About SAFLII
Databases
Search
Terms of Use
RSS Feeds
South Africa: Supreme Court of Appeal
SAFLII
>>
Databases
>>
South Africa: Supreme Court of Appeal
>>
2018
>>
[2018] ZASCA 41
|
|
K2014/49699/07 t/a Teikiedraai Eiendomme (Pty) Ltd v Shell South Africa Marketing (Pty) Ltd and Others (1206/2016) [2018] ZASCA 41 (28 March 2018)
THE
SUPREME COURT OF APPEAL OF SOUTH AFRICA
JUDGMENT
Not
Reportable
Case No: 1206/2016
In
the matter between:
K2014/49699/07
t/a TIEKIEDRAAI EIENDOMME (PTY) LTD
APPELLANT
and
SHELL
SOUTH AFRICA MARKETING (PTY) LTD
FIRST RESPONDENT
H
L HALL & SONS (GROUP SERVICES) LTD
SECOND RESPONDENT
REGISTRAR
OF DEEDS, PROVINCE OF MPUMALANGA
THIRD RESPONDENT
Neutral citation:
Tiekiedraai Eiendomme v Shell South
Africa Marketing & others
(1206/2016) ZASCA 41
(28 March 2018)
Coram:
Swain and Mbha JJA and Mothle, Hughes
and Schippers AJJA
Heard:
27 February 2018
Delivered:
28 March 2018
Summary
:
Lease agreement
–lessee - right of pre-emption – interpretation -
lessor
obliged to inform lessee of identical terms and conditions in all
respects upon which prepared to sell property to
third party –
failure by lessor to do so – sale agreement with third party
invalid - right of pre-emption validly exercised
by lessee - appeal
dismissed.
ORDER
On
appeal from:
Gauteng Division of the
High Court, Pretoria (Bertelsmann J sitting as court of first
instance):
The
appeal is dismissed with costs.
JUDGMENT
Mbha
JA (Swain JA and Mothle, Hughes and Schippers AJJA concurring):
[1]
This appeal, with leave of this court, concerns the interpretation of
clause 21 of the lease agreement concluded between Shell
South Africa
Marketing (Pty) Ltd (Shell) the first respondent and H L Hall &
Sons (Group Services) (Pty) Ltd (Hall & Sons)
the second
respondent, in terms of which Shell was granted a right of
pre-emption to purchase the leased property described as
Portion 1 of
Erf 49 Mataffin Township. The issue for determination is whether or
not Shell validly exercised its right of pre-emption.
The Gauteng
Division of the High Court, Pretoria (Bertelsmann J), held that Shell
had validly done so and granted a declaratory
order that the
agreement of sale purportedly concluded between Hall & Sons as
the seller, and K2014/49699/07 t/a Tiekiedraai
Eiendomme (Pty) Ltd
(Tiekiedraai), the appellant, as the purchaser, was deemed to have
been concluded between Hall & Sons and
Shell.
[2]
Tiekiedraai contends that the right of pre-emption was triggered when
Hall & Sons gave notice to Shell on 30 October 2014
of
Tiekiedraai’s offer to Hall & Sons to purchase the
property. Shell however contends that such right was only triggered
when the agreement of sale concluded between Tiekiedraai and Hall &
Sons was sent to it on 5 December 2014. If it is found
that the right
of pre-emption was triggered by the notice of 30 October 2014 then
the appeal must succeed, as Shell failed to accept
it within 30 days
of its receipt in terms of clause 21.3 of the lease. If, however,
this notice did not trigger clause 21.3, which
was only triggered by
the receipt by Shell of the agreement concluded between Tiekiedraai
and Hall & Sons on 5 December 2014,
then Shell accepted the offer
within the period of 30 days, and the appeal must fail.
[3]
The detailed factual matrix giving rise to the dispute, is as
follows. On 30 October 2014, Hall & Sons advised Shell by
e-mail
that Hall & Sons had been made an offer by Tiekiedraai for the
purchase of the property for R17 million. In the e-mail
Hall &
Sons stated that:
‘
(A)s
you are aware Shell [has] a pre-emptive right to match this offer per
the existing lease.’
Tiekiedraai’s
offer, dated 28 October 2014, was attached to Hall & Sons'
e-mail. Tiekiedraai’s offer to Hall &
Sons reads:
‘
Mr
Lewis,
RE:
OFFER TO PURCHASE: PORTION 1 OF ERF 49, MATAFFIN TOWNSHIP
The
purpose of this letter is to confirm the recent discussions relating
to the purchase of the above property.
We
hereby confirm:
1.
That the subdivision of Erf 49 has been approved.
2.
That a Filling Station is erected upon Portion 1 of Erf 49 and which
is presently leased to Shell in terms of a notarial long
term lease.
3.
That your company has indicated that it is prepared to accept offers
for the purchase of Portion 1 of Erf 49, Mataffin Township.
4.
That Shell has a right of first refusal.
5.
That an offer of R17 000 000.00 (Seventeen Million Rand),
with VAT being zero rated, is hereby made to your company
for the
purchase of:
5.1
Portion 1 of Erf 49 whereupon a Shell filling station is erected;
5.2
the notarial long term lease agreement concluded with Shell;
5.3
the site licence.
6.
That the offer as set out herein is subject to:
6.1
the terms and conditions of the bond granted by Nedbank, a financial
institution, subject to the normal lending criteria for
commercial
loans of a similar nature;
6.2
the purchase price in point 5 is the full purchase price with the
exception of transfer and conveying costs;
6.3
that the offer is made in my capacity as director of Tiekiedraai
Eiendomme (Pty) Ltd, registration number 2014/49699/07;
6.4
that in order for the sale to be zero rated Tiekiedraai must be VAT
registered;
6.5
that the offer as contained herein will be referred to Shell to
enable them to exercise their right of first refusal;
6.6
that in the event of Shell failing to exercise its first right of
refusal to purchase, will a formal Sale Agreement be concluded
upon
acceptance of the offer as set out herein;
6.7
that the further terms and conditions to be incorporated in the
Sale Agreement to be agreed upon
.' (Emphasis added)
[4]
On 30 October 2014, Shell acknowledged receipt of Hall & Sons’
aforesaid e-mail together with Tiekiedraai’s
offer dated 28
October 2014, and stated that: ‘[w]e [Shell] are seriously
considering it and will revert soon'.
[5]
On 1 December 2014, Shell sent an e-mail to Hall & Sons advising
that Shell was close to getting Board approval. Shell asked
to be
furnished with a draft of the sale agreement and suggested in the
alternative that its attorneys draft one. Hall & Sons
responded
to Shell on 2 December 2014, recording that in terms of clause 21 of
the lease agreement, the 30 day period within which
Shell had to
exercise its right of pre-emption, had expired on 30 November 2014.
Hall & Sons had accordingly prepared a sale
agreement and sent it
to Tiekiedraai.
[6]
Undeterred, and on the 3 December 2014, Shell sent a further e-mail
to Hall & Sons advising that Shell had full board approval
for
the R17 million purchase price for the property plus VAT, and
requested that the parties discuss the issue.
[7]
On 5 December 2014, Shell addressed a further e-mail to Hall &
Sons recording that the latter’s e-mail and offer by
Tiekiedraai forwarded on 30 October 2014, did not comply with clause
21 of the lease. It recorded further that once Shell had sight
of the
sale agreement or an offer to purchase with all the terms and
conditions spelt out, Shell had 30 days from the date of delivery,
to
match the offer. In response and on the same day Hall & Sons sent
an e-mail to Shell, enclosing a copy of the sale agreement
it had
purportedly concluded with Tiekiedraai.
[8]
On 9 December 2014, Shell sent an e-mail to Hall & Sons
acknowledging receipt of the signed sale agreement between Hall
&
Sons and Tiekiedraai and averring that clause 17 thereof, which
recorded that Shell had not exercised its pre-emptive right
to
purchase the property, was incorrect. Shell added that the agreement
between Hall & Sons and Tiekiedraai would have to be
cancelled,
and a new agreement on the same terms and conditions would have to be
concluded between Hall & Sons and Shell.
[9]
I turn to consider Clause 21 of the lease agreement which reads as
follows:
‘
21.
SALE
At
any time during the currency of this lease or any extension thereof
the Lessor undertakes that it will not sell, or otherwise
dispose of,
the premises or any portion thereof, to any third party without first
having offered to Shell to sell or dispose of
it, or the relevant
portion thereof, to Shell,
on the identical terms and conditions
in all respects upon which the Lessor was prepared to sell or dispose
of it
, or the relevant portion thereof, to the third party, and
to this end the Lessor further undertakes –
21.1
that it will, before selling or otherwise disposing of the premises
or any portion thereof to any third party, first offer
to sell or
dispose of its, or the portion thereof in question, to Shell in
writing
on the identical terms and conditions in all respects upon
which it is prepared or is desirous of selling or disposing thereof
to
the third party
;
21.2
in the offer referred to in 21.1,
furnish the terms and conditions
in all respects upon which it is prepared or is desirous of selling
or disposing thereof to the
third party
, save that it shall not
be obliged to disclose to Shell the name and address of the third
party;
21.3
the offer referred to in 21.1 shall remain open for a period of 30
(thirty) days from the date of receipt thereof by Shell;
21.4
should Shell decline the said offer, or not accept it within the said
period of 30 (thirty) days, the Lessor will not thereafter
dispose of
the premises, or the portion thereof in question, to the said third
party at a price lower or on terms and/or conditions
more favourable
in any way at all, to such third party, than the price, terms and
conditions upon which the offer was made to Shell
in terms of 21.1;
21.5
failure on Shell’s part to accept any offer made to it in terms
of the foregoing shall entitle the Lessor to dispose
of the premises,
or the relevant portion thereof, to the third party in question, but
no-one else, upon terms not more favourable
to such third party than
the last offer refused by Shell, upon condition that any such sale or
disposal shall not be concluded
without first binding the third party
to the terms and conditions of this lease. Failure on Shell’s
part to accept any such
offer shall in no way affect the obligations
undertaken by the Lessor as set forth elsewhere herein.’
(Emphasis added)
[10]
The key question that arises is whether the offer of 30 October 2014
complied with the terms set out in clause 21 of the lease
agreement,
namely, that it contained ‘the identical terms and conditions
in all respects’, upon which Hall & Sons
was prepared to
sell the property to Tiekiedraai.
[11]
The law relating to the interpretation of documents is now well
settled
.
In
Natal Joint Municipal
Pension Fund v Endumeni Municipality
[2012]
ZASCA 13; [2012] 2 All SA 262 (SCA); 2012 (4) SA 593 (SCA) paras 18
and 26, this court expressed itself as follows on the
subject:
‘…
Interpretation
is the process of attributing meaning to the words used in a
document, be it legislation, some other statutory instrument,
or
contract, having regard to the context provided by reading the
particular provision or provisions in the light of the document
as a
whole and the circumstances attendant upon its coming into existence.
… The “inevitable point of departure is
the language of
the provision itself", read in context and having regard to the
purpose of the provision and the background
to the preparation and
production of the document
…
in
most cases the court is faced with two or more possible meanings that
are to a greater or lesser degree available on the language
used. Here it is usually said that the language is ambiguous
although the only ambiguity lies in selecting the proper meaning
(on
which views may legitimately differ). In resolving the problem the
apparent purpose of the provision and the context in which
it occurs
will be important guides to the correct interpretation. An
interpretation will not be given that leads to impractical,
unbusinesslike or oppressive consequences or that will stultify the
broader operation of the legislation or contract under
consideration.'
The
Endumeni
judgment
was followed in
Bothma-Batho
Transport (Edms) Bpk v S Bothma & Seun Transport (Edms) Bpk
[2013]
ZASCA 176; [2014] 1 All SA 517 (SCA); 2014 (2) SA 494 (SCA).
[12]
Counsel for the appellant relied on the following paragraph in the
answering affidavit for the argument that Hall & Sons
were
‘prepared to sell or dispose of the property’ within the
meaning of clause 21 of the lease agreement, on the terms
set out in
its email of 30 October 2014:
‘
16.
During October 2014, Hall & Sons was approached by the Second
Respondent (“Tiekiedraai”),
who offered to purchase the
Property for an amount of R17 million, which offer was acceptable to
Hall & Sons.’
In reply, Shell stated that it did not
dispute the contents of paragraph 16. Shell’s response on 30
October 2014, that it
was seriously considering the offer and would
revert soon, so it was argued, confirmed that Shell understood the
email by Hall
& Sons (to which Tiekiedraai’s offer was
attached), to convey the desire on the part of Hall & Sons to
sell the property
on the terms offered by Tiekiedraai.
[13] The argument is unsustainable on
the facts, and the plain wording of Tiekiedraai’s offer and
clause 21 of the lease agreement.
First, the papers make it clear
that from the outset, Shell had taken the position that the email of
30 October 2014 by Hall &
Sons did not constitute notice in terms
of clause 21, as it did not contain the identical terms and
conditions in every respect
upon which Hall & Sons were prepared
to sell the property to Tiekiedraai. Indeed, Shell considered that
Tiekiedraai’s
offer was an outline of the basis upon which Hall
& Sons were prepared to contract. Further, in the answering
affidavit, Mr
Craig Lewis, a director of Hall & Sons, stated that
Tiekiedraai’s offer contained ‘the
essentialia
of
the sale between Hall & Sons and Tiekiedraai’, which
‘placed Shell SA in a position where it understood clearly
the
material terms
upon which the property was available to it
(emphasis added); and that upon a proper construction of the lease
agreement, the
material terms
of the sale of the property had
to be disclosed to Shell. On his own version therefore, the offer did
not contain
all
the terms of the sale to Tiekiedraai. Second,
that much is clear from Tiekiedraai’s offer itself: further
terms were to be
agreed upon, as is explained below.
[14] Viewed against the clear
provisions of clause 21, the offer of 30 October 2014 omitted
patently, in my view, to reflect the
identical terms and conditions
in all respects upon which Hall & Sons was prepared to sell the
property to Tiekiedraai.
[15]
Clearly, Hall & Sons had no intention of selling the property on
the conditions as set out in the said offer. I say so
because the
offer states that it was subject to, ‘…the further terms
and conditions to be incorporated in the sale
agreement to be agreed
upon.’
[16]
Plainly the offer does not contain and was never intended to, ‘…
furnish the terms and conditions, in all respects,
upon which…’
Hall & Sons was ‘… prepared or is desirous of
selling…’ the property to
Tiekiedraai. The offer merely
contains a description of the property to be purchased, the parties
seeking to contract, the purchase
price, that Shell has a right of
pre-emption and that the purchase price is to be financed by a way of
a bond. Self-evidently,
a binding agreement could not and was never
intended to be concluded on the terms set out in the offer, in the
absence of agreement
on the further terms.
[17]
In accordance with
Endumeni
,
regard must also be had to the context in interpreting clause 21, to
determine whether its provisions were complied with by Hall
&
Sons. The property was a commercial property consisting of a filling
and service station, which prior to subdivision, was
agricultural
land on which no engineering services were installed. It is for this
reason that the agreement of sale concluded between
Hall & Sons
and Tiekiedraai, deals extensively with the provision of engineering
services to the property such as sewer, water
and electricity, who
will be responsible for maintaining the supply of water, electricity
and sewerage pending such installation
and the acquisition of zoning
and a regulation 38 certificate. An agreement of sale could not be
concluded without consensus being
reached on all of these issues and
it is for this reason that Shell was entitled to be furnished with
the identical ‘….
terms and conditions in all respects
upon which…’ Hall & Sons was prepared to sell the
property. It is accordingly
not surprising that the offer was made
subject to agreement being reached on further terms and conditions as
set out in clause
6.7 of the offer.
[18]
Simply put the phrase ‘identical terms and conditions in all
respects’ has a clear meaning. All of the terms and
conditions
of the proposed agreement between Tiekiedraai and Hall & Sons,
had to be furnished to Shell. The terms and conditions
that had to be
supplied to Shell were not simply the material terms and conditions,
but all of the terms and conditions, because
they had to be provided
‘in all respects’. This interpretation is consistent with
the surrounding circumstances set
out above. Shell had to be
afforded the opportunity to conclude an agreement with Hall &
Sons, on the identical terms
and conditions as any agreement to be
concluded between Shell and Tiekiedraai, in order for Hall & Sons
to fulfil its obligations
to Shell in terms of its right of
pre-emption, contained in clause 21. The absence of agreement between
Tiekiedraai and Hall &
Sons on all of the terms and conditions on
which they were prepared to contract, precluded fulfilment by Hall &
Sons of its
obligations to Shell in this regard. In the light of this
conclusion it becomes unnecessary to consider the further arguments
advanced
by Tiekiedraai.
[19]
In light of what is stated above, I agree with the court a quo’s
finding that the offer of 30 October 2014 did not comply
with clauses
21 and 21.2 of the lease agreement and did not, as a consequence,
trigger the commencement of the 30 day period within
which Shell had
to exercise its right pre-emption. I also agree with the court a
quo’s further finding that there was only
compliance with these
clauses on 5 December 2014, when the sale agreement signed by Hall &
Sons and Tiekiedraai, was sent to
Shell. Shell exercised its right
pre-emption upon receipt thereof, within the requisite period and
validly exercised its right
of pre-emption. The appeal must
accordingly fail.
[20]
The following order is made:
‘
The
appeal is dismissed with costs.’
_______________
B
H Mbha
Judge
of Appeal
APPEARANCES:
For
Appellant:
C H J Badenhorst SC (with him L V R van Tonder)
Instructed
by:
Hough & Bremner Attorneys, Nelspruit
Phatshoane Henney
Attorneys, Bloemfontein
For
First Respondent:
M Smit
Instructed
by:
Cliffe Dekker Hofmeyr, Sandton
Matsepes Inc,
Bloemfontein