Tarpaulin & Canvass CC v Sunshine Coast Tours CC (CA 22/2008) [2008] ZAECHC 159 (19 September 2008)

Tarpaulin & Canvass CC v Sunshine Coast Tours CC (CA 22/2008) [2008] ZAECHC 159 (19 September 2008)

The court held that even if the buyer established that the warranty in the sale agreement was unfounded due to material differences between the management account and the annual income and expenditure statement, the buyer failed to discharge the onus of proving the actual diminished value of the business at the time of sale. The expert evidence relied upon by the respondent was based on flawed financial statements that included incorrect expenses and did not comply with generally accepted accounting practice. As a result, the information was unreliable, and the buyer did not provide sufficient accurate facts to enable the court to determine the true value of the business. The buyer was...

Citation
[2008] ZAECHC 159
Parties
Appellant: Tarpaulin & Canvass CC; Respondent: Sunshine Coast Tours CC
Court
High Courts - Eastern Cape
Jurisdiction
South Africa
Judgment Date
19 September 2008
Case Number
CA 22/2008
Procedural Posture
Civil Appeal / Appeal From Trial Court Judgment
Outcome
Appeal allowed. The trial court's order is set aside and replaced with judgment for the appellant for payment of the balance of the purchase price, interest, and costs.
Judges
RJW Jones, JCH Jansen, JJ Nepgen
Legal Topics
Sale of Business, Exceptio Quanti Minoris, Contractual Warranty, Burden of Proof
Commercial and Corporate Civil Procedure Sale of Business Exceptio Quanti Minoris Contractual Warranty Burden of Proof

Case Brief

Summary, issues, holding and outcome

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Parties

Tarpaulin & Canvass CC

Appellant

Sunshine Coast Tours CC

Respondent

Procedural Posture

Civil Appeal / Appeal From Trial Court Judgment

Legal Issues

  1. 1 Whether the buyer discharged the onus of proving that the business had a reduced value entitling it to a reduction in the purchase price.
  2. 2 Whether the differences between the management account and the annual income and expenditure statement were material.
  3. 3 Whether the buyer was entitled to relief under the exceptio quanti minoris based on alleged breach of warranty.

Ratio Decidendi

The court held that even if the buyer established that the warranty in the sale agreement was unfounded due to material differences between the management account and the annual income and expenditure statement, the buyer failed to discharge the onus of proving the actual diminished value of the business at the time of sale. The expert evidence relied upon by the respondent was based on flawed financial statements that included incorrect expenses and did not comply with generally accepted accounting practice. As a result, the information was unreliable, and the buyer did not provide sufficient accurate facts to enable the court to determine the true value of the business. The buyer was...

Court Disposition

Appeal allowed. The trial court's order is set aside and replaced with judgment for the appellant for payment of the balance of the purchase price, interest, and costs.

Orders

  • The appeal is allowed with costs.
  • The order of the trial court is set aside.