On
the return day of the rule nisi I confirmed the provisional order and
dismissed the counter application indicating that the reasons will
follow. These are the reasons.
This
is the return day of the rule nisi issued by this court on 10 May
2007 interdicting the two respondents (applicants in the
counter-application hereinafter referred to as “respondents” or
“first and second respondents”) from using the applicant's
(respondent in the counter application hereinafter referred to as
“applicant”) two Mercedes Benz motor vehicles registration
numbers AAA 3378 and AAA 4417 and directing the respondents to
surrender to the applicant the said motor vehicles immediately.
The
applicant undertook not to re-allocate two of its senior staff
members the said motor vehicles pending the return day.
The
respondents complied with the terms of the order requiring them to
surrender to the applicant but have filed a counter-application
seeking an order that the present applicant be ordered to surrender
the two motor vehicles to the respondents upon tender and payment of
the amount due to it for the value of the two motor vehicles.
This
application and counter application arose out of the following facts:
The
applicant employed the first and second respondents as Finance
Director and Operations Director respectively. The applicant is the
lawful owner of the two Mercedes Benz motor vehicles. It allocated
the use of the motor vehicles to the respondents in terms of its
company vehicle policy. Sometime in February 2007 the applicant's
Board of Directors had reason to cause a forensic audit to be carried
out within the applicant. A forensic audit report produced after the
audit investigations revealed possible fraudulent and prejudicial
conduct by the two respondents. The forensic audit report, which is
part of the papers, reveals that the investigations included seeking
explanations from the respondents and recording such explanations as
they would have given. When the findings and conclusions of the
forensic audit report were put to the respondents, they both offered
to resign with immediate effect.
They
both refused to hand over the two vehicles on the ground that they
were entitled to purchase the motor vehicles from the applicant. This
necessitated the chamber application resulting in the present
litigation.
The
applicant argues that the provisional order should be confirmed as
the final order since;
(a)
The applicant has not, in the exercise of its discretion, granted the
two respondents the option to purchase the two motor vehicles; and
(b)
The employees leaving its service are required to surrender the
vehicles.
The
first and second respondents, on the other hand, contend that the
provisional order be discharged and that the applicant be directed to
surrender the two motor vehicles to them up on tender of the value of
the motor vehicles.
The
respondents ground their counter-application on the following basis.
During
their term of employment with the applicant, the applicant came up
with an executive car policy which governed the acquisition and use
of motor vehicles by senior employees. The first and second
respondents contend that the scheme entitled them to exercise an
option to purchase the motor vehicles which they were using at the
time of resignation. Upon resignation, the respondents notified the
applicant that they were exercising the option to purchase the motor
vehicles for which the purchase price would be fixed in accordance
with the applicant's executive car policy.
The
right to the motor vehicle accrued at the time of the purchase of the
motor vehicle; this is demonstrated by the registration of the motor
vehicle in the respondents' names. They contend that they are
entitled, upon exercise of the option, to the motor vehicles. The
respondents also draw the court's attention to the fact that they
are in a possession of the two motor vehicles' registration books.
The
issue in this dispute, in my view, is whether, upon a proper
interpretation of the applicant's motor vehicle policy scheme, the
respondents have an enforceable right to purchase the two motor
vehicles. Put differently, did the counter-applicants hold an option
exercisable against the counter-respondent to purchase the two motor
vehicles upon their resignation from employment?
In
order to answer this question, regard must be had to the document
which both parties agree governed the use of motor vehicles by the
first and second respondents.
In
interpreting the document, the court will give effect to the ordinary
grammatical meaning of the words used unless the context clearly
requires otherwise. It will be clear from the opening paragraph of
the executive car policy document that it was formulated so as to
uphold the principle of ensuring improved welfare of the applicant's
key staff through the provision of a motor vehicle benefit designed
to motivate and retain skilled personnel.
Clause
4 deals with the replacement period of the vehicle. It states that a
company vehicle shall be due for a replacement or renewal after a
period of five years from the date of manufacture. Clause 5 goes on
to spell out that the executive using the vehicle due for a
replacement will be given the first option to purchase the vehicle
and the fixing of the price. It states that an application to
exercise the option to purchase the vehicle will be processed in line
with the relevant provisions of the policy. That same paragraph gives
detail to what happens when an employee is promoted to a higher
grade. Clause 6 is titled Vehicle
Operating Expenses
and sets out what the employer will pay for. Clause 7 spells out the
responsibilities of the company vehicle operator. Clause 8 is titled
Administration
and Control.
In
terms of this clause the Group Company Secretary keeps custody of the
motor vehicle registration books at all times even though, at
purchase, the motor vehicle is registered in the name of the employee
in terms of clause 2.
Management
reserved the right to withdraw the company car facility at its
discretion where there is evidence of abuse of allocated vehicle in
terms of clause 8. Under clause 8 as well, an employee who leaves the
company is required to surrender the vehicle and all accessories to
the Group Managing Director with the option provided for them to
purchase the vehicle as provided for under clause 5.
Clause
9 deals with interpretation and application of the policy and states
that this is the responsibility of the Board. Clause 10 specifically
states that “…, all provisions under this policy are at the
discretion of the Group Managing Director or Chairman of the Board
subject to cash flow availability.”
The
first and second respondents argue that Clause 8 creates the option
which they exercised by written notice of election to purchase the
vehicles upon their resignation.
The
question that arises is whether the option in clause 8 creates
legally binding consequences between the parties. In other words: is
the “option” an option in the legal sense of the word?
The
Dictionary of Legal Words and Phrases,
2nd
edition, Vol. 3…, defines an option as follows;
“An
option is an 'offer' which is irrevocable by the grantor during
the period stipulated in the contract, or, if there be no such
provision, within a reasonable time. See also:
Van
Pletsen v Henning
1913
AD 98; Annamma
v Moodley
1943
AD 538;
Hersch
v Nel
1948
(4) SA 695;
Brand
v Spies
1960
(4) SA 14.
If
the option be exercised, the potential contract contemplated by the
parties to the option agreement is complete.”
It
is contented, on behalf of both the respondents, that the applicant
made an irrevocable offer in clause 8 of its policy.
In
Bilodeh
Properties (Pty) Ltd
v
Wilson
1946 NPD 736…, an option was defined thus:
“A
true option is nothing more than an offer by one party to the
contract to the other; which offer remains open according to the
terms of the contract. The option holder has merely to accept the
offer in the manner, and within the time prescribed by the contract,
and a new contract comes into existence between him and the other
party…,.”
In
Wasmuth
v
Jacobs
1987 (3) SA 629 (SWA) it was explained that:
“An
option constitutes nothing more than an offer coupled with an
arrangement (express or implied) to keep the offer open for a certain
period of time…,. It is fundamental to the nature of any offer that
it should be certain and definite in its terms. It must be firm, that
is, made with the intention that when it is accepted, it will bind
the offeror. Efroiken
v
Simon
1921 CPD 367 @ 370; Finestone
v
Hamburg
1907 TS 629 @ 632…,.
Therefore,
if an offer, which is an essential element of any option, is vague on
all capable of more than one meaning, it is open to the offeror to
contend that it is not capable of being accepted and thereby convert
it into a binding contract. Where there is an 'offer' which
provides that certain terms were to be 'renewed' or to be
'negotiated' or to 'stand over' for decision at a later
stage, then, pending agreement on such outstanding terms, neither
party has any rights against the other.”
OK
Bazaars
v
Bloch
WLD
37; Wilson
Bros Garage v Texas Co (SA) Ltd
1936
NPD 386. See also Film
and Video Trust
v
Mahovo Enterprises (Pvt) Ltd
1993 (2) ZLR 191 (H).
The
contention by the respondents is that the provisions of clause 8
constitute an option exercisable against the applicant. Once
exercised, it became binding.
I
disagree.
It
will be clear from the above authorities that even assuming in favor
of the first and second respondents that “option” existed there
is no offer capable of such acceptance by the offeree as would
legally bind the offeror. There is no definite period within which
the “option” would remain open. The terms of the offer cannot be
implied. It is not contended that the terms of the sale agreement was
spelt out expressly since price of the motor vehicles was not yet
fixed. In any event, there is repeated reference to the discretion of
the management, in clause 5, to which clause 8 refers, such that it
cannot be said with certainty that there existed a formula to fix a
price as the decision to sell depended on the discretion of
management.
I
am fortified in my interpretation by the principle espoused at the
commencement of the policy document that the intention was never to
make the document a contract which binds the employer to sell its
motor vehicles once an employee applied for that. The document makes
it clear that the policy is to retain personnel not to reward
ex-employees. Such a benefit can only be extended to an ex-employee,
if, in the discretion of management or Board of Directors, such
employee merited it.
That
is not the position here.
In
any event, that is not the interpretation given to the policy
document by the parties. The fact that the applicant allowed its
vehicles to be registered in its employees names cannot, in my view,
be construed as bestowing any right to purchase the motor vehicles
on the employees. It does not advance the respondents' argument nor
does it destroy the applicant's argument. It merely reinforces the
spirit espoused by the policy which is to retain key personnel and
nothing more. In my view, the two motor vehicles remain the property
of the applicant. It is therefore ordered as follows:
The
provisional order is confirmed. The counter application by the
respondents is dismissed with costs.