PARTIES AGREE ON 3RD PARTY TO ASSESS VALUE OF SHARES IN DISPUTE: VALUER GETS ONE GO ONLY?
Tahilram v Trustees of the Lukamber Trust and Another (845/2020) [2021] ZASCA 173 (9 December 2021)
In shareholders’ agreements, provision is usually made to ensure that on the exit of one shareholder, the remaining participants have a pre-emptive right to purchase the shares that now become available. Putting a value on these shares to determine the purchase price, can be tricky if the relations between them are no longer amiable. A clever way to deal with this could be to appoint a third party (such as an auditor) who will have the final say. Imagine the confusion that will arise if the valuer issues his final determination and then amends it subsequently!
The Court here explained why, in the absence of provisions in the agreement to the contrary, such determination by a third party is final and binding. This holds true for the appointment of valuers in all forms of agreements. Only a review court has the power to interfere. And, taking one’s cue from this, it is sensible to obtain expert legal advice in the drawing of these clauses and agreements.
The Judgment
Summary of the Judgment
THINK ‘DEEDS OFFICE’ WHEN YOU SUBDIVIDE OR CONSOLIDATE
Malan v Die Gerhard Labuschagne Familie Trust & Another (Case no 44/2021) [2021] ZASCA 171 (9 December 2021)
Ms N, happy with a recent property purchase from the G Trust, was keen to acquire an additional piece of adjacent land on which there was a flatlet. The whole of the adjacent land belonged to the G Trust which had sold a subdivided portion thereof to Ms N. Thus her agreement with the G Trust included an option to purchase part of the Trust’s remaining land, still to be subdivided. She had in the meantime leased and lived on this part.
A year after taking transfer, she exercised the option and paid for the additional piece of land; she obtained the necessary approval from the Surveyor General’s office to join this additional piece of land with her property, but then left things in limbo. Two years later she is sequestrated and her insolvent estate’s trustee sells the land to Mr M, without knowledge of these dealings in respect of the additional piece of land. Some 10 years later, Mr M – who was also living on the ‘additional’ land which he thought was part of the property he had acquired – is served with an eviction notice from the purchaser of the G Trust’s land.
Sadly, the Court could not assist Mr M in an application for rectification of his title deed or sale agreement, because Ms N never attended to registration of her rights in the deeds office. The judgment summary below explains why this was so and highlights how important it is to procure registration in a deeds office of rights with regard to land.
