Jochen Kofahl v S L Keiley

The appellant, an inventor of the Hydraform brick-making machine, entered into an oral joint venture agreement in November 1995 with the respondent to market and sell the machines outside Africa through a company, Palmerfield Ltd. The appellant held 80% of the shares, while the respondent and a third party each held 10%. Palmerfield was to hold an exclusive licence to sell the machines outside Africa. The venture focused mainly on Argentina but failed to generate significant sales or attract capital. Relations between the parties deteriorated and in September 1996 the appellant repudiated the agreement. The respondent accepted the repudiation and cancelled the agreement on 6 January 1997. He sued for damages, claiming 10% of the value of Palmerfield as at that date. Liability was determined in his favour, but the valuation of his 10% shareholding was disputed.

The appeal was upheld with costs. The order of the court a quo was set aside and replaced with an order granting absolution from the instance with costs.

The case is significant for reaffirming South African principles on the valuation of shares and other incorporeal assets, particularly in damages claims following repudiation of contract. It emphasises the 'willing buyer–willing seller' test, the importance of prudent and informed valuation without reliance on speculation, and the strict application of the onus of proof in quantum.