THE SUPREME COURT OF APPEAL OF SOUTH AFRICA

JUDGMENT

Case No:   231/2011
Not Reportable

In the matter between:

CHRISTODOULOUS DEMETRIADES                              APPELLANT

and

IOANNIS DEMETRIOS PERIVOLIOTIS                       RESPONDENT

Neutral citation: Demetriades v Perivoliotis (231/2011) [2012] ZASCA 8
(14 March 2012)

Coram:
Mthiyane DP, Brand, Cloete, Mhlantla JJA and
Boruchowitz AJA

Heard:
17 February 2012
Delivered:
14 March 2012

Summary: Interpretation of an agreement of sale of shares ─ whether
it created reciprocity of obligations ─ party seeking to argue new case
on appeal.

_____________________________________________________________________

ORDER

On appeal from: North Gauteng High Court, Pretoria (Legodi, Makgoka
JJ and Ebersohn AJ sitting as court of appeal):

The appeal is upheld with costs, such costs to include the costs of
two counsel.
The order of the court a quo is set aside and replaced with the
following:
‘The appeal is dismissed with costs, including the costs of two counsel.’
___________________________________________________________

JUDGMENT

MTHIYANE DP (BRAND, CLOETE, MHLANTLA JJA and
BORUCHOWITZ AJA CONCURRING)

[1] The appeal with leave from this court is concerned with the
interpretation of a written agreement of sale of shares in a company
registered in Tanzania. In terms of the agreement the respondent (the
plaintiff) sold two hundred fully paid-up shares to the appellant (the
defendant) for R3.5million. A dispute arose between the parties
concerning payment of the purchase price and the initial question that fell
to be determined in the high court and later by the full court was whether
the agreement is one to which the principle of reciprocity applies.

[2] In an action in the North Gauteng High Court (Seriti J) the question
was answered in the affirmative but on appeal to the full court with this
court’s leave, Legodi J with Makgoba JJ and Ebersohn AJ concurring,

held that on a proper construction of the agreement reciprocal obligations
were not created between the parties, dismissed the exceptio non
adimpleti contractus raised by the defendant and found that the appellant
was obliged to pay the balance of the purchase price in terms of the
contract.

[3] The appellant now appeals that decision with leave from this court.
It is convenient to refer to the parties as they were in the high court. It
bears mention however that in the appeal before us the plaintiff
abandoned his earlier arguments on whether the agreement created
reciprocal obligations ─ in fact he now concedes that it did ─ and
disavows any reliance on the judgment of the full court, which he no
longer supports. Notwithstanding his concession ─ which as will appear
later in the judgment was well made ─ counsel considers that he has
found a way around it. He submits that because the plaintiff tendered
performance and the defendant refused to accept the tender, the plaintiff
is entitled to succeed on appeal. He says that although the plaintiff’s case
was not pleaded in these terms, the defendant has no cause to complain
because the so-called new case is capable of being raised on the papers as
they stand and the issue now raised was sufficiently traversed in the court
below.

[4] The convenient starting point is the agreement itself. On 17
September 2003 the plaintiff sold to the defendant 200 fully paid up
shares in Thinamy Entertainment Ltd, a company registered in Tanzania,
comprising 20 percent of the subscribed share capital of the company. As
I have already indicated the purchase price of the shares was R3.5million.

[5] In terms of clause 8.2 of the agreement the balance of the purchase
price of R2,5million was payable in twelve equal monthly instalments of
R208 333,33, on or before the 7th of each month, the first instalment
being payable on or before 7 October 2003.

[6] In terms of clause 9 the plaintiff undertook to ─ on or before 30
September 2003 ─ cause to be delivered to the defendant or his nominee:
‘9.1
The share certificates together with share transfer form signed by the Seller;
9.2
Cession by the Seller in favour of the Purchaser for the said loan account;
9.3
The resignation of the Seller as director of the company;
9.4
A resolution approving of the transfer of the shares from the Seller to the
Purchaser;
9.5
All books, documents and records in the Seller’s possession relating to the
company or the business.’

[7] In the particulars of claim the plaintiff alleges that the defendant
breached the terms of agreement as follows:
(a)
he only paid R55 000 towards the first instalment, being payable
on or before 7 October 2003 as already indicated above, leaving an
unpaid balance, on the first instalment, of R153 333,33;
(b)
he failed to make any further payments;
(c)
he is indebted to the plaintiff in the sum of R1 819 999,00 plus
interest at the rate of 15,5 percent per annum a tempore morae.

[8] In his plea the defendant admitted:
(a)
that he paid R55 000 towards the first instalment on or before 7
October 2003 as required under clause 8.2 of the agreement; and
(b)
that he had not made any further payments.
The defendant denied further that he was obliged to pay because the
plaintiff had failed to perform his part of the agreement by not delivering

the required documentation as required in clause 9 of the agreement. Such
failure amounted to a repudiation of the agreement, which he accepted.
The defendant pleaded that as a consequence he had cancelled the
agreement.

[9] The defendant also filed a counter-claim for the repayment of the
R55 000 he paid towards the first instalment of the purchase price. In the
counter-claim he further alleged that:
(a)
the plaintiff had breached the terms of the agreement by failing to
comply with clause 9 of the agreement;
(b)
the plaintiff repudiated the agreement, which repudiation he had
accepted; and
(c)
if it was found that he had not repudiated the agreement, the
plaintiff would in any event not be able to comply with clause 9 of the
agreement.

[10] In his plea to the counter-claim the plaintiff disputed the
defendant’s entitlement to the repayment of R55 000 alleging that the
payment of the purchase price was not dependant upon the plaintiff
fulfilling any obligations in terms of the agreement. The plaintiff further
averred that he had never had the intention to repudiate the agreement.
The plea to the counter-claim in effect averred that the agreement did not
create reciprocal obligations and that the defendant was not entitled to
succeed in his defence based on the exceptio non adimpleti contractus. As
already indicated the plaintiff has abandoned this position and correctly
so.

[11] For reciprocity to exist there must be such a relationship between
the obligations to be performed by the one party and that due by the other

party as to indicate that one was undertaken in exchange for the
performance of the other (see eg Mörsner v Len).1 On a proper
construction of the agreement between the plaintiff and the defendant,
especially if regard is had to the paragraphs dealing with the plaintiff-
seller’s obligation to deliver the share certificate and other documents on
or before 30 September 2003 (clause 9) and dealing with the defendant-
buyers’ obligation to pay on or before 7 October 2003 (clause 8.2), it is
clear that the intention was to create reciprocal obligations. The relevant
cases on the topic have emphasized that the overriding consideration is
the intention of the parties as evident from the agreement in conjunction
with the relevant background circumstances. See Man Truck & Bus (SA)
v Dorbyl Ltd t/a Dorbyl Transport Products and Busaf.2 On that approach
there can be no question that the plaintiff had to deliver the documents by
30 September 2003 and the defendant thereafter pay by 7 October 2003,
in exchange for the documents so delivered. It cannot be any clearer than
that. Accordingly the finding of Seriti J that the agreement gave rise to
reciprocal obligations was correct. It must therefore follow that the full
court erred in its conclusion that the agreement did not create reciprocal
obligations.

[12] One would have thought that once reciprocity was conceded and
the plaintiff accepted that it had not delivered the share certificate and the
other documents as required by clause 9, that would have put paid to all
the issues in the case. This because the defendant in his pleadings had
accepted the plaintiff’s repudiation of the agreement, consisting in the
plaintiff’s refusal to perform an important term of the agreement.
Whether the plaintiff subjectively intended no longer to be bound by the

1 Mörsner v Len 1992 (3) SA 626 (A) at 634A.
2 Man Truck & Bus (SA) (Pty) Ltd v Dorbyl Ltd t/a Dorbyl Transport Products and Busaf 2004 (5) SA
226 (SCA) para 12.

agreement, or whether he was actuated by a mistake of law in thinking he
was entitled to enforce the agreement as he sought to do, is irrelevant:
Van Rooyen v Minister van Openbare Werke.3

[13] Despite conceding reciprocity that would suggest that the end of
the road had been reached in this litigation, counsel for the plaintiff
submitted that he was entitled to argue a point that was not specifically
pleaded. Relying on the principle laid down in Shill v Milner,4 he argued
that a court was on appeal entitled to permit a party to go beyond the
pleadings where the issue had been traversed in evidence in the court
below.

[14] The issue raised in this new point is the following. The defendant is
liable to pay the amount claimed because the plaintiff tendered
performance and the defendant refused to accept the tender. Furthermore
the defendant failed to attend a meeting at his (the defendant’s) attorney’s
offices in 2004 where the defendant would have been given the
documents. The plaintiff is to date in possession of the share certificate
and is still willing to deliver it to the defendant.

[15] As I see it there are two insurmountable hurdles that the plaintiff
has to overcome. The first is that the agreement came to an end upon the
acceptance by the defendant of the plaintiff’s repudiation. The second is
that the tender was withdrawn by the plaintiff in his amended particulars
of claim where all reference to the tender was deleted. It is not now
possible for the plaintiff to place reliance on a tender that was withdrawn

3 Van Rooyen v Minister van Openbare Werke 1978 (2) SA 835 (A) at 844H-846A.
4 Shill v Milner 1937 AD 101 at 105.

or to seek to put the clock back prior to the cancellation of the agreement.
Accordingly the new point is without merit and falls to be rejected.

[16] Accordingly the appeal must succeed and the following order is
made:
The appeal is upheld with costs, including the costs of two counsel.
The order of the court a quo is set aside and replaced with the
following:
‘The appeal is dismissed with costs, including the costs of two counsel.’

______________________

K K MTHIYANE
DEPUTY PRESIDENT

APPEARANCES

For Appellant:
AB Rossouw SC (with him MS Janse van
Rensburg)
Instructed by:
Grobler Levin Soonius Inc, Pretoria
Naudes, Bloemfontein

For Respondent:

EA Limberis SC (with him BW Maselle)
Instructed by:
Kobus Burger Attorneys c/o Phillip Venter
Attorneys, Pretoria
Lovius Block Attorneys, Bloemfontein
THE SUPREME COURT OF APPEAL
REPUBLIC OF SOUTH AFRICA

MEDIA SUMMARY – JUDGMENT DELIVERED IN THE SUPREME COURT OF APPEAL

From:
The Registrar, Supreme Court of Appeal
Date:
14 March 2012
Status:
Immediate

Please note that the media summary is intended for the benefit of the media and does not
form part of the judgment of the Supreme Court of Appeal.

DEMETRIADES v PERIVOLIOTIS

The Supreme Court of Appeal (SCA) today upheld an appeal by Mr Demetriades (the
appellant) against an order of the full court of the North Gauteng High Court, Pretoria
dismissing the exceptio non adimpleti contractus raised by the appellant and finding that
the appellant was obliged to pay the balance of the purchase price for the shares in a
company which Mr Perivoliotis (the respondent) had sold to the appellant

The respondent had instituted proceedings against the appellant before Seriti J claiming
payment of the balance of the purchase price for the shares. In his plea the appellant denied
that he was obliged to pay because the respondent had failed to perform his part of the
agreement by not delivering certain documents to the appellant or his nominee as required
by the agreement. Such failure, the appellant said, amounted to a repudiation of the
agreement, which he had accepted. The appellant pleaded that as a consequence he had
cancelled the agreement. The issue before Seriti J was whether the agreement was one to
which the principle of reciprocity applied. Seriti J answered the question in the affirmative

and dismissed the respondent’s claim. On appeal to it by the respondent the full court held
that reciprocal obligations were not created between the parties. It upheld the appeal. The
appellant then appealed to the SCA.

Before the SCA the respondent conceded that the agreement created reciprocal obligations
between the parties. Despite this concession, counsel for the respondent raised a new point.
He argued that the appellant was liable to pay the amount claimed because the respondent
had tendered performance and the appellant had refused to accept the tender, and that the
appellant had failed to attend a meeting at the respondent’s attorney’s office where the
appellant would have been given the documents. The SCA held that the new point was
without merit and fell to be rejected. It stated that the agreement came to an end upon the
acceptance by the appellant of the respondent’s repudiation, and that the tender was
withdrawn by the respondent in his amended particulars of claim where all reference to the
tender was deleted. It stated further that it was not possible for the respondent to place
reliance on a tender that was withdrawn or to seek to put the clock back prior to the
cancellation of the agreement. The SCA upheld the appeal with costs, including the costs of
two counsel.