Cairns (Pty) Ltd v Playdon & Co, Ltd

• Jurisdiction: South Africa
• Judge: Tindall ACJ, Centlivres JA, Greenberg JA, Schreiner JA and Davis AJA
• Judgment Date: 12 May 1948
• Hearing Date: 09 March 1948
• Court: Appellate Division

Tindall, A.C.J.:

In this matter the trial court upheld an exception to the defendant's special plea. The plaintiff appeals against that decision.

The trial court further dismissed an exception taken by the defendant to the plaintiff's declaration. The defendant appeals against that decision. This has been called the cross-appeal.

This Court has come to the conclusion that the plaintiff's appeal succeeds and that the order of the trial court in regard to the special plea must be altered to: 'Exception dismissed with costs.' The reasons for this conclusion have been prepared by my Brother SCHREINER in which all members of the Court concur.

Tindall ACJ

The Court has also come to the unanimous conclusion that the cross-appeal fails but our reasons for this conclusion differ. The reasons of the majority are contained in the judgment of my Brother DAVIS.

The result is that the appeal succeeds and the cross-appeal fails. The costs of the appeal and of the cross-appeal must be paid by the defendant.

I agree that the plaintiff's appeal in regard to the defendant's special plea must be allowed with costs. I also agree that the defendant's appeal (which has been referred to as the cross-appeal) in regard to the exception taken to the declaration must be dismissed, but, as I take a different view from those expressed in the reasons of my Brethren SCHREINER and DAVIS on the cross-appeal, it is necessary for me to state my reasons for my conclusion.

The defendant's exception, as pleaded, is that the declaration is vague, embarrassing and contains no cause of action in that:

(a)

The alleged option set out in the declaration is invalid and of no effect in that it has no proper time limit within which it had to be exercised.

(b)

If it reveals a time limit, there is no allegation in the declaration that it was exercised within that time limit.

Of those two alleged grounds of exception, para. (a) was not supported by Mr. Reynolds in argument in this Court. In regard to ground (b), which was argued before us, it is necessary to mention that the declaration, after quoting the terms of the option contains the following allegations in para. 4:

'Upon or about the 6th day of May 1947 plaintiff by telegram and by letter duly exercised the said option and thereby a contract of sale of the said property upon the terms in the said option was concluded between plaintiff and defendant and defendant became obliged to transfer the said property to plaintiff upon payment by plaintiff of the purchase price thereof, being the sum of £15,000.'

It seems to me that in the context the allegation in para. 4 of the declaration that the plaintiff duly exercised the said option, implies that he exercised it while it was still open. It is clear, therefore, that the exception, in the form in which it was drafted, could not succeed in the court below.

In this Court, however, counsel for the defendant applied for an amendment of the notice of exception by adding the following additional ground of exception:

(c)

'The option alleged to be given in Annexure 'A' consisted merely of a right of first refusal or right of pre-emption, exercisable only in certain eventualities (set out in para. 2 (a) and (b) of the Annexure) and there is no allegation in the declaration that the said conditions, upon

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which the right depended, had occurred or been fulfilled or the date or dates of such fulfilment.'

Counsel for the plaintiff originally opposed the granting of this amendment but subsequently consented to it provided that a decision adverse to the plaintiff on the exception so amended did not affect the costs of the cross-appeal, and we reserved our decision on the application. We have now to decide whether the amendment ought to be allowed. It is only in this new ground (c) that the vital issue of interpretation is raised for the first time, namely whether after the signature of the option by the defendant on 10th July, 1944, it was open to the plaintiff at any time, by intimating his exercise of the option, to bring a binding contract of purchase and sale into existence even if such exercise took place before the grantor had given any notification in terms of clause 2 of the option.

Now if this issue of interpretation had been raised in the exception before the Provincial Division, in my opinion the Court would have been justified, having regard to the obscurity of the document and the difficulty of interpreting it standing alone, in declining to decide the question on exception and in directing that it should stand over for decision at the trial. Indeed, in my opinion that would, in the circumstances, have been the correct course to adopt. My reasons for this view are the following. It is by no means clear to me that, on the document standing alone, the interpretation should be in favour of the plaintiff. The result of such an interpretation would be that, immediately after the signature the grantee could, by giving notice exercising the option, have obtained not only transfer but possession of the property within a few weeks - the reasonable time that is allowed for the passing of an ordinary transfer of immovable property unless there is some complication in regard to title. If the parties had intended this, there could have been no reason, as far as I can see, for the insertion of clause 5. The concluding sentence of clause 11, contemplating as it does that the right to buy will only be exercised after notice has been given by the defendant, also militates strongly against the construction put forward on behalf of the plaintiff.

On the document standing alone there seems to me much to be said for the contention that the word 'or' between paras. (a) and (b) of clause 2 of the option must be read as 'and', that the two paras. (a) and (b) must be read together and that the intention of the option read as a whole was to give the grantee what is sometimes called 'a first refusal' to the following effect: If the

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grantor receives an offer of £15,000 or more from a third person and moreover is prepared to sell for the amount offered and to give possession on a definite date, and if such third person is prepared to buy on those terms and the other relevant terms mentioned in the option (namely those in clauses 4, 6, 7, 8 and 10), then the grantor may not sell to such third person without first giving the grantee 10 days' notice within which to buy the property for £15,000. On this interpretation the grantee was not paying the option money £105, for a right that was illusory; for the grantor could not sell for £15,000 or more without first giving the grantee the opportunity of buying for £15,000.

This interpretation gives the document a sensible meaning and there is much to be said for the view that it is more consistent with the language used as a whole than is the interpretation contended for by the plaintiff.

However, in the view I take of the matter, it is at this stage desirable to refrain from expressing an opinion, whether definite or provisional, on the correct interpretation of the document as it stands; for this is a case where evidence of the surrounding circumstances may assist such interpretation. I agree with what my Brother DAVIS has said in his reasons as to the kind of evidence which might conceivably be led. To add to the example of such evidence given by him, one may observe that it would also be relevant to ascertain whether the value of the property was rising between July, 1944, and May, 1947, and, if so, whether he refrained from giving notice of exercise of the option until May, 1947, for some reason other than an interpretation of the document corresponding to that relied on by the grantor. I add this example as such evidence may possibly afford evidence of a common interpretation of an ambiguous document by both parties to it; see Breed v van den Berg and Others (1932 AD 283, at p. 292), Shill v Milner (1937 AD 101, at p. 110).

The difficulty of construing the option as it stands, and the desirability that the court which construes it should know the surrounding circumstances, have led me to the conclusion that the amendment of the grounds of the exception, namely ground (c), applied for in this Court must be refused. If this amendment is not granted, the declaration must stand; for as I have stated, the grounds of the exception as originally drafted were bad. As, in my view, the amendment must be refused, the question of construction of the document as it stands, decided by my Brother SCHREINER and provisionally decided by my Brother DAVIS, is

Schreiner JA

not at present before the court. On this ground, and this ground alone, I concur in the dismissal of the cross-appeal with costs. Taking this view of the cross-appeal it is unnecessary for me to discuss the maxim verba fortius accipiuntur contra proferentem. On my view of the exception, as the question of interpretation raised in ground (c) is not before the Court, the occasion for deciding, whether resort to the application of that maxim is the only way out of the difficulty, has not yet arisen.

CENTLIVRES, J.A., and GREENBERG, J.A., concurred with the judgment of SCHREINER, J.A., on the appeal and with the judgment of DAVIS, A.J.A., on the cross-appeal.

Judgment

Schreiner, J.A.:

Both an appeal and a cross-appeal are involved in these proceedings. The plaintiff - I shall retain the terms plaintiff and defendant for the sake of clarity - sued the defendant for specific performance of a contract for the sale of fixed property in Port Elizabeth. The plaintiff claimed that a document executed by the defendant on the 10th July, 1944, was an option and that the plaintiff had on the 6th May, 1947, duly exercised the option and was entitled to transfer of the property against payment of the option price, which was tendered in the declaration. The defendant excepted to the declaration...