IN THE HIGH COURT OF SOUTH AFRICA
(WESTERN CAPE DIVISION, CAPE TOWN)
JUDGMENT
Reportable
Case no: A214/2025
In the matter between:
NUMACON (PTY) LTD First Appellant
MICHAEL IOANNOU Second Appellant
ADAM BHAYAT N.O. Third Appellant
RASHIDA BHAYAT N.O. Fourth Appellant
RUCHSANA BHAYAT N.O. Fifth Appellant
GADIJA BHAYAT N.O. Sixth Appellant
HYMAN BRUK N.O. Seventh Appellant
VREES INVESTMENTS (PTY) LTD Eighth Appellant
XENOPHON DEMETRIADES N.O. Ninth Appellant
JOAN DEMETRIADES N.O. Tenth Appellant
ALEXANDRA MARIKA DEMETRIADES N.O. Eleventh Appellant
KIMON ANDREAS DEMETRIADES N.O. Twelfth Appellant
HELEN CONSTANTINIDES N.O. Thirteenth Appellant
CHRISTODOULAKIS CONSTANTINIDES N.O. Fourteenth Appellant
DEMETRIOS CONSTANTINIDES N.O. Fifteenth Appellant
MARIA CONSTANTINIDES N.O. Sixteenth Appellant
LUKAS CORNELIUS SERFONTEIN (SNR) N.O. Seventeenth Appellant
LUKAS CORNELIUS SERFONTEIN (JNR) N.O. Eighteenth Appellant
PHILIPPUS CAREL PRINSLOO N.O. Nineteenth Appellant
GORDON MANN N.O. Twentieth Appellant
SONJA MANN N.O. Twenty-First Appellant
ENTEGRA TRUST (PTY) LTD Twenty-Second Appellant
and
HERWIG TILLO CORNELIUS LELEU N.O. First Respondent
MARLEEN AUGUSTA MARIE LELEU N.O. Second Respondent
BERNARD KATZ Third Respondent
Coram : SALDANHA AND NZIWENI JJ AND JONKER AJ
Heard : 13 March 2026
Delivered : 9 September 2026 (electronically)
Summary : Jurisdiction – Private valuation – Settlement agreement – Final and
binding clause – Exclusionary effect – Grounds for judicial challenge – failure to
comply with the contractual mandate – Restrictive interpretation. Waiver – Onus of
proof – Knowledge and intent – Abandonment of rights by conduct. Compromise and
Performance – Extinction of debt – Mutual intention – Insufficiency of unilateral
performance.
ORDER
1. The appeal is dismissed with costs;
2. Costs to include the costs of two counsel and to be taxed on scale C;
3. The patent error in the order of the court a quo is corrected, by deleting all
references to, or relief directed against the First Respondent.
JUDGMENT
NZIWENI J (SALDANHA J and JONKER AJ concurring)
Introduction
[1] This is an appeal against the whole of the judgment and orders delivered by the
court a quo on 5 May 2025. The appeal is brought with the leave of the court a quo.
The appellants contend, inter alia, that the court a quo erred in granting the orders
contained in paragraph 64 of its judgment.
[2] The court a quo made the following order:
‘(1) the First to Twenty Second Respondents, jointly and severally and in proportion to
their shareholding in Numacon (Pty) Ltd, make payment to the Trust of the amount of
R11 136 219 together with mora interest thereon as from date of the valuation report
by Laroki Corporate Finance (Pty) Ltd, being 18 April 2023.
(2) the costs of the application shall be borne by the First to Twenty Second
Respondents, jointly and severally, the one paying to absolve the other, which costs
shall include the costs of two counsel where so employed.
(3) the costs shall be on scale C.’
[3] Quite an amount of the factual background to these proceedings is not in dispute
and I turn, therefore, to that factual background.
[4] In September 2018, the Trust launched an application for the compulsory buyout
of its 10.02% interest in the first appellant (‘Numacon’) in terms of section 163 of the
Companies Act 71 of 2008. The appellants opposed the application. Ultimately,
judgment was granted in favour of the Trust; the court ordered the buyout relief and
directed the majority shareholders to purchase the Trust’s 10.02% shareholding in
proportion to their respective holdings.
[5] The appellants appealed to the Supreme Court of Appeal against the entire
judgment. On the day of the hearing, the matter was stood down for settlement
negotiations. On 1 September 2022, the parties reached the settlement agreement. In
terms of clause 3.2 the appellants undertook to purchase the shareholding of the Trust
for fair value, subject only to the determination of what the agreement defined as the
residual dispute. The residual dispute meant whether the purchase price for the
shareholding was subje ct to a minority discount. The settlement agreement also
provided that the parties could make representations to the valuer regarding the
valuation. Pursuant to the valuer accepting his brief on 31 August 2022, the first to
twenty-second appellants proposed to the valuer that certain further discounts,
namely, portfolio valuation and marketability discounts, should be applied. The
respondents opposed that proposal on the footing that the settlement agreement
made no provision for either discount.
[6] The valuer delivered his report on 18 April 2023. The valuer recorded both
contentions in his report, quantified both discounts at 20 percent, and set out in the
table at paragraph 41.2 of his report the figures which resulted.
[7] As agreed in the settlement agreement, the valuer's report was referred to the
initial arbitrator, Justice Brand, to resolve the residual dispute. The arbitrator agreed
with the proposition that he lacked jurisdiction to interfere with the valuer's valuation.
He further agreed that he had no jurisdiction to decide whether or not the valuer had
exceeded his mandate. Justice Brand [the arbitrator] found that whether the two
exceeded his mandate. Justice Brand [the arbitrator] found that whether the two
additional discounts apply to the determination of fair value is a matter of law that falls
within the province of the arbitral tribunal. The award was then taken on appeal to a
tribunal of three retired judges, which handed down its award on 4 June 2024.
[8] The arbitration appeal tribunal stated that it found it difficult to accept the
arbitrator's finding that the valuer had not decided whether the two additional
discounts needed to be taken into account. The tribunal held that this was clear from
the language of the report, read together with the appended valuation tables. They
also opined that, for present purposes, it was highly arguable that the valuer
undertook his task by deducting the two additional discounts, despite having
reservations as to whether this was legally correct and assuming this question could
be resolved by the arbitrator. The tribunal subsequently agreed that the valuer was
wrong. However, they further stated that this did not mean it was open to the arbitrator
to engage in an exercise of interpreting the valuation.
[9] The arbitration appeal tribunal also noted that the valuation was final and binding.
Consequently, if it required interpretation, or was thought to have been produced
outside the scope of the mandate given to the valuer, that was a matter to be
determined by a court.
[10] On 10 June 2024 the respondents were informed that the appellants intended to
transfer R19 797 723 into the trust account of their attorneys, that amount being the
figure yielded by the report after the deduction of the portfolio valuation and
marketability discounts. The amount was to be paid over against delivery of the
original share transfer forms signed in blank by the trustees and of the original share
certificates representing the 2 247 shares. The share transfer documents were
delivered, the payment was made and the shares were transferred. Neither the
proposal for payment nor the receipt of it was accompanied by any communication
reflecting that the payment was made or received in full and final settlement.
[11] The respondents launched the application in the court a quo on 8 October 2024.
They contended that the valuer had never determined the two further discounts to be
applicable, alternatively that the settlement agreement provided only for a minority
discount, and in the further alternative that if the valuer had determined the two further
discount, and in the further alternative that if the valuer had determined the two further
discounts to be applicable, he had exceeded his mandate. They claimed payment of
R11 136 219, being the difference between the amount already paid and the value of
their shareholding before the deduction of those two discounts. On 5 May 2025 the
court a quo upheld the application, reviewed and set aside the valuation report, and
ordered payment of that amount together with mora interest from 18 April 2023. It is
against that judgment and order that the present appeal is brought.
[12] The court a quo was principally concerned with a review application for
declaratory relief brought by the first and second respondents, to the effect that:
(a) The valuer’s valuation report did not determine the two further discounts (a
portfolio valuation discount and a marketability discount), to be applied to the
fair value of the shareholding in the first appellant (‘Numacon’).
(b) Alternatively, an order declaring that on proper interpretation of the settlement
agreement, alternatively, a tacit term thereof that the only discount(s) that fell to
be applied to the fair value of the twenty -second appellant’s (‘the Trust’)
shareholding was a minority discount;
(c) In the valuer’s valuation, to the extent that it held the two additional discounts to
be applicable, falls to be ignored and treated as pro non scripto for purposes of
establishing fair value of the Trust’s shareholding.
(d) Further alternatively, and should the court a quo hold that the valuer did not find
the portfolio valuation discount and the marketability discount to be so
applicable, to that extent, his valuation be reviewed and set aside, because;
(i) he exceeded his powers / mandate / jurisdiction in doing so;
(ii) the valuation, to the extent that it determined that the two ‘additional’
discounts were applicable, were not the exercise of the judgment of a
reasonable person, but rather, exercised unreasonably, irregularly or
wrongly that lead to a patently inequitable result.
(e) An order that the Second to Twenty Second Respondents, jointly and severally
and in proportion to their shareholding in Numacon make payment to the Trust
of the amount of R11 136 219 together with mora interest thereon as from the
date of the valuation report by the valuer as being 18 April 2023.
[13] I accept that the gravamen of the question confronting this Court on appeal is, in
substance and for all material purposes, identical to the issues defined by the
appellants, namely:
appellants, namely:
(a) Whether the court a quo had jurisdiction to grant the relief for the interpretation
of the settlement agreement; and/or a possible review of the valuer’s report.
(b) Whether the respondents waived their right to review the valuation; and
(c) Insofar as the court had jurisdiction and /or whether the respondents were
entitled to the review on a proper interpretation of the settlement agreement;
whether the parties agreed only on the application of the minority discount and
whether the valuer exceeded his mandate.
[14] During the hearing of the appeal, the parties agreed that the court a quo's
reference in its order to the ‘first to twenty -second respondents’ constituted a patent
error and should have been ‘second to twenty -second respondents’. The parties
further agreed that the setting aside of the entire valuer’s valuation report likewise
constituted a patent error.
The appellant’s submissions
[15] The appellants contended that the settlement agreement established a clear,
multi-stage procedural framework. The appellants also contended that under this
agreed mechanism, the valuation by the valuer was to be final and binding, leaving
any residual disputes, specifically the applicability of a minority discount and the
effective date of the buyout, to be referred to a single arbitrator. The arbitrator's
subsequent award would then be subject to an appeal before a panel of three
arbitrators.
[16] The appellants contended that following the conclusion of the settlement
agreement, the valuation took place and the residual dispute being referred to the
initial arbitrator, and the subsequent appeal heard by the three -arbitrator panel. The
respondents accepted the resulting appeal award and fully implemented the sale of
shares.
[17] During the appeal, it was contended on the appellants’ behalf that the cause of
the whole dispute arose from clause 3.2 of the settlement agreement. This specific
clause concerned the purchase of shares and the determination of the price to be
payable for the equity. The determination of price was referred to the valuer to obtain
the fair value (that would equate to the price) and the determination of the minority
the fair value (that would equate to the price) and the determination of the minority
discount, that would be either applicable or not. The arbitrator had to decide whether
the minority discount was applicable.
[18] The appellants contended that the entire process was concluded without any
party seeking a review of the appeal award. They therefore contended that the matter
was finalised; consequently, the court a quo lacked the requisite jurisdiction to grant
relief regarding either the interpretation of the settlement agreement or any
prospective review of the valuer's report.
[19] According to the appellants, upon finalisation of this appellate process, a
reciprocal exchange was to occur: the appellants would pay the purchase price to the
Trust against the concurrent delivery and transfer of the respondents’ shareholding in
the company. The appellants argue that this entire process was in fact executed, as
contemplated.
[20] The appellants also contended that the first arbitrator misconstrued the settlement
agreement. They are of the view that the two discounts form part of the valuation
process and had nothing to do with the discount to be given. According to the
appellants, the two discounts were part and parcel of the determination of fair value.
To this end, the appellants contend that the court a quo erred in finding that the valuer
wrongfully exceeded his mandate when he applied the two further discounts.
[21] It was submitted on behalf of the appellants that the valuer had an unfettered
discretion to determine the fair value of the shares subject only to the determination of
such value ‘with or without any discount for shares representing a minority holding and
with regard to the financial condition of the Company’.
[22] The appellants contended that the way the valuer prepared its report was simply
to arrive at a fair value and then determine what had to be discounted as far as the
minority discount were concerned. The appellants assert that the valuer decided that
the two discounts had to apply, and the arbitrator may decide if he acted out of his
scope to apply to the two discounts.
[23] The appellants further contended that it was wrong to claim that the valuer did not
[23] The appellants further contended that it was wrong to claim that the valuer did not
determine the applicability of the two further discounts. The mere reading of the
valuer’s report they contend makes it clear that he had in fact applied the two
discounts.
[24] To bolster the assertion that the two discounts were applied by the valuer and had
to be taken into account to determine the fair value of the equity, the appellants place
their reliance on paragraph 41.2 of the valuer’s report. To that end, the appellants
contend that prayer 1 of the notice of motion is inconsistent with the clear reading of
the valuer’s report. Paragraph 41.2 of the valuer’s report reads as follows:
‘However, the valuation has subtracted a Portfolio Valuation discount and a
Marketability discount prior to the Minority discount, so to the extent that the Arbitrator
rules that either or both should not apply then the table below would need to be recast.’
(My
emphasis.)
[25] As far as the alternative relief sought by the respondents is concerned, the
appellants maintain that this Court has no material on the record to determine a tacit
term of the contract.
[26] As far as prayer 3 of the notice of motion is concerned, the appellants contend
that the correct question was whether the valuer randomly added further discounts
and reduced the fair value of the shareholding or determined that the two discounts do
apply in arriving at fair value. According to the appellants, in arriving at the fair value,
the valuer did apply the two additional discounts; and if that is how the report is to be
read; that was the end of the matter.
[27] According to the appellants’ counsel, the court should construe the expert report
and the settlement agreement and determine whether the valuer did apply the two
discounts as part of the fair value.
[28] It was argued on behalf of the appellants that the respondents sought to make the
valuer’s report the origin of the claim. According to the appellants, there is no arbitral
decision binding the parties to a purchase price. The appellants further contended that
----
because no arbitral decision granted the respondents 11 million rand, there was no
basis for them [the respondents] to claim additional funds or to approach this court.
[29] The appellants submitted that prayer four could not be sustained, as there was no
basis in law to grant such relief and the underlying transaction had already been
concluded.
The respondents’ submissions
[30] According to the respondents, the discounts were treated as a separate issue
rather than an element of determining fair value. They submit that the settlement
agreement handles this separation through distinct mechanisms: first, it restricts the
residual dispute solely to the existence of a minority discount to the exclusion of all
others; second, it limits the valuer’s mandate strictly to quantifying the fair value; and
third, it explicitly reserves the legal applicability of minority discount for the arbi trator,
rather than the valuer.
[31] The respondents contended that the review was conditional upon a finding as to
whether the valuer had applied the additional discounts; if he had not applied them,
there was nothing to review. It was submitted that the appellants are reading findings
in the appeal tribunal findings that are not borne out by the findings. The only issue
that was before the appeal tribunal (the arbitrators) was the issue pertaining to the
minority discount. All the other issues, the tribunal said, should go to court unless t he
parties could resolve them. According to the respondents, the appeal tribunal found in
the respondents’ favour and said that the minority discount does not apply.
[32] It was contended on respondents’ behalf that this Court had jurisdiction to deal
with the dispute.
[33] The respondents contended that the valuer’s report established the cause of
action, setting the fair value at over R30 million.
[34] The respondents further argue that the appellants were seeking to deduct R11
[34] The respondents further argue that the appellants were seeking to deduct R11
million. According to the respondents, the appellants sought to argue that the element
of the two discounts are part and parcel of the fair value determination. They
contended that because the majority was absorbing the minority interest to consolidate
total control, applying any further discounts would result in an inequitable windfall for
the majority. The respondents’ counsel argued that nobody raised any other discount
but a minority discount.
[35] According to the respondents, the valuer did not assess or decide upon the
discounts; he simply applied them to the final calculation. The respondents submit that
while the appellants insist on deducting two separate discounts totalling R11 million,
such deductions are legally impermissible. The respondents clarified that they are not
seeking an additional award, but were strictly claiming the over R30 million net
amount, resisting the appellants' attempts to further devalue the shares. They point
out that the arbitrator made a factual finding that the valuer did not apply the two
additional discounts. Consequently, counsel for the respondents argued that the
appellants have no legal basis to insist on deductions that the valuer did not
determine. According to the respondents, the valuer did not have legal expertise and
as he was dealing with a special case of an inhouse buyout, he deferred the decision
to the arbitrator.
[36] It was further contended on behalf of the respondents that the settlement
agreement makes no mention of the two additional discounts, but rather, by its silence,
precludes their application. The valuer was tasked to do the valuation and quantify the
minority discount and not decide the applicability thereof. It was submitted that, it is
unfair to apply further discounts in the circumstances of the matter.
[37] According to the respondents, when the valuer mentioned marketability, portfolio
discounts, or JSE shares, he introduced irrelevant factors. They submitted that these
concepts have no bearing on the specific, narrow mandate given to the valuer under
concepts have no bearing on the specific, narrow mandate given to the valuer under
the settlement agreement. The respondents maintain that the valuer’s observations
regarding marketability were made purely in a broader, theoretical context, rather than
within the specific legal context of this matter.
[38] According to the respondents, the appellants improperly conflate an election with
a compromise. They contend that a payment in full and final settlement requires an
express declaration, which was entirely absent from this case. The underlying dispute
was ultimately resolved through arbitration, with the arbitrator's award explicitly
declaring that a minimum sum of R19 million remains payable.
[39] Additionally, they asserted that, that meant that Numacon owed the Trust at least
R19 million. They maintained that the payment of this R19 million did not constitute a
compromise, as it was not tendered or accepted in full and final settlement of the
remaining claims.
Evaluation
Whether the court a quo had jurisdiction to grant relief for the interpretation of
the settlement agreement and/ or possible review of the valuer’s report?
[40] For the sake of convenience, the analysis under this heading will co -extensively
resolve the separate inquiry as to whether the parties intended to limit the scope of
permissible deductions exclusively to the minority discount and whether the valuer
exceeded his mandate.
[41] I am aware that ordinarily, a private valuer’s determination is contractually
insulated from standard judicial review where parties have agreed that such an
evaluation will be final and binding. However, under common law and statutory
principles, a valuer's valuation is not entirely immune and may be challenged and set
aside in court on the following recognised grounds:
(a) fraud or dishonesty: where the valuer acts in bad faith or behaves with a lack of
integrity;
(b) improper procurement: where the valuation was procured by corruption, fraud,
collusive behaviour, or a manifest lack of good faith;
(c) exceeding lawful contractual power (ultra vires): where the valuer executes their
duties outside the strict parameters, rules, or guidelines specified in the
governing agreement; and
(d) gross mistake: where the valuer committed an error so fundamental or gross
that it demonstrates a failure to have applied his mind to the contractual
mandate.
[42] The Supreme Court of Appeal in Vodacom (Pty) Ltd v Makate and Another [2024]
ZASCA 14; 2024 (3) SA 347 (SCA); [2024] 2 All SA 1 (SCA) para 131, held that:
‘The standard of review applicable to the CEO’s determination is one articulated
some 40 years back in the judgment of Bekker v RSA Factors that postulates that,
where a third person is nominated to fix a price or make a valuation, such a person is
expected to exercise the judgment of a reasonable person. Courts have interpreted
mandates of this nature to mean that, whenever two parties have agreed on this type
of mandate, the decision is final and binding on them. However, should a valuer or
third person exercise their judgment in such a manner that it is unreasonable, irregular
and wrongly constituting an inequitable outcome, then the affected person would not
be bound by the valuer’s determination, and such a determination would then be
subject to rectification on equitable grounds. This test was applied in Perdikis v
Jamieson where this Court stated the following:
“It was held in Bekker v RSA Factors 1983 (4) SA 568 (T) that a valuation can be
rectified on equitable grounds where the valuer does not exercise the judgment of a
reasonable man, that is, his judgment is exercised unreasonably, irregularly or wrongly
so as to lead to a patently inequitable result.”
This is also the position in respect of the referee’s report – it can only be impugned on
these narrow grounds.’
[43] One of the principles to be deduced from these authorities is stated in Perdikis v
Jamieson 2002 (6) SA 356 (W) at 366I, as follows:
‘The legal position as I comprehend it is therefore the following: where, as in the
present case, manifestly incorrect or unjust valuation has taken place, practically
present case, manifestly incorrect or unjust valuation has taken place, practically
1The order of the Supreme Court of Appeal in Vodacom was subsequently set aside, and the appeal
remitted for hearing before a differently constituted panel, in Vodacom (Pty) Ltd v Makate and Another
[2025] ZACC 13; 2025 (6) SA 352 (CC). Nothing in this judgment turns on that restatement: the
applicable test remains the one formulated in Bekker v RSA Factors 1983 (4) SA 568 (T).
speaking there has been no determination in terms of the contract between the
parties.’
[44] The above is of course not exhaustive. However, it highlights the precise legal
grounds upon which the respondents relied in challenging the valuation in the present
matter. Specifically, the respondents contend that by introducing marketability and
portfolio discounts, the valuer acted ultra vires the strict mandate as was carved out in
the settlement agreement.
[45] The appellants’ assertion overlooked a fundamental principle: if a valuer commits
a manifestly unjust error or acts outside their mandate, the courts retain inherent
jurisdiction to review and set aside that determination. Counsel for the respondents
argued that judicial oversight survived even the completion of a subsequent arbitration
process, as contractual arrangements cannot insulate an ultra vires act from judicial
scrutiny.
[46] The respondents argued before the court a quo that they sought to set aside the
application of the two further discounts on the ground that a proper construction of the
valuation report evinced that the valuer did no more than postulate the potential
applicability of the further discounts and deferred the issue as to their applicability to
the arbitrator. Alternatively, if it was found that the valuer applied the two discounts,
then the respondents contended that he exceeded his mandate and the valuation
should be reviewed and set aside.
[47] In essence, before the court a quo the respondents argued that the valuer had
exceeded the scope of his powers if it was found that he applied the two discounts.
The appellants, before the court a quo maintained that the two further discounts were
applicable and an allowance by way of deduction from the fair value of the shares
should be made. They further maintained that the valuer did not exceed his powers or
commit any gross irregularity which would render the valuation susceptible to review.
commit any gross irregularity which would render the valuation susceptible to review.
[48] The court a quo held as follows regarding the aspect under consideration:
‘At both stages of the arbitration, the correctness of the applicability of the two
additional discounts and the interpretation of the settlement agreement arose. At both
the initial arbitration and at the appeal arbitration stages the arbitrators engaged with
these questions with the initial arbitrator finding that upon an interpretation of the
valuation that the valuer did not determine the applicability of the further two discounts.
However, the arbitration appeal tribunal found that the arbitrator, like itself, lacked
jurisdiction to interpret the settlement agreement or to determine the correctness of the
applicability of the two additional discounts. This finding of the arbitration appeal
tribunal rendered the review process necessary. Had the initial arbitrator and/or
arbitration appeal tribunal determined differently in respect of their jurisdiction to
interpret the settlement agreement and/or to determine the correctness of the
applicability of the additional two discounts, it could have rendered any review
application unnecessary.
Therefore, on a consideration of the facts of the matter and the applicable legal
principles, the argument that the applicants waived its right to review cannot be
sustained.’2
[49] Two questions arise. The first is what the valuer in fact determined. The second is
whether, on a proper interpretation of the settlement agreement, any discount other
than the minority discount fell to be applied to fair value. Perhaps more significantly,
the appellants do not deny that the two further discounts were applied. In the
circumstances of the valuer’s report, the appellants’ concession is correct.
[50] Thus, the court a quo correctly found that the valuer wrongfully exceeded his
powers by applying the two additional discounts, which effectively amounted to an
impermissible unilateral variation of the terms of the settlement agreement.
[51] The text of the report itself confirms this overreach. The valuer stated the
following:
following:
‘Marketability Discount
30. Numacon and Leleu dispute whether the Marketability discount should be
applicable:
2 Leleu N.O and Another v Numacon (Pty) Limited and Others (19065/2024) [2025] ZAWCHC 192 (5
May 2025) paras 41 & 42.
30.1 Numacon correctly states that the marketability of a private company
such as Numacon is far less than a listed entity.
30.2 Leleu correctly states that the Settlement Agreement does not refer to a
Marketability discount.
31. Regarding the applicability of a Marketability discount I reiterate the following
points:
31.1 From a purely economic standpoint as a valuer of a company, clearly a
discount for marketability would be applicable. Lack of marketability
detracts from the value of a shareholding.
31.2 The question of whether a Marketability discount is applicable or not to
this valuation is a legal matter which as previously mentioned I will leave
to the Arbitrator to decide. . .
37. Conclusion on Marketability Discount
37.1. The PWC Survey indicates a Marketability discount of just above 15%.
The PWC Survey, whilst extremely useful, is a survey of respondents
and not an empirical study. . .
37.5 I have determined under the circumstances that a Marketability discount
of 20% would be reasonable. . .
39. The Arbitrator has been tasked with deciding on the applicability of the Minority
discount.
40. There may be legal reasons whether in the framing of the mandate or definition
of fair value which would result in the Portfolio Valuation discount and / or the
Marketability discount not being applicable. I will leave that decision to the
Arbitrator. . .
41.2 However, the valuation has subtracted a Portfolio Valuation discount and a
Marketability discount prior to the Minority discount, so to the extent that the
Arbitrator rules that either or both should not apply then the table below would
need to be recast.
(My emphasis.)
30-Jun- 22 30-Jun-20
R R
Nett Asset Valuation of Numacon before any discounts 308 721 975 347 711 390
Portfolio Valuation discount (20%) 61 744 395 69 542 278
246 977 580 278 169 112
Marketability discount (20%) 49 395 516 55 633 822
Valuation of Numacon before Minority discount 197 582 064 222 535 289
Minority discount (20%) 39 516 413 44 507 058
158 065 651 178 028 231
Valuation of 10,02 shareholding before any discounts 30 933 942 34 840 681
Valuation of 10,02 shareholding after Portfolio Valuation
discount 24 747 154 27 872 545
Valuation of 10,02 shareholding after Portfolio Valuation
discount and Marketability discounts 19 797 723 22 298 036
Valuation of 10,02% shareholding before Minority discount 19 797 723 22 298 036
Valuation of 10,02% shareholding after Minority discount 15 838 178 17 838 429
[52] The excerpt clearly demonstrated that despite acknowledging he lacked the legal
authority to decide on the applicability of these discounts, the valuer went ahead and
mathematically subtracted them anyway. Moreover, it is worth considering that the
valuer explicitly noted that the only way these two unauthorised deductions would
disappear is if arbitrator actively stepped in to ‘recast’ the table.
[53] An expert valuer's authority is strictly bound by the contract of appointment. The
settlement agreement explicitly detailed the valuation framework without providing for
marketability or portfolio discounts, the valuer possessed no lawful power to apply
them. By giving effect to Numacon's extra -contractual demands the valuer committed
material error beyond its terms of reference.
[54] Furthermore, the settlement agreement provided clear and explicit boundaries
regarding what could be referred to the arbitrator following the publication of the
report. While clause 3.4.1 expressly empowered the arbitrator to determine the
applicability of a minority discount, it bestowed no authority on the valuer or the parties
to refer a residual dispute regarding any other discounts to arbitration.
[55] Accordingly, the question of whether these two additional discounts applied, fell
entirely outside the scope of the agreed arbitral framework. By attempting to enforce
these extra contractual deductions, the appellants sought to unilaterally expand the
these extra contractual deductions, the appellants sought to unilaterally expand the
carefully ring-fenced mandate of both the valuer and the arbitrator.
[56] Because the mandate of the valuer was confined strictly to determining the actual
fair value of the shareholding based on the contractually agreed formula, the court a
quo was entirely correct in setting aside the application of the two further discounts.
[57] This conclusion is reinforced by the material terms of the settlement agreement
entered between the parties, which reveal the following structured dispute resolution
process:
‘3.3.6 The valuer’s determination will be final and binding on parties and not subject
to an appeal.
3.4 On publication to the parties of the valuer’s determination, the Residual Dispute
will be referred to arbitration before the Arbitrator, who will determine:
3.4.1 whether or not the shareholding is to be purchased with or without the minority
discount;
3.4.2 whether the shareholding is to be valued as at 30 June 2020 or at 30 June
2022;
3.4.2.1 whether the interest is to run on that value from 12 October 2022 date of final
payment; and
3.4.2.2 if that is answered in the affirmative, what rate of interest shall apply;
3.4.3 the costs of the Litigation, the Valuer and arbitration.
3.5 The arbitrator will make his/her finding on affidavits delivered in the Application
and on oral submissions made by the parties.
3.6 The arbitrator’s decision will be subject to appeal before three arbitrators jointly
appointed between the parties. Failing agreement on arbitration panel, each
party shall be entitled to appoint one arbitrator and the two arbitrators then
appointed shall determine the identity of the third arbitrator. The arbitration
panel shall be entitled to determine its own procedure.
4 BREACH
In the event of either of the Parties (“defaulting party”) committing a breach of
any of the terms of this Agreement and failing to remedy such breach within a
period of 14 (fourteen) days after receipt of a written notice from the other party
(“aggrieved party”) calling upon the defaulting party so to remedy, then the
(“aggrieved party”) calling upon the defaulting party so to remedy, then the
aggrieved party shall be entitled, at its sole discretion to claim specific
performance of the terms of this agreement or to cancel the Agreement
forthwith and without further notice and in either case to ciam (sic) and recover
damages from the defaulting party. . .’
[58] Viewed in light of the above considerations, the terms of the settlement
agreement, it was evident that the settlement agreement established a dual -
jurisdiction framework that cleanly splits operational dispute resolution from contract
enforcement. The arbitrator was granted a strict, limited mandate under Clauses 3.4
and 3.5 to resolve the ‘Residual Dispute’ based on the affidavits filed, specifically
determining the minority discount, the valuation date, interest terms, and cost
allocations. Any appeal of this initial arbitral decision was barred from the courts and
had to be handled by an internal, three - person arbitration appeal panel under Clause
3.6.
[59] The valuer’s report itself was contractually deemed final and non -appealable
under clause 3.3.6. However, the high court retained a vital supervisory and
enforcement jurisdiction. Crucially, under the breach provisions of clause 4, if a party
defaulted and failed to remedy the breach within 14 days, the aggrieved party held the
sole discretion to bypass the entire arbitration mechanism and approach the court
directly to claim specific performance, contract cancellation, or damages.
[60] It is a curious and distinct structural feature of the settlement agreement that the
arbitration process was not bestowed with exclusive adjudication of all disputes arising
from it. In standard commercial contracts, parties typically include an all -inclusive
arbitration clause designed to completely oust the court’s jurisdiction. In this context, it
is significant that the parties consciously decided to depart from that practice. Under
clause 3.4, the private arbitrator’s mandate is strictly ring -fenced and restricted
exclusively to resolving the defined Residual Dispute . The arbitrator possesses no
contractual mandate or jurisdiction to adjudicate wider contractual non -compliance,
material breaches, or the ultimate dissolution of the agreement.
material breaches, or the ultimate dissolution of the agreement.
[61] Crucially, as previously indicated, clause 4 of the settlement agreement governs
breaches and explicitly created a parallel, independent path to this Court. It provided
that in the event of an uncured breach, the aggrieved party is entitled, at its sole
discretion, to claim specific performance, or to cancel the agreement and claim
damages. By pairing a heavily restricted arbitral scope with an unfettered contractual
right to elect court remedies under clause 4, the agreement creates a fragmented
dispute resolution framework. It is clear therefore that any fundamental breakdown in
performance or enforcement of the agreement shifts directly back into the court
system.
[62] Insofar as the valuer acted ultra vires by adjudicating upon matters outside his
powers, the court a quo was correct in finding that the application of the two further
discounts warranted review. Nevertheless, the court a quo committed a patent error by
failing to sever the flawed findings, as it ought to have set aside only those distinct
portions of the report applying the portfolio and marketability discounts. Put differently,
the court a quo ought to have found that the valuation report stood to be reviewed and
set aside solely in respect of the valuer’s application of the portfolio and marketability
discounts.
[63] The valuer's ultra vires conduct established that the court a quo possessed the
requisite jurisdiction to entertain the review. The appellants’ contention that the
determination was immune from judicial scrutiny is, in my view, flawed.
[64] In any event, and even if the valuation report were not susceptible to review, the
declaratory relief sought in prayers 1 and 2 of the notice of motion was competent to
grant. The court, in its discretion and at the instance of any interested person, is
empowered to enquire into and determine any existing, future or contingent right or
obligation, notwithstanding that such person cannot claim any relief consequential
upon the determination 3. The respondents' interest is neither remote nor abstract.
Their right to be paid fair value arises from clause 3.2 of the settlement agreement,
and the extent of that right turns precisely on which discounts, if any, fell to be applied.
Clause 3.3.6 renders the valuer's determination final and binding, but it does not, and
could not, place beyond the reach of a court the anterior question of what the parties
agreed the valuer was to determine.
agreed the valuer was to determine.
[65] A declaration as to the proper construction of the settlement agreement, and as to
what the valuer's report did and did not determine, produced a concrete and tangible
result. The valuer's table set out the fair value of the 10,02 percent shareholding
before any discounts at R30 933 942, and the appellants paid R19 797 723, being the
3 Section 21(1)(c) of the Superior Courts Act 10 of 2013.
figure yielded only after the portfolio and marketability discounts had been subtracted.
The declaration thus fixed the balance remaining payable against a transfer of the
shareholding that had already taken place, and the order for payment of R11 136 219
followed as relief consequential upon it.
[66] The second strand of the appellants’ argument may be described as follows, that
the Trust waived and/ or elected not to pursue its rights to review the valuer’s decision.
Did the respondents waive their right to review?
[67] The appellants pointed out that the respondents had considered reviewing the
valuation after it was delivered on 18 April 2023.That, pursuant to that decision, the
Trust obtained legal advice and expressly elected to abandon any review of the
valuation. Rather than challenging the report, the Trust chose to accept the valuation
as it stood and affirmatively elected to proceed with the arbitration process.
[68] The appellants bolstered this submission by contending that, in addition to
proceeding with arbitration, the respondents sought to actively implement the
valuation via an urgent application launched in September 2023, wherein they claimed
an interim payment from the appellants.
[69] Furthermore, the appellants assert that in correspondence dated 31 August 2023,
the respondents’ attorneys explicitly confirmed that the valuer’s determination was
final and binding.
[70] First and foremost, the parties in this matter are governed by the terms of the
settlement agreement. It is significant to note that the terms of the settlement
agreement stipulate the following:
‘6.1 This agreement constitutes the whole of the agreement between the Parties
relating to the matters dealt with herein and, save to the extent otherwise
provided herein, no undertaking, representation, term or condition relating to
the subject matter of this Agreement not incorporated in this Agreement shall
be binding on any of the Parties.
6.2 No addition to or variation, deletion or agreed cancellation of all or any clauses
or provisions of this Agreement will be of any force or effect unless in writing or
signed by the Parties.
6.3 No waiver of any of the terms and conditions of this Agreement will be binding
or effectual for any purpose unless in writing and signed by the Party giving the
same. Any such waiver will be effective only in the specific instance and for the
purpose given. Failure or delay on the part of ant Party in exercising any right,
power or privilege hereunder will not constitute or be deemed to be a waiver
thereof, nor will any single or partial exercise of any right, power or privilege
preclude any other or further exercise thereof or the exercise of any other right,
power or privilege.’
[71] In a letter to the appellants’ attorneys dated 7 August 2023, the respondents’
attorney wrote:
‘2. We have now received instructions from our client not to proceed with
the Application to review the valuation.
3. The matter may accordingly proceed too Arbitration for the
determination by the Arbitrator of what the settlement agreement refers
to as the “residual dispute”.
4. The arbitrator will accordingly have to make a ruling as to:
4.1 whether or not the shareholding is to be purchased with or without a
minority discount;
4.2 whether the shareholding is to be valued as of 30 June 2020 or as at 30
June 2022and if the former, whether interest is to run on that value from
12 October 2022 to date of final payment;
4.3 and if the aforementioned question is answered in the affirmative, what
rate of interest will apply. . .’
[72] On 31 August 2023, the respondents’ attorneys wrote a letter to the appellants’
attorneys that states:
‘1. In terms of clause 3.2 of the settlement agreement your client undertook to
buy-out- our client’s shareholding in the company for fair value, subject (only) to
the determination of the residential dispute.
2. In terms of clause 3.3.6 thereof the valuer’s determination is final and
binding.
3. Even should the two extra discounts provided for by the valuer be taken as
part of the residual dispute (which they cannot) this means that the minimum
figure your client currently owes our client amounts to R15 838,178.
4. We accordingly ask you to advise us as at the meeting later today as to
whether:
5. Your client accepts liability for the payment of this amount forthwith; and
6. Alternatively, that the arbitrator may be tasked to resolve this issue so as to
avoid the Court proceeding which our client will, unfortunately be enjoined to
otherwise embark upon.’
[73] Whether an election or waiver existed was a question of fact. The court a quo
was correct in stating that the appellants bore the burden of proving that the waiver
occurred. There is moreover a strict legal presumption against a waiver of any right.
As such, the onus rested squarely on the party asserting the waiver to prove that the
other party, with full knowledge of its rights, definitively decided to abandon such
rights. This intention must be expressed clearly or shown through conduct that was
plainly inconsistent with exercising the right. Did the letter dated 7 August 2023, prove
that a waiver occurred? I think not. The appellants in my view, failed to discharge the
burden it bore of proving the alleged waiver.
[74] Moreover, the letter dated 7 August 2023 did not establish that a waiver occurred,
as the review and the arbitration were not two conflicting options under the settlement
agreement. When the respondents elected to proceed with the arbitration, they did not
give up their right to a review of the valuation.
[75] The settlement agreement did not frame the private arbitration and a High Court
review as mutually exclusive remedies. Instead, it established a sequential, multi -
staged dispute resolution framework wherein the arbitration process logically followed
staged dispute resolution framework wherein the arbitration process logically followed
the publication of the valuation report. Consequently, participating in the contractually
mandated arbitration phase under Clause 3.4 was consistent with the terms of the
settlement agreement. Compliance with these mandatory, sequential contractual steps
could not be construed as an implied waiver or an unequivocal election to abandon
the right to review what it regarded as a fundamentally flawed valuation.
[76] It is therefore concluded, upon a comprehensive evaluation of all the
circumstances, that the text of the 7 August 2023 letter cannot be construed as a
waiver. The letter concluded with the following: ‘if you are in agreement with our
proposal we will provide the judge with the record; we await your reply,’ the
correspondence was objectively nothing more than an open -ended litigation proposal.
A conditional offer that was dependent on a future response could never constitute
clear, unequivocal evidence of an intention to surrender its entitlement. Furthermore,
the proposal was presented as an integrated, indivisible packaged arrangement, it
could thus not operate to unilaterally deprive the respondents of their right to launch
review proceedings.
[77] I am moreover of the view that the appellants have not established any arguable
point so far as the doctrine of election arose. Election only applies when a party is
faced with two choices that are mutually exclusive (meaning if you choose one, the
other becomes physically or legally impossible to perform). In Segal v Mazzur 1920
CPD 634 at 644–645, the court stated the following:
‘Now, when an event occurs which entitles one party to a contract to refuse to carry
out his part of the contract that party has the choice of two courses. He can either elect
to take the advantage of the event, or he can elect not to do so. He is entitled to a
reasonable time in which to make up his mind, but when once he has made his
election, he is bound by the election and cannot afterwards change his mind. Whether
he has made an election one way or the other is a question of fact to be decided by
evidence.’
[78] To conclude the mere fact that the letter dated 7 August 2023 stated that the
respondents' attorneys received instructions ‘not to proceed with the application to
respondents' attorneys received instructions ‘not to proceed with the application to
review the valuation’ did not unequivocally establish a waiver or a binding election. For
conduct to be unequivocal, it must be incapable of any other reasonable interpretation.
The 7 August 2023 letter was in my view no more than an ‘administrative roadmap’
and did not amount to a binding contractual election.
Compromise
[79] During oral argument, counsel for the appellants invited this Court to address two
distinct questions arising from the payment of the R19 million. First, whether this sum
constituted a part -payment of the purchase price or payment of the purchase price in
full. Second, what legal intent or meaning was conveyed by the instruction that
payment was to be made strictly ‘against transfer’.
[80] While it is not in dispute that the Trust accepted payment of R19 797 723, it
cannot be construed as the Trust thereby having waived its right to claim the further
amount it was entitled to nor does the acceptance constitute a compromise
(transactio). In ABSA Bank Ltd v Van de Vyver NO [2002] ZASCA 8; 2002 (4) SA 397
(SCA) paras 18 and 19 the following is stated:
‘Sending one’s creditor a cheque “in full settlement” coupled with a denial of liability
would almost certainly signify an offer of compromise. But there may be an offer of
compromise if there is no admission of liability accompanying the payment. And one
may have to do with an offer of compromise even if there is an admission of liability. In
the latter instance the line between an offer of compromise and payment of an
admitted liability would naturally be finer than in the other two cases. In Paterson
Exhibitions, for example, the admission was, in effect, no more than that something
was owing, but without admitting how much or that the payment offered represented
the admitted indebtedness.
[19] The caveat that requires mention, of course, is that debtors who express
themselves inadequately in their intentions to achieve a compromise run the risk of
having their words interpreted against them: Christie 533. There is therefore much to
commend in the ways suggested by the learned author at 533 -534 and by Professor
Zeffert at 48 of the Law Journal article, in which clarity can be promoted when offers of
compromise are formulated.’
compromise are formulated.’
[81] It is thus settled that a unilateral acceptance of a payment does not extinguish
the underlying cause of action unless the payment was explicitly made and accepted
‘in full and final settlement’ of the entire dispute. In the absence of such restrictive
language, the transaction is legally categorised as a mere payment on account.
[82] Compromise necessarily entails the termination of an existing obligation by mutual
agreement. According to the learned authors Van der Merwe et al Contract : General
Principles 6 ed , the subjective element of a discharge by performance requires more
than a mere intention to tender performance. It demands a concurrent intention
between the parties to extinguish the obligation entirely; an element that is
demonstrably absent from the context of this payment. The Trust's receipt of the
undisputed amount of R19 797 723 did not invoke any concession to abandon the
remainder of its claim or its right to review the valuer's report.
[83] Hence, when examining the facts in this matter in light of the above authorities the
respondents’ reliance on the learned authors are not misplaced. Van Huyssteen et al
state the following:
‘According to the courts, the effect of such an offer depends on the intention with which
it is made. A distinction is drawn between offers made animo solvendi in other words
with the intention to fufil the obligation, and those made animo contrahendi , in other
words with the intention of concluding a compromise wth ther creditor, usually
accompanied by an offer of payment in the form of a cheque. In the latter case,
acceptance of the cheque concludes a settlement, which binds the claimant to the
terms of the offer and precludes a claim for the balance allegedly due to her. If the offer
of compromise is rejected, the claimant must return the payment. Where, however, the
offer was made in payment of a liability admitted by the debtor, the debt s dischar ged
to the extent of the payment and the condition of payment “in full and final settlement”
will have no effect if the creditor does not agree to it. The creditor is then entitled to
retain the cheque and claim the balance of debt. . .
Because there was neither a subjective nor an objective basis for a compromise, the
creditor was entitled to sue for the balance . . .
creditor was entitled to sue for the balance . . .
In the final analysis, an offer to pay may be construed contra proferentem as having
been made animo solvendi if the offeror has not made their intention clear.’
[84] The payment of R19 797 723 for the shares remains uncontested and common
cause between the parties, as the Trust elected not dispute the amount. Consequently,
while the precise figure of R19 797 723 is settled and requires no further evidentiary
proof, the broader justiciable disputes regarding contractual enforcement,
performance, and ultimate liability remain live between the parties.
[85] As mentioned previously, there is nothing in the evidence to show that the Trust
intended to enter into a compromise; it is therefore fully entitled to claim the
outstanding balance. The facts demonstrate that while the appellants may have
intended the payment to serve as a final compromise, the Trust accepted it merely as
a partial payment. Absent a concurrent intention to extinguish the obligation, no
contract of compromise was concluded. 4. To this end, the payment of a baseline
admitted debt does not constitute a legal compromise, even if so labelled ‘in full
settlement’ (an explicit declaration that was, in any event, entirely absent in this
matter).
[86] In my view, taking account of all the foregoing facts and circumstances, the
appellants failed to prove the existence of a compromise.
Conclusion
[87] For the reasons set out above, I have determined that the appeal fails on all
grounds and stands to be dismissed. However, the order of the court a quo must be
varied to correct a patent error regarding the reference to the first respondent and the
setting aside of the valuer’s report. In the result, I propose the following order:
Order
1. The appeal is dismissed with costs;
2. Costs to include the costs of two counsel and to be taxed on scale C;
3. The patent error in the order of the court a quo is corrected, by deleting all
references to, or relief directed against the First Respondent.
_________________________
4 Paterson Exhibitions CC v Knights Advertising and Marketing CC 1991 (3) SA 523 (A) at 529
CN NZIWENI
JUDGE OF THE HIGH COURT
I agree, and it is so ordered.
_________________________
VC SALDANHA
JUDGE OF THE HIGH COURT
I agree.
_________________________
EM JONKER
ACTING JUDGE OF THE HIGH COURT
Appearances:
For the appellants: J G Wasserman SC with C L Robertson
Instructed by: Cliffe Dekker Hofmeyr Inc, Cape Town
For the first and
second respondents: R van Riet SC
Instructed by: DFG Attorneys
For the third respondent: Werksmans Attorneys