Vavasor Properties (Pty) Ltd v Ehlers and Others (51/2001) [2002] ZASCA 31 (28 March 2002)

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[2002] ZASCA 31
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Vavasor Properties (Pty) Ltd v Ehlers and Others (51/2001) [2002] ZASCA 31 (28 March 2002)

Saaknommer:
51/2001
DIE HOOGSTE HOF VAN APPèL VAN
SUID-AFRIKA
In die saak tussen:
VAVASOR PROPERTIES (EDMS) BEPERK APPELLANT
en
CHRISTIAAN FREDERIK EHLERS EERSTE RESPONDENT
HESTER JOHANNA EHLERS TWEEDE RESPONDENT
_____________________________________________________________
VOOR: MARAIS, STREICHER en CAMERON ARR
VERHOORDATUM: 12 MAART 2002
LEWERINGSDATUM: 28 Maart 2002
Kontrak – Stilswyende term – Kan nie ingelees
word nie – Partye het van gemeenskaplike veronderstelling uitgegaan
UITSPRAAK
CAMERON AR:
Noordwes van Pretoria op die Britspad lê 'n stuk
grond wat aan die respondente behoort. In die verhoorhof was hulle
die eisers.
Hulle is man en vrou. Deurgaans het die eerste eiser
namens hulle opgetree (ek volg die verhoorhof sowel as die advokate
en
verwys na albei as ‘die eiser’). Die eiendom is gunstig
geleë vir ontwikkeling, en in Maart 1997 het ene Pieterse namens

die appellant (‘Vavasor’) die eiser genader. Die voorstel was
dat Vavasor en die eiser 'n ooreenkoms aangaan om die eiendom
te
ontwikkel. Op 1 April 1997 het die eienaars en Vavasor 'n
ooreenkoms onderteken wat ‘n vennootskap tussen hulle in die
lewe
gebring het. Die tersaaklike terme was soos volg:
‘
2. Die eienaars sal 'n en comadite vennoot wees en
as sodanig nie aanspreeklik wees vir enige vennootskapskulde en sal
ook nie
geregtig wees om enige regshandelinge insluitende die aangaan
van skulde namens en vir die vennootskap, aan te gaan nie en Vavasor

sal die uitvoerende vennoot wees.
3. Vavasor sal op eie koste 'n gangbaarheidsstudie doen
om te bepaal of die nodige regte en padtoegange verkry kan word, die
nodige
planne optrek en 'n gangbaarheidsstudie doen om te bepaal of
dit haalbaar is om die eiendom te ontwikkel, welke
gangbaarheidsstudie
Vavasor binne ses (6) maande vanaf datum van
hierdie ooreenkoms moet finaliseer by gebreke waarvan hierdie
ooreenkoms sal verval,
die vennootskap ontbind sal wees en geeneen
van die partye enige eise teen die ander party sal hê nie.
4. Die eienaars stel die eiendom, onderhewig aan die
eienaars se besit/bewoningsreg so as wat die eienaars tot nog toe
geniet het,
tot die alleenbeskikking van die vennootskap en verleen
redelike toegangsregte aan Vavasor ten einde die voormelde
gangbaarheidsstudie
te doen.
5. Die eienaars verbind hulleself hiermee teenoor die
vennootskap om, sodra Vavasor besluit het om met die voormelde
ontwikkeling
voort te gaan, die eiendom te verkoop aan 'n
ontwikkelingsmaatskappy wat Vavasor gaan stig om die ontwikkeling te
doen teen 'n
netto koopprys R950 000.00 (negehonderd en vyftig
duisend rand) betaalbaar in kontant by registrasie van transport van
die eiendom
in die naam van die maatskappy.
6. Vavasor sal sodra dit besluit het om met voormelde
ontwikkeling voort te gaan, 'n maatskappy stig
6.1 wat die eiendom soos voormeld van die eienaars sal
koop;
6.2 wat die voormelde ontwikkeling sal voltooi en
bemark;
6.3 wat geregtig sal wees om teen sekuriteit van
verbandlenings die koopprys sowel as die transport- en
ontwikkelingskoste te betaal;
6.4 waarin die eienaars 'n 30% (dertig persent)
aandelebelang kosteloos sal verkry en geregtig sal wees om een
direkteur te benoem;
6.5 waarin Vavasor 70% (sewentig persent) van die ander
aandelebelang hou en geregtig sal wees om die ander direkteure te
benoem;
en
6.6 waarvan die aandele dividenddraend sal wees.
7. Die eienaars sal geen verpligting hê ten opsigte
van die betaling van enige skuld of uitgawe van die vennootskap of
ten opsigte
van voormelde ontwikkeling of vir die aandele in
voormelde maatskappy nie en Vavasor vrywaar die eienaars teen enige
eis wat in
dié verband teen die eienaars ingestel kan word.
Dit is gemeensaak dat die opskortende voorwaarde binne
die ses maande-tydperk vervul is, en dat die eiser ingelig is dat
Vavasor
aan prokureurs opdrag gegee het om 'n maatskappy te stig en
30% van die aandele aan hom oor te dra. Later is ooreengekom dat 'n

bestaande ‘rakmaatskappy’ vir die beoogde doel gebruik sou word
in plaas daarvan om 'n nuwe maatskappy te stig.
Die eiser het die eiendom bewoon, en hierop het hy
alternatiewe huisvesting begin soek. Hy het ook 'n
konsepkoopooreenkoms aan
Vavasor deurgestuur. Verskeie gesprekke
het oor die volgende maande tussen die partye plaasgevind. Dit is
gemeensaak dat Vavasor
egter nooit voortgegaan het met óf die
stigting van ‘n nuwe maatskappy, of die benutting van 'n
rak-maatskappy, om die koop
van die eiendom te volvoer nie.
In sy besonderhede van vordering vorder die eiser,
teen tender van die eiendom, spesifieke nakoming van die ooreenkoms;
alternatiewelik,
kansellasie daarvan plus skadevergoeding en rente.
Tydens die verhoor het hy getuig dat ten spyte van herhaalde
probeerslae
hy geen vaste onderneming van Vavasor of Vavasor se
besturende direkteur, Annandale, kon verkry om voort te gaan met óf
die
koop van sy eiendom óf die voltooiing en bemarking van die
ontwikkeling nie. Na herhaalde versekerings dat befondsing verkry

sou word, wat nooit volvoer is nie, moes hy met teësin tot
regsaksie oorgaan. Annandale het namens Vavasor getuig (Pieterse

het intussen na Nieu Zeeland ge-emigreer). Sy getuienis was dat,
hoewel die gangbaarheidsstudie getoon het dat die ontwikkeling

kommersieël gangbaar was, en ‘alles positief gelyk [het] om voort
te gaan’, verskeie onverwagte probleme verhoed het dat
Vavasor die
finansiële rugsteuning vir die ontwikkeling kon verkry.
Dit is nooit aan Annandale gestel dat Vavasor of self
finansieël in staat was om die ontwikkeling te volvoer nie, of in
staat
was om die benodigde finansies elders te bekom nie. Die
uitsluitlike vraag is dus of Vavasor nietemin kontraktueel verplig
was
om die ontwikkelingsfinansies ten minste vir die aankoop van die
eiendom te voorsien.
Die verhoorhof (Jordaan Wn R) het die eiser hierin
gelyk gegee. Die verskil tussen die koopprys van R950 000,00 en die
eiendom
se waarde soos tydens die verhoor bewys, naamlik R400
000,00, is as skadevergoeding toegeken, tesame met rente en koste.
Die
verhoorhof het verlof om te appelleer geweier; maar dit is later
deur hierdie Hof verleen.
Die verhoorhof het die kernvraag geïdentifiseer as
die betekenis van klousules 5 en 6 van die vennootskapsooreenkoms,
en bevind
dat Vavasor ‘verhinder’ het dat die beoogde maatskappy
die koopkontrak sluit. Dit stel volgens die verhoorhof kontrakbreuk

daar op grond waarvan die eis moet slaag.
In sy besonderhede van vordering het die eiser gesteun
op 'n gedeeltelik skriftelike, gedeeltelik mondelinge ooreenkoms,
waarvan
die mondelinge gedeelte was dat die beoogde maatskappy
‘voldoende fondse en personeel’ sou hê om sy verpligtinge na te
kom.
Tydens die verhoor is daar egter geen getuienis gelei wat die
mondelinge beding bewys het nie. Die hoofkwessie op appèl was
dus
of die alternatiewe eisoorsaak bewys is, naamlik dat daar stilswyend
beding is dat die beoogde maatskappy ‘voldoende fondse
en
personeel sou hê om al sy verpligtinge na te kom’. Daar is nie
betoog dat die terme van die kontrak onduidelik of dubbelsinnig
is
nie. Derhalwe is die getuienis tydens die verhoor afgele slegs
relevant om die agtergrondsomstandighede by kontraksluiting
aan te
dui.
By 'n betragting van die ooreenkoms is dit opvallend
dat die eiser as vennoot in die ontwikkelingsprojek nie bloot tot
die vennootskap
bydra deur sy eiendom beskikbaar te stel nie. Die
ooreenkoms gaan verder en bepaal dat sodra die opskortende
voorwaarde vervul
word, die beoogde maatskappy die eiendom sal koop.
Daarby bepaal die ooreenkoms dat die eiser kosteloos ‘n 30%
belang in die
beoogde maatskappy verkry, hoewel hy nie aanspreeklik
is vir vennootskapskulde nie en daarby gevrywaar word teen enige eis
ten
aansien van die vennootskap.
Was dit die partye se bedoeling, en is die
vennootskapsooreenkoms vatbaar vir die uitleg, dat afgesien hiervan
daar ‘n verpligting
op Vavasor sou rus om te verseker dat die
beoogde maatskappy die eiendom teen die vasgestelde prys koop? Die
vraag is of die
kontrak self, behoorlik geinterpreteer, daarop dui
dat die beoogde maatskappy deur Vavasor van die benodigde befondsing
voorsien
moes word, en, indien nie, of daar 'n stilswyende term tot
die effek ingelees moet word.
Klousule 6.1 bepaal dat Vavasor 'n
maatskappy sal stig ‘wat die eiendom . . . van die eienaars
sal
koop
’ (kursivering bygevoeg). Dui die
natuurlike betekenis van hierdie woorde, in hulle konteks gelees,
daarop dat Vavasor onder
‘n verpligting geplaas word om die
befondsing te voorsien wat die beoogde maatskappy in staat sou stel
om die koop te voltrek?
Die woordgreep is in die toekomstige tyd en
nie ‘n gebiedende bepaling, aangesien die maatskappy wat die
verpligting moet
uitvoer nog nie bestaan nie. ‘Sal koop’ betken
nie dat Vavasor die finansiering moet verskaf om te verseker dat dit
wel
gebeur nie. Die toekomstige tyd dui na my mening eenvoudig
daarop dat die partye ten tye van kontraksluting gedink het dat die

koop wel sou plaasvind.
By ‘n natuurlike uitleg van die kontrak se bewoording
is daar na my mening dus nie die verpligting te lees waarop die
eiser
wil steun nie. Die eiser se hoofargument op appèl was egter
dat die vennootskapsooreenkoms uit 'n kommersiële oogpunt absurd

sou wees indien daar nie stilswyend ooreengekom is nie dat Vavasor
die benodigde finansiële rugsteuning sou verskaf nie. Derhalwe

moes ‘n beding tot die effek in die kontrak ingelees word.
Na my mening kan die argument nie slaag
nie. Die kontrak is na my mening sonder die beding volkome
kommersieël sinvol
mits daar uit 'n ander
bron finansies bekombaar was
. Indien die
partye ten tye van kontraksluiting onder die gemeenskaplike
veronderstelling verkeer het dat, mits die gangbaarheidsstudie

positief is, die benodigde finansies vanuit een of ander bron
beskikbaar gestel sou word, dan was dit geensins sinneloos om 'n

bepaling wat Vavasor verplig om die finansies te verskaf weg te laat
nie.
Dit is geykte reg dat 'n stilswyende
beding by 'n kontrak ingelees kan word slegs indien dit met
sekerheid gesê kan word dat,
indien die partye ten tye van die
kontraksluiting ondervra sou gewees het oor die uitdruklike
invoeging al dan nie van die betrokke
term, hulle beide sou
geantwoord het, ‘natuurlik geld die term; dit is nie eens nodig
dat ons dit uitdruklik invoeg nie.’
Nienaber AR het in
Wilkins
NO v Voges
1994(3) SA 130 (A) at 136 - 137
die posisie soos volg uiteengesit:
‘
A tacit term, one so self-evident as to
go without saying, can be actual or imputed. It is actual if both
parties thought about
a matter which is pertinent but did not bother
to declare their assent. It is imputed if they would have assented
about such a
matter if only they had thought about it-which they did
not do because they overlooked a present fact or failed to anticipate
a
future one. Being unspoken, a tacit term is invariably a matter of
inference. It is an inference as to what both parties must
or would
have had in mind. The inference must be a necessary one: after all,
if several conceivable terms are all equally plausible,
none of them
can be said to be axiomatic. The inference can be drawn from the
express terms and from admissible evidence of surrounding

circumstances. The
onus
to prove the material from which the inference is to be drawn rests
on the party seeking to rely on the tacit term. The practical
test
for determining what the parties would necessarily have agreed on the
issue in dispute is the celebrated bystander test.
Since one may
assume that the parties to a commercial contract are intent on
concluding a contract which functions efficiently,
a term will
readily be imported into a contract if it is necessary to ensure its
business efficacy; conversely, it is unlikely
that the parties would
have been unanimous on both the need for and the content of a term,
not expressed, when such a term is not
necessary to render the
contract fully functional.’
Soos Colman R dit gestel het in
Techni-Pak
Sales (Pty) Ltd v Hall
1968(3) SA 231 (W) at
236 E - G:
‘
The Court has no power to supplement the bargain
between the parties by adding a term which they would have been wise
to agree upon,
although they did not. The fact that the suggested
term would have been a reasonable one for them to adopt or that its
incorporation
would avoid an inequity or a hardship to one of the
parties, is not enough. The suggested term must, in the first place,
be one
which was necessary as opposed to merely desirable, to give
business efficacy to the contract; and, what is more, the Court must

be satisfied that it is a term which the parties themselves intended
to operate if the occasion for such operation arose, although
they
did not express it.’
Colman R wys ook daarop dat die leer van stilswyende
terme ‘relates not to what the parties might have agreed to or
would probably
have agreed to after further negotiation, had there
been any, but to what they must have intended at the time when they
negotiated
and agreed as they did’ (237B).
In die huidige geval kan daar na my mening nie gesê
word dat Annandale namens Vavasor ten tye van die sluiting van die
ooreenkoms
sou gesê het, indien die moontlikheid van probleme met
finansiering geopper sou gewees het, ‘maar natuurlik sal Vavasor
dan
die finansiering verskaf!’ Inteendeel. Die kontrak het vir
die eiser aansienlike voordele ingehou, met minimum-risiko. Uit
'n
kommersiële oogpunt kom die betoog dat Vavasor daarby onder alle
omstandighede moes instaan vir die finansiering van die

eiendomsaankoop vir my allermins oortuigend voor. Dit lyk my meer
waarskynlik te gewees het dat dit die partye se gemeenskaplike

veronderstelling was dat finansiële ondersteuning vir die beoogde
ontwikkeling uit een of ander bron bekom sou kon word. Die

getuienis aan beide kante strook met hierdie afleiding. Vavasor is
egter nooit onder 'n kontraktuele verpligting geplaas om
te verseker
dat dit gebeur nie.
[17] Dit dien in hierdie konteks beklemtoon te word dat
die kontrak soos hy uiteindelik daar uitgesien het, afkomstig was van
die
eiser self, wat 'n ervare prokureur is. Pieterse namens Vavasor
het vir die eiser 'n konsep- vennootskapsooreenkoms verskaf. Hierop

het die eiser beduidende wysigings aangebring (insluitende 'n
verkorting van die opsietydperk vanaf 12 na 6 maande), en daarna
die
kontrak vir Pieterse teruggefaks. In hierdie omstandighede is die
gebrek aan 'n uitdruklike bepaling dat Vavasor onvoorwaardelik
vir
die finansiering van die ontwikkelingsprojek moet instaan
onvermydelik opvallend.
[18] Daar kan na my mening dus nie met die vereiste
sekerheid gekonstateer word dat óf Vavasor óf immers die eiser self
bevestigend
sou geantwoord het indien die betrokke term tydens
kontraksluiting aan hulle gestel sou gewees het nie.
[19] Indien die bedoeling van die partye was om
ingevolge klousule 6.1 ‘n verpligting op Vavasor te plaas om toe te
sien dat die
beoogde maatskappy die eiendom koop en die koopprys
betaal, moet dieselfde geld ten opsigte van klousule 6.2. Klousule
6.2 bepaal
dat die beoogde maatskappy ‘die voormelde ontwikkeling
sal voltooi en bemark’. Die feit dat die kooptransaksie
onmiddellik
moes plaasvind, terwyl die ontwikkeling later sou
plaasvind, bied geen basis daarvoor om die twee ‘verpligtinge’ as
afsonderlik
te beskou, soos betoog deur die eiser se advokaat nie.
Dit is ‘n verdere rede waarom die beding waarop die eiser steun nie
ingelees
kan word nie. Dit is naamlik onwaarskynlik dat Vavasor kon
bedoel het om te onderneem om nie slegs op eie risiko nie, maar
suiwer
ook op eie koste, vir die totale finansiering van die
eiendomsaankoop en die ontwikkelingsprojek in te staan nie. In
daardie geval
sou dit immers onnodig gewees het vir die partye om die
stigting of benutting van ‘n verdere maatskappy te beoog, en kon
Vavasor
net sowel die eiendom self aangekoop het, en self onderneem
het om die ontwikkeling to voltooi en te bemark.
[20] ‘n Verdere oorweging is die volgende. Dit blyk
duidelik uit klousule 6.3 dat die beoogde maatskappy geregtig sou
wees om
die ontwikkelingskoste ten minste ten dele te verhaal ‘teen
sekuriteit van verbandlenings’ op die eiendom. Dit dui ten minste

daarop dat die beoogde maatskappy ten dele self moes sorg dat die
finansiering bekom word, uit bronne anders as Vavasor. ‘n

Stilswyende term dat Vavasor onvoorwaardelik vir daardie koste moes
instaan is volgens my mening dus nog minder vanselfsprekend
af te
lei.
[21] Ek kom dus tot die gevolgtrekking dat hoewel
Vavasor kontrakbreuk gepleeg het deur te versuim om die koop van die
eiser se
eiendom deur die beoogde maatskappy te laat volvoer, die
eiser geen skade gely het as gevolg van die kontrakbreuk nie, omdat
Vavasor
nie op grond van die kontrak onder 'n verpligting gestaan het
om te sorg dat die maatskappy in staat was om die koop deur te voer

nie.
[22] In hierdie omstandighede is die gevolgtrekking
onafwendbaar dat daar 'n onoorkomelike gebrek in die eis voorkom, en
moes die
aksie in die verhoorhof van die hand gewys gewees het. Dit
is derhalwe nie nodig om te handel met die verdere aspekte
betreffende
rente wat in die verhoorhof se bevel vervat is nie.
[23] Die appèl moet dus
met koste slaag.
Die bevel in die
verhoorhof word ter syde gestel, en vervang met die volgende:
‘
Die eisers se eis word van die hand gewys met koste.’
E CAMERON
REGTER VAN APPèL
STREICHER AR STEM SAAM
MARAIS JA/
MARAIS
JA:
[1]
I
have had the advantage of reading the judgment of my learned brother
Cameron JA. With respect, I am unable to concur in the conclusion
he
has reached. For me, the key to a proper understanding of the
contract is an appreciation of its dual character. It is neither

solely a partnership agreement nor solely a contract which regulates
the basis upon which a potential sale of immovable property
is to
take place. It is a composite agreement which accommodates both in
one document and the jural relationships which spring
from it are
governed partly by special principles derived from the law of
partnership and partly by general principles derived
from the law of
contract. Care must be taken not to conflate, consciously or
unconsciously, these two distinct sources of legal
obligation into a
single hybrid source of obligation and then to attempt to deduce from
it what obligations do or do not exist.
[2] The
basic elements of the written agreement are quite clear. The
plaintiffs, Mr and Mrs Ehlers, owned and lived on a piece
of land
which Vavasor thought it might be profitable to exploit commercially
by developing it as a precinct for the motor industry.
But it was
not prepared to buy it from the plaintiffs until it had conducted a
viability study. That study was not to be confined
to such matters
as the feasibility of acquiring the necessary developmental rights
and road access and the drawing of plans. It
was also to extend to
the financial feasibility of developing the property which would have
to take into account the methods, availability
and cost of financing
the development. That is the plain meaning of clause 3 (“
en
(my emphasis) ‘n gangbaarheidstudie doen om te bepaal of dit
haalbaar is om die eiendom te ontwikkel”).
[3] Just as Vavasor
was not prepared to commit itself to buying the property until that
study had been completed and it was satisfied
of both the physical
and financial viability of the development it had in mind, so were
the plaintiffs not prepared to wait indefinitely
for that to be done
and to be committed indefinitely to holding their property available
for purchase and use in the development.
Hence the time limit of six
months imposed by clause 3 for the completion of the viability study.
[4] Although the
plaintiffs were to be partners in the partnership (the Doreg 27
Ontwikkeling) which would undertake the development
they were not
expected to contribute to the assets of the partnership by donating
their property to it. The partnership was to
be conducted through
the medium of a company to be formed by Vavasor alone and that
company was to be obliged to buy the property
from the plaintiffs for
R950 000. The formation of that company and the purchase of the
plaintiffs’ property was to take place
as soon as Vavasor decided
to go ahead with the development and the purchase price was to be
paid in cash against transfer of the
property to the company so
formed.
[5] The plaintiffs’
interest in the company was to be 30% and that of Vavasor 70%. The
plaintiffs were to pay nothing for their
interest and were not to be
liable for any of the partnership’s obligations. Vavasor alone was
to be the executive partner and
the plaintiffs were barred from
concluding any transactions or incurring any debts on behalf of the
partnership. Vavasor was to
indemnify them for any claims made
against them arising out of the partnership or the development.
[6] What is
abundantly clear therefore is that Vavasor was required to make up
its mind after completion of the viability study
whether to go ahead
with the development. A decision to do so would trigger the
plaintiffs’ obligation to sell their property
for R 950,000 to a
company to be formed by Vavasor for the specific purpose of buying
the property, providing a corporate framework
for the Doreg 27
Ontwikkeling partnership, enabling appropriate shareholdings to be
conferred upon Vavasor and the plaintiffs,
and developing the
property. Reciprocally, a decision by Vavasor to go ahead with the
development would oblige it to form a company
to undertake and give
effect to the obligations spelt out in clause 6.
[7] It is critical
to the proper interpretation of the agreement to bear in mind the
distinction between the different and shifting
capacities in which
Vavasor and the plaintiffs were parties to the agreement. I have
already pointed out that the plaintiffs were
not required to transfer
their property to the partnership which would come into being in
corporate garb in their capacity as partners
and in fulfilment of any
obligation to contribute to the capital assets of the partnership.
They were obliged to do so only in
their capacity as sellers.
Equally, the partnership’s obligation to them to buy the property
and pay the price was not owed
to them in their capacity as partners.
Nor was Vavasor’s obligation to them to bring about the
formation of the company which
was to purchase the property. For the
purposes of that transaction they rank in law as ordinary parties to
a commercial contract
who contracted at arm’s length with one
another.
[8] In their
capacity as partners, the plaintiffs had other rights against their
partner Vavasor. They could enforce Vavasor’s
undertaking to fund
the development if Vavasor failed to do so. However, if objectively
assessed, it were to become apparent at
any time that the development
was doomed to failure, the plaintiffs would not be entitled to insist
that the development go ahead.
That would not be compatible with
their obligation as partners to act in good faith. But Vavasor would
not be entitled to undo
the purchase by the partnership of the
property.
[9] For that reason I consider it to be unsound to
equate the obligation in clause 6.1 with the obligation in clause 6.2
and then
to narrow the ambit of the former as if it were subject to
the same limitations as the law of partnership imposes upon the
superficially
wide breadth of the obligation in clause 6.2.
[10] To my mind, no question of a tacit term arises.
The ordinary meaning of the language in which the agreement is
couched obliged
Vavasor, once it had decided to go ahead with the
development after having had the benefit of a viability study
comprehending inter
alia financial viability, to bring into being a
company which would buy the property for a predetermined price, pay
that price,
and take transfer of the property. That is quite a
different case from that in which A undertakes to B that A will
procure C to
buy B’s property. There C is an identifiable,
existing, person (whether natural or legal) with an existing
patrimony (be it
large or small) and B is able to decide whether to
sell to C in the light of C’s ascertainable financial ability to
fulfil the
obligation to pay the price. In such circumstances,
there can be no suggestion that A is obliged to ensure that C is
financially
able to and does pay the price.
[11] This is a case in which Vavasor alone would decide
whether there was to be a purchase at all. If it decided that there
would,
there would be no identifiable existing person (whether
natural or legal) who would be entitled to be the buyer and whose
financial
strength or weakness the plaintiffs could have assessed
before committing themselves to selling the property to her, him or
it.
The buyer was to be a subsequent creation of Vavasor’s. I use
the word “creation” advisedly for the buyer could and would
not
be a natural person. The plaintiffs were to be obliged to sell their
property to Vavasor’s creation. It had to be created
for the
specific purpose of buying the property for R 950,000 and paying cash
against transfer.
[12] In my opinion, it would be absurd to suppose that
Vavasor was free to give birth to a legally and financially
still-born company
which was incapable of effectively acquiring the
property by buying it and obtaining transfer by paying for it. Just
as Vavasor
would have failed to fulfil its contractual obligations if
it had formed a company the memorandum of association of which did
not
allow it to acquire immovable property, so would it have failed
to do so if it provided it with no share or loan capital or other

financial means to enable it to function effectively or at all.
Unless it was Vavasor’s obligation to empower the company legally

and financially to purchase the property and pay for it, it would not
matter whether its failure to do so was simply the result
of it
choosing not to do so although able to do so, or the result of its
own financial inability to do so. In neither event would
the
plaintiffs have any cause for complaint in law.
[13] It would also mean that in order to escape the
charge that it had been guilty of any breach of contract by failing
to form
a company to buy the property, it would be open to Vavasor to
form a penniless company and cause it to sign a deed of sale without

having any intention whatsoever of the company actually acquiring the
property and the plaintiffs being paid the purchase price.
[14] The interpretation of the agreement for which
Vavasor contends is the basis for Vavasor’s stance in this case.
That stance
amount to this: Vavasor admits that it failed to carry
out its contractual obligations to establish the company which would
be
obliged to buy the property but says that the plaintiffs have
suffered no damages because Vavasor was not obliged to provide the

company with the means to pay for the property. Bluntly stated, the
proposition is that Vavasor was to be in a position to render
itself
immune from any claims for damages for its own breaches of contract.
[15] A reading of the agreement which
gives rise to these absurd results is, in my view, untenable and in
conflict with the ordinary
meaning of the words used. I am unable to
agree that the agreement would make commercial sense if it were to be
read as excluding
any obligation on Vavasor’s part to fund the
company to be formed, provided that at that time there were, or were
thought to
be, funds available from another source. It would mean
that the plaintiffs were prepared to commit themselves contractually
to
holding their property available for possibly as long as six
months for purchase by an as yet non-existent company which no one

would be contractually obliged to fund to enable it to pay for the
property and, in return, to be content with a mere
spes
that the company would find the money.
[16] An interpretation of an agreement which would be
commercially absurd cannot escape being labelled as such merely
because, if
certain things were to happen which no one is obliged by
the agreement to make happen, the purpose of the agreement will
adventitiously
have been achieved.
[17] However, if I am perhaps wrong in so thinking, and
the implication of a term would be necessary, I have no doubt that a
term
should be implied. With respect, I do not believe that the
hypothetical question posed in paragraph [16] of the judgment of
Cameron
JA is the question which must be asked. It presupposes that
it would have been in order for a company with no financial resources

or facilities of its own to be formed by Vavasor and that that
company might then experience “probleme met finansiering”.
It
does not address a logically anterior question which I think is the
true question to be posed: Does the agreement mean that
the company
which Vavasor is obliged to establish need not be one which can in
both fact and law buy, take transfer of and pay
for the property?
[18] The plaintiffs would certainly have answered that
question in the negative. Can it realistically be supposed that
Vavasor
might have answered it in the affirmative? I think not.
Vavasor would not have dared to answer in the affirmative for if it
had,
the proposed transaction would have fallen to the ground. There
can be no doubt that the plaintiffs would not have been willing
to
commit themselves to Vavasor to hold their property for six months
for possible acquisition by the partnership and then to sell
their
property to a company to be established by Vavasor but which Vavasor
was refusing to commit itself to fund. Vavasor would
have known that
that would be the reaction of the plaintiffs and would therefore have
had to reply to the question in the negative.
[19] The reasoning in the previous paragraph postulates
that Vavasor might have contemplated answering in the affirmative but
was
driven to answer in the negative if the transaction was to
survive. In point of fact there is no reason to suppose that it
would
at that time have even considered answering in the affirmative.
As has been pointed out in the judgment of Cameron JA, Vavasor
did
not at that time anticipate any problem in financing both the
purchase of the property and the development. That is an added

reason why it is unrealistic to suppose that it might have answered
in the affirmative to the hypothetical question I have posed.
In the
words of Nienaber JA (quoted in paragraph 15 of the judgment of
Cameron JA) the placing of an obligation upon Vavasor to
fund the
company which it was obliged to establish to buy and take transfer of
the plaintiffs’ property is “necessary to render
the contract
fully functional”.
[20] In my opinion, the reference in clause 6.3 to the
company’s entitlement to fund the purchase price and the
development costs
by way of loans secured by mortgage bonds cannot be
regarded as lending any support to the counter argument. In marked
contrast
to the usually encountered bond clause in deeds of sale of
immovable property (entire sale and with it the obligation to pay the

price conditional upon obtaining of a bond), the company’s
obligation to pay the price is not stated to be conditional upon the

obtaining by it of loans secured by mortgage bonds. Secondly, there
is no obligation upon the company to finance the purchase
by way of
such loans.
[21] It was not for the plaintiffs to prove
that Vavasor was in a position to provide the company with enough
money to pay for the
property. Nor was it relevant in law whether or
not Vavasor was in such a position. If, on a proper construction of
the agreement,
it was its contractual obligation to provide the
company with the money, its inability to do so (which I may say was
not proved)
would not be an answer to a claim for damages against it
(Vavasor). Those damages would have to be assessed by comparing the
financial
position in which the plaintiffs would have been if Vavasor
had established the company, the company had bought the property, and

Vavasor had provided it with sufficient funds to pay for it, with the
position in which they are as a consequence of the failure
to do
these things. That is what the Court
a quo
did.
[22] In my opinion the appeal should be dismissed with
costs.
_________________________
R M MARAIS
JUDGE OF APPEAL