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1 TN THE HIGH COURT OF SOUTH AFRICA /MF (GAUTENG DIVISION, PRETORIA) (I) REPORTA BLE: Yft / NO (2) OF IN TEREST T~OTHER JUDG ES: YF$/ NO [3) REVISED. C/...?.\.5-:....\\~..... YJ... Case No: 21499/2014 In the matter between: THUM OS PROPERTIES 1 (PTY) LTD (Formerly known as Capicol 1 (Pty) Ltd) Plaintiff and VILLA RETAIL PARK INVESTMENTS (PTY) LTD (Formerly known as Brookfield Investments 246 (PTY) LTD THE VILLA RETAIL PARK HOLDINGS (PTY) LTD ( THE VILLA RETAIL PARK HOLDINGS 2 (PTY)LTD THUMOS PROPERTIES 11 (PTY) LTD (Formerly known as Capicol 11 (Pty) Ltd THE REGISTRAR OF DEEDS First Defendant Second Defendant Third Defendant Fourth Defendant Fifth Defendant

2 2 JUDGMENT PRINSLOO,J [l] In February 2016 the First, Second and Third Defendants filed an exception against the Plaintiffs Consolidated Particulars of Claim on the basis that the Particulars of Claim lack averments necessary to sustain a cause of action for the relief claimed. [2] In October 2016, the Plaintiff filed a Notice of Amendment of the Particulars of Claim. [3] On 1 November 2016 the First, Second and Third Defendants filed an objection to the Notice of Amendment in terms of Rule 28(3). [4] On 10 November 2016 the Plaintiff filed a substantive application for leave to amend, which attracted a Notice of Intention to Oppose filed on 15 November 2016 with the corresponding Opposing Affidavit. the Plaintiff filed a Replying Affidavit dated 27 January 2017.

3 3 (5] What comes before me for decision is the objection to the proposed amendment on the basis that the amendments sought, if effected, would render the Plaintiff's Consolidated Particulars of Claim excipiable on the grounds set out in the Exception and on the further grounds set out in the Notice of Objection to the amendment. (6] Mr. Brett S.C., for the Defendants, summarised the mam thrust of the Defendants' objection as follows in his Heads of Argument: "In essence, the Defendants ' objection is directed at the Plaintiff's attempt to ascribe certain meanings to certain contractual terms relied upon by the Plaintiff, namely 'closing date', 'business ' and 'property', under circumstances where the meanings sought to be ascribed are not sustainable, having regard to the contracts relied upon. " [7] Mr. Maritz S.C. appeared for the Plaintiff. INTRODUCTION: [8] As pleaded in the Plaintiff's Consolidated Particulars of Claim the parties concluded three agreements, namely a Sale of Business Agreement concluded on 15 January 2009 ("the Sale of Business Agreement"); a Settlement Agreement concluded on 2 February 2011 ("the Settlement Agreement") and

4 4 a Sale of Business Amendment Agreement concluded on 14 July 2011 ("the SOBA"). [9] The Sale of Business Agreement was entered into between the Plaintiff and the First Defendant and related to the development and sale of a shopping centre, to be known as the Villa Mall, in Wingate Park Extension 1, Pretoria. [ 1 O] In terms of the Settlement Agreement, this time entered into between the Plaintiff and the First, Second and Third Defendants, the Sale of Business Agreement was cancelled. The Settlement Agreement did not receive a great deal of attention before me, perhaps because it was followed by the SOBA, also entered into between the Plaintiff and the First, Second and Third Defendants, not too long after the Settlement Agreement was concluded. [11] All three the agreements are lengthy, detailed and complex affairs. [ 12] The transactional history which unfolded between the parties as they entered into these three agreements can perhaps be sketched, in very broad terms, with this brief overview: As already mentioned, the three agreements were entered into over a period of more than two years;

5 5 The initial Sale of Business Agreement was entered into between a company Capicol l (Pty) Ltd, the name of which was changed to Thumos Properties 1 (Pty) Ltd (the Plaintiff) and Brookfield Investments 246 (Pty) Ltd, now known as Villa Retail Park Investments (Pty) Ltd (the First Defendant); The Second and Third Defendants became parties to the Settlement Agreement, entered into more than two years later; Some five months later, the SOBA was entered into between the same four parties, now the Plaintiff and the first three Defendants; The Fourth and the Fifth Defendants were joined because of their possible interest in the outcome of the case and they did not take part in the proceedings before me, neither is any relief sought against them; Initially, in terms of the Sale of Business Agreement, the Plaintiff would construct, upon a piece of land comprising forty two erven, later to be consolidated into two large erven, a retail shopping mall, procure tenants and sell and transfer the final product to the First Defendant against payment of a purchase price running into more than R2 billion (the amount still had to be calculated in terms of a certain formula);

6 6 In order to fund the construction costs of the Villa Mall, the First Defendant would advance certain interim payments to the Plaintiff,. which would be treated as "loans" and would ultimately be deducted from the purchase price; The Sale of Business Agreement also gave the Plaintiff an option, exercisable at a future date, to repurchase the Villa Mall from the First Defendant; It is this repurchase option or "Buy Back Option" which the Plaintiff purported to exercise in November 2012 in terms of the provisions of clause of the original Sale of Business Agreement, which lies at the heart of the present dispute between the parties and is the subject which inspired the Defendants to note the exception, and later to oppose the application to amend the Consolidated Particulars of Claim; The Settlement Agreement of 2 February 2011 demonstrates that, as at the date of conclusion thereof, the construction of the Villa Mall had been commenced, but not completed (and it was still untenanted) and that an amount of money had been paid by the First Defendant to the Plaintiff in the form of the "loans" mentioned to fund the construction costs of the Villa Mall;

7 7 In terms of the 14 July 2011 SOBA, concluded after the Settlement Agreement: }.> the Plaintiff would retain the money previously paid by the First Defendant to it to fund the construction of the Villa Mall; }.> As quid pro quo for the retention of those monies, the Plaintiff would immediately transfer to the First Defendant a 30% undivided portion of the Villa Mall and the property on which it was situated. This 30% share was duly transferred to the First Defendant on 7 November 2011 so that, at present, the Plaintiff and the First Defendant own the Villa Mall and the property upon which it is situated in undivided shares in a ratio of 70:30; }.> The First Defendant would complete the construction of the Villa Mall at its own cost and, upon demonstrating that it had the financial means to do so, would take transfer from the Plaintiff of a further 50% undivided share in the Villa Mall property and thereafter complete construction of the project and thereafter tenant the mall itself; }.> Therefore, upon completion of the construction and tenanting of the mall, the Plaintiff and the First Defendant would own

8 8 undivided shares in the Villa Mall in the ratio 20:80. The First Defendant also acquired an option to buy the Plaintiff's 20% undivided share; As mentioned, the Plaintiff, in November 2012, purported to exercise the Buy Back Option provided for in clause 20 of the original Sale of Business Agreement and the main declaratory relief sought in the Particulars of Claim (not the subject of the proposed amendment) is crafted as follows: "An order declaring that the Plaintiff was on 7 November 2012 vested with an option and validly exercised the option in terms of clause of the Sale of Business Agreement, Annexure "POCJ " hereto, to purchase from First Defendant the 30% undivided share held by the First Defendant in the forty two properties as listed in Annexure "A" to the Sale of Business Amendment Agreement, Annexure "POC3 ". " Against this background, some of the complicating factors which arose for consideration in the proceedings before me, include the following:

9 9 ~ The SOBA, particularly in clauses 3 and 4 thereof, made provision for the revival of the original Sale of Business Agreement and the survival of certain provisions thereof subject to specified conditions; and ~ The merx, originally intended by the parties to be the subject of the sale in terms of the Sale of Business Agreement, is different from the merx contemplated as the subject of the sale in terms of the SOBA. In terms of the Sale of Business Agreement the "business" which was to be sold comprised the rental enterprise conducted by the seller as a going concern and consisting of the property, the leases and all fixtures and fittings on the property of a permanent nature. In terms of the SOBA, the merx was described as an 80% undivided share in and to the property and all the right, title and interest in the 80% undivided share of the seller (then still Capicol 1) in and to the property and/or the business enterprise having been conducted by or at the instance of Capicol 1 pertaining to or in respect of the property, prior to the effective date. [13] So much for the introduction and brief overview. THE ORDER OF 19 OCTOBER 2017:

10 10 (14] After hearing lengthy argument on the abovementioned date, and after some debate with counsel, the following order was made: "1. Judgment is reserved, 2. Counsel are requested to file supplementary Heads of Argttment limited to the following topics: 2.1 A consideration of the third ground of exception taking into account the allegations in paragraphs 11 and 12 of the Particulars of Claim and the provisions of clause 3.4 of the SOBA; 2.2 The necessity or lack thereof for the Plaintiff to demonstrate and/or raise a triable issue or issues and also to disclose what evidence would be offered with reference to the relevant factual matrix relating to the agreements. Particular reference may be had to remarks on the subject by the author Erasmus and by the Court in Ciba-Geigy (Pty) Ltd v. Lushof Farms (Pty) Ltd & 'n Ander, 2002(2) SA 447,

11 The subject of the change of the merx taking into account the provisions of the original Sale of Business Agreement and the provisions of the SOBA in this regard." Counsel were invited to file the Supplementary Heads by November 2017 and the costs were reserved. [15] Lengthy Supplementary Heads of Argument were filed. [16] I propose limiting the rest of my observations, by and large, to the subjects identified in this particular order. [17] I regret having been unable to attend to this judgment at an earlier stage. THE THIRD GROUND OF EXCEPTION TAKING INTO ACCOUNT THE ALLEGATIONS IN PARAGRAPHS 11 AND 12 OF THE PARTICULARS OF CLAIM AND THE PROVISIONS OF CLAUSE 3.4 OF THE SOBA: [18] In very broad and perhaps oversimplified terms, it can be said that the main thrust of what is encapsulated in the third ground of exception is the following: it is all about the Buy Back Option available to the Plaintiff in terms of clause 20 of the original Sale of Business Agreement. Because the SOBA, in clauses 3.4 and 3.5, provide for an obligation on the Defendants to

12 12 pay the Plaintiff an amount of R50 million in order to procure the cancellation of the option which, as I have said, forms the basis of the Plaintiffs action for declaratory relief to confirm the entitlement to exercise the option. It is common cause that the Defendants failed to make the R50 million payment. The Plaintiff pleads that payment of the "cancellation fee" represents a resolutive condition for the cancellation of the option. The Defendants plead that the option was cancelled with immediate effect with the conclusion of the SOBA so that the Particulars of Claim (for declaratory relief that the option may be exercised) lack averments necessary to sustain a cause of action for that relief. It is obvious that everything turns on the question of how to interpret the various clauses of the various contracts. [ 19] I tum to a more detailed consideration of this dispute by taking into account the comprehensive submissions made by counsel in their Supplementary Heads of Argument. [20] Paragraphs 11 and 12 of the Consolidated Particulars of Claim read as follows: " II. On a proper interpretation of the Sale of Business Amendment Agreement (note: obviously the SOBA), in particular the provisions of clauses 3.4 and 3. 5 thereof, the cancellation of the Capicol 1 Buy-

13 13 Back Agreement (as contained in clause 20 of the Sale of Business Agreement) was subject to the fulfilment of the suspensive conditions contained in clause 13 of the Sale of Business Amendment Agreement, and subject to the resolutive condition (as contained in clause 3. 4 read with clause 3.5 thereof) that if the First Defendant should fail to pay the amount of R50 million to the Plaintiff, the Capicol 1 Buy-Back Agreement would not be cancelled, but would remain in full force and effect The suspensive conditions contained in clause 13 of the Sale of Business Amendment Agreement were fulfilled The First Defendant failed to make payment of either of the instalments of R25 million, or of the total amount of R5 0 million, to the Plaintiff in terms of clause 3.5 of the Business Amendment Agreement In the premises the provisions of clause 3.4 of the Sale of Business Amendment Agreement ceased to be of any force or effect on 28 February 2012."

14 14 [21] It is common cause that the R50 million was not paid. The date, 28 February 2012, is the date when the second of the two R25 million instalments had to be paid in terms of the provisions of clause 3.5 of the SOBA. [22] The third ground of exception reads as follows: "15. The Plaintiff, in seeking to exercise the option, relies on the provisions of clause 3 of the SOBA, which not only purports to revive the Sale of Business Agreement, but also contains further provisions in relation to option specifically. 16. Clause 3.4 of the SOBA provides for the cancellation of the option as contained in the Sale of Business Agreement. Clause 3.5 of the SOBA provides for the payment, by the First Defendant, of a cancellation fee of R50 million in order to procure the cancellation of the option. 17. In paragraphs 11 and 12 of the Consolidated Particulars of Claim, the Plaintiff pleads that payment of the cancellation fee provided for in clause 3.5 of the SOBA is resolutive to the cancellation of the option and that because the fee was not paid, the option remains extant.

15 On a proper construction of clause 3 of the SOBA, when read both in isolation and in its context within the agreements as a whole, the effective clauses 3. 4 and 3. 5 is to cancel the option with immediate effect and, in its stead, to provide the Plaintiff with a claim for payment of R50 million. 19. Given that the option was cancelled with effect from the conclusion of the SOBA, the Plaintiff cannot enjoy any cause of action to seek the exercise of any alleged rights thereunder. 20. In the premises, the Particulars of Claim lack averments necessary to sustain a cause of action for the relief claimed. " (23] In the circumstances, it will be necessary for the Trial Court, if the matter goes to trial, to interpret the provisions of clauses 3.4 and 3.5 of the SOBA and to decide whether, on a proper interpretation thereof: the cancellation of the Buy-Back Agreement is subject to the resolutive condition that if the First Defendant should fail to pay the amount of R50 million to the Plaintiff, the Buy-Back Agreement would not be cancelled but would remain in full force and effect, as contended for by the Plaintiff; or

16 16 the effect of clauses 3.4 and 3.5 is to cancel the Buy-Back Agreement / option with immediate and final and irreversible effect, irrespective of whether or not the First Defendant paid the amount provided for in clause 3.5, as the Defendants contend. [24] Counsel for the Plaintiff pointed out, correctly in my view, that it is significant that the Defendants, in crafting the third ground of the exception, themselves pleaded that a R50 million "cancellation fee" to use their terminology, was payable "in order to procure the cancellation of the option". Indeed, the point is made with even greater force in clause 3.5 of the SOBA itself, which stipulates: "Villa Retail shall pay to Capicol 1 an amount of R5 0, 000, (fifty million Rand) in exchange for the cancellation by Capicol 1 of the Capicol 1 Buy-Back Agreement, payable as to 50% thereof (R25,000,000.00) on 28 of February 2012 and the balance (R25,000,000.00) by no later than 31 December "[Emphasis added] [25] As a general proposition, it seems to me that it is eminently arguable that the proper interpretation may be that the "cancellation" cannot take place without the R50 million payment, and the one is dependent on the other. It is not

17 17 necessary for me, for present purposes, to make a final pronouncement on the issue. [26] [ tum to the provisions of clauses 3.4 and 3.5 of the SOBA. [27] The relevant portions of clause 3.4 read as follows: " The parties... hereby agree and confirm that, subject to the fulfilment of all the suspensive conditions in clause 13 below with effect from the Sale of Business Amendment Agreement Effective Date (which, as I have said was done), but subject to tlte provisions of 3.5, the 'Capicol 1 Buy-Back Agreement' as defined in clause 20 of the original Sale of Business Agreement is cancelled herewith and will be of no further force and/or effect and the parties will have no claims, of whatsoever nature, and howsoever arising, against each other flowing from such cancellation or the prior existence of Capicol 1 Buy-Back Agreement. " (Emphasis added) [28] For the sake of convenience I repeat the first portion of3.5 (already quoted): "Villa Retail shall pay to Capicol 1 an amount of R50,000, (fifty million Rand) in exchange for tlte cancellation by Capicol l of

18 18 the Capicol 1 Buy-Back Agreement, payable... " (Emphasis added) [29] Again, it seems to me that it must be arguable that on a proper interpretation of these clauses, the cancellation of the Buy-Back option is subject to the R50 million payment so that the cancellation cannot take effect without the payment. As it is put in 3.5, the payment is made "in exchange for the cancellation ". [30] In my view there is much to be said for the submission by counsel for the Plaintiff to the effect that a Trial Court may come to the conclusion that to give clauses 3.4 and 3.5 the interpretation advanced by the Defendants, would result in the words "but subject to the provisions of 3. 5" having no operation, and being superfluous and tautologous. In this regard counsel referred me to the decision in Wei/worths Bazaars Ltd v. Chandlers Ltd, 1947(2) SA 37 {A) at 43 where the Learned Judge of Appeal quoted with approval a passage from an English judgment as follows: "It is... a good general rule in Jurisprudence that one who reads a legal document, whether public or private, should not be prompt to ascribe - should not, without necessity or some sound reason, impute - to its language totalogy or superfluity and should be rather at the

19 outset inclined to suppose every word intended to have some effect or be of some use. " 19 [31] Significantly, and with direct reference to the dispute between the parties, namely whether or not a resolutive condition came into play, counsel for the Plaintiff referred me to Pangbourne Properties Ltd v. Gill & Ramsden (Pty) Ltd, 1996(1) SA 1182 (AD) at 1187 I to 1188 D where the Court said the following: "The phrase 'subject to' has no a priori meaning. Reference to any dictionary establishes that. In statutory contexts it is often used to establish what is dominant and what is subordinate... In contractual settings, especially insurance contracts, it is usually used to create a suspensive condition, but also (always depending on the context) a resolutive condition (SA Eagle Versekeringsmaatskappy Bpk v. Steyn, 1991 (4) SA 841 (A) at 848 B-D)... " [32] Against this background, it was submitted by counsel for the Plaintiff that on a proper interpretation thereof clauses 3.4 and 3.5 bear the meaning as alleged by the Plaintiff in paragraph 11 of the Consolidated Particulars of Claim so that there is no merit in the third ground of exception.

20 20 (33] Counsel for the Defendants submitted, correctly in my view, that the question to be decided is whether the words ' subject to the provisions of clause 3.5" in paragraph 3.4 of the SOBA means that the payment of R50 million referred to in clause 3.5 of the SOBA is resolutive to the cancellation of the Buy-Back Option or "whether the phrase is no more than a material term of the SOBA, creating an obligation without being resolutive in its effect". I have already expressed the view that to contend for the former interpretation is, in my view, eminently arguable and it appears to be arguable that the interpretation advanced by the Defendants (the second of the abovementioned interpretations) would result in the words "but subject to the provisions of 3.5" having no operation, being superfluous or tautologous. This approach may well find favour with the Trial Court and, for present purposes, I refrain from formally pronouncing on the subject. It seems to me, with respect, that counsel for the Defendants may be underplaying the significance of the phrase "but subject to the provisions of 3.5 ", which has to be read in conjunction with the stipulation in 3.5 that the R50 million is to be paid "in exchange for the cancellation... of the Buy-Back Agreement". Moreover, counsel appears to recognise the remarks in Pangbourne, supra, that the phrase "subject to" is "usually used to create a suspensive condition, but also (always depending on the context) a resolutive condition".

21 21 [34] Something else which counsel for the Defendants, with respect, appears to be steering clear of is the subject of the general principles applicable to exceptions. They are set out in the well-known passage from Harms, Civil Procedure in t/ze Superior Courts, at B-165, paragraph B23.3: "Pleading lacking averments An exception is a valuable part of the system of procedure: its principal use is to raise and obtain a speedy and economical decision on questions of law which are apparent on the face of the pleadings. In this manner the leading of unnecessary evidence is avoided. An over-technical approach should be avoided because it destroys the usefulness of the exception procedure, which is to weed out cases without legal merit. If evidence can be led which can disclose a cause of action or defence alleged in a pleading, that particular pleading is not excipiable. A pleading is only excipiable on the basis that no possible evidence led on the pleadings can disclose a cause of action or defence. Causes of action are not in the first instance dependent on questions of law. They require the application of legal principle to a particular factual matrix. The test on exception is whether on all possible readings of the facts no cause of action is made out. It is for tlze excipient to satisfy the Court that the conclusion of law for which the Plaintiff contends cannot be supported upon every interpretation that can be put on the facts. "

22 22 [Emphasis added] I do not visit all the authorities quoted here by the learned author. I use this guideline, as I should, when considering not only this particular ground of exception, but all the other objections raised by the Defendants in their exception and opposition to the proposed amendment. [35] Further guidance is found, and must be applied, from the following remarks by the learned author, setting out the trite legal position, at B-165 to B-1 66: "The object of an exception is not to embarrass one 's opponent, but to settle the case (or part of it) in an inexpensive and easy fashion or to protect oneself against an embarrassment that is so serious that it merits the costs of an exception. A Court should not look too critically at the pleadings. Unless the excipient can satisfy the Court that there is a real point of law or a real embarrassment, the exception should be dismissed"; and '' When courts consider exceptions, no additional facts may be adduced by either party and the Court must assume that the facts alleged in the relevant pleading are correct."

23 23 Counsel for the Plaintiff summed up this passage as follows: "The Defendants are accordingly not entitled to oppose this application on the basis that they seek to dispute the correctness of the factual averments made in the Particulars of Claim in the proposed amendedform;" and [quoting again from Harms at B-165): "Unless an exception is taken for the purpose of raising a substantive question of law, which may have the effect of settling the dispute between the parties, an excipient should make out a very clear case in order to succeed. Exceptions are generally not the appropriate procedure to settle questions of interpretation. The same applies to the pleading of implied (strictly tacit) terms; the test on exception is whether the trial court could (not 'should') reasonably imply the term alleged. 11 [Emphasis added] [36] Counsel for the Defendants pointed out that the judgment of Unica Iron & Steel (Pty) Ltd & Another v. Mirchandani, 2016(2) SA 307 is authority for the proposition that the phrase "subject to II can connote a term of an agreement as opposed to a condition. Counsel devoted a fair amount or time in his Heads of Argument to suggest that, in the present instance, the phrase is a term and not a condition. He also referred to the celebrated words of Wallis

24 24 JA in Natal Joint Municipal Pension Fund v. Endumeni Municipality, 2012(4) SA 593 (SCA) paragraph [19] where the Learned Judge said: "... The process is objective, not subjective. A sensible meaning is to be preferred to one that leads to insensible or unbusinesslike results or undermines the apparent pwpose of the document... " Given the argument advanced by counsel for the Plaintiff that to give clauses 3.4 and 3.5 the interpretation advanced by the Defendant, would result in the words "but subject to the provisions of 3.5 " having no operation, and being superfluous and tautologous, the trite principles laid down as described by the author Harms and the considerable onus on the Defendants, I am not persuaded that the interpretation advanced on behalf of the Defendants will necessarily find favour with the Trial Court. After all, the contract clearly provides that the R50 million had to be paid in exchange for cancelling the Buy-Back Agreement. THE SECOND TOPIC: THE NECESSITY OR LACK THEREOF FOR THE PLAINTIFF TO DEMONSTRATE AND/OR RAISE A TRIABLE ISSUE OR ISSUES AND ALSO TO DISCLOSE WHAT EVIDENCE WOULD BE OFFERED WITH REFERENCE TO THE RELEVANT FACTUAL MATRIX RELATING TO THE AGREEMENTS. PARTICULAR REFERENCE MAY BE HAD TO

25 25 REMARKS MADE ON THE SUBJECT BY THE AUTHOR ERASMUS AND BY THE COURT IN CIBA-GEIGY (PTY) LTD V. LUSHOF FARMS (PTY) LTD: (37] The objection relating to the proposed amendment of paragraph 15.4 of the Consolidated Particulars of Claim forms the subject of this particular topic. More particularly, it has to do with the attempt by the Plaintiff to rely on the "relevant factual matrix relating to the agreements and on a proper interpretation thereof" (38] The proposed paragraph 15.4 is to read as follows: "Having regard to the relevant factual matrix relating to the agreements and on a proper interpretation thereof By reason of the fact that the First Defendant had on 7 November 2011 taken transfer of a 30% undivided share in and to the property (as defined in clause 1.2 of the Sale of Business Amendment Agreement)and the rights relating thereto, and after 30 January 2012 had no right to take transfer of any further share in the property and the rights relating thereto, [my note: as per 7.3 of the SOBA] the Plaintiff in terms of clause of the Sale of Business Agreement had an option exercisable on 7 November 2012, to purchase from the First Defendant that

26 26 part of the business (as defined in clause I of the Sale of Business Agreement) which had previously been sold and transferred to the First Defendant As no leases as defined in clause 1 of the Sale of Business Agreement had been concluded and the building of the Villa Mall had not yet been completed by 7 November 2102, the 'business' which the Plaintiff in terms of clause of the Sale of Business Agreement had the option to buy back from the First Defendant comprised of a 30% undivided share in the property and the rights pertaining thereto, together with all fixtures and fittings on the property of a permanent nature The 'fixtures and fittings on the Property of a permanent nature' as contemplated in the definition of 'Business' in clause 1 of the Sale of Business Agreement, as at 7 November 2012 comprised of the uncompleted structure and building of the Villa Mall, which acceded to and formed part of the Property (as defined) (see paragraph above) By reason of the fact that no Leases as contemplated and defined in the Sale of Business Agreement had been

27 27 completed, no rental enterprise was being conducted on the property as a going concern and income earning activity, and the uncompleted structure and building of the Villa Mall had in law acceded to and become part of the property, the 'business' which the Plaintiff is entitled to buy back from the First Defendant comprised of only the 30% undivided share in the property held by the First Defendant. " [39] The Defendants argued that this phrase (having regard to "the relevant factual matrix relating to the agreements... '') is objectionable, and that the Plaintiff, in order to raise a "triable issue" is required to specifically plead all the facts upon which it will rely as constituting "the relevant factual matrix relating to the agreements", and that if it does not do so, the Particulars of Claim lack averments necessary to sustain a cause of action. [ 40] It was argued on behalf of the Plaintiff that it is trite that the Plaintiff is required to plead facta probanda, and not facta probantia. It was submitted on behalf of the Plaintiff that the "relevant factual matrix" constitutes facta probantia. In this regard the Plaintiff also relies on the provisions of Rule 18(7), which provides that: "It shall not be necessary in any pleading to state the circumstances from which an alleged implied term can be inferred. "

28 28 It was submitted that such circumstances constitute part of the facta probantia or the evidence. [41] In dealing with Rule 18(7) the learned author Harms says the following on B- 142(3), B18.12: "It is not necessary to state the circumstances from which an implied term can be inferred. This provision relates only to a term in an express contract. The case where there is an implied term in an express contract, however, must be distinguished from the case where an entire contract is implied. (Note: Not applicable here, in my view.) Here, a statement of the facts and circumstances constituting the implied contract relied upon is required: in other words, the facts and circumstances from which such implied contract is inferred must be set out in the pleading." Before me it was submitted on behalf of the Plaintiff, correctly in my view, that in this matter the Plaintiff does no more than allege that the contract falls to be interpreted "having regard to the relevant factual matrix".

29 29 I was referred to the case of Sun Packaging (Pty) Ltd v. Vreulink, 1996(4) SA 176 (AD) at 184 A- C. I quote extracts from the passage: " The basic principles are, for the most part, clear. The determining factor is the intention of the parties. This is ascertained from the language used, read in its contextual setting and in the iight of any admissible evidence... Broadly speaking there are three classes of such evidence. One is of background facts. Another relates to surrounding circumstances. The third is evidence of what passed between the parties and the subject of the contract. Only the first and second need to be considered. It would seem tltat evidence of tlte former, i.e. background facts, is part of the context and as such always admissible. It has been described as encompassing the 'genesis of the transaction ' or its factual matrix '. Its aim is to put the Court 'in the armchair of the authors' of the document. "[Emphasis added] As stated on behalf of the Plaintiff, a party is not required to plead evidence, and evidence of the context or factual matrix is admissible, irrespective of whether or not it has been pleaded. In Endumeni, at 604C-D, Wallis JA said:

30 30 " The 'inevitable point of departure is the language of the provision itself' read in context and having regard to the purpose of the provision and the background to preparation and production of the document." [42] Against this background, it was submitted with some force on behalf of the plaintiff that regardless of whether the facts constituting the "context" have been pleaded, and regardless of whether the facts constituting the "background to the preparation and production of the document" have been pleaded, a court is not only entitled but is obliged to have regard to the context and the background, and evidence thereof is admissible. [43] It was submitted on behalf of the Plaintiff that the allegations sought to be introduced in paragraph 15.4 of the to be amended Particulars of Claim that the contract falls to be interpreted "having regard to the relevant factual matrix relating to the agreements " is no more than the statement of a wellestablished and trite legal proposition. I was reminded that there is no authority, and none is referred to by the Defendant, which requires the 'factual matrix ", "context" or "background circumstances" to be pleaded. [44) Turning to the necessity to raise a triable issue, counsel for the Plaintiff referred me to Harms at B-189, B28.18:

31 31 "An amendment must raise a triable issue - i.e. it must be of sufficient importance to justify any procedural disadvantages caused by the amendment proceedings in the sense that the issue is viable and relevant or will probably be covered by the available evidence. It will normally not be granted if there will be prejudice to the other party which cannot be cured by an order for costs or a postponement... There will not be prejudice if the parties can be put back for the purpose of justice in the same position as they were when the pleading, which is sought to be amended, was originally filed. The onus rests upon the Applicant seeking the amendment to show that the other party will not be prejudiced by the amendment. " [ 45] As authority for the proposition that an amendment must raise a triable issue, the learned author refers to a number of decisions, including the one of Ciba Geigy (Pty) Ltd v. Luslwf Farms (Pty) Ltd, 2002(2) SA 447 (SCA) at 462 to 463. [46] In Ciba-Geigy, at 462 F-H, the following is said: "In Trans-Drakensberg Bank Ltd (Under Judicial Management) v. Combined Engineering (Pty) Ltd & Another, 1967(3) SA 632 Dis op 641 A tot B gese: 'Having already made his case in his pleading, if he wishes to change or add to this, he must explain the reason and

32 32 show prima facie that he has something deserving of consideration, a triable issue, he cannot be allowed to harass his opponent by an amendment which has no foundation. He cannot place on the record an issue for which he has no supporting evidence, where evidence is required, or, save perhaps in exceptional circumstances, introduce an amendment which would make the pleadings excipiable.... '." At 462 J-463B the following is said: "Blykens die aangehaalde dicta kan 'triable issue ' verstaan word in die sin van: (a) 'n geskilpunt wat, indien dit aan die hand van die getuienis wat die applikant in sy aansoek in die vooruitsig stel, bewys word, lewensvatbaar of relevant sou wees; of (b) 'n geskilpunt wat op die waarskynlikhede deur die getuienis wat aldus in die vooruitsig gestel word, bewys sou wees." It appears from the judgment at 463 B to F that the Learned Trial Judge who refused the amendment took a dim view of the fact that the new defence, not pleaded in the first place, which is sought to be introduced in the proposed amendment, came at a very late stage, in fact when one of the witnesses was still being cross-

33 33 examined. The Learned Judge also held ( at 463 B) that in the particular circumstances he wasn't persuaded that the new defence which the Defendant wanted to introduce, amounted to "something worthy or consideration". Or that there was any "supporting evidence " for that defence. [47] Moreover, it seems to me that the definition of a "triable issue" only refers to evidence which the Applicant through an amendment intends offering to the Court ("in die vooruits ig stet") and there does not appear to b'e a direct indication that such evidence ought to be pleaded. [ 48] Comparing Ciba-Geigy to what we have in the present instance, the following remarks can be made: The Plaintiff is not seeking to introduce a new claim. the proposed 15.4 appears to be only a more detailed version of the original 15.4, now sought to be replaced, which reads as follows: "By reason of the fact that the First Defendant had on 7 November 2011 taken transfer of a 30% share in the property, [my note: as per 7. 3 of the SO BAJ (as defined in the Sale of Business Agreement) and after 30 January 2012 had no right to take transfer of any further share in the property, the Plaintiff in terms of clause of the Sale of Business Agreement had an option,

34 34 exercisable on 7 November 2012, to purchase from the First Defendant a 30% undivided share in the property and the business enterprise conducted thereon. ", The amendment is moved at an early stage, even before the filling of a plea, let alone a replication; and The Particulars of Ciaim, by and large, are based on a proposed interpretation of the various agreements. This is not a case where factual evidence, evidently expert evidence involving the application of weed killers or chemicals to a crop, (like in Ciba-Geigy] 1s withheld until cross-examination stage. [ 49] Against this background, I fail to see that anything that was said in Ciba Geigy can be applied in support of the efforts of the Defendants to defeat the amendment. [50] In his opposing Heads of Argument, counsel for the Defendants, with respect, does little more than quoting the same passages from Ciba-Geigy that I have dealt with. He also quotes the passage from Erasmus Superior Court Practice, which is little more than a translation of what was said in Ciba Geigy about what a triable issue is.

35 35 [51] In any event, where we are dealing mainly with questions of interpretation, it is useful to revisit the words of the author Harms that: "Exceptions are generally not the appropriate procedure to settle questions of interpretation. " TlIE THIRD TOPIC: THE SUBJECT MATTER OF THE CHANGE OF THE MERX, TAKING INTO ACCOUNT THE PROVISIONS OF THE ORIGINAL SALE OF BUSINESS AGREEMENT AND THE PROVISIONS OF THE SOBA IN THIS REGARD [52] By agreement between the parties, het merx or the subject of the sale changed from what was negotiated in terms of the Sale of Business Agreement to what was negotiated in terms of the SOBA: In terms of the sale of business agreement, what was sold was the "Business" meaning "the rental enterprise conducted by the Seller as a going concern and income earning activity of the Property as at the Closing Date, and which Business comprises of- The Property; The Leases, Al/fixtures and fittings on the Property of a permanent nature."; and

36 36 What was sold in terms of the SOBA, after the Sale of Business Agreement had been settled in terms of the Settlement Agreement, and when it was common that there was no "Business" as originally anticipated, in the form of a fully constructed and tenanted mall, was an 80% undivided share in and to: "The property, and All the right, title and interest in the 80% undivided share, of whatsoever nature, and howsoever arising, of Capicol 1, in and to the property and/or tlie business enterprise having been conducted by or at the instance of Capicol I pertaining to or in respect of the property, prior to the effective date, on the terms and conditions contained in the SOBA. "[Emphasis added] [53] The effective date was 1 July 2011, with the SOBA having been entered into on 14 July [54] The "Property" is defined in the Sale of Business Agreement to mean collectively Erf 764 and Erf 765 Wingate Park Extension 1. These are the ultimately consolidated properties comprising the 42 erven in Wingate Park originally belonging to the Seller and on which the mall was to be constructed. Strangely, the same "Property" forms the subject of the SOBA,

37 37 entered into well after the Sale of Business Agreement, but in the case of the SOBA the 42 erven are listed collectively as the "Property". It seems that nothing turns on this. [55] The term "Property and/or Business Enterprise" forming part of the definition of the "Property" as defined in the SOBA, must be of some significance because, it appears that the only reasonable inference to be drawn is that the 80% undivided share bought by the purchasers would be either an 80% undivided share in the property, as defined, or in the Business Enterprise "having been conducted by or at the instance of Capicol 1 pertaining to or in respect of the Property" or both. Where there was no "Business Enterprise" at the relevant time, it would mean, certainly on at least one interpretation, the right, title and interest in the 80% undivided share, of whatsoever nature, and howsoever arising, of Capicol l in and to the Property. [56] In very broad terms, and without recording all the details of the SOBA, it can be said that, in terms of clause of the SOBA, it was recorded that the Purchaser (in fact Villa Retail, which is the First Defendant) would take transfer of the 80% undivided share in and to the property and the rights pertaining thereto as follows:

38 38 Forthwith after 15 August 2011 the First Defendant would take transfer of the first 30% of the 80%, leaving the remaining 50% to be transferred as mentioned hereunder. The first 30% would be acquired at an agreed purchase consideration of some RI.235 billion. This was done. The payment was made and the transfer was effected; The First Defendant would take transfer of the remammg 50% (to make up the 80%)' for the sum of no less than Rl.45 billion. Funding for this purpose would be registered over the First Defendant's 80% undivided share in and to the property and would be required to be paid as follows: ~ The amount of R50 million by no later than 30 January It is common cause, as pointed out earlier, that this never happened and, on the Plaintiffs version, failure to make this payment led to the revival and enforceability of the Buy-Back Agreement; and ~ A further amount of R300 million by no later than the completion of the Villa Mall. This has obviously not been done;and ~ A final amount of RI. l billion. This never happened.

39 39 [57] In terms of clause 3.1 of the SOBA, the original Sale of Business Agreement was reconstituted between the parties in its terms, with full effect, "save to the extent to which the original Sale of Business Agreement is amended and/or any terms or conditions thereof conflict with the terms and conditions of this agreement following the entering into of the Sale o Business Amendment Agreement. " So the Sale of Business Agreement was revived but, in the event of conflict, the SOBA will prevail. [58] The Plaintiff alleged in paragraph 13 of the Particulars of Claim that the First Defendant failed to make any payment or to procure any funding as contemplated in clause 7 of the SOBA, and therefore lost its right to claim transfer of the remaining 50% undivided share. There was no objection or exception to this part of the pleading. It is also stipulated in clause 7.3 of the SOBA that, in the event of the relevant payments not being made, the First Defendant shall have no claim to demand transfer of the remaining 50% undivided share. [59] Against this background, it was argued on behalf of the Plaintiff that the operation of clause 7.3 of the SOBA has the consequence that the merx in terms of the SOBA, which has already been sold and transferred to the First

40 40 Defendant, is only a 30% undivided share in and to the property and the rights pertaining thereto, so that the merx has changed to that extent. [60] It was argued on behalf of the Plaintiff that the clear meaning of "buy back" is to repurchase that which has previously been sold and delivered. What the Plaintiff would sell and deliver to the First Defendant was the 80% undivided share in the property and the rights pertaining to the property (first by transfer of the 30% share and then by transfer of a further 50% share) provided the First Defendant performed its obligations by making the payments in terms of clause 7. This is what the Plaintiff would be entitled to "buy back" if the Buy Back Option was reinstated. Consequently, so it was argued, with the 50% no longer being part of the equation, the subject of the Buy Back Option would have to be the 30% share already sold and delivered. [61] On behalf of the Defendants, the following argument is offered: "The Buy Back Option specifically refers to 'the option to buy back the business' (My note: This is in line with the wording of clause 20.2 of the Sale of Business Agreement.) and as already stated, 'the business' is defined in a specific way. In suggesting that the SOBA has amended the definition of 'the business' as it appears in the Buy Back Option, is to do violence to the plain meaning of the wording of

41 41 the Buy Back Option read in its context, as being part and parcel of the original Sale of Business Agreement.... The Plaintiff, in attempting to apply the Buy Back Option within the factual matrix of the SOBA, contorts the meaning of certain definitions in the Sale of Business Agreement, but in doing so, completely ignores the fact that the merx contemplated in the Sale of Business Agreement, is completely different from the merx contemplated in the SOBA." [62] While one respects the arguments offered on behalf of the Defendants, the fact remains that the existence of the clause 20 Buy-Back Agreement is recognised in clause 3.4 of the SOBA, with the SOBA already featuring the amended merx, and 3.4 provides, as already indicated in some detail, that the Buy-Back Agreement is cancelled "subject to the provisions 3.5", which, in tum, provides that the R50 million shall be paid "in exchange for the cancellation by Capicol 1 of the Capitol I Buy-Back Agreement..." [63] Another argument offered on behalf of the Defendants, if I understand it correctly, has to do with the fact that the buy-back option provided for in terms of clause 20 of the Sale of Business Agreement, is linked to the closing date in the sense that the Seller shall have the option to buy back the business in the month after the closing date at a certain rate or twelve months after the closing date or twenty four months after the closing date ( clauses to of the Sale of Business Agreement).

42 42 [64] The "closing date" is defined in the Sale of Business Agreement as meaning "the date of registration of transfer of the property in the name of the Purchaser in accordance with the provisions of this agreement and against full payment of the purchase price to the Seller". [65] The argument as formulated in the Heads of Argument of Defendants' counsel appears to be the following: "It is common cause that the property, as defined in the Sale of Business Agreement, was never transferred to the First Defendant and the First Defendant did not pay the full purchase price therefor. Accordingly, the closing date has not yet arrived." [66] On this argument, and given the change in merx to an 80% interest in the property as now described in the SOBA, and given the fact that the Defendants appear to have forfeited the right to claim transfer of the remaining 50% of the anticipated 80% because of their failure to pay the RSO million, it appears that the closing date as defined in the Sale of Business Agreement, will never arrive. Consequently, so it appears to be argued on behalf of the Defendants, the Buy Back Option, linked to the closing date, can never be enforced. Yet, as pointed out, the Sale of Business Agreement, including the Buy Back Option, was revived in terms of the SOBA and on the

43 43 interpretation offered on behalf of Plaintiff, could only be cancelled subject to the provisions of clause 3.5 which stipulated that the R50 million (which was never paid) had to be paid in exchange for cancelling the Buy Back Option. Counsel for the Plaintiff argues that the change in merx affects the meaning and interpretation of "closing date". He argues that had the First Defendant made full payment of the purchase consideration in terms of the SOBA, an 80% undivided share in the property would have been transferred to the First Defendant in two tranches (first 30% and then 50%) and the "closing date" as amended in terms of clause 3.1 of the SOBA (the clause reviving the Sale of Business Agreement) would undoubtedly, according to counsel, have been the date of registration of transfer of an 80% undivided share in the property, the definition of which was amended in the SOBA. Counsel submits that a 30% undivided share in the property, as now defined in the SOBA, was transferred and paid for on 7 November 2011 so that this is what can be bought back in terms of the revived Buy Back Option and it can be bought back twelve months after the closing date (7 November 2011) so that the option to buy back was exercised on 7 November 2012, which is the basis of the declaratory relief sought. [67] In my view, this whole debate illustrates the fact that the dispute between the parties will ultimately have to be decided on a proper interpretation of all the agreements. This applies to all the issues raised in the exception and the