Lewis v Oneanate (Pty) Ltd and Another

• Jurisdiction: South Africa
• Judge: Corbett CJ, E M Grosskopf JA, Nestadt JA, Eksteen JA and Nicholas AJA
• Judgment Date: 28 September 1992
• Citation: 1992 (4) SA 811 (A)
• Hearing Date: 31 August 1992
• Court: Appellate Division

Nicholas AJA:

Dewdale Farm lies in the Franschhoek Valley. It comprises C two portions: portion 2 of farm No 1145, which is some 38 ha in extent and is owned by Oneanate (Pty) Ltd ('Oneanate', which is pronounced as if it were written 1 & 8); and portion 1 of farm No 1145, which is owned by Bergriviershoek (Pty) Ltd ('Bergriviershoek') and also has an area of some 38 ha. Oneanate, which holds all the shares in Bergriviershoek, is controlled by Mr G Lubner. It conducts a fresh fish farming operation on both portions of Dewdale Farm.

D On 28 January 1990, Mr Paul A Lewis wrote to Lubner a manuscript letter which was 'confirmed' by Lubner on behalf of Oneanate and Bergrivierhoek. The complete document reads as follows:

'Paul A Lewis

Mahé

E Box 652

Seychelles

28 January 1990

G Lubner

c/o Dewdale Farm F Franschhoek

Dear Mr Lubner

Re: Oneanate (Pty) Ltd

Bergriviershoek (Pty) Ltd

I wish to confirm that you have accepted my offer to purchase the G properties owned by the above two companies at Franschhoek and which comprise the farm and farming operations currently conducted by you under the name and style of Dewdale Farm.

The salient terms of our agreement are as follows:

1.

Purchase price for the property, farms and commercial operations, tools, equipment and appurtenances etc is R10 500 000 (ten million five hundred thousand rand). H

2.

This will be paid as to R7 000 000 in cash and the balance will be financed by way of a mortgage to be granted by Oneanate (Pty) Ltd for R3 500 000 repayable over a period of three to five years. Interest on the loan will be at 15% per year payable quarterly in advance. Principal will be repayable in tranches of R375 000 per quarter commencing at the beginning of the fourth year with a balloon payment I at the time the final tranche becomes payable.

3.

The transaction will be structured in the most efficient manner possible (and as presently advised) the farm property owned by Oneanate (Pty) Ltd will be transferred to Bergriviershoek (Pty) Ltd. This will include the commercial and farming operations. I will thereafter acquire the shares and loan claims in the last mentioned J company thereby giving me total ownership and control of the venture.

Nicholas AJA

4.

A I will be responsible for all legal costs involved in giving effect to the transaction including costs of transfer from Oneanate to Bergriviershoek but you will be responsible for the commission of R250 000 due to Anton Buirski Associates Inc who have negotiated this transaction.

5.

Inasmuch as this transaction will be subject to the approval of the exchange control division of the South African Reserve Bank, the deal B will accordingly be subject to such approval being given both to me and to you and our respective interests.

6.

Finally I wish to record that although we have reached agreement on all the main issues final documentation will still have to be drawn and it is agreed that such documentation may incorporate terms which have not been specifically discussed. Notwithstanding as far as I am concerned we have 'a deal' and I shall be pleased if you would append C your signature to this letter confirming this. I also wish to record that although I have entered into this agreement in my personal capacity I reserve the right to make the acquisition in whatever corporate or trust structure as I may be advised, in which event for the sake of good order, my signature to this letter may be regarded as binding on such corporate entity. I also confirm that you are dealing with me personally. D

Yours sincerely

(sgd) P A Lewis

Paul Anthony Lewis

Confirmed

(sgd)

G Lubner E G Lubner on behalf of

Oneanate (Pty) Ltd

Bergriviershoek (Pty) Ltd

As witness

(sgd) A Buirski

A Buirski.'

F On 8 February 1990 Lewis advised Lubner by telefax that 'there is not and never was a final deal' between the parties.

Oneanate and Bergriviershoek thereupon issued a summons out of the Cape Provincial Division on 19 March 1990, claiming an order on Lewis to perform the obligations undertaken by him in his letter, a copy of which G was annexed to the particulars of claim as annexure 'D'. Lewis excepted to the particulars of claim 'on the ground that they lack the averments necessary to sustain the cause of action pleaded'. The main grounds of exception were the following:

'1.

The alleged agreement upon which the plaintiffs rely (annexure "D" to the particulars of claim), ex facie its own terms, does not H constitute a binding agreement because:

1.1

The mortgage contemplated in clause 2 thereof constitutes the giving of financial assistance in contravention of s 38 of the Companies Act 61 of 1973. This renders the agreement unenforceable and void;

1.2

I [The alleged agreement is void for vagueness because]

(a)

of the inadequate and vague description of "the property, farms, commercial operations, tools, equipment and appurtenances, etc" being sold (clause 1);

(b)

of the uncertainty and doubt as to the structure of J the transaction as set out in clause 3;

Nicholas AJA

(c)

A it is clear from the alleged agreement that the parties had not reached agreement on all the material terms of the agreement and/or by reason of the express intention of the parties to draw "final documentation" which may "incorporate terms which have not been specifically discussed" (clause 6).'

B The exception was dismissed with costs, including the costs of two counsel.

The matter now comes before this Court in pursuance of leave to appeal granted by the Court a quo.

Annexure 'D' purports in the first unnumbered paragraph to confirm an C acceptance by 'you' (sc Mr Lubner) of an offer to purchase the properties owned by Oneanate and Bergriviershoek, comprising the farm and farming operations currently conducted by 'you' under the name of Dewdale Farm. However, counsel on both sides were agreed that on a proper construction of annexure 'D' it is an 'agreement' for the purchase by Lewis for D R10500000 of Oneanate's shares and loan account in Bergriviershoek after certain preliminary steps had been taken, namely the transfer by Oneanate to Bergriviershoek of portion 2 of farm 1145 and of 'the commercial or farming operations'. In this way, Lewis...