Van der Merwe NO and Others v Hydraberg Hydraulics CC and Others; Van der Merwe NO and Others v Bosman and Others

• Jurisdiction: South Africa
• Judge: Binns-Ward J
• Judgment Date: 17 June 2010
• Citation: 2010 (5) SA 555 (WCC)
• Docket Number: 12742/09 and 22837/09
• Hearing Date: 12 April 2010
• Counsel: RS van Riet SC for the applicants. AP Möller for the respodents.
• Court: Western Cape High Court, Cape Town

Binns-Ward J:

B [1] Two separately instituted applications came before me for hearing together. The applicants in both applications were the trustees of the Monument Trust.

[2] In the first application the applicants seek the following orders by way of substantive relief, arising out of the execution of a deed of C contract, the object of which was the purchase and sale of a business and the fixed property from which the business operated:

'1.

That the Sales (sic) Agreement (Option to Purchase) dated 4 July 2008 annexed to First Applicant's founding affidavit herein and marked ''MT1'' be rectified by substituting the name ''Clarke D Bosman Trust'' on page 1 thereof with the name ''Hydraberg Property Trust''.

2.

That the Respondents be ordered to take all necessary steps so as to effect the transfer of [the fixed property] to the Applicant (sic) within 7 days of the Court Order.'

E [3] In the second application the applicants seek to enforce a covenant in restraint of trade, incorporated in clause 8 of a subsequently executed addendum to the aforementioned deed of contract, in terms of which the Trust, the close corporation, one Edward William John Clarke (Clarke) and one Quinton Petrus Johannes Bosman (Bosman) bound themselves in favour of the purchaser and the business not to compete with the F business for a period of two years after the date of the final payment of the purchase price. [1] For various reasons, which I shall discuss presently, the respondents contend that the agreement recorded in the deed of contract is void. It will therefore become necessary to engage with the merits of the second application only if the first application is granted. G I shall therefore treat with that application alone to begin with. There was, however, a cross-referencing between the two applications in the affidavits and counsel therefore agreed that, notwithstanding the absence of any formal consolidation of the two matters, the court could, for the purposes of determining either of the applications, have regard to the H evidence in the affidavits in the other.

[4] The contract document evinced an option agreement signed by the option grantors and the option grantee on 4 July 2008; [2] and, by his further signature thereto, on 11 July 2008, the purported exercise of the option by the option grantee. The resultant deed identified a seller and I a purchaser; it recorded a price and it described the res vendita with

Binns-Ward J

sufficient detail to enable its identity to be objectively ascertained. A Insofar as it recorded, in part, an agreement in respect of the sale of immovable property, the deed of contract therefore complied, on its face, with the formalities requirements of the Alienation of Land Act 68 of 1981. It was therefore amenable, if needs be, to rectification. [3]

[5] The fixed property that was the subject of the deed of contract was, B as at the date of the signature of the deed, in July 2008, registered in the names of Clarke and his wife. Mr and Mrs Clarke owned the property jointly in undivided shares. In terms of a deed of alienation executed by the parties thereto on 30 June 2005, Mr and Mrs Clarke had bound themselves, as sellers, to sell the property at a price of R400 000 to the C Hydraberg Property Trust (the Trust). The property had, however, not yet been transferred to the Trust when the contract in issue in the current case was concluded.

[6] It is common ground that when the contract currently in issue was D concluded the trustees of the Trust were Clarke and Bosman. It is a matter of dispute whether one Johan Gerhard Slabbert was also a trustee at the time. The beneficiaries of the Trust are Clarke and Bosman, and their respective spouses and descendants, as well as any trust created 'mainly' for the benefit of any of the aforementioned. It is apparent from the provisions of the trust deed that the positions of Clarke and Bosman E as trustees are entrenched for as long as they might wish to hold office as such, whereas the third trustee (described in the trust instrument as 'an independent trustee') may be dismissed if the majority of the other trustees [4] so decide. Should either Clarke or Bosman cease to be a trustee, they and those of their respective family members who are beneficiaries are empowered to replace them. (Quite how - ie by what F procedure - each of the respective groups of family beneficiaries is to effect the nomination of the replacement is not evident from the trust deed.)

[7] The deed of contract currently in issue purported on its face to have G been concluded between Hydraberg Hydraulics CC and 'the Clarke Bosman Trust' of the one part, as seller, and Johannes Marthinus Van der Merwe or his nominee/s of the other part, as purchaser. It is evident from the facts that are common cause that Hydraberg Hydraulics CC was the intending seller of the business, and the Trust the intending seller of the fixed property, but the Trust and the close corporation acted H jointly in the sale of both business and land. The deed of contract recorded that Clarke and Bosman purported to represent both the close

Binns-Ward J

A corporation and the seller-trust in concluding the contract, and each of them warranted that he was duly authorised by the corporation and such trust to do so. It is common cause that the transaction was intended to be an indivisible one; this, notwithstanding the express allocation of part of the purchase price as being B in respect of the business, and the balance in respect of the fixed property. Thus, it is the position of all the parties that the sale of the business and the fixed property go together, and that a failure of one leg results in a failure of the whole contract.

[8] During argument I raised a query as to whether the applicant for enforcement of the transfer of the fixed property should not have been C Van der Merwe, rather than his nominee, the trustees of the Monument Trust (of whom he was one). Following upon that, an application was moved to introduce Van der Merwe in his personal capacity as a fourth applicant. The respondents' counsel advised the court at that stage that the respondents accepted that the trustees of the Monument Trust had standing to seek the relief being sought and did not wish to take issue on D their locus standi. It thus became unnecessary to consider this aspect further, and the application to introduce Van der Merwe as fourth applicant was not proceeded with.

[9] As far as is known, no trust by the name of the Clarke Bosman Trust existed. In context it is obvious that Clarke and Bosman were intending E to represent the Hydraberg Property Trust. After all, it was only in that capacity that they must have expected to take transfer of the fixed property from the registered owners and thus be placed in a position to fulfil the obligation under the contract to give transfer of the property to the option grantee/purchaser. There is no other sensible explanation for F their action in playing the role they did in the execution of the deed of contract. Indeed, the central basis of opposition to the first application is the voidness of the contract because the Hydraberg Property Trust was not effectively represented by its trustees, in compliance with the provisions of the trust instrument. In regard to the identified defect in the description of one of the sellers in the deed of contract, Clarke, the G deponent to the principal answering affidavit, averred that the error had occurred because of a mistake on the part of the drafting attorney, one Theron. He went on to argue that, even if the agreement were to be rectified, the agreement was nevertheless void because there was no written authority from the Trust, as required in terms of s 2 of the H Alienation of Land Act, empowering Bosman and him to execute the deed as only two of the three trustees. He pointed out in his affidavit that there was in any event, at that stage, no claim by the applicants for rectification.

[10] In the applicants' replying affidavit it was averred in response that I rectification was not required, but that 'a notice of intention to amend the notice of motion [would] nevertheless, insofar and if this [might] be necessary, be filed in due course to provide for the rectification of the name of the seller trust'. A notice of intention to amend was not filed. Instead, application was made from the bar at the commencement of the hearing to amend the notice of motion by introducing a prayer for the J appropriate rectification of the deed.

Binns-Ward J

[11] The respondents' counsel was somewhat equivocal in his attitude to A the application to amend the notice of motion. He certainly did not consent to it. In my view there was no cogent basis to oppose the amendment sought. It was foreshadowed in the papers and, as mentioned, the mistake regarding the description of the Trust is essentially conceded in the respondents' answering papers. The application for the amendment of the notice of motion will accordingly be granted. B

[12] Whether any point will be served by granting the rectification depends, of course, on the determination of the legal validity, alternatively, the enforceability, of the deed of contract. And it is to those questions that I now turn. C

[13] The deed establishing the Trust provides that there -

'shall at all times be a minimum of three trustees, provided that if there are less than three trustees as a result of the termination of the office of a co-trustee, the remaining trustee(s) shall be authorised to exercise all the powers of the trustees for the maintenance and administration of the trust fund until such time as another trustee has been appointed'. D

It is not in dispute that Mr Slabbert, who had been appointed as the third trustee upon the establishment of the...