Steffen and Others v Mdluli (95/2016) [2017] SZSC 63 (24 November 2017);

 

IN THE SUPREME COURT OF SWAZILAND

JUDGMENT

HELD AT MBABANE                                                  CIVIL APPEAL CASE NO: 95/2016

 

In the matter between:

 

 

HANS OSCAR HELMUTH STEFFEN                                 1ST APPELLANT                                 

 

HERMANN HANS HELMUTH STEFEEN                     2ND APPELLANT

 

STEFPONT INVESTMENTS (PTY) LTD                            3RD APPELLANT                          

And

                                                                                                                            

BONIFACE MDLULI                                                              RESPONDENT 

 

 

Neutral Citation:    Hans Oscar Helmuth Steffen and 2 Others V. Boniface Mdluli

                               (95/2016) [2017] SZSC 63   (24 November 2017)

 

Coram:                  DR. B.J. ODOKI, JA

                               M.J.  DLAMINI, JA

                             S.B. MAPHALALA, JA                          

 

Date Heard:          3  October 2017

Date delivered:     24 November 2017      

                                                                   

Summary:   Civil Law ‒ Contracts ‒ Rectification  of contract concluded with a non ‒ registered entity calling itself Matata Group of Companies ‒ Intention of parties to sell shares of company to Respondent‒ common mistake of parties that Matata owned Company ‒ whether rectification by court a quo  proper ‒ Held ‒ Court a quo  justified to rectify the contract to correct common mistake and fulfill the intention of the parties ‒ Appeal dismissed with costs.

 

 

                                               JUDGMENT

       

DR. B.J. ODOKI  J.A

[1]    This is an appeal from the judgment  of the High Court whereby the court allowed the Respondent’s claim for rectification of the contract entered into  by the parties, and made other consequential orders.

 

[2]    The background to this case is as follows;  The Respondent launched combined summons in which he claimed that on 18 March 2014 he entered into a sale agreement (Annexture BM1) with the 1st Appellant who duly represented the 2nd Appellant.  The sale agreement was to the effect that the Respondent would become the owner of the property  at Plot 21, Tubungu Estates, Matsapha, by purchasing the shares in the company which  owned the said property.  The said agreement was reduced into writing on 18 March 2014.

 

 

[3]    At the time of signing the agreement all the parties bona fide believed that Matata was a company registered in terms of the company laws of Swaziland and therefore was in existence.  They also believed that Matata  owned  the entire shares in the company incorporated and registered as Stefpont Investment (Pty) Ltd  (the 3rd Respondent),  and that the 1st Appellant was duly authorized to act for and on behalf of Matata to sell its shares in the 3rd Appellant to the Respondent .  The property was the only asset the 3rd Appellant had.  By selling all the shares in the 3rd Appellant the Respondent would effectively become the owner of the property.

 

[4]    At the time the position was that 1st and 2nd Appellants were the

         shareholders of the 3rd Appellant which held as its only asset, the property.  For the Respondent to be owner of the property,  the shares of the 3rd Appellant had to be transferred to the Respondent.

 

[5]    It was also a fact that Plot 21, Tubungu Estates, Matsapha was registered in the name of a company by the name of Stefpont Investment  (Pty) Ltd, a company  duly registered with limited liability, in accordance with the laws of the Kingdom of Swaziland.

 

[6]    In order to give effect to the common intention of the parties, the Respondent pleaded  that he was entitled  to have the contract rectified in the following manner:

 

 

“6.7.1    By substituting “Matata Group of Companies”  with “Stepfpont Investments (Pty) Ltd” on the cover pages;

 6.7.2     By deleting the preamble to ANNEXTURE ‘BM1’ and substituting same with the following;

              “WHEREAS,  Sellers are the owner of all the  issued shares in Stefpont  Investment (Pty) Ltd

              AGREEMENT made this 18th day of March 2014 

              WHEREAS, the purchaser desires to purchase all the issued shares in the sellers; and

              WHEREAS, the parties are desirous of effective  a smooth and efficient transfer of their shares in the sellers and acknowledge that their mutual goodwill and cooperation are essential to this end.”

6.7.3        By the deletion of clause 1A and the substitution thereof with the following;

                                  “SALE OF ASSETS

             A.  The sellers agree to sell and transfer and the purchaser agrees to buy 100%   shares in the sellers free and clear of any and all liabilities, debts, mortgages, security, interest or other liens or encumbrances.”

 

 

         6.7.4          By the deletion of clause 2 iii and the substitution thereof with the following:

                “iii    The purchaser buys 100% shares of the seller.”

 

[7]    The Appellants denied ever being parties to the agreement (Annexture MB1).  They argued that the agreement was between the Respondent and a non-existing entity referred to as Matata.  Therefore there was no valid agreement as Matata was a fictitious entity.  The Appellants also contended that it was impossible to rectify the agreement because the Appellants were never part of the agreement and yet the order for rectification is sought against them.

 

[8]    The appellants argued, in the alternative, that in the event the court found that there was an agreement, it was an implied term of the contract that the purchase price would be paid within a reasonable period but the Respondent failed to pay the purchase price within a reasonable time.  Consequently, the Appellants cancelled the agreement, and  therefore, the Respondent is not entitled to the transfer of share.

 

[9]    After hearing oral evidence and submissions from the parties, the court a quo made the following order;

“1.   The written contract dated 18th March 2014 is hereby rectified  in terms of paragraph 6.7 of the Plaintiffs Particulars Claims;

 

 

         Alternatively the 1st and 2nd  defendant’s executor are granted leave to sell their shares to the 3rd defendant if they are so inclined who in turn is ordered to sell its shares to plaintiff in terms of Paragraph 31 of this judgment.

 

2.      1ST Defendant’s executor are hereby ordered to sign all necessary documentation to effect transfers of shares in 3rd Defendant to the Plaintiff.

3.      Defendants are hereby ordered to pay costs of suit”

 

 [10]   Being dissatisfied with the judgment and orders of the  court a quo  the Appellants noted an appeal to this Court.  The summary of the grounds of appeal is as follows;

 

1.     The learned judge erred in making an  order of rectification of the agreement.

 

2.     The learned judge erred in making  the alternative to order 1 in terms of which the first Appellant and second Appellant are granted leave to sell their shares to the third Appellant if they are so  inclined who in turn is ordered to sell its shares to the Respondent.

 

 

 

 

3.     The learned judge erred in not dealing with the Appellants submissions as to why the Respondent was in breach of contract by failing to make payment of the purchase price.

 

4.      The learned Judge erred in not finding that after the death Mr. Steffen Senior (the second Appellant) transfer of the property could not take place.  Standard Bank required  further  resolution to be passed, which did not occur and an executor was only appointed long afterwards.  Section 15 of Schedule 1 to the Companies Act explicitly states that the executor is the sole person recognized as having title to the shares of the deceased.

 

5.     The fact that there was no resolution  from the first, second or the third Appellants is also not mentioned in the judgment, and the Respondents  claim should have been dismissed on this ground alone.

 

6.     The learned Judge erred in not finding that no valid agreement was concluded, and in not dealing with the defendants’ submissions in this regard. The plaintiff’s  claim should have been dismissed on this ground alone.

 

 

 

 

 

 

7.     If the plaintiff had made out a case for any relief (which is denied) the learned Judge erred in making the order contained in paragraph 2 of the order (which appears in paragraph [53] of the judgment] in terms  of which the first and second defendants are ordered  to effect transfer of the shares in the third defendant to the plaintiff.

 

8.     The learned judge erred in not upholding the counter claim.

 

[11]   There are three main issues raised in this appeal. The first issue is whether the court a quo erred in ordering the rectification of the agreement in question.  The second issue is whether the court a quo erred in ordering the 1st and 2nd Appellants to transfer their shares to the Respondent.  The third  issue is whether the court a quo erred in not upholding the counter claim.

 

[12]   Arguing  on the issue of rectification of the contract, counsel for the Appellants submitted that the 1st Appellant and the 2nd Appellant resisted the Respondent’s claim on the following grounds:

 

(1)   The 1st Appellant and the 2nd Appellant were not parties to   the purported agreement in Annexture BM1,  and cannot be sued on it.

 

 

 

(2)   The said purported agreement is invalid as one of the parties     (“Matata Group of Companies”) is non existent.

 

 

(3)   An agreement cannot be rectified so as to bind third parties who were not parties to the original agreement.

 

(4)   If it be found that the agreement can be rectified and is valid, the Appellants have lawfully cancelled the agreement due to non-payment of the purchase price by the Respondent.

 

 

(5)   In any event the Respondent must tender the purchase price against transfer and on his own version is not able to do so.

 

[13]   It was counsel’s contention that in order for the Respondent to be successful in his action he had to overcome all the above five defences,  and the learned judge in the court a quo  erred in not dealing with each of the said defences.

 

[14]   Counsel submitted further that the learned judge did not refer to the law of rectification of contracts, and gave no reason why the contract should be rectified. It was also argued that the learned judge erred in not  following the authorities relied upon by the Appellants that an agreement cannot be rectified in order to introduce parties who were not parties to the agreement.

 

 

          It was counsel’s contention that the Respondent’s action  should have been dismissed on this ground  alone, as rectification was the basis of all the Respondent’s claims.

 

[15]   In support of his submissions, counsel for the Appellant referred to the case of A X Z S Industries v A F Dreyer (Pty) Ltd 2004 (4) SA 186 (w) where it was held that “of course, it must be correct that rectification can only be sought against the parties to an agreement.”  Counsel also cited the case of Industrial Finance and Trust Co (Pty) Ltd v. Heitner and Another, 1961 (1) 516 (w) where it was stated,

                                                                                                  “….the rectification would  have to be strictly limited, in its effect to the parties concerned in the error sought to be rectified.  That is in fact, a requirement for the rules as to rectification of contracts other than negotiable instruments”

 

[16]   Counsel further argued that a claim for rectification is brought when a party is of the view that a written contract does not reflect the true intention of the parties, and it has been held in Strydom v. Coach Motors (Edms) B pk 1975 (4) SA 838, that the summons must  allege that the contract was entered between the parties.           It was the contention of counsel that in this case the Respondent did not allege in the particulars of his claim that the agreement had been concluded with the 1st Appellant and the 2nd Appellant, as they were not parties to the agreement.

 

[17]   Counsel submitted that according to the doctrine of privity  of contracts, parties who are not privy to the contract cannot be sued on it.  Counsel relied on the authority of Chritie’s Law of Contract in South Africa 7th  ed, page 302, in support of his submissions.

 

[18]   It was counsel’s contention that as the1st Appellant and the 2nd Appellant were not  parties to the written agreement “BM1”, they could not be introduced into the contract by way of rectification of the agreement.  To support his argument, counsel cited the case of South African Broadcasting Corporation v. Thompson and Another  [1998] 3 All SA 586 (c)  paragraph [18] where it was held as follows:

                                                                                                            “….a person who acts as an agent on behalf of a non-existing principal cannot be held personally liable ex contractu. The reason for this is plain: Such an agent is not himself a party to the contract; unless the terms of the contract indicate otherwise.  To hold otherwise would be to make a new contract for the parties.”

 

[19]   Accordingly, counsel maintained, the Respondent’s claim for rectification was still-born and should have been dismissed.   As the Respondent’s whole cause of action was based on rectification, it follows that his whole claim should have been dismissed with costs.

 

 

[20]   Counsel argued further that the learned judge  erred in not finding that no valid agreement was concluded, and in not dealing with the Appellant’s submissions in this regard.  It was the contention of counsel that as the “Matata Group of Companies” is not a legal persona, and does not exist, no valid agreement had been concluded with it.  Counsel also submitted that “Matata Group of Companies” could never have sold the shares, as the shares were owned by the  1st Appellant and the 2nd Appellant.

 

[21]   In reply Counsel for the Respondent submitted that Agreement “BM1”  was signed by Hans Oscar Helmuth Steffen, the 1st Appellant, who was fulfilling the intention of his father, the 2nd Appellant, that the Respondent eventually owns the house described as Lot No. 21, situated on the Tubungu Township.  Counsel referred to the record of proceedings where William Jacobus Synman (DW1) stated,

 

          “ On the Purchase Agreement there was Mr. Steffen Junior and I must testify from what I know but he once told me that his Dad said he wanted to transfer this property to Mr. Mdluli as an incentive

          and there was a previous Agreement signed already in February  or March 2013, and that Agreement was the same as this Agreement that was signed between them and I was also asked by the bank to confirm, which I did in about September. 

 

 

 

[22]   Therefore, Counsel maintained, the authors of “BM1”  are the Appellants and submitted that this is confirmed by the letter written by the 1st Appellant to LC Von Wissell (Pty) Ltd dated 6 September 2013, which stated in reference to the Deed of Sale as follows: 

                                                                                                  “With this we confirm that the deed of sale entered into by Matata Group of Companies and Mr. Boniface X. Mdluli, regarding the sale of Stefpont (Pty) Ltd located in plot No. 21, Tubungu Township, Matsapha in the Manzini region still stands”

It was therefore the contention of Counsel for the Respondent  that the above letter written to the bank confirmed that there was Matata Group of Companies.

 

[23]   In conclusion, Counsel for the Respondent submitted that the parties to this agreement “MB1”  were Hans Steffen Junior, Hans Steffen Senior and Stefpont.  Hans Junior represented Matata Group of Companies when the agreement was concluded.  The evidence of Synman was to the effect that Hans Steffen Senior was the author  of the agreement, meaning that this agreement came about as a result of his wishes, and Hans Steffen Junior was fulfilling his father’s wishes.  It was Counsel’s contention that it was, therefore, unreasonable for the Appellants to say that they were never party to the main agreement.  Furthermore Counsel submitted, when the Respondent secured financing from the bank, by bank guarantee, the funds had been made available to Matata Group of Companies, but the Appellants never questioned the guarantee that the guarantees were against  the Companies Act.

 

[24]   Counsel submitted further that under Section 81 (1) of the Companies Act, a company may give financial assistance in the acquisition of its shares or those of its holding company in accordance with the Section. The only exception that this should not be done is where there are reasonable grounds for believing that the company will be unable to pay its liabilities  as they became due.  Moreover, counsel argued, there was no evidence in this case that the company would not be able to pay its liabilities.

 

[25]   In her judgment, the learned judge  in the court a quo identified the issues in the case as follows:

                                                                                                  “[15]  There are a number of issues arising from the pleadings filed and the oral evidence adduced by  the parties. The questions are: Is there a contract? If yes, who are the parties to the contract? What is “Matata”?  Did the plaintiff fail to raise the purchase price?  If he did not, did he raise it within reasonable time?  What is reasonable time?  In brief, is the plaintiff  entitled to the orders sought?”

 

[26]   The learned judge then considered each of the above questions in detail.  After reviewing the evidence  adduced from both parties, the learned judge came to the conclusion that the 1st and 2nd Appellants were parties to the contract.  This is how the learned judge addressed the issue,

 

                                                                                                            “[19]  From the above quoted evidence, it is clear that the first  and second defendants who according to the undisputed evidence of the plaintiff, were shareholders and directors of “Matata” (trading name of conglomerate of companies inclusive of 3rd defendant) did  offer to sell the property to the plaintiff.   This piece of evidence was common cause during the hearing as observed by Senior Counsel for the defendants.  The plaintiff has pointed out in his Particulars of claim that the 1st and 2nd defendants are owners of the shares in 3rd defendant. The terms of the agreement were not to sell the property direct but to sell the shares in the 3rd defendant.  For this reason, the 1st and third, defendants were correctly cited as they were parties to the agreement of sale.”

 

[27]   In order to appreciate the above conclusion reached by the judge in the court a quo,  it is necessary to set out the relevant part of the original agreement  concluded between the parties on 18 March 2014.  The Agreement reads in part  as follows:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

“PURCHASE AGREEMENT

BETWEEN

MATATA GROUP OF COMPANIES

HEREIN DULY REPRESENTED BY HANS STEFFEN

Hereinafter referred to as the “SELLER”

AND

BONIFACE MDLULI

Hereinafter referred to as the “PURCHASER”

 

 

WHEREAS: Seller is the owner of a company called Stefpont (Pty) Ltd located in Plot No. 21 Tubungu  Township, Matsapha in the Manzini District and

AGREEMENT made this…………………….18the ……..day of March 2014

 

 

1.                    PURCHASE PRICE

i.                     The purchase price for the whole transaction shall be E800 000.00

ii.                    The purchase price shall be paid on a date to be agreed after signing the Purchase Price Agreement

iii.                  The purchaser buys 100% shares of Stefpont (Pty) Ltd.

2.        REPRESENTATIONS.

          The Seller warrants and represents the following:

A.        It is the owner of and has good and marketable title to all the assets free from all debts, security interest, liens, and encumbrances

B.       It has entered into no contracts relating to its business.

C.       There are no judgments liens, actions, or proceedings pending or threatened against it anywhere.

D.      There are no the violations of any kind pending or threatened against the business and will comply with all notices of violations of law,  ordinances, or rules and regulations affecting the business as of the date of closing.

E.       It has not used any other business name or address within three years of the date of this Agreement.

F.       The property to be transferred is now and at the time of closing will be located at the Seller’s place of business and will not be removed there from without the written consent of the Purchaser.

3.    VOERSTOOTS

The company is sold to the Purchaser as it stands without any warranties whatsoever and subject to all such conditions and servitudes set out in the General Plan and /or as are mentioned or referred to in the Company’s existing title deed of the Plot and the building thereon and having acquainted himself with the nature, conditions and extent of the Company.

 

4.  NOTICES  

The parties here by chose the following addresses as their domicilium  citandi et executandi for all purposes and in   connection with this agreement:

 

a.        The Company at the office of the Chief Executive Officer situate in Matata Super Spar in Big Bend at P.O. Box 1 Matata  L311, FAX 23646020.

 

b.        The Purchaser at the Plot with a copy to P.O. Box  951 Matsapha.

 

5.  ENTIRE AGREEMENT

The Parties represent that this is the entire agreement and understanding among the Parties, and that there are no representations, warranties, terms, covenants or conditions made by any other party except as herein expressly contained.  This agreement shall not be altered, modified or cancelled in any respect except in writing, duly executed by all of the Parties hereto, and no oral agreement of course of conduct to the contrary, shall be deemed an alteration, amendment, modification of cancellation.

 

6.  LAW

The construction, performance and enforcement of this Agreement shall be governed by the Laws of the Kingdom of  Swaziland.

 

 

7.  SUCCESSOR AND ASSIGNS

This Agreement shall be binding upon and inure to the benefit of the Parties hereto and their legal representatives, successors  and assigns forever.”

 

 

[28]   It is clear that the agreement was signed by the 1st Appellant who owned 1%  (one percent) shares in Stefpont Investment (Pty) Ltd (the 3rd Appellant) at the date of signing the agreement.  The Respondent also signed.  The 2nd Appellant could not sign the agreement because he was bedridden in South Africa.  It is common cause  that the agreement was authored by the Appellants and that the Respondent was merely invited to sign it.

 

[29]   It is also common cause that “Matata” was a fictitious entity in that it was not a registered company but a trading  name.  But the company which was trading under Matata Group of Companies, namely the 3rd Appellant was a legal entity and was in  existence.  There was, therefore, a mere misdescription of the seller as Matata, which was a bona fide  mistake on both sides, which did not amount to misrepresentation or fraud.  This genuine mistake  did not affect the true intention of the parties as expressed in the agreement which was to sell to the Respondent 100% shares in the 3rd Appellant company.  The Appellants had earlier realized that the agreement needed to be rectified to effect the true intention of the parties, but the arrangement did not succeed  as the Respondent refused  to sign the revised agreement which had introduced new terms in the agreement which he did not agree with it. It appears strange that when the Respondent now brought  application to rectify  the original agreement, the Appellants opposed it  and claimed they were not parties to it.  A party is not entitled to approbate and reprobate at the same time.

 

 

 

[30]   Counsel for the Appellants cited the case of South African Broadcasting  Corporation v Thomson and Another (supra) for the proposition that third parties could not be introduced into the contract by way of rectification.  In this case, both agreements sought to be rectified did not correctly record the agreement between   the parties in that the name of the second defendant was incorrectly reflected.  The company with which the plaintiff had intended to contract and which the First Defendant was  representing as Honston Video and Film Distributors (Pty) Ltd was in fact Haunston Distributors (Pty) Ltd.  The First Defendant submitted  further that the incorrect description of the 2nd defendant was occasioned by a mistake in drafting the document and the parties signed the  written contract in the bona fide but mistaken  belief that it recorded the correct and registered name of the second defendant.  The First Defendant pleaded that the agreements should be rectified by the deletion of the words “Honston Video and Film”  and the substitution thereof of the word “Hauston”.

 

[31]   The court held that a party claiming  rectification must prove a common intention which the parties intended to express in a contract, but which through some mistake they failed to express.  The  onus is on a party seeking rectification.

           

[32]   It should be noted that the South African Broadcasting Corporation  Case  (supra) is distinguishable from the instant case in that in the South African Case, the evidence indicated that the plaintiff  intended to contract with an existing entity and the first defendant was aware of this.

          The misrepresentation was intended to induce the plaintiff to enter into the transaction and by pretending that Hounston was a company in existence, he intended to induce the plaintiff  to conclude the agreements with such entity.

          If the plaintiff had known the true facts it would not have entered into the contracts.  In the present case all the parties knew the true status of the “Matata” and there was no intention to induce any party from entering into a contract they would not have otherwise entered. 

 

[33]   Recently this court dealt with a case in which the validity of an agreement entered into by a non-existing entity was challenged by the very Counsel who had been instructed by the entity to represent  it and obtained a consent judgment for his client, but did not want  to account for the money received for his client.           This was in the case of M.P. Simelane Attorney General v. Beauty Build Construction (Pty) Ltd and Two Others (case 68/2016) [2017] SZSC 14 (29 May 2017).

 

 

[34]   In M P Simelane Attoneys v Beauty Build Construction (Pty) Ltd and Two Others  (Supra) this Court stated:

 

“[28]   The consent order in this matter was arrived at by the consent of parties themselves and is like a compromise.  The parties would normally be estopped from challenging the compromise, except on certain grounds.

In the present case, the ground for challenging the consent order is that the 1st Respondent is a fictitious entity incapable of signing  such consent.  However, the evidence on the record is clear that the 1st  Respondent is a Trade name for the incorporated company, Real Ocean Res Investments (Pty) Ltd.  Therefore the 1st Respondent is an existing entity.

 

[29]  The Applicant was duly instructed by a resolution of the Board of Directors of Real Ocean Res Investment (Pty) Ltd, and the Applicant carried out the instructions and obtained  monies from the Government of Swaziland on behalf of the 1st Respondent.  The Applicant is estopped from claiming that the 1st Respondent does not exist and must pay the 1st Respondent monies obtained on its behalf.”

 

[35]   In my view, the learned judge in the court a quo was justified in finding that the 1st Appellant and the 2nd Appellant were parties to the agreement in question and that the agreement could be rectified not withstanding that Matata Group of Companies was a non existent entity but was a trade name for the 3rd Appellant and other companies in the group.  There was a bona fide mistake in the description of the seller which could not defeat the common intention of the parties. There were no  third parties introduced in the agreement.  Therefore, the court a quo  was correct in ordering rectification of the agreement as indicated in Particulars of the Claim.

 

[36]   The next issue is whether the learned judge erred in ordering the 1st and 2nd Appellants to transfer their shares to the Respondent.  In her judgment , the learned judge stated in paragraph [29]:

 

“In the present case there is no evidence that the 3rd defendants owns any shares. The agreement reflects an equivocal intention of the parties to sell the business or 3rd defendantIn other words, the defendants contemplated plaintiff stepping into the shoes of the two shareholders.  This must have operated in the mind of the draftsman (defendants) of the agreement dated 18th  March  2014.  It is for that reason that he decided to find a third party to sell the 3rd defendant.  Unfortunately the Third party was a non-legal entity in the name of “Matata.” It is my considered view that the seller ought to be the shareholders themselves.  By disposing off the entire shares in the 3rd defendant, they are effectively selling 3rd Defendant subject to the agreement that 3rd defendant is sold without any liabilities.  In the final analysis, the seller should be the 1st defendant and 2nd defendant’s executor,  Mr. Peter Tailor as it was so revealed by the defendant’s witness.”

 

[37]   I am unable to fault the conclusion  reached by the learned judge on this issue which was amply supported by the evidence.  The agreement itself envisaged the seller to sell and transfer 100% shares in the 3rd Appellant.

 

The purchase price was stipulated at E800.000.  Therefore the order to transfer the shares was merely fulfilling the common intention of the parties.  Accordingly, the learned judge did not err in making Order No 2 in the judgment.

 

[38]   Since the first order in the judgment rectifying  the contract has been upheld,  I do not find it necessary to deal with the alternative order in the judgment as the first order is sufficient.

 

[39]   The Appellants raised an issue that if the contract is rectified, it cannot be performed because they had cancelled the contract.  There is no evidence to this effect.  They alleged that the reason for cancellation was that the Respondent had failed to pay the purchase price.

 

However the Respondent endeavored to meet his obligations by securing bank guarantees, but the Appellant could not fulfil their obligations following the death of the 2nd Appellant.  I therefore find no merit in this ground.

 

[40]   The last issue is whether the court erred in not upholding the counter-claim.  The first counter-claim was instituted by the 3rd Appellant who sought an order evicting the Respondent from the property owned by the 3rd  Appellant.  As the claim for rectification of the contract has been sustained, this counter claim must fail.

 

[41]   The second counter-claim was instituted by the 2nd Appellant for damages on the basis that the occupation of the property by the Respondent was unlawful since he had been dismissed from his employment.   It was submitted that the 3rd Appellant was entitled to reasonable market related rental which had been agreed between the parties at the pre-trial conference as being E8.500.00 per month.

 

[42]   Counsel for the Respondent submitted that at the time of the dismissal of the Respondent, there was a sale agreement entered into by the parties and the Respondent had started fulfilling his obligations and the Appellants were willing to assist   finalize the transaction.  But the Appellant had challenges in performing their obligations and it was unreasonable for the Appellants to depict the Respondent as the one who wanted to unlawfully occupy the house.

It was counsel’s contention that a party cannot call upon the other party to perform his contract without himself having performed or being ready to perform his part of the contract.  Reference was made to the cases of Thompson V Scholtz 1999 (1) SA 232 and Houman V Nortje 1914 AD 293.

 

[43]   In her judgment, the learned judge in the court a quo  in effect held that these counter-claims could not be upheld because the delay in including the transactions lay with the Appellants.  She observed, in paragraph [52], as follows:

 

“The defendants drew a contract whose seller was not recognisable in law.

The defendants in an attempt to rectify the error drew a second agreement but which was untenable in law as it contained clauses which had been rejected by the plaintiff before (i.e. the lease clauses).  Although defendants appreciated that they had to appoint an executor or authorised Mr. Paul Taylor to later endorse the transfer once appointed executor, the defendants failed to take such reasonable steps to pass transfer.  The failure is on the side of the defendants.  It is clear therefore, that had the defendants not committed the irregularities stated therein, plaintiff would have received transfer of the property much earlier than his dismissal. Oral evidence on behalf of defendants was that at a meeting, 1st defendant did state that the transaction had been delayed. In the eyes of the law the purported performance by defendants was defective or as it were, defendants under-performed.  Exceptio non adimpleti contractus must be upheld.”

 

[44]   I am unable to fault the reasoning and conclusion of the learned judge.  In view of the order rectifying the agreement and the failure by the Appellants to perform their part of obligations under agreement, the counter-claims were rightly dismissed.

 

[45]   For the foregoing reasons, I find no merit in this appeal.  Accordingly, I make the following order;

 

1.     The appeal is dismissed

2.     The Respondent is awarded costs.

 

 

 

 

                                                        DR. B.J ODOKI

                                                    JUSTICE OF APPEAL

 

 

I agree                                             

             M.J. DLAMINI

                JUSTICE OF APPEAL

 

 

 

 

I agree                                             S.B. MAPHALALA

                                                    JUSTICE OF APPEAL

 

 

 

FOR THE APPELLANTS:           ADV. P Van Der Berg Sc

FOR THE RESPONDENT:          Mr. B. Gamedze