Benjamin v Gurewitz

• Jurisdiction: South Africa
• Judge: Van Blerk JA, Jansen JA, Rabie JA, Van Winsen AJA and Kotzé AJA
• Judgment Date: 17 October 1972
• Citation: 1973 (1) SA 418 (A)
• Hearing Date: 13 March 1972
• Court: Appellate Division

Van Blerk, J.A.:

After this appeal was heard and judgment was reserved the appellant, before judgment was delivered, made an application

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to this Court for the hearing of further evidence. This application was argued before us and judgment thereon was reserved. The application cannot succeed. The reasons for its refusal will follow on the reasons for judgment on the appeal.

A The appeal concerns the determination of the respondent's right to rectify a written contract of sale of the shares in a company. The seller was the appellant, a woman married out of community of property to Norman Benjamin. The latter will be referred to as Benjamin. The purchaser was Gurewitz, the defendant in the Court a quo. After the close of the pleadings he died and his estate, the present respondent, B was substituted as defendant. The deed of sale is dated 7th August, 1968. The subject of the sale was the issued share capital and the loan accounts in the company called Granite Tenant Holdings (Pty.) Ltd., which belonged at the time to one Sutherland and his wife. For the sake C of convenience the subject of the sale will be referred to as 'the shares'.

The preamble to the contract states that whereas the appellant is about to acquire the shares and whereas Gurewitz has agreed with appellant that upon her acquisition of the shares he will purchase from her one half of the total thereof on certain terms and conditions and whereas D the parties desire a written record of their agreement to be executed prior to the appellant acquiring the shares, therefore it is recorded between the parties as follows (only what is relevant for the purpose of this judgment will be quoted from the document):

'1.

Immediately after the said Benjamin (the appellant) has acquired the total shareholders' and directors' interest in Granite Tenant Holdings (Pty.) Ltd., that is to say, all the issued E share capital in the said company, as well as the directors' and shareholders' loan accounts in the said company, and on the basis that the company will own the block of flats known as Granton Heights, Windermere Road, Humewood, Port Elizabeth, and that the company will have as its only liabilities, its share capital and directors' and shareholders' loan accounts (one half of which is to be purchased by the said Gurewitz from the said Benjamin) and a mortgage bond in favour of the Port Elizabeth F Board of Executors for a capital of R172 000 (one hundred and seventy two thousand rand) and an appropriation account, if any, the said Gurewitz will purchase one-half of the total issued share capital in the said company and one-half of the directors'/shareholders' loan accounts in the company from the said Benjamin, for a purchase price of R51 500 (fifty one thousand five hundred rand) payable cash against transfer into the name of the said Gurewitz of the shares so bought by him and of a cession into the name of the said Gurewitz of the loan accounts so bought by him.

2.

The said Benjamin G hereby agrees that she will sell one-half of the said shares and loan accounts acquired by her to the said Gurewitz on the terms above set out.

3.

In the event of the company having any liabilities other than those set out in para. 1 supra and the said Benjamin nonetheless purchasing the said shares and said loan accounts, the said Gurewitz will be obliged to purchase one-half thereof at the H purchase price of R51 500, less however, any such liabilities other than those set out in para. 1 supra.

4.

The parties hereto record that, acting on the strength of this agreement and on the basis of the said Gurewitz's purchase from her as is contemplated in this agreement, she will now use her best endeavours to acquire the total issued share capital and directors'/shareholders' loan accounts in the said company.

5.

The parties hereto agree that they will both sign as sureties and co-principal debtors to the bondholders of the said company.'

The foundation of the respondent's case is that there was a common understanding between Benjamin and Gurewitz that the latter had to

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pay half of what the appellant paid to the Sutherlands but that Benjamin, acting on behalf of the appellant, fraudulently represented to Gurewitz that R51 500 was half of what the appellant was about to pay.

It was after the appellant had informed Gurewitz that she had bought, as A envisaged in the written agreement, the shares from Sutherland and his wife that it came to the notice of Gurewitz that she had paid less for the shares than was envisaged in the deed of sale between the parties.

As a result of this information acquired by Gurewitz he instructed his attorney to write on 30th November, 1968, to the appellant requesting her to accept that his liability to her in respect of the purchase price B would be half of what she had paid to the Sutherlands, and stating that, if she did not accept this to be the position, he would apply for a rectification of the agreement. In this letter Gurewitz's version is set out as follows: The written agreement of sale was concluded on the C basis that the parties would be equal shareholders in all respects and that they would each pay an equal amount into the Granite Tenant Holdings Co., either by way of purchase price of shares, or loan capital based upon the actual purchase price paid by the appellant to the Sutherlands for the shares; that the amount of R51 500 mentioned in the deed of sale was arrived at on the basis that the anticipated purchase D price of the shares payable to the Sutherlands would be the sum of R275 000, less R17 2000, representing the capital amount of the existing mortgage bond over the fixed property owned by the company; but that in fact the purchase price for the shares payable by the appellant to the Sutherlands in terms of the agreement actually concluded between them E was the sum of R240 000 less R172 000, the capital of the mortgage bond, that is $68 000; and that on this basis Gurewitz had to pay only R34 000 and not R51 500 as stated in the deed of sale. The appellant disputed these allegations.

The deed of sale is silent as to the amount of the purchase price which F the appellant was to pay to the Sutherlands, although on 5th August, 1968, that is two days before the deed was signed by the parties on 7th August, 1968, the Sutherlands as sellers had already signed a deed of sale (but not yet signed by the appellant) whereby they sold the shares to the appellant for R240 000 less R172 000, the capital amount of the mortgage bond, leaving a balance of R68 000 payable in cash before 1st December, 1968.

G As the appellant did not have sufficient funds of her own to pay the R68 000, and as both she and Gurewitz - despite the differences which had arisen between them - were anxious to secure the shares from the Sutherlands, a written agreement was entered into between the parties H whereby it was agreed that Gurewitz would lend to the appellant R17 500 and that the dispute between the parties would be left in abeyance pending legal proceedings, which the appellant would be 'entitled' to institute against Gurewitz for the balance of R17 500 which she alleged was owing by him.

The appellant did institute action in the Court a quo against Gurewitz for payment of the amount of R17 500. Gurewitz in answer to this claim relied on his contention set out above and claimed that he

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was entitled to rectification on the ground that by reason of a mutual mistake the deed of sale incorrectly and erroneously recorded the oral agreement, alternatively, on the ground that Benjamin, the appellant's agent, to the knowledge of the appellant, falsely represented to him A that the half-share of the purchase price payable by him would amount to R51 500 instead of R34 000.

The appellant's action failed. Hence this appeal.

As Gurewitz had died, the only witness available to the respondent who could testify as to what transpired between Benjamin and Gurewitz, was B the latter's son-in-law, Behr, in whose presence the negotiations between Benjamin and Gurewitz took place. Behr was called by the respondent. The appellant, however, did not call Benjamin. She called only the attorney (Prisman) who attended to the drafting of the contested deed of sale, and closed her case.

According to Behr's evidence Benjamin negotiated with Gurewitz at two C meetings, and he (Behr) actively participated in these discussions. The first was at Gurewitz's flat in Sea Point. About a month to six weeks later, on 7th August, 1968, discussions were continued in Behr's office in Dock Road, Cape Town. Schoeman, the estate agent acting on behalf of the Sutherlands, was present at this meeting.

D At the first meeting Benjamin asked Gurewitz to purchase in equal shares with the appellant the block of flats known as Granton...