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2024
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[2024] ZAECMKHC 55
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On Farm Holdings (Pty) Ltd v Van den Heever N.O. and Others (864/2020) [2024] ZAECMKHC 55; [2024] 3 All SA 629 (ECG) (21 May 2024)
IN
THE HIGH COURT OF SOUTH AFRICA
EASTERN CAPE DIVISION,
MAKHANDA
CASE
NO: 864/2020
In
the matter between:
ON
FARM HOLDINGS (PTY) LTD
Plaintiff
and
ARNOLDUS
JACOBUS VAN DEN HEEVER N.O.
First
Defendant
LITA
VAN DEN HEEVER N.O.
Second
Defendant
ANDRE
DAVID PRETORIUS N.O.
Third
Defendant
ARNOLDUS
JACOBUS VAN DEN HEEVER N.O.
Fourth
Defendant
LITA
VAN DEN HEEVER N.O.
Fifth
Defendant
ANDRE
DAVID PRETORIUS N.O.
Sixth
Defendant
JUDGMENT: ABSOLUTION
LOWE
J
:
Introduction
[1]
This matter came before me on trial, proceeding on
a special plea only. There was a dispute as to the duty to
begin and in
this regard I produced a full ex tempore judgment
dealing with the various issues and ordering that for the purposes of
the separated
issue the plaintiff bore the onus of adducing evidence
and had the duty to begin in respect thereof, reserving the costs.
Plaintiff, commenced leading evidence and having done so closed its
case. Defendants then applied for an order of absolution
from
the instance. It is to this aspect of the matter that this
judgment is directed.
[2]
The plaintiff’s case proceeds on the basis
that it accrued various rights and entitlements in terms of a written
agreement
and that it has suffered damages in consequence of the
defendants’, who are the trustees of the AJ van den Heever
Familie
Trust (“Familie Trust”) and the Van den Heever
Dogters Familie Trust (“Dogters Trust”), having
unlawfully
repudiated their agreement.
[3]
The matter is complex in some respects and my
interim ruling on the duty to being was provisional, raising issues
of interpretation
of both legislation and contract, the full context
and purpose not being fully elucidated at the time of that ruling.
[4]
The issue of the lawfulness and validity of the
management and share milking agreement (“MSMA”), relied
upon by the
plaintiff as the basis for its claim, having regard to
the provisions of the Sub-Division of Agricultural Land Act 70 of
1970 (“SALA”),
was separated relevant to the issues
arising out of paragraphs 1.4.13 and 1.4.14 of the defendants’
amended special plea
and the relevant annexures annexed to the
plaintiff’s amended particulars of claim, together with
paragraph 17 to 23 of the
plaintiff’s replication.
[5]
Defendants plead that the MSMA relied upon by the
plaintiff is a lease of agricultural land for ten years, and as it
excluded the
use of an undivided portion of one of the farm
properties subject to the MSMA, gave rise to a contravention of
section 3(d) of
SALA and as a consequence the MSMA is void being
unlawful.
[6]
The replication takes issue with the contention
that the MSMA was in contravention of SALA and pleads that the
exclusion of what
is described as the excluded improvements for use
by Mr. van den Heever does not give rise to a contravention of SALA
(properly
interpreted).
Absolution at the
end of the plaintiff’s case
[7]
The term “
absolution
from the instance
”
is used to
describe two concepts relevant to a finding that may be made at
either of two distinct stages of the trial. In
both cases this
conveys that the evidence is insufficient for a finding to be made
against the defendant if the argument is successful.
[8]
Absolution may be granted at the end of the
plaintiff’s case if at that stage there is no evidence to
support the plaintiff’s
claim, or insufficient evidence upon
which a court acting reasonably might find for the plaintiff.
There is then no prospect
that the plaintiff’s claim might
succeed and in those circumstances the defendant should be spared the
trouble and expense
of continuing to mount a defence to a hopeless
claim.
[9]
The
test for determining absolution at the close of the plaintiff’s
case was dealt with in
Claude
Neon Lights SA (Pty) Ltd v Daniel
[1]
as
follows:
“…
[W]hen
absolution from the instance is sought at the close of plaintiff’s
case, the test to be applied is not whether the
evidence lead by the
plaintiff eestablsihes what would finally be required to be
established, but whether there is evidence upon
which a court,
applying its mind reasonably to such evidence, could or might (not
should, nor ought to) find for the plaintiff.”
[10]
In
Gordon
Lloyd Page and Associates v Rivera and Another
[2]
it was held that this requires the court to find that there is
evidence relating to all the elements of the claim. Harms
JA
stressed that the court ought not to be concerned with what someone
else might think but rather with its own judgment and not
that of
another “
reasonable
”
person
or court.
[3]
The test was
put slightly differently in
De
Klerk v Absa Bank Ltd and others
[4]
(
supra
)
as being whether a court, if no further evidence were led, and after
a reasonable application of its mind, might find in favour
of the
plaintiff.
[11]
Of course, in this matter, and as I will deal with
more fully hereafter, the principal issues relate to the
interpretation of contract
and statute, this being a matter of law
for the court to decide, but nevertheless taking into account the
context thereof in a
unitary exercise, the issue of onus being
substantially less relevant.
[12]
One must bear in mind that the courts have
frequently emphasized that absolution should not be granted at the
end of the plaintiff’s
evidence except in very clear cases, and
that questions of credibility should not normally be investigated
until a court has heard
all the evidence which both sides have to
offer.
[13]
In
matters of interpretation, the authorities hold that the trial court
should normally refuse absolution unless the proper interpretation
appears to be beyond question.
[5]
[14]
In
Rosherville
Vehicle Services vs BFM Plaaslike Oorgangsraad
[6]
Olivier AJ makes it clear that where a plaintiff’s case depends
on a document, and its interpretation is in issue, the interpretation
upon which the defendant relies must be beyond doubt before an
absolution application can succeed. The court set out that
the
interpretation of the document should preferably in fact be
determined at the end of the case. As authority herefor the
court referred to
Gafoor
v Unie Versekerings Adveseurs (Edms) Bpk
[7]
.
[15]
The challenge which defendants must mount requires
to meet the test of establishing the interpretation for which they
contend, upon
a proper interpretation of the document in the manner
set out hereafter, to the extent that the interpretation contended
for must
be beyond question. This is not an onus issue but one
of law.
The pleadings
[16]
Plaintiff pleads that the MSMA concluded in May
2018, annexure A to the particulars of claim, provided that the
Familie Trust and
the Dogters Trust would make available to Bridge
Farm Dairy (Pty ) Ltd (“Bridge farm”) for its use, in
order to conduct
a dairy farming enterprise on their farming
properties, 3 in number, being separate portions of the farm Tark
Bridge, together
with water and all dairy farming infrastructure, in
terms of which the plaintiff (“On farm”) would pay to the
two trusts
collectively the sum of R1 million per annum annually.
[17]
The two trusts were to jointly pay to Bridge Farm
the sum of R200 000,00, and plaintiff (“On farm”) would
make available
to Bridge Farm for its use various cows, tractors, and
equipment, On Farm to pay Bridge Farm R200 000,00.
[18]
Plaintiff alleges that Bridge Farm would be
utilised as a “
vehicle for the
conduct of the dairy farming enterprise as a joint venture
”
between the two trusts on the one hand and
plaintiff (On farm) on the other. Plaintiff alleges further
that Bridge Farm appointed
On Farm as its sole and exclusive manager
of the dairy farming enterprise.
[19]
Defendants deny that the material terms of the
MSMA were correctly summarised by the plaintiff pleading its
understanding thereof,
and in the special plea, that if the MSMA and
its addendum in fact constituted a binding agreement between the
parties, this constituted
an agreement in terms of which defendants
undertook to lease the farm properties to Bridge Farm for a period of
not less than 10
years, but pertinently excluded portions of the farm
properties from the operation of the lease; the addendum
recording that
the amount payable to defendants as an “
annual
rental
”
was an amount of
R1 million per annum. Defendants then plead that the farm
properties are agricultural properties as
defined in SALA leased for
10 years, and accordingly in accordance with section 3(d) of SALA,
such lease (and MSMA) is unlawful
and void.
[20]
The replication denies these allegations alleging
that a joint venture was established, conducted between the two
trusts and On
Farm and Bridge Farm, which was the vehicle from which
a joint venture was to be conducted.
[21]
It is particularly pleaded that with that purpose
in mind, the MSMA, was not, as to content or substance, in the nature
of a lease,
and thus avoids SALA.
[22]
Plaintiff further pleaded in its replication that
the exclusion of certain of the improvements did not constitute an
undivided portion
of agricultural land on a proper interpretation of
SALA, and that the purpose of the introduction of clause 36 to the
MSMA, in
the addendum, was to increase the benefit to be received by
the two trusts from the joint venture.
[23]
The MSMA itself is lengthy, clause 2 thereof
referring to a joint venture dairy enterprise conducted by the two
trusts and plaintiff
(rendering available the livestock and
implements) which granted the management of the joint venture to
Bridge Farm. The
improvements excluded in clause 2.1.9, as
defined, relate to several improvements of the properties excluded
from the transaction
which the family trust would retain for the sole
use of Mr. van den Heever including sheds, housing and buildings
(being a private
dwelling and an auction complex and feed lots) –
necessarily situated on the property and including at least a portion
of
the property.
[24]
The addendum introduced a new paragraph 36 into
the MSMA headed “
Rental in respect
of infrastructure and properties
”
and
provided that plaintiff would pay to the trusts R1 million annual
rental, this to be a joint venture expenditure.
[25]
Defendant argues that the pleading in paragraph 10
of the particulars of claim provides clearly that the two trust made
available
to Bridge Farm various farming properties, excluding the
farming infrastructure identified, for which On Farm would pay R1
million
per annum this being no more nor less than the lease of
properties for a rental sum.
[26]
That this was a lease is fully pleaded (in the
plea) and, argues defendants, is not adequately met in the
replication, on the face
of it, against the MSMA with its addendum.
[27]
Defendants argue that if this is a lease, and that
it is, this is for a period of ten years, and, were it a lease, it is
common
cause that section 3(d) of SALA would render this unlawful and
void, as the MSMA pertinently excluded portions of the farm
properties
from operation of the lease, as more fully referred to
above.
[28]
Defendant points out that in the further
particulars for trial, plaintiff alleges that the instruction given
to attorney de Jager
as regards the addendum related to an annual
rental to be paid to the trusts in the sum of R1 million. It is
further argued
that it is said in the further particulars that clause
36 of the MSMA was introduced by the addendum –making clear
that this
was a lease with a rental.
[29]
Plaintiff’s argument is two-fold the crucial
issue in fact being:
29.1
That defendant alleges that the MSMA is a lease
plaintiff stating the contrary;
29.2
That defendant says if it was a lease, it is in
breach of SALA, plaintiff denying this and saying it is not, on the
basis of SALA
properly interpreted.
[30]
In amplification, plaintiff argues that the MSMA
is a joint venture agreement, not a lease, in terms of which the
trusts made available
farming property to Bridge Farm in order to
conduct a dairy business with the herd and equipment referred to in
the MSMA, provided
by the trusts. Plaintiff argues that, in
consideration therefor, Bridge Farm would pay plaintiff management
fees, being 50%
of the annual net profit of Bridge Farm (put simply),
which was a reward in respect of management services rendered and the
livestock
and tractor and implement contribution.
[31]
Plaintiff
also argues that if it was a lease, it did not breach SALA referring
to the matter
MPR
De Villiers v Elspiek Boerdery (Pty) Ltd and another
[8]
.
[32]
It
contends that this authority supports its argument that defendant
sought to escape liability, relying on a breach of SALA, and
bore the
onus in that regard, carrying a duty to satisfy the court that it
ought to succeed on the issue, and also having to adduce
evidence in
regard to the factual background relevant to the defence.
[9]
[33]
I have already set out the defendants’ main
contention relevant to the above, save that defendant argues that the
question
of illegality in respect of SALA is an illegality not based
on an agreement being contrary to public policy, but relevant to
compliance
or noncompliance with SALA, properly interpreted.
This argument is fundamental to defendant’s position. The
effect
on a contract of a contravention of a statute is determined
with reference to the specific statute contravened, properly
interpreted,
in this matter, it being common cause that if this is so
this would render the contract unlawful and void.
[34]
Having regard to my ruling on the duty to begin
relevant to the above it would be supererogation to repeat what I
said but this
remains relevant as it impacts on my judgment on the
separated issue to the extent quoted below:
“
[43]
Christie the Law of Contract in South Africa 8
th
Ed
page 421 says that the onus of proving compliance or non-compliance
with the statutory requirement will depend upon a proper
construction
of the statute. The work suggests that a plaintiff seeking to
enforce a contract of that kind must therefor
allege and prove
compliance with statutory requirements referring to
Noffke
v Credit Corporation of SA Ltd
[10]
.
This applying to a statute which provides that no contract of a
particular type shall be of any force or effect unless a
certain
requirement has been complied with.
[44]
It would be the reverse if the statute assumes that the contracts are
valid but provides that
they shall be of no force or effect in
certain specified circumstances in which event a plaintiff seeking to
enforce that kind
of contract was not required to allege and prove
that the circumstances do not exist in relation to the contract.
It would
then be for the defendant relying on statutory illegality as
a defence to allege and prove the existence of the
circumstances.
[11]
[45]
Where an agreement is contrary to legislation, its validity must be
sought primarily in the wording
of the legislation itself. An
agreement may be declared invalid or unenforceable expressly or by
implication. In this
matter there are two issues, firstly the
agreement must be a lease to potentially be struck by SALA in this
instance, and secondly
the question is whether or not if it is a
lease, it is in fact struct by SALA.
[46]
As to interpretation, it is now trite both as to statute and
documents that “
the
interpretation of language, including statutory language, is a
unitary endeavour requiring consideration of text, context and
purpose
”
.
[12]
[47]
In SALA section 3(d) provides that no lease in respect of a portion
of agricultural land
of which the period is 10 years or longer
(inter alia) “shall be entered into” unless the Minister
has consented in
writing. It is common cause that there has
been no consent.
[48]
On the appropriate approach to interpretation in the context
applicable at least at this stage
of the matter before me, it is more
than clear that the provisions of SALA render such a lease
agreement as being unlawful
and void abentio if in contravention
thereof – indeed the contrary was not contended. Such a
lease is simply prohibited.
[49]
Put otherwise, having regard to the reasons for holding statutory
provisions void as set out
in
De
Fari v Sheriff, High Court, Witbank
[13]
-
it is impossible to escape the conclusion that the legislature
intended the general rule to apply that is that non-compliance
with
the prescriptions of SALA result in nullity. The provision is
couched in peremptory language, as well as negative language
and a
criminal sanction is imposed if the provisions are not complied
with.
[50]
It follows, in my view, that a plaintiff seeking to enforce a
contract subject to SALA must allege
and prove compliance with the
statutory requirements in the event of the contract being subject
thereto.
[51]
That defendant has raised non-compliance, assuming that the agreement
as a lease and is struck
by the provisions of section 3(d) of SALA,
the necessary onus falls upon the plaintiff as a matter of law to
allege and prove compliance
with those statutory requirements.
[52]
It does not seem to me to vary the position that plaintiff alleges
that the agreement which on
the face of it, refers to rental, is in
fact not a lease agreement, and thereby not subject to SALA,
alternatively that in its
terms it is not struck by SALA.
[53]
In that sense, it seems to me that this is not a “
special
defence
” as set out in the authorities.”
The trial on the
special plea referred to above
[35]
Plaintiff called the evidence of Pierre Scheepers,
who is a director of plaintiff (On Farm) as is his wife, Ronelda.
Having
done so, plaintiff then closed its case and defendants applied
for absolution.
[36]
He explained in his evidence that On Farm is a
dairy business which commenced in 1994, now running some 5000 cows,
milked on different
farms.
[37]
He sketched the background to his having come into
contact with first defendant, Arnoldus van den Heever, an adult male
farmer of
the farm Tarka Bridge in the Cradock district, who is also
a trustee of the Familie Trust and the Dogters Familie Trust
[38]
In short, the evidence was that Mr. A van den
Heever had indicated to him in a phone call that he was “
in
trouble”
and needed Mr.
Scheepers’ assistance in this regard. Apparently, a
discussion was had briefly relevant to “
sharemilking
”
,
that is a situation where a farmer, supplies land (usually already
developed) to someone else who has the relevant cows –
the
management of the cows on the farmer’s land is left to those
with the necessary management knowledge, the income to be
shared this
being negotiated, but usually on a fifty-fifty basis.
[39]
This was followed by a meeting on the intended
farm, where the general ideas were discussed, and the farm examined –
this
having a half finished milking parlour with no machinery.
This contemplated something in the region of a thousand head of
stock, which was described as “
no
joke
”
, the question was whether
it would work on the property offered.
[40]
In summary, the farm comprised certain centre
pivot irrigation machinery on a number of areas, which would be
planted with an appropriate
selection of feed bearing crops suitable
to a dairy herd, the pivots being sixteen in number. Lucerne
was present on some
of the pivot areas and was not entirely suitable
and had to be changed to a mixed feeding crop, some of which would be
suitable
for winter grazing, it being clear that the dairy cattle
would graze on the crops themselves in the irrigated pastures.
[41]
He described the operation of a rotary milking
parlour, with appropriate machinery, holding tanks, and the like, the
animals requiring
to be brought into the parlour from holding pens
outside and then released into the pastures to feed for the next
rotation twelve
hours later.
[42]
He explained that attorney De Jager was engaged by
the parties to draft an agreement appropriate to the situation,
resulting in
the MSMA relevant to this matter.
[43]
Much of Mr. Scheepers’ evidence comprised
his reading through various clauses in the contract, or having these
read to him,
confirming same for whatever purpose that was intended
to achieve.
[44]
I will refer to such evidence as was given in
addition hereto, where appropriate.
[45]
Paragraph 2.1.8 of the agreement reads as follows:
“’
Bridge
Farm’ means Bridge Farm Dairy (Proprietary) Limited,
(Registration Number 2017/526198/07) a private company registered,
incorporated and existing in accordance with the laws of South
Africa, herein represented by Koot van den Heever in his capacity
as
director, duly authorized thereto, its successors in title and/or
assigns, which Joint Venture Dairy Enterprise shall be conducted
by
the Trust and the Van den Heever Trust (rendering available the
Properties and dairy infrastructure to Bridge Farm) and On Farm
(rendering available the Livestock Contribution and the Tractors and
Implements, as set out on Annexure “D” to Bridge
Farm)
and providing the management for the Joint Venture Dairy Enterprise
trading as Bridge Farm Dairy.”
[46]
In this regard he commented simply that this was
the purpose of the agreement.
[47]
I pause to say that Bridge Farm comprised the
properties defined in the MSMA, three in number, together with their
improvements
and registered water entitlements, but excluding those
described in clause 2.1.9, predominantly the private dwelling
occupied by
Koort van den Heever, with a guest house, garages and
outbuildings adjacent thereto, including significantly “
the
auction complex and feedlots
”
.
[48]
It was clear from Mr. Scheepers’ evidence
that, at least in his mind initially, the parties would conduct a
joint venture
dairy enterprise, the property made available to Bridge
Farm, van den Heever through the trusts providing the property,
whilst
On Farm would provide the cows and management.
[49]
There was reference to the need to secure a milk
buyer to purchase the milk that was to be produced – this being
accomplished
early on, and thereafter he gave detailed evidence
concerning the excluded improvements, as identified on various maps,
diagrams,
and Google Earth images.
[50]
It was more than apparent from the evidence in
this regard that significant portions of land were utilised for
farming purposes
(surrounding the excluded auction complex and
feedlots) in areas of, in one instance, 9 hectares and in another,
1,49 hectares,
this land being within the boundary established by the
witness Scheepers on the main plan relevant, in respect of the
farming property
utilized by Bridge Farm.
[51]
Whilst, in the context of the entire farming
property it may seem that these particular areas were not enormously
significant, they
constitute together more than ten hectares of
usable land, in this instance feedlots and holding pens relevant to
the auction and
feedlot enterprise conducted on the farming property
by Mr. van den Heever, and not by On Farm or Bridge Farm.
[52]
In my view, it is not necessary to set these out
in any detail, save to say that this also included a significant
number of buildings
relevant to the enterprise conducted by van den
Heever.
[53]
Turning to the addendum to the MSMA this reads as
follows as to its relevant portion:
“
2.
AMENDMENT
2.1
The Parties wish to include the following term in the Agreement, as
if specifically incorporated
therein:
36.
RENTAL IN RESPECT OF INFRASTRUCTURE AND PROPERTIES
On Farm shall pay to the
Trusts an annual rental, amounting to R1 000 000,00 (One Million
Rand) per annum, payable annually in arrears.
The aforesaid
rental shall be a Joint Venture expenditure and, as agreed, there
shall be no escalation.”
2.1
By amending clause 8.8.3 to read as follows:
8.8.3
The Parties record that the Trust has, irrespective of the
Commencement Date as set out in this Agreement,
planted pastures and
the Trust’s expenditure with regard to seed and fertiliser,
amounts to R1 984 000,00 (One million nine
hundred and Eighty Fourt
Thousand Rand), which shall be deemed to be Joint Venture expense,
irrespective of the aforesaid costs
having been incurred prior to the
Commencement Date. The Trust shall provide all the supporting
documentary vouchers, supporting
the aforesaid expenditure to On
Farm, prior to the Commencement Date. On Farm shall pay on the
Commencement Date to the Trust,
into the Trust’s nominated bank
account, the amount of R992 000,00 (Nine Hundred and Ninety Two
thousand Rand) (excluding
VAT) being On Farm’s contribution
towards the establishment of pasture costs on the Properties.”
[54]
Mr. Scheepers was at pains to point out that the
excluded assets were of no use of, or interest to, the dairy farming
enterprise,
which depended entirely on the sixteen pivot irrigable
land areas and the milking parlour and holding pens, stating further
that
the existence of other cattle on the property was, in fact,
dangerous or injurious potentially to the dairy herd, relevant to the
transmission of communicable diseases.
[55]
He also dealt with the background to the
conclusion of the addendum to which I will refer hereafter.
[56]
I will, where necessary, revert to the MSMA in due
course in its relevant terms.
Interpretation as
to Principles and their application
[57]
The decision which I must make in this matter
involves both the issues of contractual interpretation relevant to
the MSMA and its
addendum, but also potentially the provisions of
SALA, as relevant to the dispute plaintiff having a two phase
argument in this
respect.
[58]
I have very briefly above referred to the general
approach to the interpretation of contracts and legislation, this
being a unitary
endeavour requiring consideration of text, context,
and purpose as set out in
Endumeni
(
supra)
.
[59]
This is easily said but not as easily applied and
requires careful elucidation in order to inform the interpreter as to
the proper
approach to context, somewhat differently relevant to
contract and statute.
[60]
As much as the
Endumeni
approach to interpretation is trite, it
is worthwhile further considering same as subsequently referred to in
a number of decisions
which I deal with below.
[61]
In
Capitec
Bank Holdings Ltd and Another v Coral Lagoon Investments 194 (Pty)
Ltd and Others
[14]
Unterhalter
AJA said as follows:
“
[25]
…. The much-cited passages from
Natal
Joint Municipal Pension Fund v Endumeni Municipality (
Endumeni)
[15]
offer
guidance as to how to approach the interpretation of the words used
in a document. It is the language used, understood in
the context in
which it is used, and having regard to the purpose of the provision
that constitutes the unitary exercise of interpretation.
I would only
add that the triad of text, context and purpose should not be used in
a mechanical fashion. It is the relationship
between the words used,
the concepts expressed by those words and the place of the contested
provision within the scheme of the
agreement (or instrument) as a
whole that constitutes the enterprise by recourse to which a coherent
and salient interpretation
is determined. As
Endumeni
emphasised,
citing well-known cases, ‘[t]he inevitable point of departure
is the language of the provision itself’.
[16]
[26]
None of this would require repetition but for the fact that the
judgment of the high court failed
to make its point of departure the
relevant provisions of the subscription agreement.
Endumeni
is
not a charter for judicial constructs premised upon what a contract
should be taken to mean from a vantage point that is not
located in
the text of what the parties in fact agreed. Nor does
Endumeni
licence
judicial interpretation that imports meanings into a contract so as
to make it a better contract, or one that is ethically
preferable.
[17]
[62]
Perhaps
what may be added to this is that as was said in C
omwezi
Security Services (Pty) Ltd v Cape Empowerment Trust Ltd
[18]
,
the conduct of the parties in implementing an agreement may, even in
the absence of ambiguity, provide clear evidence as to how
reasonable
persons of business construed a disputed provision in a contract.
[63]
As
further pointed out in
Capitec
,
there is now an expansive approach to interpretation, as laid down in
Endumeni
,
extrinsic evidence being admissible to understand the meaning of the
words used in a written contract. Such evidence may
be
relevant, as it was said, to the context within which the contract
was concluded and its purpose, and this is so whether or
not the text
of the contract is ambiguous, either patently or latently.
[19]
[64]
Unterhalter AJA also pointed out that the parol
evidence rule is an important principle that remains part of our law,
and at first
blush may be at odds with the broad admission of
intrinsic evidence to establish the context.
[65]
Here,
one must turn to the Constitutional Court decision in
University
of
Johannesburg
v Auckland Park Theological Seminary and Another
[20]
,
where the Constitutional Court affirmed that an expansive approach
should be taken to the admissibility of its intrinsic evidence
of
context and purpose, whether or not the words used were ambiguous, so
as to determine what the parties of the contract intended.
[21]
[66]
Indeed,
in
University
of Johannesburg
[22]
the following appears:
“‘
Let
me clarify that what I say here does not mean that extrinsic evidence
is
always
admissible.
It is true that a court’s recourse to extrinsic evidence is not
limitless because “interpretation is a matter
of law and not of
fact and, accordingly, interpretation is a matter for the court and
not for witnesses”. It is also true
that “to the extent
that evidence may be admissible to contextualise the document (since
“context is everything”)
to establish its factual matrix
or purpose or for purposes of identification, one must use it as
conservatively as possible”.
I must, however, make it clear
that this does not detract from the injunction on courts to consider
evidence of context and purpose.
Where, in a given case, reasonable
people may disagree on the admissibility of the contextual evidence
in question, the unitary
approach to contractual interpretation
enjoins a court to err on the side of admitting the evidence. There
would, of course, still
be sufficient checks against any undue reach
of such evidence because the court dealing with the evidence could
still disregard
it on the basis that it lacks weight. When dealing
with evidence in this context, it is important not to conflate
admissibility
and weight.’
[23]
[67]
In
summary then as pointed out by Unterhalter AJA in
Capitec
[24]
this gives a very wide remit to the admissibility of extrinsic
evidence of context and purpose.
[68]
As regards the parol evidence rule the
Constitutional Court in
University of
Johannesburg
dealt with the tension
between the historical exclusion of parol evidence and the concept
that context is everything as follows:
“‘
The
integration facet of the parol evidence rule relied on by the Supreme
Court of Appeal is relevant when a court is concerned
with an
attempted amendment of a contract. It does not prevent contextual
evidence from being adduced. The rule is concerned with
cases where
the evidence in question seeks to vary, contradict or add to (as
opposed to assist the court to interpret) the terms
of the agreement.
. . .’
[25]
[69]
Unterhalter AJA then considers the parol evidence
issue – it is not relevant however to this matter and I leave
it at what
I have said above.
[70]
In an illuminating passage, Unterhalfter AJA
states as follows:
“
[50]
Endumeni simply gives expression to the view that the words and
concepts used in a contract and their
relationship to the external
world are not self-defining. The case and its progeny emphasise that
the meaning of a contested term
of a contract (or provision in a
statute) is properly understood not simply by selecting standard
definitions of particular words,
often taken from dictionaries, but
by understanding the words and sentences that comprise the contested
term as they fit into the
larger structure of the agreement, its
context and purpose. Meaning is ultimately the most compelling and
coherent account the
interpreter can provide, making use of these
sources of interpretation. It is not a partial selection of
interpretational materials
directed at a predetermined result.
[51]
Most contracts, and particularly commercial contracts, are
constructed with a design in mind,
and their architects choose words
and concepts to give effect to that design. For this reason,
interpretation begins with the text
and its structure. They have a
gravitational pull that is important. The proposition that context is
everything is not a licence
to contend for meanings unmoored in the
text and its structure. Rather, context and purpose may be used to
elucidate the text.
[26]
[71]
In this matter, it is clear that the evidence as
to pre-contractual exchanges between the parties leading up to the
conclusion of
the contract and its drafting by attorney De Jager are
relevant, as well as such additional evidence as there was relevant
to the
context in which the contract was concluded. At this
stage of the enquiry, of course, I not having the benefit of
defendants’
evidence in this regard.
[72]
The MSMA and its addendum in this matter must be
interpreted in the light of its context, so as to ascertain the
parties intention
as a unitary consideration of text, context, and
purpose, but as I have pointed out above, considering the text, its
words and
sentences as they fit into the larger structure of the
MSMA, its context and purpose.
[73]
In commercial contracts such as this, where the
parties had a design in mind with words and concepts chosen to give
effect to that
design, as was pointed out in
Capitec
,
the interpretation begins with the text and its structure, that being
the gravitational pull referred to, the context and purpose
then to
elucidate the text.
[74]
It is helpful to refer to an article in the PELJ
2019 (22) by Wallis JA concerning the issues relevant to
interpretation.
[75]
This
bears upon both contractual and statutory interpretation and
elucidates that approach in each instance.
[27]
[76]
Having commented extensively on the genesis of
interpretation through to
Endumeni
the author referring to text and context states
that:
“
Endumeni
does
away with the idea in
Coopers
& Lybrand
that
interpretation is an exercise that occurs in stages. The starting
point is the text, because as the writer Elena Ferrante expresses
it:
"The words, the grammar, the syntax are a chisel that shapes our
thought." But from the outset that is viewed
in context,
so that the process is both textual and contextual.
There
will be some cases, though they are likely to be few, where the
language admits of only one meaning, in which event no
amount of
reliance on context can avoid that meaning. In my experience, the
ingenuity of counsel can usually find arguments favouring
an
alternative meaning, however unlikely they might seem in the light of
the grammar and syntax of the provision under consideration.
Then
context will come into play to a greater or lesser extent. The
clearer the language used in the text and the more obvious
its
meaning in accordance with the ordinary understanding of language,
the less the influence of context in arriving at a conclusion
as to
its meaning. The more possible meanings there are and the more finely
balanced they are, the more powerful will be the influence
of
contextual factors in the ultimate decision. In construing
legislation or developing the common law the influence of the spirit,
purport and objects of the Bill of Rights is an essential part of the
context. But there is a line to be drawn beyond which
the
interpreter cannot go. Context cannot be used to create a meaning
that the language, when viewed in context, is incapable of
bearing.
That is not interpretation. It is contractual or legislative
drafting.”
[77]
The author refers to the fact that there is, from
Endumeni
,
the notion that the process of interpretation is objective, simply
indicating that one is not trying to go behind the contract
to any
unwritten or unexpressed intention formed by the legislature or
parties.
[78]
Referring to context in contract, the author
points to the fact that it is unlikely in large commercial
organisations, such as banks
and the like, that in interpreting such
contracts, the role of external facts will provide context – or
put differently that
in these kind of “
take
it or leave it
”
contracts, the
room for contextual interpretation is small.
[79]
He continues, however, that in respect of
contracts of individuals and small businesses the position is
different as follows:
“
The
contracts of individuals and small businesses will often be different
and less carefully formulated, especially where prepared
by lay
people. Here the likelihood of facts specific to the parties and
their arrangements being relevant to the interpretation
of the
agreement is greater. Their contemplation will potentially have a
greater impact. This emphasises the proposition that the
more formal
and careful the drafting, the less the need to look to extrinsic
factors. Error is not lightly assumed, although that
may not be the
case where the evidence reveals that the contract was drafted in
haste or by persons lacking legal training and
drafting skills.
Likewise superfluity is not assumed, but that is not to be confused
with verbosity, which is ever present. Particular
care must be taken
by courts not to reverse the consequences of a hard-fought process of
bargaining, or to relieve parties of risks
that they decided to run
in order to secure gains elsewhere.
In
the result, in a detailed commercial contract the context will be
provided largely by the nature and purpose of the transaction
in
question and the economic and commercial background to its
conclusion. A loan from a bank is plainly different from a loan from
a friend. Where there is disproportionate bargaining power, this must
be recognised, as must the reasons for commercial organisations’
wishing to standardise the terms of their business dealings with the
general public. And, curiously enough, judges are human and
reluctant
to impose burdens that seem harsh and unfair on the weaker and
disadvantaged members of society. So fairness and equity
is part of
the context.”
[80]
This latter quote is relevant to the matter before
me.
[81]
As to context in legislation, also relevant to
this matter, the author points out that when dealing with a statute
context does
not involve guess work as to the intention of the
legislature but a reasoned assessment of the broader purpose
underlying its enactment
as follows:
“
When
dealing with a statute, context does not involve guesswork as to the
intention of the legislature, but a reasoned assessment
of the broad
purpose underlying its enactment. Statutes directed at ameliorating a
distinct social problem are entitled to a more
generous construction,
given that purpose, than a technical regulatory statute such as
the
Companies
Act
. Nor can
it mean, for example, that in a taxing statute a construction
favourable to the revenue must be given because the
purpose of the
statute is to raise revenue. But anti-avoidance measures may be
entitled to more generous consideration than the
provisions defining
what is taxable.
[82]
I
may add that in respect of the interpretation of statutes, this is no
different from the approach to contract save that this must
specifically comprise a purposive statutory interpretation, in
context, consistent with the constitution.
[28]
[83]
The author continues to state that:
“
Then
there is the context provided by the content of the legislation as a
whole. This is invariably relevant because of the provision
in the
definition section of all statutes that the definitions will apply
"unless the context otherwise indicates". This
provision
was considered by the SCA in
Hoban
where it was
described in the following way:
'Context'
includes the entire enactment in which the word or words in
contention appear … and in its widest sense would include
enactments
in pari materia
and the situation, or
'mischief', sought to be remedied. … That is the first point.
The second is that there is no
justification for the distinction, so
heavily relied on by the learned Judge, between linguistic context
and legislative intention.
The moment one has to analyse context in
order to determine whether a meaning is to be given which differs
from the defined meaning
one is immediately engaged in ascertaining
legislative intention. One remains so engaged until the
interpretation process is concluded.
It is only concluded when
legislative intention is established. As remarked by E Cameron in
Joubert (ed)
The Law of South Africa
vol 27 at 207
para 229,'… 'context does no more than reflect legislative
meaning which in turn is capable of being
expressed only through
words in context'.
Legislative
history is another source of relevant context that can be of great
assistance in resolving problems of interpretation
and can on
occasions prove decisive in clarifying what is otherwise obscure. The
provisions of the
Interpretation Act
33 of 1957
operate as interpretative guides in certain situations, and finally
section 39(2) of the Constitution contains the injunction
that
legislation must be interpreted in accordance with the spirit,
purport and objects of the Bill of Rights. So, as with all
law, the
Constitution provides a context for its interpretation that cannot be
avoided and will plainly affect the meaning of specific
provisions,
even though its terms may not specifically address the problem under
consideration. It provides the norms by and through
which the
interpretative process is undertaken.”
[84]
The author comments that the interpreter must
escape from an approach to interpretation that involves an
a
priori
assessment of the meaning of the
document in issue and endeavour, by invoking whichever canons of
interpretation suit, to justify
the meaning. One must not
reason backwards from a desired construction.
[85]
Put otherwise, a Judge must articulate and explain
the contextual material upon which that Judge relies, providing a
complete picture
from which it is permissible to draw the conclusion
reached.
[86]
In this particular matter, it is worth emphasising
that there are facts specific to the parties and their arrangements
which are
relevant to the interpretation of the MSMA. Their
contemplation is relevant, as also that conveyed to the attorney and
then
in the course of drafting by the attorney to the parties
themselves. That the parties contemplated a joint venture is
perfectly
clear as to context on what is presently before me.
[87]
As this matter was a contract drafted by an
experienced attorney, it is also true that the more formal and
careful drafting the
less need to look to intrinsic factors. As
was pointed out, error is not lightly assumed, nor was the contract
drafted in
particular haste, but by an experienced attorney with
legal training and drafting skills. In this matter, there was
no disproportionate
bargaining power, nor was there any wish to
standardise the terms of the business dealings, as with banks,
finance houses and the
like.
[88]
I will, in due course, turn back to the MSMA and
the relevant legislation in order to finally answer the separated
issue before
me at the absolution stage, insofar as is relevant.
This is obviously not the last word on the proper interpretation
thereof,
as the defendant may adduce evidence in this regard if the
absolution argument fails.
The interpretation
[89]
As already set out above the question to be
decided is whether, properly interpreted, the MSMA, which plaintiff’s
relies upon,
is a lease of agricultural land, and as it excludes the
use of an undivided portion of one of the farm properties subject to
the
agreement whether this gives rise to a contravention of section
3(d) of SALA, and as a consequence, the MSMA is void being unlawful.
[90]
This requires me to revert to the MSMA itself.
[91]
The fundamental structure of the MSMA was, says
Pierre Scheepers, intended to create a joint venture farming
enterprise, the property
to be provided by the entities controlled by
Mr. van den Heever, whilst the cows and farming implements, and
expertise, were to
be provided by On Farm. He described this as
a milkshare enterprise, apparently not unusual in the industry.
[92]
The MSMA itself, whilst having extensive
definitions of various terms, read in context, was such as to
establish:
92.1
That On Farm had expertise in the management of dairy farming
operations;
92.2
That On Farm would own and contribute the
livestock and implements relevant required for the dairy business to
be conducted;
92.3
That Bridge Farm (being Bridge Farm Dairy (Pty)
Ltd) was to conduct the dairy enterprise on the properties referred
to hereafter
during the agreement;
92.4
That On Farm, in addition to contributing the
livestock and implements and equipment to the dairy business, would
manage the business
of Bridge Farm (the dairy business) this being
outsourced exclusively to On Farm;
92.5
That the two trusts would make available the
properties to which I refer hereafter to enable Bridge Farm to
conduct the dairy enterprise;
92.6
That the properties to be provided were immovable
properties registered in the name of the trusts together with their
improvements
and water entitlements being three properties portions
of the farm Tarka Bridge, but by definition the “
excluded
improvements were separated therefrom
”
;
92.7
That the excluded improvements were to be retained
for the sole use of Mr. van den Heever, including sheds housing and
buildings,
being as I have previously set out a particular private
dwelling guest house, garage and outbuildings, and an “
auction
complex and feedlots
”
;
92.8
The nature and extent of the auction complex and
feedlots, to which I have referred to briefly above, were various
buildings and
portions of the farming property at least 10.4 hectares
in extent in total;
92.9
That the agreement was to commence on 1 July 2018
and had the term “
joint venture
dairy enterprise
”
defined as
meaning “…
the Joint
Venture by the Parties to this Agreement in order to conduct the
Business through Bridge Farm as equal Shareholders
”
;
92.10
The livestock contribution by On Farm was 1000
dairy livestock units (each unit a separate animal);
92.11
That in summary On Farm would provide the
livestock, implements and equipment and expertise to run what was
described as the “
joint venture
dairy enterprise”
, which was
separately defined as I have quoted above being the conduct of the
“business” through Bridge Farm, the parties
being equal
shareholders therein;
92.12
That On Farm was appointed as the “
manager
”
and would be responsible for all aspects of
management relating to the business meaning the business of Bridge
Farm being dairy
farming as defined;
92.13
That On Farm was to purchase the tractors and
implements set out in Annexure D to the agreement and at an agreed
consideration of
R5 414 200,00 (Five million four hundred
and fourteen thousand two hundred rand) from the Familie Trust
payable on or
before commencement date;
92.14
That the Familie Trust had expended R992 000,00
(Nine hundred and ninety-two thousand rand) on planting pastures
which was deemed
to be a joint venture expense;
92.15
That the only obligation of the trusts was to
provide the farming properties (excluding those portions excluded by
the definition
referred to above);
92.16
That as consideration for the “
services
to be rendered as well as the livestock contribution, tractors and
implements
”
contributed by On
Farm, Bridge Farm was, from the commencement date, to pay On Farm a
management fee equal to 50% of the annual
net profit of Bridge Farm
before Tax, and would separately be entitled to “…
all
the income received from all livestock sales that occur for the
duration of the agreement
”
.
(Exactly what livestock sales were envisaged is opaque);
92.17
That clause 15.4 provided that the Familie Trust
would be entitled to certain draw downs but that thereafter the
profit would be
“
split equally …
as agreed by the parties
”
;
92.18
That the parties to the agreement each contributed
R200 000,00 (Two hundred thousand rand) working capital into the
nominated bank
account of Bridge Farm at the commencement thereof;
92.19
That there was, irrespective of the above, a
special arrangement as to year one financially, the Familie Trust
being entitled to
the first R3 500 000,00 profit earned by
Bridge Farm, details of which are further not relevant hereto.
[93]
The MSMA drafted by attorney De Jager was signed
by the parties at Grahamstown on 3 May 2018.
[94]
Attorney De Jager drew an addendum to the MSMA
which was apparently signed shortly thereafter in May 2018 which
provided that (I
repeat for convenience):
“
2.
AMENDMENT
2.1
The Parties wish to include the following term in the Agreement, as
if specifically incorporated
therein:
36.
RENTAL IN RESPECT OF INFRASTRUCTURE AND PROPERTIES
On Farm shall pay to the
Trusts an annual rental, amounting to R1 000 000,00 (One Million
Rand) per annum, payable annually in arrears.
The aforesaid
rental shall be a Joint Venture expenditure and, as agreed, there
shall be no escalation.”
[95]
He was taken to a letter from Mr. De Jager,
addressed to Mr. van den Heever and himself, dated 20 April 2018,
referring to the fact
that attorney De Jager had drafted a
provisional MSMA, the structure of which would be that the two trusts
provided the immovable
property relevant, whilst On Farm, described
as “
Scheeper’s Newco
”
,
could provide one thousand dairy livestock. Clause 3.3 of the
letter provides that:
“
3.3
Die grond word
verhuur aan die nuwe entiteit wat die melkery sal bedryf synde die JV
Newco. Die huurbedrag in terms van huur
moet op ooreengekom
word en die huurkontrakte moet onderteken word tesame met hierdie
ooreenkoms.
3.4
Die vee en implemente en toerusting word verhuur deur Pierre se
entiteit (Scheepers Newco) aan die JV
Newco. Hierdie ooreenkoms
moet onderteken word tesame met die Deelmelkooreenkoms.
3.5
Die melkery vind derhalwe plaas binne die Joint Venture Newco.
Wins word verdeel voor belasting.
”
[96]
The genesis of this addendum was referred to in
the evidence and as relevant to certain correspondence emanating from
attorney De
Jager and, in particular, a letter dated 4 May 2018 (post
signature) addressed to the various parties, in terms of which
attorney
De Jager referred to the signed MSMA and stated “
I
have omitted to make reference in the Agreement to annual rental,
payable by Pierre to Koot amounting to R1 million per annum
”
and “
I have
prepared an Addendum of which I enclose copy, including the rental
payable to be incorporated into the Agreement
”
.
[97]
There was reference in the letter to the fact that
there would be no escalation to the “
rental
”
and that the “
rental”
would be paid annually in arrears in
the amount of R1 million per annum.
[98]
On 15 May 2018, attorney De Jager wrote to the
various parties again, attaching the addendum, which he said made
provision for rental
to be paid by Bridge Farm Dairy to the “
trust”
.
[99]
It must be said immediately, that the introduction
of this new clause 36 to the MSMA was, patently, the first reference
that had
been made in the agreement to “
rental”
,
read together with the letters of attorney De Jager, that On Farm
would pay to the trusts an annual rental of R1 million, which
would
be treated as joint venture expenditure as agreed.
[100]
In point of fact, it would seem that attorney De
Jager’s letter of 15 May 2018, stating that the addendum made
provision for
payment of rental by Bridge Farm Dairy to the Familie
Trust, was erroneous, the MSMA in fact providing that On Farm would
pay the
said “
annual rental
”
of R1 million to the trusts.
[101]
When dealing with this aspect of the matter in his
evidence, Mr. Scheepers said that the origin of the addendum creating
clause
36 was that the original MSMA had been formulated in somewhat
of a rush, and there were issues that still needed to be discussed,
and that Mr. van den Heever felt that he had obligations to the
trust, and that the 50-50 split was not sufficient, and he wanted
to
receive, or required, a further R1 million to pay to the trusts in
respect of his obligations, to which On Farm agreed, represented
by
Pierre Scheepers.
[102]
Mr. Scheepers did not explain the rental concept,
and had some difficulty in cross-examination in dealing with the
letters from
Mr. De Jager to him, which foreshadowed clause 36 and
the reference to “
rental
”
.
[103]
It would appear that the original intention in
April 2018 was that the properties would be let in its entirety to
the new entity
(presumably Bridge Farm), and that a rental amount
would have to be agreed, and a lease contract signed, together with
the concept
dairy business agreement, this also incorporating the
lease of the equipment.
[104]
On 2 May 2018 (the day prior to signature of the
MSMA), attorney De Jager wrote a letter to the various parties as
follows:
“
2.
I enclose the draft Joint Venture agreement.
3.
In due course, I will prepare a Shareholders’ Agreement
reflecting the
Trusts collectively as 50% shareholders in Bridge Farm
(Pty) Ltd and furthermore reflecting On Farm Holdings (Pty) Ltd as a
50%
shareholder in Bridge Farm (Pty) Ltd.
4.
The directors will be, subject to your instructions, Koot and
Pierre.
5.
There are some issues on which I still need instructions, being the
following:
5.1
Koot wanted the Joint Venture to run for 9 years and Pierre requires
same to continue operating
for 10 years. I need final
instructions on this after the parties have agreed.
5.2
My instructions from Koot are that Pierre agreed to pay rental in
respect of the farming
properties, in the amount of R1 m per annum.
I have not made provision for the aforesaid in the JV Agreement.
If the
aforesaid is agreed to by Pierre, then we should either
introduce a clause stating that the farm will be leased or that the
infrastructure
will be leased at the aforesaid rental. I also
need to know what the escalation will be. Please let me have
instructions
in this regard.
6.
Please peruse and let me have your further instructions.”
[105]
It is to be noted (as I have said) that this
letter is dated one day prior to the signature of the main MSMA, and
it would appear
that it was then envisaged by the parties as had
previously been the case in April 2018, that to some extent or
another lease agreements
would be included relevant to the farming
properties and equipment, although the parties had in mind a joint
venture running for
either nine or ten years, as reflected in this
letter.
[106]
The concept of a final rental in respect of the
farming properties, as referred to in this letter of 2 May 2018, is
most certainly
not contained in the MSMA as originally drafted and,
in fact, as signed. This, in my view, is significant. The
reference
by attorney De Jager to lease agreements in respect of the
property, and then separately the equipment, was most certainly not
carried forward into the agreement in those terms, nor was the
original suggestion that these be signed as separate agreements
together with the joint venture agreement ever carried forward.
This indicates, clearly, in my view, that in context, there
had been
a re-think hereof, at the very least by Mr. De Jager, but as conveyed
to his clients, this being omitted entirely, and
there being no
rental, so-called, included in the final signed agreement, the MSMA.
It is simply not conceivable that if
a lease or leases, were intended
at that time, an experienced attorney could possibly have entirely
omitted same, whether in the
MSMA or by way of simultaneous
agreements, as envisaged in April 2018.
[107]
It is here, that the evidence of Mr. Scheepers is
highly significant, that the origin of the “
rental
”
stems from Mr. van den Heever’s view that
the trusts required an additional R1 million, as the fifty-fifty
split was not sufficient
– however this was to be
accomplished. It was also to be a charge against the joint
venture expenses.
[108]
Indeed, it would seem that as late 2 May 2018 the
parties themselves had not agreed finally hereon.
[109]
There can be no doubt, however, that as late as 2
May 2018, in context, attorney De Jager (and presumably the parties)
envisaged
a “
rental
”
being paid for the farming properties,
alternatively that the infrastructure would be leased at that rental,
seeing that the important
thing was the additional R1 million per
annum. This was, however, not carried forward into the MSMA,
prior to or upon signature.
[110]
It is implicit in the De Jager letter of 4 May
2018 referred to above that he must have received instructions
relevant to the R1
million, he saying he had omitted to make
reference in the MSMA to “
annual
rental
”
in the sum of R1 million
per annum. He had thus prepared the addendum, which included,
as he put it, “
rental
”
payable to be incorporated into the agreement
ex
post facto.
[111]
Clause 36, then, providing that On Farm would pay
to the trusts a “
rental”
of R1 million per annum, which would be
joint venture expenditure, fits in herewith. What this was for,
the remaining
terms relevant thereto, and the usual lease clauses,
are not stipulated or catered for. In fact, it is not even
clear in
the clause itself that this would be rental for the
immovable property, as opposed to the equipment, as originally
referred to
in the letters from Mr. De Jager. The only
reference in this regard is the heading to clause 36, not the clause
itself –
referring not to a lease but to “
Rental
in respect of infrastructure and properties
”
.
This is most unsatisfactory, and lends the impression, in context,
that this was simply an afterthought relevant to the
need to produce
a further R1 million rand payment, as discussed between Mr. van den
Heever and Mr. Scheepers, and clearly then
conveyed to Mr. De Jager
hence the addendum.
[112]
Again, in context, it is not by any means
inevitable that this R1 million annual rental referred to was
intended to relate only
to the immovable property leased, indeed its
genesis and ambit in the MSMA is opaque.
[113]
This presents the interpreter with something of a
conundrum.
[114]
It cannot be wished away, however, as it seems
that the parties contemplated and finally agreed that an “
annual
rental
”
would be paid by On Farm
to the trusts, the owners of the property, but that this would be a
joint venture expenditure, obviously
impacting on the profits, which
were to be split fifty-fifty. Seen in context, the parties
clearly envisaging a joint venture,
as set out in and upon the terms
of the original signed MSMA, which had not a word in it relevant to
lease, let alone rental.
[115]
The conundrum, it seems to me, is provisionally
potentially solved, once one accepts that the agreement, which
clearly created a
joint venture between the parties with a
fifty-fifty profit share, put loosely, incorporated in it something
that was intended
originally to be an independent agreement, side by
side with the main MSMA, but which then, by addendum, incorporated
only a “
rental
”
clause 36. What this annual rental was in
fact for is not stipulated (save in the heading), which in context –
the need
to produce an additional R1 million rand for the trusts, as
required by Mr. van den Heever, is by no means certainly in any way
the creation of a rental agreement relevant to the immovable
properties concerned.
[116]
In the context of the MSMA itself and the context
set out above, that rental is not by any means clearly intended to
refer to a
rental only for the immovable property owned by the trust,
payable by On Farm, that, in addition, provided the livestock and
equipment,
and which of itself was referred to in the De Jager letter
already referred to, as being a lease in a separate agreement or
agreements
contemplated.
[117]
It is also not beyond doubt, by any means, that
the reference to an “
annual
rental
”
in clause 36 was anything
more than language and a convenient vehicle used to describe an
additional flow of funds to the trusts,
as requested by Mr. van den
Heever, beyond the fifty-fifty share envisaged, as against the
context of the joint venture intention
and the contributions thereto,
as set out in the MSMA. Put otherwise, it is not beyond doubt ,
at this stage of the trial,
that clause 36 was not such as to create
a lease of immoveable property properly interpreted in context.
The result
[118]
In the result, and at this stage of the trial,
absolution from the instance at the end of plaintiff’s case,
and applying the
tests already fully set out above, and the proper
approach to a contextual, unitary interpretative exercise, it cannot,
by any
means, be said to be beyond question, or put differently,
beyond doubt, that the provisions relied upon by defendant in clause
36, in the context of the entire agreement, properly interpreted, did
not create a lease of immovable property, bringing it within
the
ambit of SALA.
[119]
Put differently, on the proper approach set out
above, and at the absolution stage, it is certainly not beyond
question that plaintiff’s
contention, that an interpretation,
as a matter of law, against the context and purpose of the agreement,
is such that a court,
applying its mind reasonably to such issue
could or might (not should, nor ought to) find for the plaintiff.
[120]
The plaintiff has in other words crossed the
relevant threshold, such as to put the defendants on their defence.
[121]
As to costs, the parties were in agreement that
costs should follow the result, accordingly, it must be ordered, as I
do below,
that the plaintiff’s costs, in respect of the special
plea, must be paid by the defendants, jointly and severally, the one
paying the other to be absolved. The costs of two counsel, in
this complicated matter, should be allowed, as their employment
is a
wise and reasonable precaution.
[122]
It is also, in the circumstances, unnecessary for
me to deal with, let alone decide, the second issue, that was raised
by plaintiff,
and that is, whether, upon a finding that clause 36
created a lease of immovable property, that lease was not struck by
section
3(d) of SALA. This is a distinct and completely
separate enquiry. I have said sufficient in this regard already
in
my judgment on the duty to begin.
Order
[123]
In the result the following order issues:
1.
The defendants’ claim for absolution from
the instance, at the end of the plaintiff’s case, in respect of
the separated
issue arising from paragraph 1.4.13 and 1.4.14 of the
defendants’ amended special plea and the relevant annexures
annexed
to the plaintiff’s amended particulars of claim
together with paragraph 17 to 23 of the plaintiff’s
replication, is
dismissed;
2.
The defendants are to pay the plaintiff’s
costs, the one paying the other to be absolved, such costs to
include the
costs of two counsel, the scale of those costs to be
reserved for the trial court in due course.
M.J. LOWE
JUDGE OF THE HIGH
COURT
Appearing
on behalf of the Plaintiff:
Adv.
D. de la Harpe S.C. together with Adv. K. Watt, instructed by
Carinus Jagga Attorneys, Ms. Jagga.
Appearing
on behalf of the Defendants:
Adv.
B. Ford S.C, instructed by Huxtable Attorneys, Mr. Huxtable.
Date
heard:
6
– 9 May 2024
Date
delivered:
21
May 2024
[1]
1976
(4) SA 403
(A) at 409 G – H.
[2]
2001
(1) SA 88 (SCA).
[3]
At
921 I – J. This was confirmed in De Klerk v Absa Bank
Ltd and Others
2003 (4) SA 215
(SCA) at [10].
[4]
See
footnote 3.
[5]
Gafoor
v Unie Versekerings adverseurs (Edms) Bpk
1961
(1) SA 335
(A) at 340 C;
Botha
v Minister van Lande
1967
(1) SA 72
(A) at 76 E – G;
Marine
and Trade Insurance Company Ltd v Van Der Schyff
1972
(1) SA 26
(A) at 38 H – 39 A;
Malcolm
v Cooper
1974
(4) SA 52
(C) at 59 D – E;
Rosherville
Vehicle Services (Edms) Bpk v Bloemfontein se Plaaslike Oorgangsraad
1998
(2) SA 289
(O) at 293 B – I.
[6]
1998
(2) 289 (OPD) at 293 B – I.
[7]
At
340 C;
Botha
v Minister van Lande
(
supra
);
Marine
and Trade Insurance
(
supra
)
at 38H – 39B;
Build-A-Brick
BK en n Ander v Eskom
1996
(1) SA 115
(O) at 123 E.
[8]
2015
JDR 2195 (WCC) particularly paragraph [21] and [29].
[9]
Diners
Club SA (Pty) Ltd v Singh
2004
(3) SA 630
(D) at 645 F – G.
[10]
1964
(3) SA 451 (T).
[11]
P
Trimborn Agency CC v Grace Trucking CC
2006
(1) SA 427
(N) at 430 – 1.
[12]
Better
Bridge Pty Ltd v Masilo and Others NNO
2015
(2) SA 396
(GNP) [8];
Natal
Joint Municipal Pension Fund v Endumeni Municipality
2012
(4) SA 593
(SCA) [20] – [24];
Cool
Ideas 1186 CC v Hubbard
2014
(4) SA 474
(CC) [28].
[13]
2005
(3) SA 372 (T)
[14]
[2021]
ZASCA 99
(9 July 2021)
[15]
Natal
Joint Municipal Pension Fund v Endumeni Municipality
[2012]
ZASCA 13
;
[2012] 2 All SA 262
(SCA);
2012 (4) SA 593
(SCA) (
Endumeni
)
para 18.
[16]
Endumeni
para 18.
[17]
Para
[25] and [26].
[18]
2012
[ZASCA] 126 paragraph 15.
[19]
Capitec
paragraph
38.
[20]
2021
[ZACC) 13.
[21]
Capitec
paragraph
[39].
[22]
Para
68.
[23]
University
of Johannesburg para
68.
[24]
Paragraph
[40].
[25]
University
of Johannesburg
para
[68];
Capitec
paragraph
[41].
[26]
Capitec
para
[50] and [51].
[27]
PER
2019 (22) page 1 Wallis JA.
[28]
Cool
Ideas 1186 CC v Hubbard
2014 (4) SA 474
(CC) [28].