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FORM A

FILING SHEET FOR EASTERN CAPE JUDGMENT

ECJ no : 90

PARTIES:

CRAIG RICHARD LINDHORST First Plaintiff

BRIAN RICHARD LINDHORST Second Plaintiff

GAVIN ROBIN RAMSAY Third Plaintiff

CHRISTOPHER BASIL LINDHORST Fourth Plaintiff

and

MARK GREGORY ANDERSEN First Defendant

LINDA ANN ANDERSEN Second Defendant

KWELERA NATURE RESERVE (Pty) Ltd Third Defendant

SKYPROPS 71 (Pty) Ltd Fourth Defendant

REFERENCE NUMBERS -

• Registrar: 329/03

EL 130/03

• Magistrate:

• High Court: East London Division

DATE HEARD: 11 May 2006

DATE DELIVERED: 7 December 2006

JUDGE(S): Leach J

LEGAL REPRESENTATIVES -

Appearances

• for the State/Applicant(s)/Appellant(s):Adv Smuts (SC) and Adv Dugmore

• for the accused/respondent(s): Adv. Ford (SC) and Adv Taljaard

Instructing attorneys:

• Applicant(s)/Appellant(s): Yazbeks

• Respondent(s): Campos

CASE INFORMATION -

• Nature of proceedings :

• Topic:

• Keywords:

THE HIGH COURT OF SOUTH AFRICA

(EAST LONDON DIVISION)

CASE NO: 329/03

EL 130/03

In the matter between:

CRAIG RICHARD LINDHORST First Plaintiff

BRIAN RICHARD LINDHORST Second Plaintiff

GAVIN ROBIN RAMSAY Third Plaintiff

CHRISTOPHER BASIL LINDHORST Fourth Plaintiff

and

MARK GREGORY ANDERSEN First Defendant

LINDA ANN ANDERSEN Second Defendant

KWELERA NATURE RESERVE (Pty) Ltd Third Defendant

SKYPROPS 71 (Pty) Ltd Fourth Defendant

JUDGMENT

______________________________________________________________

LEACH, J

The Kwelera river flows in an easterly direction, reaching the Indian Ocean just to the north of East London. Close to the river mouth and adjacent to its southern bank, is a piece of immovable property formerly known as Riverdale Farm but now known as the Kwelera Nature Reserve (for convenience, I shall refer to it as “the reserve”).

The reserve, which lies at the heart of the dispute of these proceedings, is divided by a tarred road which runs in an easterly direction from the Mthatha-East London main road south of the river to the village of Kwelera at the mouth of the river. The bulk of the reserve lies to the north of this road, between it and the river. Also to the north of the road, bordering on the reserve, is an unusual residential development known as Whats Landing on which there is a runway for light aircraft as well as a number of luxurious residential homes. The purpose of this development is to provide a restricted number of wealthy individuals with housing, from which they can fly back and forth without using the East London airport.

In circumstances that will be set out more fully below, the reserve was purchased in 1998 by a company known as Skyprops 71 (Pty) Ltd, the registered name of which was changed on 19 October 1998 to Kwelera Nature Reserve (Pty) Ltd (the third defendant). The third defendant’s shares are held by an entity known as the Daneswold Family Trust of which Mark Andersen and his wife Linda, respectively the first and second defendants, are the trustees.

The first and fourth plaintiffs, Craig and Christopher Lindhorst, are brothers who both live at Whats Landing. So do the first and second defendant as well as Niels Andersen, the first defendant's brother. As they were all referred to by their names during the course of evidence, for convenience I also intend to do so in this judgment.

Craig and Christopher conduct certain of their business activities through the medium of two trusts, the Craig Richard Lindhorst Family Trust and the Christopher Basil Lindhorst Family Trust of which they are, respectively, trustees and beneficiaries. They instituted these proceedings in their capacities as trustees of their respective trusts, claiming that their trusts had purchased fifty percent of the shares in the third defendant from the Daneswold Family Trust at an agreed purchase price of R1 million, that they have paid that price but that, despite demand, such shares have not been transferred to them. They therefore seek an order for specific performance in that regard viz. delivery of the shares.

While it is at the very least common cause that Craig, acting on behalf of an entity other than himself, had agreed with Mark to buy fifty percent of the shareholding in the third defendant at an agreed price of R1 million which the plaintiffs have paid, the defendants contend that the sale was subject to a suspensive condition that a shareholders’ agreement be concluded, that no such agreement has been concluded and that, as the suspensive condition has never been fulfilled, no contractual relationship between the parties came into being. They therefore tendered to return the R1 million paid for the fifty percent shareholding in the third defendant. As the latter's only real asset, the reserve, is today worth substantially more than what it was back in 1998, it would be inherently unfair for the plaintiffs now to receive merely that which they paid, and the offer in the pleadings to refund them the R1 million was ameliorated by the defendants making an open tender to pay a sum of R2 067 468,50 – an amount arrived at by calculating what a lump sum of R1 million, invested in a money market account in 1998 when payment was made, would be worth today. In the light of the undisputed evidence led by the plaintiffs that the reserve is now worth some R8 million,¹ the tender was insufficient to induce the plaintiffs to settle.

While the plaintiffs admit that that the parties have not signed a shareholders’ agreement, they deny that that is due to any fault attributable to them. In any event, they also deny that the sale was ever subject to the suspensive condition advanced by the defendants, and although there are a myriad of other issues which arise out of the pleadings, the first and most important issue to be decided is whether the sale of the shareholding in the third defendant was subject to this alleged condition.

But before dealing with that issue, it is necessary to set out the relevant factual background. In doing so, I should record that the trial lasted several weeks during the course of which the facts were examined repeatedly and in minute detail. In my view, it would be an unnecessary exercise for me to attempt to assay the minutiae of all the evidence and, for present purposes, I intend, rather, to summarise that which I perceive to be relevant.

Like all good stories, it is probably best to start at the beginning. Both Craig and Mark are men of considerable wealth. Craig is the fourth generation of a family that has traded in that area in the Eastern Cape commonly known as Transkei. He and his father, Brian, established the Kokwetu Trading Company with which they went into business together in 1985. The company appears to have gone from strength to strength. From an initial operation at Idutwya, it has expanded considerably and now conducts a chain of wholesale and retail supermarkets with outlets also at Cala, Butterworth, Kentani and Good Hope. A younger brother, Christopher, the fourth defendant, later joined the business when he left school. As a result of financial advice they received, the Lindhorsts later created trusts in which to hold their business interests and to which they transferred their shares in Kokwethu – with the Craig Richard Lindhorst Family Trust and the Brian Lindhorst Investment Trust each getting forty shares while twenty shares were transferred to the Christopher Basil Lindhorst Family Trust.²

Turning to Mark, he is a self made millionaire who started from scratch. Initially employed as a salesman for a seed company, he branched out on his own in a similar business, and prospered. He is clearly a person of substantial business acumen as his business interests burgeoned and, today, he heads a substantial business empire.

Both Craig and Mark share a common love of flying. Craig flies a helicopter while Mark flies fixed wing aircraft. Not only did their paths cross as a result of their involvement in the East London Flying Club, but also as a result of one Mark’s companies, known as Seedplan, having marketed its products through the Kokwethu businesses in Transkei.

Mark and Craig’s interest in flying led to them being founders of What’s Landing when it was established in 1997. In order to develop Whats Landing, various interested parties, including Craig, Mark and Niels, teamed up and put money into a company they called Koala Bare³ which was used to purchase the land and to effect the necessary developments. A portion of the property was divided into residential plots and each of them bought a plot on which they built a home. Craig later bought the plot next to his where a home was built for his parents in-law. Christopher has since also established his residence there.

In addition to his passion for flying, Mark has a passion for nature and its conservation. During the course of the establishment of Whats Landing, he became aware that a Mr Kruse, who had become disenchanted with the authorities relating to an application for rezoning that he had made, might be in the market to sell his neighbouring farm, Riverdale. Mark knew the farm well, having rented a boathouse on the river there for several years. Not only does the property have river frontage along the Kwelera, but it is also crossed by the Dwa-Dwa river, a tributary of the Kwelera, alongside which are substantial areas of natural vegetation and forests. Charged by a dream of turning the farm into a nature reserve, Mark embarked upon lengthy and convoluted negotiations with Kruse which eventually culminated in a written agreement of sale being signed by them in late January 1998.⁴ As is set out in the deed of sale, Mark or his nominee agreed to purchase the farm from Kruse for R1,8m to be paid in cash against registration of transfer which, it was agreed, was to be effected as close as possible to 31 July 1998.⁵ Mark ultimately used Skyprops 71 (Pty) Ltd as his nominee under the sale and as the vehicle to develop the project. It was pursuant to this agreement that the third defendant came to own the reserve.

Although Mark is a wealthy individual who alleged that he could himself have found the R1,8 million needed to purchase the property, he conceded it would have left his bank account “a bit lean” and in about April or May 1998 he talked to his brother, Niels, about joining him in the venture. Niels expressed interest in doing so but was told that if he wanted to become involved, he would have to put up the money for a share. Although Niels initially felt that he lacked the necessary capital to do so at that time, he went to Denmark where he was able to make arrangements to obtain sufficient family finance to enable him to participate in the venture.

On his return from Europe, Niels was employed by one of Mark’s companies. In the course of his work, he met with Craig at his supermarket in Transkei and a discussion took place between them in regard to Mark’s plan to develop a nature reserve at Kwelera. The precise ambit of their discussion is a matter of some dispute. According to Niels, he merely broadly sketched Mark's plans and suggested to Craig that if he was interested in becoming involved in the development of the reserve, Mark might be prepared to sell him a share. On the other hand, Craig testified that, as far as he could recall, Niels had told him that Mark was looking for investors and would be prepared to offer him a 50% shareholding in the reserve. Niels denied having said that and Mark denied having been on the lookout for potential investors at that time.

It does not seem to me to be necessary to resolve exactly what passed between Niels and Mark at their meeting at the supermarket. Whatever may have been said, it led to Craig approaching Mark about becoming involved in the reserve. According to Mark, Koala Bare was at that stage, as he put it, “getting into full swing” and, at a meeting in regard to the development, Craig remarked to him that he had heard that he had bought the farm and asked whether he could possibly be accommodated in the project. He replied that he would think about it and that Craig should come and have a look at the property.

By that time, although Mark had not yet taken transfer of the farm, Kruse had given him full access to the property. He therefore arranged to meet Craig there a few days later, and the two of them went down to a boathouse where he kept a boat which they took and went up the river to a camp site he had already established. During the course of their trip, he explained his vision of a self-sustaining nature reserve which would obviously be most pleasant for both of them to use once they were living at Whats Landing.

It is common cause that Craig liked what he saw and expressed interest in becoming involved in the project. He testified that he told Mark that he needed to discuss the matter with his parents who were away at the time, and that he would revert to him once he had done so. Mark, on the other hand, testified that Craig had expressed interest in acquiring a stake in the project, that he had told him that he would think about it and that they would discuss it further at a solo party to be held a few days later at the East London Flying Club⁶ on 20 June 1998.⁷

It is common cause that both Craig and Mark attended this event. According to Mark, the two of them had a long and detailed discussion about the venture during the course of which he agreed, in principle, to selling Craig a third share in the venture. Although Niels was also at the solo party, he is apparently something of a party animal and had other things on his mind, and although he says he saw Mark and Craig talking to each other at one stage, he did not join them or enter into the negotiations. However, according to Mark, he and Craig agreed that the two of them and Niels would each have an equal one-third share. Mark further testified that he and Craig had reached agreement on all the material terms, including that their agreement would be conditional upon a shareholders’ agreement being prepared, and that Craig undertook to have his attorney prepare such an agreement. He also specifically asked Craig to shake hands on the deal, which they did.

Craig's recollection of the meeting at the Flying Club is substantially different. According to him, he and Mark merely had a brief discussion. His parents were away as I have said, and as his involvement in the scheme would require a substantial capital withdrawal from his business interests in Transkei to finance it, he was not prepared to commit himself until he was able to discuss the matter with his father. He therefore categorically denied that he had reached agreement in principle on all the terms of an involvement in the project or that he had undertaken to have a shareholder’s agreement prepared and shaken hands with Mark on the deal. He was also emphatic that it had never been suggested at any stage that he was negotiating for anything less than half the shareholding.

Craig said that a few days later, on 23 June 1998, he took his father, Brian, who had since returned from his holiday, to view the farm. He flew by helicopter from Transkei, landed at the East London airport where he picked up Brian, and proceeded to fly to the property for him to view it from the air. Brian liked what he saw but told him that he first needed to discuss the matter with his wife before giving his approval. At that stage, Craig was prepared to let both Brian and Christopher share his half of the shareholding with him. A few days later, Brian told him that due to his retirement being on the horizon, he would not become involved but that he felt it was an excellent opportunity for Craig and Christopher and that he was agreeable to them using their investment in Kokwethu to fund and become involved in the venture.

Consequently, on 29 June 1998 (which happened to be his birthday) Craig arranged to meet Mark at his offices at Seedplan at the East London suburb of Gonubie. He took his father with him, not only as he was a trustee of his trust which was going to be used as the vehicle for his involvement in the venture, but also in an advisory capacity and as he wanted to make Brian feel comfortable about the money coming out of the family company being spent wisely. According to Craig, after Mark had outlined his plans for the property for the benefit of his father, it was agreed that he would acquire a 50% shareholding in the third defendant against payment of R1 million – being R900 000,00 in respect of 50% of the purchase price of the farm, with a further R100 000,00 to recompense Mark for his time and effort in acquiring the farm and transferring the shares.

It is Craig’s case that the contract was a straightforward sale of 50% of the shareholding in the third defendant against payment of an agreed price of R1 million, and that while it was mentioned that a shareholders’ agreement would be drawn up in due course, the sale of the shares had never been conditional upon that being done. It was also his case that it was understood during the negotiations at Seedplan that although he would be acquiring 50% of the shareholding, he would in due course bring his Christopher into the venture and share his half with him.

Craig's version was materially supported by his father, Brian, who confirmed that he had been flown over the property by Craig a few days before the Seedplan meeting on 29 June 1998. He stated that during the course of that meeting, Mark had described his vision – which included fencing in the reserve, stocking it with game and building self contained units – and also confirmed that Mark had agreed to sell 50% of the shares in the third defendant to Craig's trust against payment of R1 million, but that there had no suggestion of this sale being conditional upon anything, and that Craig had in no way undertaken to arrange a shareholders’ agreement.

Mark's description of the negotiations was substantially different. As I have already indicated, he denied having merely a brief discussion with Craig at the Flying Club solo party on 20 June 1998, it being his version that they had a lengthy and detailed discussion which culminated in them shaking hands on the deal, the material terms of which were, inter alia, that Craig would acquire no more than a one-third share in the third defendant, that the enterprise would pursue the vision of a self-sustaining and economically viable nature reserve, that this vision would be set out in a shareholders’ agreement which Craig would have prepared, that Mark would retain a veto right on development decisions and would be managing director of the company and that, until the shareholders’ agreement was concluded, no share transfer would be effected.

Mark also testified that he met with Craig on the farm on 23 June 1998 when Craig landed there with his helicopter – something which Craig testified just did not happen. According to Mark, not only did Craig land on the farm but they had a discussion during the course of which Craig asked him when he wanted him to pay his half share of the purchase price. This came as a surprise to him as their earlier agreement had been that Craig would purchase a third share. And so he said something along the lines of “Hang on, what do you meant your half? It’s Niels, yourself and me”. To this, Craig replied that he had understood the agreement to be that the Andersens and the Lindhorsts would share equally in the venture. In fact, according to Mark, Craig explained that the contracting party would be a trust involving what he described as being the “greater Lindhorst family” which benefited both his brother and his parents. Although this differed from their agreement of a few days earlier, he agreed to sell half of the shareholding to this trust but, in doing so, he stressed that he was only prepared to do so if he was protected in the shareholders’ agreement which, he emphasized, was of paramount importance. He also alleged that Craig stated that he would attend to the shareholders’ agreement immediately. As the entity doing the deal was a family trust, Craig also asked him if he would be prepared to meet him together with his father to whom he could explain the details of the venture. He agreed to do so, and it was this that led to a subsequent meeting held at his offices at Seedplan on 29 July 1998.

Mark also alleged that after his meeting on the farm with Craig on 23 July, he had met with his brother, Niels, and explained that things had changed and that the venture had agreed to extending the Lindhorst family a 50% shareholding in the venture which, he said, was effectively going to be “of the age group, two brothers and two brothers”.

Mark alleged that it was pursuant to this meeting on the property that he had prepared the document, annexure P1 to the pleadings.⁸ Headed “Progress Report – Riversdale Farm” it records that Skyprops 71 (Pty) Ltd had been formed and that there had been a request for a name change to Kwelera River Sanctuary or a number of other alternatives, including Kwelera Nature Reserve. It then goes on to read:

“(2) Agreement on a development plan needs to be detailed into a shareholders agreement. See attached proposals.

3. Once shareholders agreement is in place then Accurate Trading IV (Pty) Ltd will purchase 50% of the shares in Skyprops 71 for a cash consideration of R1 000 000,00 and Craig Lindhorst (and/or family) will purchase the other 50% for R1 000 000,00. The deadline for this is end of June 1998”.

To this are attached two further pages in which, under the heading “Development Proposals”, details of the work envisaged in the development of the property in three phases are set out – the first involving, inter alia, the cleaning up of the property, the removal of internal fencing, the erection of game proof fencing and the establishment of hiking and horse trials – the second being the subdivision of the property and the sale of plots – the third being the establishment of a conference centre and resort.

The plaintiffs obviously viewed this document with great suspicion, particularly as it was completed on different types of paper using different pens, and they felt that it might well amount to a fabrication of evidence. The unusual features of this document mentioned by the plaintiffs’ expert on falsified documents, Bester, certainly do give rise to justifiable suspicion, but there is nothing to show that Mark's explanations are false, and there is certainly no basis for me to find that he fabricated the document. Mark averred that he had prepared this document to reflect items for discussion at the meeting and, although he had not handed it over to either Craig or Brian, he stated he could have had it before him on his desk and probably made use of it during the course of their meeting.

According to Mark, at the meeting at Seedplan on 29 June 1998, after wishing Craig a happy birthday, he ran through his proposals in regard to the property more or less as they are set out in the so called “progress report”. He said that he stressed that they really needed to agree on the details of the development because that was paramount in regard to the shareholders’ agreement. He stated that he asked Craig if he had seen his attorney the previous week about such an agreement, but he had replied that he had been terribly busy but would attend to it.

As is apparent from what I have set out above, there are substantial discrepancies between the two sides involved in the negotiations which led to the contract between them as to what was discussed and when such discussions took place. Considering the lapse of more than six years before they testified in regard thereto, these discrepancies are not surprising. What is of importance is that, whatever discussions may have taken place during the various meetings that occurred from the time of the boat trip on the Kwelera river in mid-June 1998 until the conclusion of the meeting at Seedplan on 29 June 1998, Mark had agreed to sell 50% of the shareholding in the third defendant to a trust Craig represented for the benefit of himself and his family against payment of a purchase price of R1 million. And while there may be a dispute to whether the conclusion of a shareholders’ agreement was a condition precedent for the coming in to force of the agreement which Craig and Mark had concluded, it is at the very least common cause that they were ad idem that such an agreement had been discussed and would be drawn up in the future. A considerable amount of time was spent during the course of the trial in regard to who had borne the responsibility having such an agreement prepared.

It certainly appears to have been accepted that Attorney Ben van Rensburg should be approached to do so, and that this suggestion arose as he was an attorney who had done some work for Craig's father, Brian. Possibly this led to the confusion which reigned, and there certainly seems to have been a breakdown in communication between Craig and Mark in regard to this issue, with each thinking the other was to attend to the matter. But, in any event, Ben van Rensburg was finally approached by Mark in this regard.

Ben van Rensburg is an attorney who practices in East London. He had done some work for Craig’s father, Brian, with whom he played golf, and had a vague idea of the proposed development at the reserve. It is common cause that, late in 1998, Mark arrived at his offices and spent some time explaining to him his vision for the property and the establishment of a nature reserve and chalets. Van Rensburg never took notes of this interview and did not open a file. Indeed he appears to have been somewhat bemused as to why Mark had come to see him and, although it appears that a shareholders’ agreement was mentioned, he seems never to have understood that he had been instructed to draft such an agreement. If he had, he said, he would have taken proper notes and instructions, including details as to shareholdings, boating, special resolutions, etc which should normally be incorporated into such an agreement and that he would then have done something about preparing a draft. Instead, he did nothing about the matter after Mark had left because he didn’t regard himself as holding instructions to do to do anything (he did not even seek to charge a fee).

Time passed, and nothing was done to obtain a shareholders’ agreement. Eventually, in March 2000 when it became apparent that Ben Van Rensburg was not going to do anything about the matter, Mark approached attorney Anton van Rensburg who, during the months that followed, prepared a series of draft shareholders’ agreements. Unfortunately, Mark had his hands full at that time. Not only was he extremely busy but he experienced a number of business crises, was away from East London for extended periods and spent some time in hospital with serious heart problems. Consequently, he did not give his full attention to the various drafts although he did, from time to time, express dissatisfaction with certain clauses which Anton Van Rensburg had inserted into the drafts he had prepared. He clearly became increasingly dissatisfied with Anton’s efforts and, eventually, decided to abandon him. He was at the time extremely busy in Johannesburg where he had built up a relationship with an attorney by the name of Campos to whom he turned with an instruction to draft a shareholders’ agreement. With this end in view, during the Easter week-end of 2002, Campos stayed with Mark and visited the reserve. Unfortunately, due to various other pressing commitments, it was only by November 2001 and after Niels had asked him to expedite the matter, that Campos got around to preparing a draft.

The Campos draft agreement formed the basis of discussions between the parties at a meeting on 6 December 2002 which both Mark and Craig attended. Mark was accompanied by Campos. Anton Van Rensburg was also there. According to Campos, he viewed Anton Van Rensburg as Craig's attorney. How he could have perceived that to be the case, I am not sure as Anton’s mandate to prepare a shareholders’ agreement on behalf of both Mark and Craig had never been formally terminated and he explicitly stated at the meeting that he was there purely to attempt to facilitate agreement between the two factions. Both he and Campos appear to me to have been somewhat short sighted in regard to the question of representation, but it is not necessary to apportion blame. What is clear is that after the discussions, during which all the outstanding issues were canvassed, it appeared as if in all probability agreement had been reached and Campos went off and drafted a revised agreement which he later made available to Craig.

In response, Anton addressed a letter to Mark on 20 December 2002⁹, raising a number of issues which Craig wished to discuss further, including the use of the boathouses, an issue which had been a particularly contentious. Despite the parties being so close to reaching agreement on a binding shareholders’ agreement, and it seems influenced somewhat by Campos's attitude, Mark felt that agreement had been already reached on these issues and was not prepared to discuss them any further. And so the settlement floundered. This was extremely unfortunate as with a little bit more tact, patience and negotiation, I am sure that a settlement could have been reached and these proceedings would never have been necessary. Be that as it may, no such agreement was forthcoming and, as no binding shareholders’ agreement came into being, Mark refused to transfer 50% of the shareholding in the third defendant to Craig, Christopher or their trusts and, in due course, these proceedings were instituted.

In the light of this background, I turn now to consider the issues between the parties. As I have set out above, there is a material conflict between the respective sides as to whether their negotiations resulted in their contract being conditional upon the conclusion of a binding shareholders’ agreement. As the plaintiffs seek to prove an agreement which, on their version, excludes the contract being conditional in this way, they bear the onus proving that it did not include the terms relied upon by the defendants.¹⁰ In considering whether the plaintiffs have discharged this onus in the light of the contradictory evidence in regard thereto, it is necessary to bear in mind the approach set out in National Employers’ General Insurance Coy. Ltd v Jagers 1984 (4) SA 437 (E) at 440-441¹¹ where Eksteen J, as he then was, said:

“It seems to me, with respect, that in any civil case, as in any criminal case, the onus can ordinarily only be discharged by adducing credible evidence to support the case of the party on whom the onus rests. In a civil case the onus is obviously not as heavy as it is in a criminal case, but nevertheless where the onus rests on the plaintiff as in the present case, and where there are two mutually destructive stories, he can only succeed if he satisfies the Court on a preponderance of probabilities that his version is true and accurate and therefore acceptable, and that the other version advanced by the defendant is therefore false or mistaken and falls to be rejected. In deciding whether that evidence is true or not the Court will weigh up and test the plaintiff's allegations against the general probabilities. The estimate of the credibility of a witness will therefore be inextricably bound up with a consideration of the probabilities of the case and, if the balance of probabilities favours the plaintiff, then the Court will accept his version as being probably true. If however the probabilities are evenly balanced in the sense that they do not favour the plaintiff's case any more than they do the defendant's, the plaintiff can only succeed if the Court nevertheless believes him and is satisfied that his evidence is true and that the defendant's version is false.……I would merely stress however that when in such circumstances one talks about a plaintiff having discharged the onus which rested upon him on a balance of probabilities one really means that I the Court is satisfied on a balance of probabilities that he was telling the truth and that his version was therefore acceptable. It does not seem to me to be desirable for a Court first to consider the question of the credibility of the witnesses as the trial Judge did in the present case, and then, having concluded that enquiry, to consider the probabilities of the case, as though the two aspects constitute separate fields of enquiry. In fact, as I have pointed out, it is only where a consideration of the probabilities fails to indicate where the truth probably lies, that recourse is had to an estimate of relative credibility apart from the probabilities.”

In considering whether an oral agreement contained a particular clause expressly alleged by one party but denied by the other, actions often speak louder than words, and the manner in which the parties conducted themselves after the conclusion of the agreement often forms a reliable basis for inferring what their actual agreement had been. Bearing this in mind, for the reasons set out below, the probabilities seem to me to be wholly in favour of the plaintiffs.

Firstly, although Craig was an extremely successful and experienced businessman, the Lindhorst business empire was a family affair and it seems to me to be extremely likely that he was not prepared to commit himself to a venture which would have required a substantial capital withdrawal from the family business before he had been able to discuss the matter with his father and obtain his approval. This he could not do until after the meeting at the Flying Club. While I am prepared to accept that he clearly indicated to Mark that he was extremely interested in becoming involved in the project, the probabilities appear to be overwhelming that he would not have been prepared to have committed himself to the venture at the Flying Club as Mark said was the case (or indeed at any subsequent meeting on the farm) but only once his father, Brian, had viewed the property and had been able to engage with Mark about the project. I therefore find Mark’s evidence that agreement was reached at the Flying Club on 20 June 1998 to be inherently improbable and Craig's version that agreement was only reached once he had his father's approval at the Seedplan meeting to be far more likely.

As I have said, Craig testified that although the issue of a shareholders’ agreement was mentioned at the Seedplan meeting, he had not undertaken to arrange for the preparation of such an agreement. He explained that, at that stage, he simply did not have the experience and expertise to ensure that an adequate agreement was drawn. It was argued on behalf of the defendants that this was wholly unacceptable as Craig was an experienced and extremely successful businessman but, as Craig also explained, the Lindhorst business empire was a family affair (albeit a most successful one) and I therefore do not find it at all surprising for him to say that he knew nothing about shareholders’ agreements and the like. Certainly, Mark, whose business expertise appears to be substantially more wide-ranging than that of Craig, would have been in a better position to have arranged such an agreement.

Of course, as I have mentioned, Mark stated that when he and Craig had reached agreement in principle at the Flying Club on 20 June 1998, Craig had acceded to his request to attend to the preparation of a shareholders’ agreement and that, subsequently, during the meeting at the reserve held on 23 June 1998, Craig had repeated his undertaking in that regard. Mark also testified that, at the Seedplan meeting, Craig had reassured him that he was attending to the preparation of the shareholders’ agreement – an averment he repeated on 27 July 1998 when he paid Mark the R1 million he’d agreed to pay for the shares in the third defendant. However, in my view, it is inherently improbable that, if Craig had been as keen as he clearly was to become involved in the project, he would not have gone to see attorney to have such an agreement prepared if he had indeed repeatedly undertaken to do so as Mark alleged, particularly if it had been stressed (as Mark was so emphatic had been the case) that such an agreement was a precondition to his involvement in the scheme. Accordingly, if the parties had so clearly agreed that the sale of the shares in the third defendant was conditional upon the preparation of this shareholders’ agreement and that Craig would do the necessary in ensuring that such an agreement was obtained, the breakdown in communication in regard to who was responsible for organizing the agreement was hardly likely to have occurred and Craig's failure to do so would be absolutely inexplicable. The fact that no shareholders’ agreement was concluded, or that no attorney was instructed to prepare such an agreement as a matter of urgency, speaks volumes on the probability that the parties had not agreed upon their contract being subject to the condition relied upon by the defendants and is far more consistent with Craig’s allegation that although it had been discussed, it was not something that had to be immediately attended to and could be dealt with in due course.

This becomes all the more probable when one bears in mind that R1 million was in issue. Although Mark attempted to down play the necessity to obtain alternative finance for his venture, it is not without significance that instead of being obliged to find R1,8 million in order to pay for the farm at the end of July, he in fact only had to put up a quarter of that figure by reason of the Lindhorsts and his brother’s involvement. And when the money was required to pay Kruse, Mark had no reservation in calling upon Craig to pay the R 1 million, and personally received it from him. If Mark was so keen to protect his vision that he required the agreement to be subject to shareholders’ agreement reflecting that vision, why did he immediately call for payment well knowing that no such agreement had been concluded? On his version, both he and Craig would have been acutely aware at that stage that payment was not due as no shareholders' agreement was in place, and it is most unlikely that Mark, who professed to be so keen on ensuring that the shareholders’ agreement accurately reflected his vision, would be prepared to allow Craig into the scheme well knowing that the contract between them had not come into force as a suspensive condition had not been fulfilled.

By the same token, it is also most unlikely that Craig would have parted with such a sum well knowing that he was doing so in terms of an agreement which was inchoate in the sense that it would then not have been binding as no shareholders’ agreement had been concluded. There does not seem to me to be much doubt that Craig, knowing that a shareholders’ agreement had not been concluded, would not have handed over R1 million if Mark had clearly spelled out to him that his obligation to do so was conditional upon them having such an agreement. It would have been absolutely foolish for him to have done so and, successful business man that he is, he is not likely to have been so foolhardy as to have handed over that amount of money knowing that he was not contractually bound to do so.

Accordingly, the mere fact that the payment was made, and accepted, within a few weeks of the meeting at Seedplan and at a time when both sides were aware that no shareholders’ agreement had been concluded, speaks loudly of the agreement not having been subject to the suspensive condition relied on by the defendants.

Moreover, if the parties’ contractual relationship was conditional upon the existence of a shareholders’ agreement, it is highly improbable that they would both have allowed the conclusion of such an agreement to drift along as they did. It would obviously have been of vital importance to both of them to have certainty on that issue as soon as possible. Mark’s explanation that he wanted Craig to arrange to the agreement in order to ensure that he had fully understood the vision as he had explained it to him, rings somewhat hollow. If he was as keen as he said he was on ensuring that the agreement reflected his vision, one wonders why he did not specifically instruct an attorney of his choice to ensure that the agreement spelled out his vision. Not only did he not do so right at the outset, but he allowed things to drift on for several years before he ultimately instructed Campos.

It is also significant that Mark did not tell attorney Ben Van Rensburg that the sale of the shares was conditional upon a shareholders' agreement been concluded. Similarly, attorney Anton van Rensburg was never informed that this was the case, although it later became apparent to him that Mark considered there to be a relationship between it and the transfer of shares. And in a letter Mark addressed to Anton Van Rensburg on 4 December 2002, in which he stated that Craig had taken responsibility for arranging a shareholders’ agreement, he made no mention of this being a pre-condition to the enforceability of the agreement between the parties. If it had been such a precondition, one would have expected this to have been clearly drawn to the attention of these attorneys right at the outset.

The evidence of the accountant, Mr Cooper, who was called on the part of the plaintiffs, is also extremely pertinent to this issue. According to him, as was confirmed in a hand written note which he had made, Mark spoke to him telephonically on the 7 November 2000 and told him to effect transfer of the share certificates to the Lindhorsts at a purchase price of R1 million but that he was not to transfer Niels’ shareholding at that stage. Although the first defendant thereafter countermanded this instruction, his initial instruction to transfer the shares is wholly inconsistent with anything other than a binding agreement to do so and it is inconceivable that if the sale agreement had been subject to the alleged suspensive condition and which he at all times knew had not been fulfilled, he would have issued this instruction.

Not only are these factors inconsistent with the agreement being subject to a suspensive condition, but Craig and Christopher both acted as shareholders and were treated as such by Mark and Niels until discussions on the Campos drafts broke down. Not only did they make regular and substantial financial contributions to the third defendant, but they were given notice of and attended shareholders’ meetings and participated in the daily running of the company and its affairs. Craig was also allowed to renovate the old dairy on the property and to effect certain building improvements in order to move the offices of Kokwethu to the reserve. He was also permitted to renovate and improve one of the boat houses on the property for the use of Christopher, himself and their families. This was clearly done on the basis that they were equal partners in the reserve. All of this is consistent with a binding sale to them of the shares of the third defendant and inconsistent with such sale being subject to a suspensive condition which had not been fulfilled. It is difficult to comprehend that Mark would have allowed to Craig and Christopher to have become so involved with the development of the reserve and treated them as shareholders if he knew that they were not and that the purchase of their shares had been subject to an unfulfilled suspensive condition.

It is also highly improbable that Craig would have been prepared to make the regular financial contributions that he did make to the third defendant if he had been aware that his purchase of its shares had been conditional and that he was not a shareholder - which, on Mark's version would have been the case. And it appears from Niel’s testimony that, by 2001, Craig was clearly concerned about his shares not having been transferred to him, a reaction which is, in itself, indicative of a belief on his part that there was no reason for his shares not be transferred.

The issue whether or not the agreement between the parties contained the suspensive condition relied upon by Mark is one of fact which falls to be determined from the evidence. In evaluating the evidence it is, of course, necessary to bear in mind that a court must guard against making contracts for people or supplementing an agreement merely because it would have been reasonable for the parties to have contracted on particular terms.¹² Instead the court must decide on what the parties actually agreed. Accordingly, even if it would have been a reasonable precaution for the parties to have contracted on the basis that their agreement was conditional upon them concluding a shareholders’ agreement, that does not necessarily mean that they contracted on that basis.

In addition, in evaluating the evidence and the probabilities, I must also bear in mind that it is all too easy for a witness, particularly after the lapse of a substantial period of time, to incorrectly reconstruct facts and events. Witnesses all to often testify that they did reach agreement on something because it would have made sense to do so, and therefore in their reconstruction of the events decide that they did do so. To a certain extent, this is illustrated by the evidence of Niels who initially testified that the agreement was conditional upon the conclusion of a valid shareholders' agreement. However, when pressed, Niels testified that Mark never mentioned a shareholders’ agreement when he discussed his involvement in the scheme with him and that, as they already had a partnership agreement, he understood that there would be a shareholders’ agreement as “that is the nature of how I did business”. The only discussion concerning a shareholders’ agreement that he was able to recall was at a meeting at which Craig and Mark were also present held in September 1998, a few months after the Seedplan meeting. And, as he put it, the discussion about the shareholders’ agreement merely related to who would prepare the agreement as part of the setting up of the operation. The fact that Mark never discussed a shareholders' agreement with him, nor mentioned that during his discussions with Craig he had insisted upon the conclusion of such an agreement as a condition to his involvement in the reserve, indicates on the probabilities that he had not in fact laid down such a condition – possibly because he, like Niels, merely assumed that would be how they would all do business.

Niels also testified that after he had seen them talking to each other at the Flying Club, Mark had commented that Craig was "in". It was argued on the half of the defendants that this remark corroborated Mark's statement that an agreement had already been concluded by that time. While it does to a degree, the statement that a person is "in“ is somewhat indefinite and may well connote no more than that the person concerned is extremely interested in participation rather than definitely committed thereto. What is of greater importance, to my mind, is Mark’s admission that before the meeting at Seedplan, he had told Niels that things had changed and that he had agreed to the Lindhorst family having a 50% shareholding in the venture which, he said, was effectively going to be “of the age group, two brothers and two brothers”. This is inconsistent with both his further statement that the trust would be representing the "greater Lindhorst family" and his allegation in the affidavit he lodged in seeking an amendment to the plea, in which he stated that after numerous attempts at finalising a shareholders' agreement, Craig advised him that he wished to involve Christopher in the venture. However, it is consistent with Craig's allegation that Mark had agreed during their discussions at Seedplan that he could bring his brother into the venture with him.

Counsel for the defendants, in seeking to persuade me that their version was more probable, placed considerable emphasis, understandably, upon the document annexure P1 to the pleadings. While Mark recorded therein that Craig would purchase once a shareholders' agreement was in place, that does not necessarily mean that he proceeded to convey this to Craig. He did not make a copy available to either Craig or Brian when they met with him, and he assumed that he had it on the table at the time. In the light of these features, Mark may well not have conveyed to them what he had noted earlier. Certainly, neither he nor Craig thereafter conducted themselves as if their agreement was subject to such a condition.

Not only are the probabilities then firmly in favour of the plaintiff’s version, but there are a number of issues in respect of which Mark’s evidence was unsatisfactory. Firstly, and importantly in the light of what follows, his evidence in regard to the entity Craig was representing at the time he negotiated with him was both confused and confusing. After the close of pleadings and pursuant to an extensive consultation Mark held with his counsel and attorney, a substantial amendment to the defendants’ plea was sought introducing, inter alia, an allegation that the agreement concluded at the Flying Club had been concluded not with the Craig Lindhorst Family Trust as had originally been pleaded but with the Lindhorst Family Trust. In the answering affidavit opposing such an amendment, it was pointed out that the Craig Lindhorst Family Trust was a family trust of the Lindhorst family. In response thereto Mark averred that Craig had, at the conclusion of the agreement and at all times prior thereto, represented to him that he represented “a trust of the Lindhorst family” which he also described as being “the greater family trust” as the contracting party. He also suggested that he had used the terms “Craig Lindhorst Family Trust” and “Lindhorst Family Trust” inter-changeably and stated that he had understood that the two were one and the same being as the “greater” Lindhorst family trust. As regards Christopher and his family trust, Mark stated that he had, in principle, been amenable to Christopher becoming involved in the venture on the basis that shareholding in a company would be held equally between the Andersen family on the one hand and the Lindhorst family on the other.

However, in January 2003, when Mark instructed attorney Campos, he advised him that Craig had told him that he would hold his interest in the Craig Lindhorst Family Trust – which was consistent with the initial plea that the sale had been concluded with that trust. When it came to testifying, Mark was confronted in cross examination with what he had stated under oath in the affidavits in the amendment application and was constrained to concede that, during their discussions at the Flying Club, Craig had not told him that he was representing the family trust of the Lindhorst family (as he had deposed). However, his stance in this regard vacillated as his statement to that effect was irreconcilable with his other testimony to the effect that Craig had indeed advised him that he would be contracting through his family trust as well as his testimony that Craig had possibly mentioned his trust at the Flying Club or “might have mentioned that he would have put it into a company – I really can’t recall the specifics of it, my impression is that it was an entity of Craig’s”. This too is irreconcilable with his later statement that Craig never said at the Flying Club that he was “going to hold this in my personal capacity or in a personal trust or in a company I hold”. Later he stated that at that time he did not know that there was a trust involved and that there was “no word trust or anything mentioned”, but almost immediately thereafter stated that, while he did not recall Craig using the word “trust” it was possible that he had said that he would be “…putting it into a trust, because I do remember him at some stage saying obviously I’ll be putting it into a trust”. Despite his earlier denial of Craig mentioning a trust, Mark ultimately conceded that it was possible Craig had stated that he was participating through his family trust.

In the light of all this, there is considerable merit in the argument of plaintiff’s counsel that Mark’s evidence on the question of what Craig had told him at the Flying Club meeting in regard to him representing a family trust was, as he put it, “somewhat akin to a lucky packet in that one can take one’s pick”.

Mark’s evidence was also unsatisfactory in regard to the alleged meeting he had with Craig at Kwelera 23 June 1998. Initially, when Craig was cross-examined, counsel for the defendant suggested to him that he may have met with Mark at Whats Landing on that day, a suggestion that was met with a firm negative response. It was only after an adjournment when instructions were taken that it was suggested to Craig that he had in fact landed at Kwelera near the farm house on the reserve. Craig’s response was that he had merely taken his father for a half hour flip over the reserve, and it was not suggested to him at that time Mark was not referring to that flight but to a flight in which Craig had come from Transkei to land at Kwelera. However, when Mark testified, he was able to recall that Craig had landed after flying from Transkei and that, while at Kwelera, they had discussed his participation in the venture and agreed to shareholding to be split equally between the two families, and that after this meeting Craig had left him with the distinct impression that he was going to arrange to meet with his father. However, his certainty as to Craig arriving by air from Transkei for the meeting on 23 July subsequently dissipated as, under further cross-examination, it appeared that he was uncertain of whether Craig had in fact arrived by air or in a light delivery vehicle and only stated that it had been by helicopter as Craig’s logbook referred to a flight to Kwelera that day.

Moreover, and most importantly, the fact that there was a meeting between Mark and Craig on the reserve on 23 June 1998 at which certain of the essentials of the contract were redefined and agreed upon, was never part of the defendants’ case on the pleadings. When this was put to him, Mark responded that his legal representatives had displayed a “lack of acceptance” of this issue and that he had always been uncomfortable with the pleadings in that regard. However, if it had always clearly been his case that during this meeting the terms of the contract earlier agreed at the Flying Club had been substantially amended and finally agreed, there is no reason to think this would not be not reflected in the pleadings – particularly as reference was made in the pleadings to the meeting at Seedplan which, according to Mark, took place well after a final agreement had already been reached. In these circumstances, if Mark's description of the events which occurred at the reserve on 23 June was not a figment of his imagination or an erroneous reconstruction but something of which he had it all times been aware, it is almost inexplicable that reference thereto was not made in the pleadings and the inference is almost irresistible that this was something he had thought of later.

I do not think it is necessary to subject Mark’s evidence or the defendants’ version to any further analysis for present purposes (one could go on and on). Bearing all of the above in mind, I am of the view that Mark’s evidence as to the terms of the agreement that was concluded is riddled with improbabilities and inconsistencies. Whether this is as a result of a bona fide but inaccurate reconstruction or some other reason, I need not decide. Suffice it to say that I find Craig's evidence to be far more convincing and probable, and have therefore concluded that the plaintiffs have established, on a balance of probabilities, that Craig, acting on behalf of his trust, concluded the simple and uncomplicated agreement he averred in which he purchased 50% of the shareholding in the third defendant against payment of the sum of R1 million, and that the sale was neither subject to a suspensive condition that a shareholders' agreement to be concluded nor contained all the detailed terms alleged by the defendants. I find further that when the agreement was concluded, Mark was agreeable to Craig disposing of one half of his trust's shareholding to his brother, Christopher.

Accordingly, I have concluded that the parties contacted on the terms relied upon by the plaintiffs and that the lack of a shareholders’ agreement does not render the sale of the shares to them unenforceable. This conclusion renders it unnecessary to deal with many of the further issues that were raised on the pleadings although I think it is necessary at this stage to deal, with the plea that the contracting party was in fact the Lindhorst Family Trust, the effect of this contention being that the plaintiffs’ lack locus standi to enforce the sale.

I have already referred to Mark’s somewhat confused evidence in regard to this issue, but it is clear from his own testimony that the personality with whom he was prepared to contract was Craig and that it did not matter to him what vehicle Craig used for purposes of their venture. Also importantly, he conceded that, on the day they reached agreement, Craig may have indicated that his participation in the venture would be through his family trust. Importantly, under cross-examination when it was put to him that the entities involved in the shareholding were not critical in putting together the deal which was dependent upon the investment and the payment of the purchase price, Mark’s response was that it was the identity of those who the entities represented that was crucial, not the entities themselves. Importantly, the persons he was prepared to deal with were Craig and, later, when Craig wanted to bring his younger brother into the venture, Christopher as well.

At that stage, due to financial advice they had been given, the Lindhorsts as a family were restructuring their financial affairs which resulted in the creation of the Craig Richard Lindhorst Family Trust and the Christopher Basil Lindhorst Family Trust, both of which had a shareholding in Kokwethu through which Craig and Christopher conducted their business interests. In these circumstances, the probabilities are overwhelming that they would use their trusts as vehicles for the acquisition of their shareholding in the reserve, particularly as the funds which were used to purchase such shareholding came out of their loan accounts in Kokwethu There was also no reason for the Lindhorst Family Trust, the beneficiary of whom was their father, Brian, to have been involved as he at no stage expressed any interest in personal involvement and had merely enjoyed the opportunity of visiting and briefly looking at the property before the meeting at Seedplan on 30 June 1998. And although Mark stated that he understood the trust would represent the “greater Lindhorst family” as he understood it when agreement was reached, that is hardly probably in the light of the fact that appears to have been common cause that Craig had asked Brian whether he wanted to be involved to which he replied in the negative, and at no stage during the discussions that were held at Seedplan did Brian indicate to Mark that he wanted to be involved. Moreover, if the original agreement had been an entity involving the “greater Lindhorst family” why would Craig subsequently have asked Mark if Christopher could be involved? He would already have been involved through the trust representing the greater Lindhorst family.

In the light of this, I have concluded that there is no merit in the defendants’ contentions that the contract was concluded by the Lindhorst Family Trust and that the plaintiff's lack locus standi to enforce it.

A further issue to which I now turn it is a special plea of prescription, the defendants contending in their plea that the claim for transfer of the shares had prescribed as summons was issued more than three years after the purchase price for the shares had been paid in 1998. While in the witness box, Mark stated that he did not want to win the case on the point of prescription, but his munificence in this regard did not cause him to abandon his plea of prescription. Instead, although the plea if upheld would mean that the Lindhorsts would have paid R1 million for shares they could not receive, he stated that he did not want their money and offered to pay the price he received for the shares to charity. What must now be considered is whether any such charity will benefit.

Extinctive prescription commences to run under s 12 (1) of the Prescription Act, 1969 as soon as a ”debt" is “due”. As the term ”debt” is not defined in the Act, it has persistently being held that it must be given a wide and general meaning and includes an obligation to do something, whether by making payment or by effecting delivery of goods and services. For present purposes I intend to accept, but without deciding, that it would include an obligation to effect transfer of a share certificate in a company.

There is of course a vital difference between the existence of a debt and it being recoverable, and prescription begins to run, not necessarily when a debt arises, but only when it is due i.e. when it is immediately claimable by the creditor in legal proceedings. This implies an obligation on the part of the debtor to immediately perform.¹³ As it is trite that the party who raises prescription as defence must prove the date of the inception of the period of prescription, the defendants’ were therefore obliged to show when the debt (the obligation to perform) fell due. Relying on various authorities¹⁴ and upon the fact that none of the parties had ever alleged that it had been agreed that the shares were to be transferred by a specific date, counsel for the plaintiffs argued that the debt could only have become due within a reasonable time of the first and second plaintiffs, as trustees of Daneswold, being placed in mora by way of demand. He also argued that the earliest communication relating to the transfer of shares is contained in certain correspondence which took place in about October 2000¹⁵ which, so the argument went, would be the earliest that mora would arise and prescription could begin to run. Summons was issued less than three years later in April 2003. The plaintiff’s argument therefore is that summons was issued well before three years had elapsed from the time the defendants were placed in mora.

There is considerable merit in this argument. However, even if one assumes for present purposes that the obligation to transfer the shares became due and recoverable upon payment of the R1 million in mid-1998 as the defendants contend, there seems to me to be a further reason why, clearly, the defence of prescription cannot be upheld. Sections 14(1) and (2) of the Prescription Act No. 68 of 1969 provide as follows:

1. The running of prescription shall be interrupted by an express or tacit acknowledgement of liability by the debtor.

2. If the running of prescription is interrupted as contemplated in subsection (1), prescription shall commence to run afresh from the day on which the interruption takes place or, if at the time of the interruption or at any time thereafter the parties postpone the due date of the debt from the date upon which the debt again becomes due.

It is necessary to bear in mind that a share certificate merely proves to the outside world the identity of the owner of the shareholder. As I have mentioned above, after the price of R1 million had been paid, Craig and Chris Lindhorst (or more properly, their respective trusts) were recognised as being shareholders in the reserve in whose affairs they participated in the day to day running and administration. There can be no more cogent tacit acknowledgment of the liability to transfer a person his share certificate than to allow such person to act as a shareholder and member of a company. It was only when the negotiations involving Campos broke down in May 2002 that Craig and Chris were treated as if they were not in fact shareholders and, in my view, it was only at that stage that prescription commenced to run afresh under s14(2). There can therefore be no question of a claim having prescribed when summons was issued in April 2003. Accordingly, in my view, (and unfortunately for charity) the special plea of prescription must be dismissed.

A final objection raised by the defendants to the plaintiffs' entitlement to the relief sought is based on the submission that although a court will, as far as possible, give effect to a plaintiff's case to specific performance, it has a discretion in that regard and may, in a fitting case, refuse to grant such an order but leave it to the plaintiff to claim damages. It was submitted on behalf of the defendants that while they bore the onus of proving facts on which the court can and should exercise its discretion in their favour by refusing specific performance¹⁶, they had discharged that onus particularly as a deadlock situation will immediately result between the shareholders of the third defendant which would lead to its liquidation. This contention was based upon the suggestion that, by reason of a number of factors, the shareholders viz Mark, Niels, Craig and Christopher, will be unable to work effectively together in the management of the affairs of the third defendant.

The factors to which the defendants refer include Craig's lack of trust in Mark (as shown, inter alia, by his suggestion that annexure P1 was possibly fabricated), their previous involvement in acrimonious spoliation and arbitration proceedings arising out of the dissolution of a partnership relating to an aeroplane, the fact that there had been a physical fracas between them and a serious altercation between Mark and Craig's father, Brian, as well as Craig's alleged attempts to undermine Mark in the eyes of his brother, Niels, and the fact that Craig had insisted that the shares should be kept in trust pending the outcome of these proceedings. In addition, Mark believes that Craig only pays lip service to his vision for the reserve and that there is, in truth, absolutely no love lost between them at present.

All these factors are indeed relevant to the exercise of my discretion in regard to the question of specific performance. But there are a number of other factors which are to be taken into account. Firstly, I cannot lose sight of the fact that there are four shareholders in this enterprise, not just Mark and Craig. And while it may be that Niels testified that he, too, has lost faith in Craig as a result of something which happened during the course of attempted settlement negotiations, there seems to be no doubt that the relationship between the two of them is less fraught with difficulties than that which exists between Craig and Mark. And while it is understandable that the relationship between the different factions has been strained during this litigation, finality in regard to these proceedings may well alleviate the position remarkably. It is also not without significance that the parties were not too far apart in reaching consensus on a shareholders’ agreement which, if concluded, will alleviate future problems in regard to the use of the reserve. I am sure all parties would prefer to reach consensus in that regard rather than to undergo yet another court case. And it is also significant that the two Lindhorst brothers as well as Mark and Niels are all members of Koala Bare resident at Whats Landing, and have been able to remain so despite their personal difficulties.

It also seems to me to be relevant to bear in mind that to refuse specific performance will result in Christopher, against whom neither Andersen holds reproach, being denied his entitlement to participate in the reserve in respect of which he had paid his share, and it would be inherently unjust to him to refuse specific performance and to oblige him to attempt to prove damages, something which may be a difficult, expensive and difficult task. If there is a dispute as to the running of the third defendant, it is also by no means certain that Christopher will automatically side with his brother and I certainly cannot find that the management of the third defendant’s affairs will end up in deadlock and will lead inevitably to it being wound up.

In addition, the exercise of the discretion in regard to a specific performance must be considered bearing in mind that the plaintiffs purchased shares in a property owning company which has, as its most valuable asset, a prime and incomparable stretch of river bushveld and river frontage possessed of immense development potential. Not only have plaintiffs performed in full and paid for half of the shares in the third defendant as long ago as July 1998, they have since then both financed the defendant and assisted in the management and early development of the reserve. They have contributed 50% of the purchase price of the land, have purchased half of the share in the third defendant and have, in addition, paid a significant premium to Mark for his efforts in the initiation of the venture and for transfer of the shares. All of this would render it inherently unfair to the plaintiffs to exclude them from the further development of the venture. In addition, damages would be extremely difficult to quantify and, as it cannot be said that performance by the defendants is impossible, the immense development potential of the land and the life style benefits associated with a shareholding in the third defendant, operates strongly in favour of on order of specific performance.¹⁷ In addition, a plaintiff ordinarily has the right to elect whether to demand performance or sue for damages, and the courts will as far as possible give effect to this election.¹⁸

Bearing these principles and the facts that I have set out above, I have decided to exercise my discretion in favour of ordering specific performance and directing the defendants to transfer the shares that were sold.

The final issue to consider is whether the order should direct transfer of the 50% shareholding in the third defendant to the Craig Richard Lindhorst Family Trust or whether 25% of the shareholding should be transferred to that trust with the remaining 25% to be transferred to the Christopher Basil Lindhorst Family Trust. Counsel for the plaintiffs did not mind which of these options I exercised and informed me that, between Christopher and Craig, there was consensus that even if the order was made solely in favour of the Craig Richard Lindhorst Family Trust, it would transfer half of those shares to Christopher’s trust.

Although, strictly speaking, Craig represented his trust in concluding the purchase the shareholding, on his version (which I have accepted) Mark had no objection to him splitting that shareholding with Christopher and, in truth, the shares were paid for by them both. As I have said, Mark mentioned to Niels right at the outset that it would be the two Andersen brothers and the two Lindhorst brothers involved in the development. And even on his own version, Mark had no objection to Christopher’s involvement once he became aware that Craig had introduced him into the venture, and thereafter treated him as an equal shareholder. In these circumstances, one can regard the sale of the shares as having been varied to the extent that the purchasing parties were in fact Mark and Christopher, each representing his own trust. I have therefore decided that the defendants should be ordered to transfer 25% of the shareholding in the third defendant to Craig's trust and a further 25% to Christopher's trust.

There is no reason why the costs should not follow the event. There is no reason to burden the third defendant¹⁹ with the costs as it is its shareholding which is at stake. Accordingly, the costs order should issue against the first and second defendants who are sued in their capacities as trustees of the Daneswold Holding Trust, the holder of the shares in the third defendant, who have refused to make 50% of the shareholding over to the plaintiffs.

It was argued on behalf of the plaintiffs that I should grant the costs order on the scale as between attorney and client, particularly in the light of the trial having been extensively prolonged in the pursuit of spurious defences (some belatedly introduced, some abandoned after days of evidence, others clearly untenable on the available evidence) and as Craig was subjected in cross examination to unjustified and unjustifiable slander quite irrelevant to the issues between the parties. However litigation is at times a hard game, and although I have found against the defendants, this does not appear to me to be a matter in which the conduct of the defence was such that I should visit them with a punitive costs order.

Also reserved for my decision at this stage were the costs of an opposed application by the plaintiffs for an amendment to their pleadings (I granted the amendment on 6 April 2006 but reserved the question of costs). The hearing of the application was but one of many interruptions and delays that took place during the course of the trial. The defendants’ objection to the amendment was based substantially on the fact that the issue of waiver which was raised in the amendment had not been specifically canvassed with Niels when he had testified. The amendment was, however, granted and, in due course, only the first defendant, Mark, was recalled. In these circumstances I think it is fair to treat the time spent on the opposed amendment as being part and parcel of the trial itself, and I therefore direct that the costs of the opposed application for an amendment allowed by me on 6 April 2006 are to be costs in the cause.

As special items of cost, the plaintiff further asked for the qualifying expenses of its expert witnesses, Gouws and Bester, the costs of a pre-trial inspection in loco of the reserve attended by counsel, the costs of those photographs the plaintiffs had provided, the declaration of the first and second plaintiffs as necessary witnesses, and the costs of two counsel. I did not understand counsel for the defendants, correctly in my view, to dispute the issue of the special orders in the event of the plaintiffs succeeding in their claim.

The following order will therefore issue:

1. The first, second and third defendants are hereby ordered to forthwith transfer or cause to be transferred 25% of the shares in the third defendant to the Craig Richard Lindhorst Family Trust and a further 25% of the shares in the third defendant to the Christopher Basil Lindhorst Family Trust.

2. In the event of the first, second and third defendants failing to comply with paragraph 1 above within seven days of this order, the Sheriff of the High Court of South Africa for East London is hereby authorized to sign all documentation and to take all necessary steps to effect transfer of the above shareholding to the aforementioned trusts.

3. That the first and second defendants, jointly and severely, the one paying the other to be absolved, are ordered to pay the plaintiffs’ costs of suit, together with interest thereon calculated at the legal rate from a date fourteen days after allocatur to date of payment. Such costs are to include:

1. the qualifying expenses of the witnesses Gouws and Bester;

2. the costs of one pre-trial inspection in loco at the Kwelera Nature Reserve attended by counsel;

3. the costs of the plaintiffs’ photographs;

4. the costs of two counsel.

4. The costs of the plaintiffs’ opposed application for an amendment granted on 6 April 2006 are to be costs in the cause.

5. The first and second plaintiffs are declared to have been necessary witnesses.

___________________________

L.E. LEACH

JUDGE OF THE HIGH COURT

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