The applicant is a Trust duly registered in terms of the laws of this country whereas the fifth respondent is a limited liability company registered in terms of the laws of this country. The first to fourth respondents are sole shareholders and directors in the fifth respondent, Saltana Enterprises (Pvt) ...
The applicant is a Trust duly registered in terms of the laws of this country whereas the fifth respondent is a limited liability company registered in terms of the laws of this country. The first to fourth respondents are sole shareholders and directors in the fifth respondent, Saltana Enterprises (Pvt) Ltd.
The fifth respondent is currently under judicial management. Its judicial manager, Mr C Madondo, has, however, since filed a letter saying that he has no interest in this case and will abide by the decision of this Court and has sent a representative for an observation brief.
That being the case, the question of the fifth respondent's locus standi, that is to say, the right to stand and be heard in court, becomes a non-issue.
The first and second respondents are husband and wife. The same applies to the third and fourth respondents.
At the commencement of this hearing, the first and third respondents requested that their wives be excused from the hearing and that they be allowed to represent and speak on behalf of their respective wives to save costs.
There being no objection from counsel for the applicant, I granted the two respondents permission to represent and speak on behalf of their wives.
In any case, the two wives were already in default and would have had default judgments entered against them anyway. It is highly unlikely that they can successfully apply for rescission of judgment seeing that the defaults appear to be willful and deliberate. For that reason, I cannot perceive any prejudice which cannot be redressed by an appropriate order of costs if their husbands are allowed to speak on their behalf with the applicant's consent.
In this regard, I find the applicant's attitude commendable in that it is not trying to snatch at default judgement but to obtain judgment on the merits.
In granting this unusual request, I was alive to the peculiar relationship between husband and wife in that they normally have a common interest and household.
Generally speaking, at common law, the husband is the head of the family and has the marital power although the position has been somewhat altered by statute. In Christian parlance, they are said to become one flesh and blood at marriage.
That being the case, I could perceive no impediment or impropriety in a husband representing his wife in a case in which they are jointly being sued and there is no objection from the other party.
The respondents objected to the matter being placed before this Court arguing that the dispute ought to have been referred for arbitration in terms of clause 13 of the contract which provides as follows:
“In the event of a dispute or a claim arising as a result of a breach of this agreement or other cause arising from this agreement, then, the purchaser shall be entitled, after notifying the seller beforehand, to have the dispute or claim or other cause referred to arbitration.”
My reading of the above clause is that it does not compel the applicant to refer the matter for arbitration in the event of a dispute arising. It merely entitles, without directing, the applicant to refer the dispute for arbitration.
In other words, the clause merely confers a discretion on the applicant whether or not to refer the matter to arbitration without impeding its right to approach the Courts for redress.
For that reason, I hold that the applicant was within its rights in referring the dispute to court for resolution.
Having said that, I now turn to determine the matter on the merits.
The facts giving rise to this application are to a large extent common cause. The undisputed facts are that some time in March 2005 the first to fourth respondents (hereinafter referred to as the respondents) concluded a written contract in terms of which they sold to the applicant their entire shareholding in the fifth respondent to the applicant.
The written contract of sale was subject to various suspensive conditions in favour of the applicant. The contract however conferred upon the applicant the right to waive the suspensive conditions thereby bringing the terms of the contract into force.
The applicant subsequently waived its rights under the suspensive conditions sometime in June 2005 and demanded that the respondents perform their part of the bargain in terms of the written contract.
The respondents took exception and objected on the basis that they had already cancelled the contract on account of breach of contract. In particular, they objected on the basis that the applicant had not discharged its obligations under clause 1. 2.18 of the contract. That clause falls under the definition section of the agreement and it provides as follows:
“'Signature date' means the date of signature of this agreement by the party last signing.
As soon as possible thereafter the amount of $100 million shall be paid to the Sellers in equal portion of $25 million each in such consideration as the Purchaser shall determine at its sole discretion. A further amount of $100 million shall thereafter be paid to the Sellers on similar terms, on the Effective Date.”
The respondents acknowledged having been paid the initial $100 million dollars in terms of the above clause but denied having been paid the remaining $100 million dollars.
The alleged non-payment of that amount forms the basis of the respondents' refusal to perform their part of the bargain and purported cancellation of the contract.
The applicant denies that it breached any material terms of the contract as alleged or at all thereby entitling the respondents to cancel the contract.
Firstly, it denies that it failed to pay the remaining $100 million dollars as alleged by the respondents.
This is a factual dispute incapable of determination on the papers. Fortunately, it is not necessary to resolve that factual dispute for the purpose of determining this matter.
Apart from denying that it failed to pay the amounts stipulated in clause 1. 2. 18 of the contract, the applicant also argued that the clause was not a material term of the contract but merely constituted a sweetener.
A sweetener, in my view, is payment calculated to raise the other party's appetite so as to induce him to contact.
Clause 1.2.18 of the contact appears to have all the hallmarks of a sweetener in that it is tied up with the definition of the word “signature”. It refers to payment of “such consideration as the purchaser shall determine at its sole discretion.”
It is inconceivable that had the payment under this clause been intended to be a material term of the contract the parties could have left its payment to the sole discretion of the parties.
This provision is different from clause 4 which places an obligation on the applicant to pay on pain of cancellation and heavy penalties in the event of failure to pay.
For that reason, I come to the conclusion that clause 1.2.18 is not a material term of the contact the breach of which would entitle the aggrieved party to cancel the contract.
