Chrysafis and Others v Katsapas

• Jurisdiction: South Africa
• Judge: Hoexter JA, Van Heerden JA, Nestadt JA, MT Steyn JA and Nicholas AJA
• Judgment Date: 30 August 1988
• Hearing Date: 03 May 1988
• Court: Appellate Division

Hoexter JA:

In the Transvaal Provincial Division the three appellants H sought certain orders against the respondent. The respondent resisted the application which was heard by Daniels J. The learned Judge dismissed the application with costs, including the costs consequent upon the employment of two counsel by the respondent. With leave of the Court a quo the appellants appeal to this Court.

The essential facts are the following. The third appellant ('Eldim') I is a private company having an issued share capital of 200 shares. For the sake of brevity I shall refer to the first two appellants individually as 'Elias' and 'Dimitrios' respectively. Elias and Dimitrios each held 100 shares in Eldim and each was an unsecured loan creditor of Eldim. A company called Schannabels (Pty) Ltd ('Schannabels') conducted the business of a restaurant and coffee bar J ('the business') in Sunnyside, Pretoria, under the

Hoexter JA

A name of 'Lady Annabel's'. In 1980 Schannabels sold the business to Eldim. On 27 May 1981, when Eldim had not yet paid the full purchase price of the business to Schannabels, the shares in Eldim were sold to the respondent. The terms of the latter sale are set forth in a written agreement ('the written contract') between Elias and Dimitrios as the sellers and one Vladislavich as the purchaser. Vladislavich entered into B the written contract as an agent for and on behalf of an undisclosed principal who was the respondent. Schannabels was also a party to the written contract. In terms of the written contract Elias and Dimitrios sold to the purchaser 200 shares in Eldim as well as their claims against Eldim in respect of their loan accounts. The purchase consideration was the sum of R315 000, being the agreed value of, inter C alia,

'... the goodwill attaching to the company's business, the furniture, fixtures and fittings, plant and equipment, the stock-in-trade, the cutlery, crockery and glasses...'.

Of the purchase price of R315 000 an initial cash payment of R102 500 ('the deposit') was to be paid to the sellers in the ratio of 60% to D Dimitrios and 40% to Elias. The balance of the purchase price was to be paid by the purchaser to the sellers in monthly instalments of R3 500. The written contract further provided that until the balance owing by Eldim to Schannabels had been paid in full such monthly instalments would be paid to Schannabels on account of the purchase price payable by the buyer to the sellers; and that when such balance had been paid in E full

'... then in such event the purchaser shall effect payment of the amount of R3 500 per month to the sellers jointly'.

In due course Eldim's debt to Schannabels was in this wise discharged in full; and thereafter, in terms of the written contract, the respondent F became obliged to pay monthly instalments of R3 500 to Elias and Dimitrios jointly. However, pursuant to a separate transaction between Dimitrios and the respondent the former was obliged to make certain payments to the latter. Accordingly Elias and Dimitrios agreed with the respondent ('the oral contract') that instead of paying R3 500 monthly to the sellers jointly the respondent would simply pay Elias R1 750 monthly; and that payment of the balance (R1 750) of the monthly G instalment would be effected by set-off of the aforesaid indebtedness of Dimitrios to the respondent.

Mention has already been made of the fact that under the written contract 40% of the deposit of R102 500 was payable by the purchaser to H Elias. In January 1983 Elias instituted an action in the Transvaal Provincial Division ('the trial action') against Vladislavich (as first defendant) and Dimitrios (as second defendant) in which he claimed payment of R41 000 from Vladislavich. The trial action had not been heard when the present application was decided by Daniels J.

Later in 1983 Elias and Dimitrios purported to cancel their sale of the shares to the respondent and thereafter they instituted motion I proceedings in the Transvaal Provincial Division ('the earlier application') for an order that the sale had been duly cancelled. The earlier application (in which Elias was likewise the first applicant) was dismissed with costs and in September 1984 an application for leave to appeal against the judgment in the earlier application was refused. J After the purported cancellation of the

Hoexter JA

A sale in 1983 Elias, on the advice of his then attorney, refused to accept further monthly payments of R1 750 from the respondent. Such refusal by Elias notwithstanding, the respondent made certain monthly payments of R1 750 in trust to his own attorney in respect of his monthly debt to Elias under the oral contract. In addition both Dimitrios and the respondent appear to have accepted that the B respondent's indebtedness to Dimitrios in respect of one-half of the monthly instalments of R3 500 continued to be discharged by the operation of set-off pursuant to the oral contract.

On 12 December 1983 the respondent's attorneys wrote a letter to the attorneys then acting for Elias in connection with the application for leave to appeal which was pending in the earlier application. The C concluding paragraph of this letter reads thus:

'We confirm that the monthly instalments of R1 750 in respect of first applicant's share are being paid into our trust account monthly. We believe that the previous arrangement with second applicant still continues insofar as his share of the monthly instalments is concerned.'

In due course Elias changed his attorneys and thereafter he was D represented by the firm Ross & Jacobsz. On behalf of Elias his new attorneys on 24 March 1986 wrote a letter to the respondent's attorneys. The heading to this letter was:

're: E Chrysafis / S Vladislavich & D Chrysafis.'

E In the opening paragraphs thereof Ross & Jacobsz discussed the future of the trial action which Elias had instituted in January 1983; and then a further matter was raised in the following terms:

'We would be pleased if you would kindly furnish us with full details regarding moneys paid by your client in trust for credit of our client.

According to our calculations your client is presently in arrears with F payments in a total amount of R57 750. Whereas up to now our client has refused to accept payment due to previous advice received, he now insists on payment and should this amount not be paid at our office within 14 days from date hereof, our client shall access (sic ) any right he may have in terms of the agreement.

We shall be pleased to receive your answer by return of post.'

G By letter dated 1 April 1986 the respondent's attorneys acknowledged receipt of the above letter and then proceeded to say:

'With the utmost respect we do not understand and cannot agree with the contents of the letter. May we suggest that you obtain full instructions from your client before taking the matter any further. The action between the parties relates to a claim by your client from our clients in an amount of R41 000.

H Our client has not paid money into our offices for the account of your client.'

On 7 May 1986 Ross & Jacobsz wrote the following letter ('the letter of demand') to the respondent:

're: E Chrysafis / S Vladislavich / Yourself / Schannabels (Pty) Ltd

We act on behalf of Mr E Chrysafis.

I In terms of the agreement between our client and Mr S Vladislavich monthly payments of R1 750 had been paid to our client.

...

The above-mentioned instalments were paid up to June 1983 and thereafter had not been paid. We now hereby give you notice to pay the arrear amount of R61 250, being the total monthly payments from 1 July 1983 to 1 May 1986, at our offices within 14 days from date of this J letter.

Hoexter JA

A Should you fail to pay the said amount, our client reserves his right to act according to clause 16 of the agreement.

A copy of this letter is being sent to your attorneys....'

In response to the letter of demand the respondent's attorneys on 20 May 1986 wrote a letter under the heading

B 're: E Chrysafis / S Vladislavich & H...