Sea Lake (Pty) Limited v Chung Hwa Trading Enterprise Company (Pty) Limited and Another (CIV/APN 492 of 98) [2000] LSCA 66 (10 July 2000)

1 C I V / A P N / 4 9 2 / 98 IN T HE H I GH C O U RT OF L E S O T HO In the matter of: S EA L A KE (PTY) L I M I T ED A P P L I C A NT and C H U NG H WA T R A D I NG E N T E R P R I SE C O M P A NY (PTY) L I M I T ED Y U - S H I NG S IU 2nd 1st R E S P O N D E NT R E S P O N D E NT For the Applicant For the Respondents : M r. L. Molete : M r. S. M a k h e ne J U D G M E NT Delivered by the Honourable M r. Justice T. M o n a p a t hi on the 10th day of July 2000 T he Respondents hold rights to a certain plot n u m b er 1 2 2 7 + 0 0 5 / 1 9, M a s e ru Industrial Area. T he dispute between the parties concerned an a g r e e m e nt between the parties over the said plot. This w as an application in w h i ch the Applicant w as seeking a C o u rt O r d er compelling the S e c o nd R e s p o n d e nt or a ny official of the First R e s p o n d e nt to sign a deed of sale b e t w e en the Applicant a nd the First R e s p o n d e n t, allegedly concluded on or about the 17th N o v e m b er 1998. T he alleged a g r e e m e nt w as for the sale of First Respondent's rights in a sublease of the said plot a nd that is w hy the Applicant asked Respondents to: "perform in compliance with the terms of the said agreement." A draft written a g r e e m e nt h ad b e en m a de but h ad since remained unsigned because of misunderstanding that followed after M r. Lepholisa (the attorney w ho d r ew the agreement) h ad completed the draft. T he R e s p o n d e n ts w e re also to be interdicted f r om selling their rights a nd interest to w h o s o e v er other than the Applicant pending the determination of this application. A rule nisi h ad b e en issued w h i ch lapsed or the matter s e e m ed to be no longer treated an urgent o ne since the 10th D e c e m b er 1 9 98 w h en the rule w as granted. I indicated to M r. Molete as early as before the completion of his a r g u m e nt that probabilities w o u ld incline to s h ow that an oral a g r e e m e nt w as in fact reached between the parties. T h at is w hy his client w as given possession of a c h e q ue of T wo H u n d r ed a nd Fifty T h o u s a nd Maloti (M250,000.00) allegedly for purchase price. Indeed his client declined to deal with the c h e q ue as his on the g r o u nd of s o me disagreement w h i ch the C o u rt decided not to go into. Consequently I discouraged M r. M a k h e ne f r om delving into the so called "external manifestations" of the parties conduct to determine w h e t h er a contract existed or not. I h ad h o w e v er opined that there m u st h a ve been s o me misunderstanding about s o me aspect of the oral agreement. Counsel h ad to argue on the basis that there h ad in fact been an oral a g r e e m e nt w h i ch w as to be written a nd signed. It is this a g r e e m e nt w h i c h, it w as safe to c o n c l u d e, the R e s p o n d e n ts w e re reneging o n. As matters finally stood there w as a draft written a g r e e m e nt w h i ch w as unsigned. T h at is w hy the Applicants' d e p o n e nt said in p a r a g r a ph 12 of the f o u n d i ng affidavit: " T he Applicant h as n ot c o m m i t t ed a ny b r e a ch of the said a g r e e m e nt a nd there is no basis of the 2nd R e s p o n d e n t 's refusal to c o m p ly with the requirements of the said a g r e e m e nt except for malicious intention to renege on the said a g r e e m e n t ." C o u n s el also agreed that there h ad b e en no Minister's consent obtained in t e r ms of section 35(b) of L a nd A ct N o. 17 of 1 9 7 9. T h is w o u ld be inevitable to inquire into in the light of w h at w as p r o p o s ed in p a r a g r a ph 1 of the draft a g r e e m e n t. It w as therein written thus: " T he seller shall i m m e d i a t e ly u p on the signature of this a g r e e m e nt apply for the appropriate Minister's consent in t e r ms of section 35 of the L a nd A ct to dispose of its rights, title a nd interest to the property referred to herein. In the event of the seller n ot succeeding in its application for Minister's consent a nd in the e v e nt of Minister's consent b e i ng refused, in w h i ch event the p u r c h a s er shall h a ve the right to use a nd o c c u py this property for the duration of the existing L a nd A ct lease as well as for the duration of the e x t e n d ed period thereafter." T he point being m a de w o u ld therefore be that it s e e m ed f r om the a g r e e m e nt a nd it w as s u p p o s ed that certain benefits s u ch as use a nd occupation of the property w e re saved in the event of the refusal of the Minister's consent. T he futility of the provision of the a g r e e m e nt w o u ld surely be that the a g r e e m e nt r e m a i n ed invalid in the a b s e n ce of the Minister's consent. S ee M O H A LE A ND A N O T H ER v C O M M I S S I O N ER OF L A N DS A ND S U R V EY A ND O T H E RS L AC (1985-89) 2 50 O ne reasons w o u ld be that such a sub-lease o u g ht to be registered a nd it w o u ld require the Minister's consent. S ee also section 35(1) (a) (iii) of the L a nd A ct 1 9 7 9. A nd see furthermore D e e ds Registry A ct 1 9 67 Sections 24(1) a nd (2) a b o ut registration of long leases a nd consent of proper authority. M o st of Applicant's Counsel's a r g u m e nt centred on the issue of w h e t h er an oral or informal a g r e e m e nt h ad b e en reached by the parties before M r. Lepholisa w as a p p r o a c h ed a nd w h e t h er it w as a binding a nd enforceable contract. I h a ve already decided that an oral or informal contract w as reached. C o u n s el also dealt with the l aw on an important question that h ad to be a n s w e r e d. It w as w h e t h er or not the contract b e t w e en the parties w o u ld only c o me into being after or u p on the signature of the d e ed of sale. W h en speaking a b o ut the validity of an oral a g r e e m e nt C o u n s el for Applicant referred the C o u rt to the w o rk T HE L AW OF C O N T R A CT IN S O U TH A F R I CA by A. H. Christie), 2nd edition p a ge 1 22 a nd G R O T I US 3.14.26. C o u n s el submitted further, on the question w h e t h er there w as no valid contract until the written contract has b e en d r a wn up a nd c o n c l u d ed b y, referring to G O L D B R A TT v F R E E M A N T LE 1 9 20 AD 123 w h e r e in Innes J said: "Subject to certain exceptions mostly statutory, a ny contract m ay be verbally entered into, writing is not essential to contractual validity. A nd if during negotiations m e n t i on is m a de of a written d o c u m e n t, the C o u rt will a s s u me that the object w as m e r e ly to afford facility of p r o of of the verbal a g r e e m e n t, unless it is clear that the parties intended that writing should e m b o dy the contract." ( My underlining) T h e n, m o st wisely, there resulted a concession on the point by Applicant's C o u n s e l. It w as that it s e e m ed uncontestable that the validity of the parts a g r e e m e nt w o u ld only take f o rm a nd materialise after the written a g r e e m e nt w as signed by the parties. T h is h ad b e en w as m a de e v en clearer by p a r a g r a ph 9 of the draft a g r e e m e nt w h i ch recorded that: "This is the sole a nd complete a g r e e m e nt b e t w e en the parties a nd a ny term or condition thereof insofar as it refers to an obligation of a ny o ne the parties is a material term or condition, a nd a ny a m e n d m e nt of addition to, or substitution of a ny term or condition in this A g r e e m e nt or to this A g r e e m e n t, shall only be valid binding a nd enforceable u p on the parties in the event of it being induced to writing a nd signed by both the purchaser a nd the seller each before t wo (2) witnesses." I therefore found no n e ed to address issues such as b u r d en of proof as to w h at the intention of the parties w e re a nd the issue that w o u ld arise such as w h at transpired in the negotiations, w h e re a nd h ow the parties could n ot h a ve b e en ad idem. T he latter w o u ld h a ve b e en important in that the R e s p o n d e n ts h ad cited misunderstanding on the aspect of the contents of the a g r e e m e nt as the reason for reneging on the agreement. I agreed with M r. M o l e te that there w as nothing to enforce in the a g r e e m e nt a nd there w as nothing w h i ch the R e s p o n d e n ts w o u ld be compelled to perform based on the alleged agreement. I agreed further that the Applicant w o u ld probably be entitled to claim d a m a g es for alleged breach. This application w h i ch w as for a f o rm of specific performance in the circumstances w as irregular a nd enforceable. I endorsed further that the granting of a specific p e r f o r m a n ce of a ny nature w as discretionary a nd d e p e n d ed on the circumstance of each case. T he C o u rt w o u ld therefore not grant specific performance w h en d a m a g es w o u ld adequately c o m p e n s a te the Applicant or w h en the thing claimed c an be readily bought anywhere else. See F A R M E RS C O - O P E R A T I VE S O C I E TY ( R E G) v B E R RY 1912 ( A D) 3 43 a nd H A Y N E SS v K I NG W I L L I A M S T O WN M U N I C I P A L I TY 1951 (2) SA 3 70 AD at 3 7 8 H. This is even m o re so where the Applicant did not contend that it would be difficult to assess his damages, that it w as in the p o w er of the Respondent to carry out his undertaking a nd that order w as the only order that could do justice in the circumstances. S ee F A R M E RS CO- O P E R A T I VE S O C I E TY v B E R RY (supra) at 3 5 0. In H A Y N ES v K I N G W I L L I A M S T O WN M U N I C I P A L I TY (supra) the order for specific performance w as refused in the Court's discretion despite the existence of a valid contractual obligation. In the instant matter, as I h a ve decided, the contract between the parties w o u ld be an unenforceable contractual obligation. See C A S I M J EE v C A S I M J EE 1947 (3) SA 701(N). I could n ot therefore exercise the Court's discretion in favour of the orders sought because this w as not a proper case. On the 20th J u ne 2 0 00 I decided that the application be dismissed with costs. T. M O N A P A T HI J U D GE 10th July 2 0 0 0.