("the
Trust")
a portion of land, being erf 12597 Somerset West, at an agreed price.
The land sold is part of a larger development
being undertaken by the
Trust. The respondents herein are cited in their capacities as
trustees of the said trust.
Clause 20 of the said agreement leads
to the present dispute. It relates to a portion of the land which had
not been rezoned and
subdivided at the time the agreement was
concluded. The relevant clause is handwritten and reads as follows:
"The purchaser
of this property has the first option to purchase the section of land
marked as Anexure (sic) A approximately
1.09ha @ R50m2 plus
VAT."
The applicant contends that the said
clause constitutes an option in its favour, which option the
applicant has validly exercised.
The Trust, on the other hand, is of
the view that the term "option" in the clause quoted above
was not intended to create
a true option and ought to be interpreted
as a right of pre-emption. A resolution of this dispute is a key
issue which arises for
determination in this matter.
The events leading up to the insertion
of the said clause in the agreement, and the authorship of the
clause, are disputed by the
parties.
Mr
David Charles Tolson, ("Tolson") the managing director of
applicant, contends that the inclusion of clause 20 was "critical
to the deal as a whole". He says he agreed to the purchase of
erf 12697 subject to the said clause as it secured for the applicant
a one hectare site at a minimal holding cost of approximately R300
000 which was the approximate purchase price of erf 12697.
According
to Tolson he represented the applicant and the fifth respondent, Mr
Julian Weil, ("Weil") was the Trust's representative.
It
was agreed that Weil, an attorney, would draw up the agreement.
Tolson was comfortable with this as Weil was also his attorney
and
had assisted him in various property transactions. It was agreed
between them that once the portion of the development was
ready for
development, the applicant would be entitled to exercise the option.
Weil
proceeded to prepare the deed of sale and Tolson attended on his
offices to sign the document. When he received the document
Tolson
realised that the option had been left out. He raised this with Weil
who apologised for the oversight and wrote the clause
in by hand.
Tolson accepted that Weil's formulation of the option was in
accordance with the intention of the parties.
Weil
denies that he was present when the deed of sale was signed by
Tolson. He also denies that it was signed at his offices. He
alleges
that the handwritten clause was written by the first respondent, Mr
George Hazelden ("Hazelden"). Hazelden confirms
this in his
agreement.
In
his replying affidavit Tolson quite properly contends that this
dispute is not of great moment. On respondents' own version the
clause was included by a duly authorised representative of the trust.
One
of the points raised in limine by the Trust is the proper
identification of the property referred to in the handwritten clause
20. It was contended on behalf of the Trust that the alleged option
to buy the land in question is invalid as the said land is
not
identifiable from the provisions of the said clause. There is no
section of land marked "A" in either the agreement
or on
the diagram which is attached to it. It appears that when the
agreement was concluded the parties accepted that the "section
of land" referred to in clause 20, was the shaded area depicted
on the diagram which is attached to the agreement and marked
"Anexure
{sic) A".
Mr
A J Smit SC, who appeared on behalf of the respondents, argued that
it is impossible to identify the property with reference
solely to
the description contained in clause 20. For it to constitute a valid
option with the purchase of land, the terms of the
option must be in
writing in accordance with the provisions of s2(l) of Act 68 of 1981
("the Act"). The description of
the property sold must
comply with the provisions of the Act. What is required is that the
land sold must be identifiable "on
the ground by reference to
the provisions of the contract without recourse to evidence from the
parties as to their negotiations
and consensus". (See
Clements
v Simpson
1971 (3) SA 1
(AD) at 7F-G).
Mr Smit submitted that the said option, if such, was invalid for want
of compliance with the statute as the description
of the property is
not sufficient to enable identification on the ground.
Compliance,
however, does not mean "a faultless description of the property
sold couched in meticulously accurate terms".
(See
Van
Wvk vs Rottchers Saw Mills
(Pty)
Ltd
1948 (1) SA 983
A at 989). The property was clearly demarcated on
Annexure A - the un-subdivided land was shaded in by the parties and
can be clearly
seen from the document itself. It is approximately lha
in extent and is bounded by erven numbers 14794, 12697, a private
open space,
a proposed access road and so on. In any event, the Trust
has not advanced any reasons why the land is not identifiable ex fade
the agreement.
Furthermore,
the applicant's interest in the land was historically recognised by
the Trust. When a draft deed of sale was forwarded
by the Trust
attorneys to the applicant the annexure to the agreement was omitted.
On 11 November 2002 the applicant's attorneys
advised the Trust's
attorneys of the omission. A day later the Annexure was forwarded to
the applicant's attorneys and the diagram
clearly shows the portion
to be acquired being one hectare in extent and bounded by the erven
and open spaces as indicated above.
Weil in fact admits that the
diagram shows the shaded area which is approximately lha in extent.
The
portion of land to which clause 20 refers is quite clearly
identifiable ex fade the document. If so, then the agreement is
valid.
Respondents
counsel also referred to other problems with regard to transferring
the property described in clause 20 to the applicant.
It appears that
the property has been subdivided already. The new Portion A differs
to some extent from the shaded portion of the
diagram attached to the
deed of sale. As it is not applicant's case that it bought Portion A,
the property would have to be "re-subdivided"
to demarcate
a portion with a similar configuration as the shaded portion. Mr Smit
contends that this further complicates the relief
sought by the
applicant, namely, transfer upon subdivision of the property
described in clause 20.
As
Mr A D Brown, who appeared on behalf of the applicant, has pointed
out, the fact that the land ultimately sought to be transferred
may
differ slightly from the identified land due to subsequent events
cannot, and does not, affect the validity of the agreement.
Although
it may result in a claim for damages, a discrepancy between the
stated size of the piece of land and the actual size of
the land does
not affect the validity of the sale of agreement. (See
Conroy
vs Coetzee
1944 OPD 207).
On
the issue as to whether clause 20 constitutes an option, Hazelden
states that it was his intention to grant "a prior right
to
purchase the land". He says that it was described as a first
option as a right of pre-emption was intended and that is
how the
clause should be interpreted.
In
this instance the meaning of the clause is clear from the words used
and no intrinsic evidence is required to ascertain the intention
of
the parties. It unequivocally indicates an option. An option gives to
a party the right to purchase the subject-matter for a
specified
price. A right of pre-emption is quite different. It places an
obligation on the owner of the subject-matter to offer
it to the
right-holder before selling it to a third party. In the latter
instance the right to acquire the subject-matter only
arises when a
decision is made to sell it. (See
Hirschowitz
vs Moolman
1985 (3) SA 739A
at plus VAT
indicates the granting of an option. It would be most unusual where a
right of pre-emption is granted. (See
Stewart
vs Breytenbach
, supra, at 521). The
right of pre-emption or first refusal is the right to meet what a
third party may offer.
As
Mr Brown has correctly pointed out, Hazelden was unable to explain
the fact that the Trust did not intend to be bound to a price
yet an
amount was in fact stipulated in the agreement.
The
fact that no time period is specified for the duration of the option
does not invalidate the option (see Christie: The Law of
Contract in
South Africa Third Ed at 58) and insofar as the Trust suggests that
clause 20 does not correctly reflect the intention
of the parties, no
case is made out for rectification. A party relying on rectification
must claim it specifically and it must
set out the terms of the
rectification sought. (See
Lazarus
vs
Gorfinkel
1998 (4) SA 123C
at 131B-H). The Trust does not allege a mistake in
the drafting of the clause nor does it seek to make out a case for
rectification.
plus
VAT indicates the granting of an option. It would be most unusual
where a right of pre-emption is granted. (See
Stewart
vs Breytenbach
, supra, at 521). The
right of pre-emption or first refusal is the right to meet what a
third party may offer.
As
Mr Brown has correctly pointed out, Hazelden was unable to explain
the fact that the Trust did not intend to be bound to a price
yet an
amount was in fact stipulated in the agreement.
The
fact that no time period is specified for the duration of the option
does not invalidate the option (see Christie: The Law of
Contract in
South Africa Third Ed at 58) and insofar as the Trust suggests that
clause 20 does not correctly reflect the intention
of the parties, no
case is made out for rectification. A party relying on rectification
must claim it specifically and it must
set out the terms of the
rectification sought. (See
Lazarus vs
Gorfinkel
1998 (4) SA 123C
at 131B-H).
The Trust does not allege a mistake in the drafting of the clause nor
does it seek to make out a case for rectification.
In the result, an order is granted in
the following terms:
1.
That clause 20 of the Deed of Sale concluded on 17 July 2000 between
the applicant
and Somerset Park Business Trust ("the
Trust") constitutes an option granted in favour of the applicant
to purchase
the property described therein at a price of R50 per
square metre plus Value Added Tax;
2.
That the applicant has validly exercised its rights in terms of the
option and
that it is entitled to transfer of the property, upon its
subdivision, against payment of the purchase price therefor; and
3.
That the Somerset Park Business Trust (wthe Trust") is to pay
applicant's
costs.
DESAI, J