THE SUPREME COURT OF APPEAL OF SOUTH AFRICA
JUDGMENT

Reportable
Case no: 667/2021

In the matter between:

PLATTEKLOOF RMS BOERDERY (PTY) LTD

APPELLANT

and

DAHLIA INVESTMENT HOLDINGS (PTY) LTD

RESPONDENT

Neutral citation:
Plattekloof RMS Boerdery (Pty) Ltd v Dahlia Investment Holdings
(Pty) Ltd (667/2021) [2022] ZASCA 182 (15 December 2022)
Coram:
VAN DER MERWE, GORVEN and MOTHLE JJA and WINDELL and
MALI AJJA
Heard:
3 November 2022
Delivered:
This judgment was handed down electronically by circulation to the
parties’ representatives by email, publication on the Supreme Court of Appeal website
and release to SAFLII. The date and time for hand-down is deemed to be 11h00 am
on 15 December 2022.
Summary:
Contract – pre-emptive right in respect of two of eight portions of farm –
offer by third party to purchase farm – activated right of pre-emption – appellant’s
remedy – enforcement of respondent’s contractual obligation to determine in good
faith what portion of global purchase price pertains to two portions and to deliver offer
to appellant accordingly.

ORDER

On appeal from: Western Cape Division of the High Court, Cape Town (Binns-Ward
J, sitting as court of first instance):

The order of the high court is varied only to the extent that the dismissal of the
application is set aside.

The respondent is directed to deliver to the appellant, within 10 days of the date
of this order, a written offer, in terms of clause 10 of the lease agreement concluded
by the parties on 13 April 2018, to purchase the leased premises, based on the deed
of sale concluded by the respondent and Swellendam Plase (Pty) Ltd on 7 April 2020.

The appellant is directed to pay the costs of the appeal, including the costs of
two counsel.

JUDGMENT

Van der Merwe JA (Gorven and Mothle JJA and Windell and Mali AJJA
concurring):
[1] This appeal concerns a pre-emptive right in respect of immovable property that
the respondent, Dahlia Investment Holdings (Pty) Ltd, granted to the appellant,
Plattekloof RMS Boerdery (Pty) Ltd. The appellant launched an application in the
Western Cape Division of the High Court, Cape Town (the high court), for an order
enforcing compliance with the right of pre-emption. The high court (Binns-Ward J)
dismissed the application with costs. Its judgment is reported as Plattekloof RMS
Boerdery (Pty) Ltd v Dahlia Investment Holdings (Pty) Ltd and Another 2021 (2) SA
527 (WCC). The appellant’s appeal is with the leave of this court.

Background
[2] The respondent is the owner of a farm in the district of Riversdale in the Western
Cape that carries the name Plattekloof (the farm). It consists of eight separate portions.
The appellant owns an adjoining farm. Mr Gunther Schmitz is a director and the sole
shareholder of the respondent. Mr Albert Vermaak, in turn, is a director and the sole
shareholder of the appellant.

[3] Two of the eight portions of the farm are described as: the remainder of the
farm Hottentots Bosch no 80 (424,6700 hectares in extent); and portion 5 of the farm
Platte Kloof no 90 (443,1839 hectares in extent) (the two portions). On 13 April 2018,
the appellant and the respondent concluded a written lease agreement (the lease). In
terms thereof the appellant rents the two portions for a period of five years ending on
1 April 2023.

[4] Clause 10 of the lease (clause 10) provides for a right of pre-emption, in these
terms:
’10.
Right of First Refusal
10.1
Provided that the Lessee has complied with all of its obligations under this agreement,
the lessee shall have the right of first refusal to purchase the Premises on terms and conditions
the same as nor (sic) no less favourable than those offered by a bona fide third party to the
Lessor and the Lessor shall deliver written notice to the Lessor (sic) specifying the terms and
conditions of such offer, and the Lessee shall have 14 (fourteen) days thereafter in which to
accept or reject the offer by written notice, failing which the Lessor shall be entitled, subject to
the Lessor (sic) commitments under this agreement, to dispose of the property to any third
party on the terms originally offered for a period of 60 (Sixty) days, failing which this right of
first refusal shall revive.’

[5] Mr Schmitz inherited the shareholding in the respondent. He is a businessman
who resides in Cape Town. He has no interest in farming. Since 2017, therefore, he
attempted to sell the farm or the shares in the respondent. In terms of a deed of sale
concluded on 7 April 2020, the respondent sold the farm to Swellendam Plase (Pty)
Ltd (Swellendam Plase) for a global purchase price of R17 million. The deed of sale

recorded that the farm was sold subject to the lease, but did not allocate a purchase
price per portion of the farm.

[6] The appellant learned of this sale on 16 April 2020. In a letter to the respondent
dated 20 April 2020, the appellant’s attorney conveyed that he held instructions to
claim specific performance of clause 10 and invited the respondent to make an offer
to the appellant in terms thereof in respect of the two portions. Despite a subsequent
exchange of correspondence between the attorneys of the parties, no such offer was
forthcoming.

[7] The appellant consequently approached the high court. The appellant claimed
that the respondent be ordered to comply with clause 10 by delivering a written notice
offering to sell the two portions to the appellant for R4 million, on the same terms and
conditions as those contained in the deed of sale between the respondent and
Swellendam Plase. The appellant also asked for an order affording it a period of 14
days to accept or reject that offer.

[8] In the meantime, on 4 June 2020, the respondent and Swellendam Plase in
writing agreed to cancel the deed of sale. In the answering affidavit Mr Schmitz
explained that the reason for the cancellation was that the respondent had been
advised that the sale of the shares in the respondent would provide tax advantages
over those of the sale of the farm. Counsel for the respondent rightly did not contend
that the cancellation of the deed of sale was of any significance in the matter.

[9] The main issue before the high court concerned the proper interpretation of
clause 10 and the consequent application thereof to the facts. I shall return to its
findings in this regard. The respondent, however, raised various other defences to the
enforceability of clause 10. One of these was that the appellant had failed to comply
with its obligations in terms of the lease and that therefore the proviso in clause 10
was not fulfilled. The high court rejected all of these defences and these findings were
not challenged before us.

Discussion
[10] It follows from what I have said that the following passage in GB Bradfield
Christie’s Law of Contract in South Africa 8 ed (2022) at 77, is apposite to the
determination of the appeal:
‘Regarding breach of the preference contract, there are essentially two issues. The first is
whether in the given circumstances the right of preference was “triggered” and, if so, the
second is what remedies the right holder has in the event of breach of the contract granting
the preference right. The answers to these questions depend on the terms on which the right
has been granted, and these terms vary.’

Trigger
[11] The first question is whether the high court correctly held that the ‘package deal’
had ‘triggered’ the appellant’s pre-emptive right. In this regard one has to ask whether
the sale of the farm gave rise to an obligation on the part of the respondent to make
an offer to the appellant in terms of clause 10. That would be the case if the conduct
of the respondent breached the provisions of clause 10. As I have said (and the high
court recognised), the answer depends in the first place on an interpretation of clause
10 in terms of the ordinary well-known principles of construction of contracts.

[12] Ultimately the question is whether clause 10 means that the right of pre-emption
would only be activated if the respondent receives an offer for the two portions on their
own. I do not think so. First, on the ordinary meaning of clause 10, the respondent
obtained an offer to purchase the ‘Premises’, even though it was part of a wider offer.
This, I think, is illustrated by Sher v Allan 1929 OPD 137.

[13] There the defendant leased half of an erf to the plaintiff. In terms of the lease
agreement, the defendant granted the plaintiff ‘the first option to purchase the leased
property, should he desire to sell the same during the continuance’ of the lease. The
defendant sold the whole erf without notice to the plaintiff. The plaintiff consequently
sued the defendant for damages and the question arose whether the sale of the whole
erf constituted a breach of the option in respect of the leased property.

[14] McGregor AJP answered the question in the affirmative. He said at 143:

‘For by selling the whole erf the defendant must needs ex necessitate rei be selling the half;
and being a free agent herein he must be taken to have desired that which his act implied and
involved. He could not – as a matter of ordinary possibility – sell the whole without selling the
half’.
And at 144 he trenchantly stated:
‘If we took a different view we might have this result: that, if the owner chose to sell all his
property at Kroonstad to a substantial purchaser in globulo, it might still be contended that the
plaintiff had no cause to complain in that there was no desire to sell the leased half – which
might seem to bring one into a somewhat metaphysical sphere.’

[15] Secondly, upon such a construction the right of pre-emption would be
circumvented or rendered nugatory by adding something to an offer to purchase the
two portions. That would be so unbusinesslike and insensible that the parties could
not have intended it. For these reasons I agree with the high court’s finding that the
rights of the appellant in terms of clause 10 had been activated. I therefore turn to the
issue of remedy.

Remedy
[16] The high court determined the content of the rights of the appellant in these
terms:
‘Upon the triggering of the right, the first respondent became obliged, according to the tenor
of clause 10 of the lease, to give the applicant written notice specifying the terms and
conditions of the offer it had received from Swellendam Plase and the applicant would
thereafter have 14 days in which to indicate by written notice to the first respondent whether
or not it intended to acquire the property on same terms and conditions. In other words, in
exercising the right to acquire the two erven on the same terms and conditions as the third
party was prepared to do, the applicant would, in the circumstances of the offer made by
Swellendam Plase, have to purchase the whole farm for R17 million. It would have to take the
whole package because the package deal reflected the terms and conditions upon which
Swellendam Plase would acquire the pre-emption property. That would be to give effect to the
plain meaning of the language of clause 10.’

[17] I am unable to agree with this conclusion. The decision of this court in Brocsand
(Pty) Ltd v Tip Trans Resources and Others [2020] ZASCA 144; 2021 (5) SA 457
(SCA) para 17, serves as a convenient starting point:

‘Brocsand’s right of first refusal had a specific content. It was the right “to enter into a new
agreement with the Holder for the appointment . . . to render mining services in respect of the
Minerals on the Property”, that is, a right against Full Score in the respect of laterite and sand
on Red Hill. As a matter of logic, the content of a right cannot change because of a breach
thereof, not even when the breach takes place by collusion.’
See also para 25. The appellant’s rights must, of course, be determined by a proper
construction of clause 10.

[18] In terms of clause 10 the appellant clearly has no more than the ‘right of first
refusal to purchase the Premises’, that is, the two portions. In context the expressions
‘such offer’ and ‘the offer’ refer to the offer that the respondent is obliged to make to
the appellant for the purchase of ‘the Premises’. That offer has to be the same or not
less favourable than that which a bona fide third party offered in respect of the two
portions. Thus, the respondent is contractually obliged to determine in good faith what
portion of the Swellendam Plase offer pertained to the two portions and to offer that to
the appellant.

[19] As I have indicated, the appellant contended that the evidence proved that the
respondent and Swellendam Plase had agreed on a purchase price of R4 million for
the two portions, it being the fair and reasonable price thereof. I therefore proceed to
analyse the relevant evidence.

[20] Over the period from December 2017 to 11 April 2018, various discussions took
place between Mr Vermaak and Mr Schmitz, during which the latter indicated that the
respondent would be prepared to sell the two portions for R4 million. On 13 April 2018,
as I have said, the lease was concluded. In subsequent discussions up to 10 January
2020, various possibilities in respect of the sale to the appellant of the shares in the
respondent, the farm or the two portions were mooted, but nothing came thereof.

[21] During February 2020 Swellendam Plase, represented by Mr Lourens van
Eeden, showed an interest in acquiring the remaining six portions (other than the two
portions) of the farm. Mr van Eeden inspected the farm on several occasions. On 6
March 2020, Mr Schmitz phoned Mr Vermaak. Mr Schmitz indicated that there was a
purchaser for the six portions. He enquired whether the appellant would still be

interested in purchasing the two portions for R4 million. Mr Vermaak responded in the
affirmative. On 12 March 2020, Mr Vermaak had a similar conversation with Mr
Cornelis van Tonder, an estate agent appointed by the respondent. Mr van Tonder
disclosed that the prospective purchaser of the six portions was Swellendam Plase.

[22] On the same day, Mr van Tonder sent an email to Mr Schmitz, stating that Mr
van Eeden (Swellendam Plase) had an option to purchase the six portions and that he
wished to exercise that option (‘wil hy graag daardie opsie uitoefen’). No such
document was produced in the evidence and it is unclear what exactly Mr van Tonder
intended to convey to his client. It did appear from the record that in an email to the
respondent’s attorney dated 27 February 2020, Mr Schmitz enquired whether he could
sign ‘the option document’. Be that as it may, during separate conversations on 14
March 2020, both Mr van Tonder and Mr van Eeden informed Mr Vermaak that
Swellendam Plase would pay R13 million for the six portions.

[23] In the answering affidavit Mr Schmitz explained what happened thereafter, as
follows:
’We proceeded to engage in negotiations. After a further visit to the farm Mr van Eeden
informed me that the value of the two portions leased by the applicant was higher than R5
million, while the remaining six portions were not worth R13 million. He would prefer buying
the whole farm. Mr van Tonder subsequently informed me that the buyer wanted to purchase
the whole farm and not only the remaining six portions separately (the relevant email
correspondence is attached as “GS20”).
On 25 March 2020 I went to the farm for the eviction of Mr Botha. On this day I also inspected
the condition of the buildings and the land together with Mr van Eeden. We agreed to reduce
the price for the whole farm to R17 million based on the bad condition of the remaining six
portions. In agreeing on the purchase price for the farm as a whole, we did not differentiate
between the six remaining portions on the one hand, and the two leased portions, on the other
hand, save to extent that the six remaining portions were, because of their condition and the
funds that would be required to rehabilitate them, regarded as having a lower value as
opposed to the two leased portions. As subsequently reflected in the Swellendam contract,
the eight portions were sold as an indivisible transaction.’
The further visit alluded to, took place on 19 March 2020, in the presence of Mr van
Tonder. In their affidavits, both Mr van Eeden and Mr van Tonder confirmed the
evidence of Mr Schmitz.

[24] The appellant urged us to reject the evidence set out in the previous paragraph
and to find that the purchase price of R17 million for the farm had been arrived at by
adding R4 million to the offer of R13 million for the six portions. The argument was
based on a weighing of probabilities. It is trite, however, that motion proceedings are
not designed to determine probabilities and that it is not permissible to decide genuine
disputes of fact in motion proceedings. In the result, the version of the respondent in
respect of disputed facts has to be accepted for purposes of the determination of an
application, unless that version is so far-fetched or clearly untenable as to warrant its
rejection out of hand. See National Director of Public Prosecutions v Zuma [2009]
ZASCA 1; 2009 (2) SA 277 (SCA) para 26. I am by no means satisfied that the
respondent’s evidence could be rejected merely on the papers.

[25] It follows that the main relief claimed, namely that the respondent be directed
to make an offer of R4 million for the two portions, must fail. In its heads of argument
in this court, the appellant for the first time attempted to raise a ground for alternative
relief. That was that the high court should have determined a reasonable price for the
two portions, if needs be after hearing oral evidence in that regard. Apart from the
procedural obstacles in its way, the contention is untenable simply because the
appellant has no such right. As I have said, the appellant has the right to a bona fide
offer on the basis of that part of the R17 million that pertains to the two portions,
nothing less and nothing more.

[26] Finally, the question arises whether this should be the end of the matter. The
proper interpretation of clause 10 was central to the proceedings in the high court and
in this court.  That the applicant claimed to be entitled to an offer in the amount of R4
million for the two portions, made no material difference hereto. That claim was based
on what the appellant perceived to be the facts. This court has spoken on the issue
and it would appear quite senseless to require the appellant to commence proceedings
afresh to decide this issue.

[27] What weighs heavily with me in this regard is that as far back as 20 April 2020,
the respondent was formally and correctly invited to make an offer in terms of clause
10. To this day, it has not done so. It would not be difficult for the respondent to comply

with a direction to make an offer in terms of clause 10. The respondent fully set out
what had transpired and, during July 2020, it obtained a detailed valuation of each of
the eight portions of the farm as on 26 March 2020. The valuation was confirmed under
oath. After all, as was said in Mokone v Tassos Properties CC and Another [2017]
ZACC 25; 2017 (5) SA 456 (CC) para 59:

‘Court-coerced compliance by the grantor will be doing nothing more than to require her or
him to honour what she or he had bargained for. It will not be an imposition.’

[28] As this would nevertheless constitute the granting of an indulgence to the
appellant, there is no basis for varying the costs order of the high court. And the
appellant should be directed to pay the costs of the appeal, including the costs of two
counsel. I therefore do not think that the proposed order would cause prejudice to the
respondent and its counsel did not allude to any.

[29] These considerations have persuaded me that in the particular circumstances
of this case, the interests of justice require that the respondent be directed to comply
with clause 10. For these reasons, I make the following order:

The order of the high court is varied only to the extent that the dismissal of the
application is set aside.

The respondent is directed to deliver to the appellant, within 10 days of the
date of this order, a written offer, in terms of clause 10 of the lease agreement
concluded by the parties on 13 April 2018, to purchase the leased premises, based on
the deed of sale concluded by the respondent and Swellendam Plase (Pty) Ltd on 7
April 2020.

The appellant is directed to pay the costs of the appeal, including the costs of
two counsel.

________________________
C H G VAN DER MERWE
JUDGE OF APPEAL

Appearances

For appellant:

T D Potgieter SC
Instructed by:
M J Vermeulen Inc c/o Walkers Inc,
Cape Town

Hill McHardy & Herbst, Bloemfontein

For respondent:
R Goodman SC (with P van Zyl)
Instructed by:
Barnaschone Attorneys, Cape Town

McIntyre
&
Van
der
Post,
Bloemfontein.
THE SUPREME COURT OF APPEAL OF SOUTH AFRICA
MEDIA SUMMARY OF JUDGMENT DELIVERED IN THE SUPREME
COURT OF APPEAL
FROM:
The Registrar, Supreme Court of Appeal
DATE:
15 December 2022
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.
Plattekloof RMS Boerdery (Pty) Ltd v Dahlia Investment Holdings (Pty) Ltd
(667/2021) [2022] ZASCA 182 (15 December 2022)
Today the Supreme Court of Appeal (the SCA) handed down judgment in an appeal from the
Western Cape Division of the High Court, Cape Town (the high court). It varied the high court’s
order only to the extent that the dismissal of the application was set aside and directed that the
respondent was to deliver to the appellant a written offer to purchase the leased property in question,
based on Clause 10 of the lease concluded by the parties on 13 April 2018 (the lease).
This appeal concerned a right of pre-emption in respect of two portions of a farm that the
respondent, Dahlia Investment Holdings (Pty) Ltd had granted to the appellant, Plattekloof RMS
Boerdery (Pty) Ltd. The farm consisted of eight separate portions, two of which were leased out to
the appellant for a period of five years in terms of the lease. On 7 April 2020, the respondent sold
all eight portions of the farm to Swellendam Plase (Pty) Ltd for a global purchase of R17 million
(the Swellendam Plase offer). The deed of sale recorded that the farm was sold subject to the lease.
The appellant subsequently sought specific performance of his right to pre-emption in respect of
the two leased properties.
The SCA was required to determine whether the appellant’s right to pre-emption would only be
activated if the respondent received an offer regarding only the two portions concerned. The SCA
determined that this could not be the case. The SCA thus held that the Swellendam Plase offer
‘triggered’ the appellant’s right of pre-emption. As to the appellant’s remedy, the SCA held that
clause 10 of the lease, such being the clause setting out the right of pre-emption, determined that

the appellant had no more than the right of first refusal to purchase the two portions and the
respondent was, in turn, obliged to have made an offer to the appellant to purchase the two portions
of the farm. Thus, the respondent was contractually obliged to determine, in good faith, what
portion of the Swellendam Plase offer pertained to the two portions, and make a subsequent offer
to the appellant.
Swellendam Plase sought to purchase the entire farm and the fixed price of R17 million was stated
without differentiating between the six portions and the two leased portions; the eight portions were
sold as an indivisible transaction. The appellant contended that the Swellendam Plase offer was
made by adding R4 million for the two portions to R13 million for the six portions to arrive at the
amount of R17 million. This disputed contention was based on a weighing of probabilities, which
could not be entertained in motion proceedings.
Accordingly, the SCA determined that the main relief sought, being that the respondent be directed
to make an offer of R4 million must fail. The appellant had a right to a bona fide offer on the basis
of that part of the R17 million that pertained to the two portions. The SCA was particularly
displeased with the fact that the respondent had the opportunity to tender an offer since 2020, but
failed to do so.
In the result, the SCA ordered the respondent to comply with the provisions of Clause 10 of the
lease agreement.

~~~~ends~~~~