Benson v SA Mutual Life Assurance Society

• Jurisdiction: South Africa
• Judge: Corbett JA, Kotzé JA, Hefer JA, Galgut AJA and Cillié AJA
• Judgment Date: 29 November 1985
• Citation: 1986 (1) SA 776 (A)
• Hearing Date: 07 November 1985
• Court: Appellate Division

Hefer JA:

In the Court below the present respondent claimed from the appellant delivery of 63 600 ordinary shares in a company known as McCarthy Group Ltd (the "company"). It was alleged in the declaration that the respondent on 17 August 1982 had purchased from the appellant 171 500 shares in the B company at a price of 210 cents per share, that it was an implied term of the agreement that delivery of the shares would take place within a reasonable time, and that the appellant had delivered 107 900 of the shares but had failed to deliver the remaining 63 600. Respondent also claimed damages from appellant in an amount of R9 540. This claim was based on the C following allegations which appear in para 9 of the declaration:

"As a result of defendant's failure to place plaintiff in possession of the said scrip, plaintiff was unable to register the said 63 600 shares in plaintiff's name by 22 October 1982, that being the last date to register the shares in plaintiff's name so as to become entitled to a dividend of 15 cents per share. Plaintiff has accordingly suffered a loss of dividend in the sum of R9 540, being 15 cents per share on 63 600 shares, as a result of defendant's said failure to effect timeous delivery to plaintiff, and plaintiff has accordingly suffered damages in the sum of R9 540, which sum defendant is accordingly obliged to pay to plaintiff."

E Appellant in his plea admitted his failure to deliver the 63 600 shares. His main defence is irrelevant for present purposes; it was rejected by the trial Court and no reliance was placed on it in this Court. An alternative defence was pleaded in the following terms:

"11.

Alternatively, if defendant has breached his obligations to deliver the said 63 600 shares, defendant pleads that:

11.1

F Plaintiff should not be awarded an order for specific performance as claimed in prayer (a), as:

11.1.1

Plaintiff knew, by the latest on 4 September 1982, that the aforesaid 63 600 shares would not be forthcoming from defendant.

11.1.2

G Ordinary shares in McCarthy Group Ltd were at all material times hereto daily dealt in on the stock market.

11.1.3

Plaintiff could have bought in 63 600 ordinary shares in McCarthy Group Ltd on the stock market without difficulty (and H defendant furthermore pleads that this could have been done at less than 210 cents a share).

11.1.4

Plaintiff should have bought in the said shares at the end of August beginning September 1982, and in any event on or immediately after 4 September 1982.

11.1.5

It would furthermore and in any event be I inequitable and unconscionable to order specific performance against defendant in view of the circumstances set out in 11.1.1 to 11.1.4 above.

11.2

Plaintiff was at all material times under a duty to buy in 63 600 ordinary shares in McCarthy Group Ltd to mitigate any loss flowing from defendant's failure to J deliver same, and defendant here refers to paras 11.1.1 to 11.1.5 above.

Hefer JA

11.3

Defendant pleads furthermore, and with reference to A the claim for loss of dividends set out in para 9 of plaintiff's declaration, that had plaintiff bought in the said shares as it was oblig to do, it would not have suffered any loss of dividends."

The trial Court rejected the alternative defence as well and granted judgment against appellant for delivery of the shares, B for payment of an amount of R7 447,96 by way of damages and for costs. Against that judgment the appellant, with leave of the trial Court, has now appealed.

In view of the nature of the argument which was presented to this Court on appellant's behalf, it is unnecessary to discuss the evidence at this stage beyond saying that the respondent C called two witnesses at the trial, one of whom was its equity portfolio manager at the relevant time, Mr W J Mitchell. Appellant led no evidence and on Mitchell's evidence the trial Court was satisfied that the agreement for the sale of the shares, on which respondent relied, had been established. On that basis the Court found that the appellant was obliged to D deliver the shares to respondent within a reasonable time after 17 August 1982. Due to his admitted failure to deliver them he was also liable for the damages which respondent had suffered as a result of the loss of the dividend referred to in para 9 of the declaration. The amount of the loss was reduced during the trial to the amount for which judgment was granted.

In this Court the argument for the appellant generally followed E the lines of the alternative plea to the effect (1) that specific performance by the appellant of his obligations in terms of the agreement of sale should not have been decreed, and (2) that respondent should in any event have mitigated (and possibly averted) the loss of the dividend by buying shares elsewhere once it became apparent that delivery of all the F shares purchased from the appellant would not be forthcoming. I shall first deal with the argument relating to specific performance. In doing so, I shall not deal with all the grounds which were advanced in the written heads of argument for the submission that specific performance should not have been ordered. Some of them derive from what I shall later refer to G as the English rules relating to specific performance. They may conveniently be dealt with collectively. Others were abandoned at the hearing of the appeal and with them I shall not deal at all.

At the outset there are three preliminary observations that I wish to make. The first relates to the general approach in an H appeal in which the Court of appeal is asked to interfere with the grant of a decree of specific...