THE SUPREME COURT OF APPEAL OF SOUTH AFRICA
JUDGMENT

Not reportable

Case No: 1017/17

In the matter between:

LEOLA SHARON MEYER N O
FIRST APPELLANT
GLENN TYRES N O
SECOND APPELLANT
HELEEN JEANNE MEYER N O
THIRD APPELLANT
J G MEYER BOERDERY (PTY) LTD
FOURTH APPELLANT

and

BIG FIVE DEVELOPMENTS (PTY) LTD
FIRST RESPONDENT
FORE STREET HOLDINGS (PTY) LTD
SECOND RESPONDENT

Neutral Citation:
Meyer & others v Big Five Developments (Pty) Ltd
(1017/17) [2018] ZASCA 136 (28 September 2018)
Coram:
Shongwe ADP and Dambuza, Mathopo, Mocumie and
Molemela JJA
Heard:
23 August 2018
Delivered:
28 September 2018
Summary:
Contract – Interpretation of the agreement – whether joint
venture agreement includes sale of land or not – whether Alienation of Land
Act applicable – authority of trustees – rectification whether claims properly
abandoned or not.

______________________________________________________________

ORDER
______________________________________________________________

On appeal from: The Gauteng Division, Johannesburg (Nicholls J, sitting as
court of first instance):
The appeal is dismissed with costs, such costs to include costs occasioned by
the employment of two counsel.
______________________________________________________________

JUDGMENT
______________________________________________________________

Mathopo JA (Shongwe ADP and Dambuza, Mocumie and Molemela
concurring):

[1] This appeal concerns the interpretation of an agreement concluded
between Big Five Developments (Pty) Ltd, a development company, Fore
Street Holdings (Pty) Ltd, (hereinafter collectively referred to as Big Five) and
Klipriviersberg Trust, JGM Trust and JG Meyer Boerdery Trust, a private
company which conducts farming operations on the land owned by the Trust
(the Trusts or the appellants). It arises from an action instituted by the
respondent (Big Five) in the Gauteng Division, Johannesburg. Big Five sought
the following relief; (a) rectifying various clauses of the joint venture
agreement, (JVA) (b) declaring that the agreement concluded is valid and of
full force and effect, (c) interdicting the trustees from negotiating the sale of
the property to Home Talk Developments and any other third party.

[2] The appellants raised various defences to the relief sought. Primarily
they questioned the validity and enforceability of the JVA. First, they
contended that the agreement is a sale of land and thus invalid for lack of
compliance with the requirements of the Alienation of Land Act 68 of 1981
(the Act). Second, they averred that Ms Leola Meyer, one of the trustees, did
not have the authority to bind the trusts. Third, they averred that no proper
case for rectification was made by the respondent. Each of these contentions

will be considered later. The high court dismissed the appellants’ defences.
With leave of the high court the appellants now appeal against that decision.

[3] The brief background facts are as follows. During 2010 Leola Meyer, a
trustee of Klipriviersberg Trust and JGM Trust approached Glenn David Crick,
a director of Big Five and proposed that he develop a piece of land belonging
to the Trust. I should add that Leola and Crick had previously dealt with each
other when developing another piece of land in Bassonia belonging to the
Trust. The negotiations led to the conclusion of three agreements styled joint
venture agreements.

[4] During the negotiations relating to the first agreement, the envisaged
development was originally a low to medium density residential estate with an
equestrian theme, incorporating some commercial offices at a fairly low
density residential scheme. The first agreement was concluded on 22 October
2010 between Crick on behalf of Big Five and Leola as a representative of
Klipriviersberg Trust, JGM Trust, Pather Trust and the Boerdery Trust. The
second agreement, which was similar to the first, was signed on 20 July 2011
by Crick on behalf of Big Five and Leola on behalf of the Klipriviersberg Trust,
JGM Trust and the Boerdery. The Pather Trust was excluded from the
agreement. By the time the third agreement was finalised the vision had
changed. It was envisaged that a high density mixed use residential scheme
incorporating residential, commercial, hospitality, medical facilities, offices and
large retail component would be developed. In order to achieve this vision a
team of experts was engaged to assist with the development of the area and
the rezoning of the property from agricultural to a property with rights to
develop a mixed used scheme.

[5] The main purpose of the JVA according to the respondents was to
increase the value of the land by obtaining the appropriate rezoning, then on
sell it to a third party or a realisation company. It was not contemplated that
Big Five would purchase the property from the Trust. The appellants as
intimated earlier adopted the stance that the JVA was intertwined with the

sale agreements. Absent compliance with the provisions of the Act, the
agreement was invalid and unenforceable.

[6] Premised
on
the
factual
allegations
that
the
respondents
mischaracterised the JVA as only an agreement to develop the property and
not of sale, the appellants raised special pleas which principally attacked the
validity of the agreement. The appellants’ principal stance was that the
agreement is a sale of land which, absent compliance with the Act, is invalid
or unenforceable. This argument was based on the suggestion that because it
was not determinable from the agreement which Trusts own the land
purportedly sold, and again since the purchase price and value thereof was
uncertain, the agreement is void for vagueness. It was further submitted that
because the purchase price was not clearly stated in the agreement or rather
left to the determination of Big Five. The unilateral determination of the
purchase price by Big Five renders the contract of sale uncertain, void and
thus unenforceable. The submission made was that this clause took away the
parties’ opportunity to decide for themselves before they become bound in law
whether they wished to enter into a contract or not. It was argued that giving
Big Five an unfettered discretion to decide on the contract price is
unconscionable.

[7] A second string to the appellant’s bow related to the validity of the
November 2011 agreement. It was submitted that following upon the evidence
of Mr Ewan Simmonds (Simmonds), an attorney who acted for Big Five at the
conclusion of the agreement, the trustees’ resolution related to the July
agreement only. We were urged to accept that absent any proper formal
quorate resolution of the trustees of a particular trust regarding a particular
parcel of land, the agreement was invalid and unenforceable. Foundational to
that contention is the suggestion that there was no proper resolution
authorising the conclusion of the November agreement. Thirdly, it was
submitted that no proper case had been made for rectification of the
agreement. This argument was developed further as a result of the purported
abandonment of certain orders during the application for leave to appeal by
counsel for the respondents. In essence it was submitted that by abandoning

the orders in relation to clauses 8.1 and 8.2 of the JVA, the respondents lost
their locus standi to sue. Each of these contentions will be considered later.

[8] The respondents adopted an approach that on a proper reading of the
JVA agreement there was no sale of land between Big Five and the Trusts.
The high-water mark of the respondent’s case was that all the clauses of the
agreement referred to the transfer of land only to the realisation company and
development company. These sales, so the argument continued, would only
take place in the future with other parties. Accordingly the respondents
submitted that the Act was inapplicable. Addressing the appellant’s contention
that the agreement was void for vagueness as a result of the undetermined
purchase price and value of the property, the respondents submitted that the
appellants misconstrued the agreement and to a large extent ignored the
unchallenged evidence of Crick and Simmonds that Leola or the Trusts did
not envisage any sale.

Was the JVA intertwined with elements of property development as well
as the sale of land by the Trust to the realisation company?

[9] To answer this question it is necessary to interpret the agreement. The
starting point is the words of the agreement. It has to be borne in mind as
emphasised by this court in Novartis SA (Pty) Ltd v Maphil Trading (Pty) Ltd
2016 (1) SA 518 (SCA) at para 27, ‘that this court has consistently held ... that
the interpretative process is one of ascertaining the intention of the parties’.
To this end the court has to examine all the circumstances surrounding the
conclusion of the agreement i.e. the factual matrix or context including any
relevant subsequent conduct of the parties.

[10] To fully appreciate the parties’ contention, one should start with a
consideration of the relevant provisions of the written agreement. The heading
of the agreement is styled ‘Joint Venture Agreement’. In the interpretation
section the Trusts are defined as Klipriviersberg Trust duly registered with
registration number 1333/1994 and JGM Trust duly registered with

registration number 4907/1995. The property means the immovable
properties known as:
‘1.2.2.4.1
The remaining extent of Portion 136 (a portion of Portion 2) of the
Farm Klipriviersberg 106, measuring approximately 730794 hectares
and held under Title Deed T84172/1994;
1.2.2.4.2
Portion 240 of the Farm Klipriviersberg 106, measuring approximately
205132 hectares and held under Title Deed T54572/2001;
1.2.2.4.3
Remaining extent of Portion 2 of the Farm Klipriviersberg 106,
measuring approximately 905481 hectares, held under Title Deed
T22463/2002.
Jointly measuring approximately 380 hectares and set out in the diagram attached
hereto marked “A”.’

[11] Clause 2.2 sets out the purpose of the agreement as follows:
‘2.2
The Trust and Big Five hereby enter into a joint venture in terms whereof Big
Five will rezone the property for purposes of increasing the value of same for on sale
to the development company.’

[12] Clause 3.3 states the value of the property as follows:
‘3.3
The parties hereby agree that the value of the property is an amount of
R200 000 000.00 (Two Hundred Million Rand) subject to the proposed rights, as
envisaged by Big Five, being approved.’

[13] Clause 3.8 provides:
‘3.8
On signature hereof, Big Five undertakes to pay to the Trust the amount of
R1 000 000.00 (One Million Rand), as part payment of the purchase price, which is
paid for and on behalf of the realization company.’

[14] Clause 3.4 sets out the role of the realisation company. It reads as
follows:
‘3.4
It is anticipated that prior to any portion of the property being proclaimed, that
a company/ies, being a special purpose vehicle/s. will be established for the purpose
of taking transfer of the relevant portions of the property ( (“the realization company”),
and on selling same to the development company.

[15] Clause 5 sets out the obligations of Big Five:
‘5.
Big Five’s obligations
5.1
Big Five shall be responsible for the day-to-day affairs of the project.
5.2
The Trust hereby authorises Big Five to apply to the relevant Authorities in
regards to obtaining the relevant permission to continue with the development
and undertakes to sign any and all documentation necessary to give effect
thereto.
5.3
Big Five shall be entitled to appoint agents and sub-contractors to assist it in
performing its obligations in terms thereof.
5.4
Big Five shall be responsible for the costs associated with and related to the
development.’

[16] In terms of the JVA, the Trusts would contribute the land to the joint
venture and Big Five would undertake the task of developing and rezoning it.
It would pay all the fees associated with that function. Big Five maintained the
properties and employed labourers to tend the properties. During October
2005 Big Five obtained approval for the construction of an off-ramp for the
purposes of facilitating access to the property. This, according to Crick,
increased the expenditure to R5 million. It was further anticipated that after
the rezoning process the land would have to be transferred into a company to
be formed and only at that point would money flow to the Trusts. It was further
contemplated that the land would be subdivided so that the Trusts would get
paid once those subdivided portions of the land were transferred.

[17] It is quite clear that the purpose of the agreement was to increase the
value of the land by means of residential and commercial rezoning. In the
interpretation clause only the word ‘development’ is defined. No sale is
mentioned or contemplated. This, in my view, indicates that any possible sale
could only take place in the future to the realisation company and thereafter
the development company. There was no agreement of sale between Big Five
and the Trusts. In the bigger scheme of things Big Five would not be a party
to the eventual alienation of land agreement. Its limited role in terms of clause
3.7 of the agreement was to negotiate the purchase price for the property

which would accrue to the realisation company and be shared equally
between the parties in terms of clause 3.5 of the agreement, which provides:
‘The shares in the realization company/ies will be held equally by the Trusts and/or
its nominees and by Big Five and/or its nominees.’

[18] The contention by the appellants that the agreements did not expressly
state the values of the property misconstrues the purpose of the JVA. In terms
of the agreement once the properties are developed and rezoned, the values
would be assessed at the applicable market values at that time. What the
appellants lost sight of is that all the clauses of the agreement which refer to
the sale of land relate to the realisation company and development company.
The alienations are to take place in the future and do not concern Big Five.
The evidence of Crick that there was never a sale intended between the
parties was unchallenged. Equally undisputed was his evidence that the
parties intended future sale agreements with other parties.

[19] It cannot be successfully contended that during the negotiations
between Leola and Crick any sale was discussed. The evidence points to the
contrary. What was foremost in the minds of both was to develop the property.
To achieve this the JVA was concluded. On a proper reading of the
agreement and further considering the evidence of Crick and Simmonds, no
evidence of the intended sale by means of a JVA could be established. This
evidence was corroborated by Simmonds who testified that:
‘When Leola came to see us she instructed us that she had provided a third party
with a right of first refusal to purchase the property because of that she could not
enter into a purchase agreement.’
This crucial piece of evidence was unchallenged and there is no reason why it
should not be accepted.

[20] There is no doubt in my mind that there could not have been a
development agreement without the subsequent sales by the realisation
company. The appellants’ contention would lead to an unbusinesslike
conclusion where Big Five would develop the property belonging to the Trusts
without any quid pro quo. In my view what elevates this agreement to a legally

enforceable one and distinguishes it from being intertwined to the sale
agreement is the fact that Leola categorically agreed that the Trusts were
entering into a JVA to develop the land and granted the right of first refusal to
a third party, Home Talk Development. On the facts of this case enforcing the
JVA as being only a property development agreement would not be interfering
with the good faith which the parties promised themselves.

Was Leola Meyer authorised to represent the trustees and if so was
there a proper resolution of the trustees to sign the November
agreement?

[21] The lack of authority argument was premised on the contention that
Leola, one of the trustees, did not have the authority to sign the agreement on
behalf of the other Trusts. The argument advanced on behalf of the appellants
was that in order to bind the Trusts all trustees were required in law to sign. In
support of his argument counsel relied on the judgment of this court in Land
and Agricultural Bank of South Africa v Parker 2005 (2) SA 77 (SCA), where it
was held that: ‘when fewer trustees than the number specified in the trust
deed were in office, the trust suffered from an incapacity that precluded action
on its behalf’. The facts in Parker are clearly distinguishable from the present
case and accordingly reliance on it is misplaced.

[22] There are also many insuperable obstacles standing in the way of the
appellants. There were three trustees of the Trusts namely Leola, Heleen and
Tyers. The deeds provided for decisions of the trustees to be taken by a
majority vote and no unanimity was required. As to the resolutions, two were
signed by all three, the third was signed by Leola and Heleen, while the fourth
was signed by Leola and Tyers. On the uncontradicted evidence of Simmonds
and Crick, there is nothing to suggest that Leola did not have the authority of
the other trustees. On the contrary the evidence demonstrates that the other
trustees were involved in the process. Heleen was present when the meetings
with Crick took place. Tyers at some stage demanded a meeting with Crick to
discuss the financial implications of the agreement. Evidently all of the
trustees were aware and in fact actively involved in the discussion to sign the

JVA. In a letter dated 11 September 2013 signed by all of them addressed to
Home Talk Developments the following is stated:
‘We confirm that the Trust is of the view that it was entitled to conclude a joint venture
agreement with a third party to develop its own immovable property, which it has duly
done.’
The extract of this letter is ample evidence that all trustees formally resolved
to conclude the JVA and authorised Leola to sign on behalf of the Trusts. The
evidence of Simmonds that the relevant resolutions were passed authorising
the November agreements cannot be faulted. The submission that the high
court relied on informal processes is accordingly misplaced.

[23] Confronted with the aforegoing evidence the appellants declined to join
issue with the respondents. In President of the Republic of South Africa &
others v South African Rugby Football Union & others 2000 (1) SA 1 (CC) at
para 61 it was stated that ‘if a point in dispute is left unchallenged in cross-
examination, the party calling the witness is entitled to assume that the
unchallenged witness's testimony is accepted as correct. This rule was
enunciated by the House of Lords in Browne v Dunn and has been adopted
and consistently followed by our courts.’ In my view the fundamental flaw in
the appellants’ case is that the witnesses which the appellants failed to call
were the defendants themselves in the high court and on whose behalf the
plea was filed. In the absence of their evidence it is difficult to imagine how
the appellants expected to discharge the evidentiary burden on the defence of
lack of authority. I am satisfied that the high court correctly accepted the
evidence of Crick and Simmonds on the purpose of the agreement and
Leola’s authority to bind the Trusts.

Rectification and abandonment
[24] I now turn to another related matter of considerable importance which
was debated at length by the parties during the application for leave to appeal
and argument in this court. For a proper appreciation of this issue a brief
history is necessary. In the particulars of claim the respondents (plaintiffs)
sought rectification in 14 instances. At the trial 11 claims for rectification were
abandoned and only three were persisted with. The rectification was

grounded on the allegation that there was a common error between the
parties which led to the parties signing the agreement in the mistaken belief
that the agreement recorded their true intention in the JVA. Before us the
appellants did not challenge the orders granted by the high court which
related to the rectification of the description of the property. The rectification
sought by the respondents before the high court related to clauses 8.1 and
8.2 of the agreement which read as follows:
‘8.1
In view of the fact that Big Five is a holding company and acts as an agent of
its subsidiary companies, Big Five is concluding this agreement on behalf of
one of its subsidiary companies.
8.2
Big Five shall be entitled to cede, assign and make over its rights in terms of
this agreement to the relevant nominee subsidiary company.’

[25] The rectification in respect of clause 8.1 of the agreement as explained
by Crick in evidence was intended to delete this clause in its entirety and align
it with the evidence that Big Five acted as the principal and not agent. In other
words it had locus standi to sue. In support of this argument reliance was
placed on the evidence that Leola always dealt with Crick as principal on
behalf of Big Five. Rectification was all aimed at rectifying the erroneous
description of the properties and drafting mistakes. It did not affect the rights
and duties resting on the parties in terms of the agreement. It also did not
affect the substance of the agreement.

[26] During the hearing of the application for leave to appeal before the high
court counsel for the respondents inadvertently abandoned the orders relating
to clauses 8.1 and 8.2 of the agreement. These orders were at the core of the
respondents’ case. It bears mentioning that there were other orders in the
judgment of the high court which were not sought or asked for. What is
evident from the high court’s judgment is that it conflated the evidence relating
to the misdescription of the property with the rectification in clauses 8.1 and
8.2 which had nothing to do with the property description but locus standi. In
the process of trying to clarify the issues and more importantly to appraise the
high court that such orders which were not sought would be abandoned,
counsel for the respondents inadvertently abandoned the order which related

to the locus standi of Big Five. The locus standi of Big Five was at the heart of
the respondents’ case and it was admitted on the pleadings by the appellants.
It seems clear from the provisions of the JVA read as a whole that Big Five
acted as principal and not agent for its subsidiaries. There is no doubt in my
mind that the abandonment arose as a result of a bona fide error on the part
of counsel for the respondents. To hold the respondents bound by that
erroneous submission which in any event was corrected during argument
before the high court is opportunistic and devoid of merit. For the
abovementioned reasons the appeal must fail.

[27] The following order is made:
The appeal is dismissed with costs, such costs to include costs occasioned by
the employment of two counsel.

________________________
R S Mathopo
Judge of Appeal

APPEARANCES:

For appellant:
W J Vermeulen SC and J P Snijders

Instructed by:

Mills Groenewald Attorneys c/o Couzyns Inc, Rosebank

Phatshoane Henney Attorneys, Bloemfontein

For respondent:
M v R Potgieter SC and HA van der Merwe

Instructed by:

Senekal Simmonds Inc c/o Monté Coetzer Inc,
Johannesburg

Symington de Kok, Bloemfontein