Shakawa Hunting & Game Lodge (Pty) Ltd v Askari Adventures CC

Shakawa Hunting & Game Lodge (Pty) Ltd and Askari Adventures CC concluded a written agreement in 2004 in terms of which Askari would receive not less than 10% of the value of Shakawa if the company was sold or if its sole shareholder, Mr Wilkinson, passed away. In 2011 Wilkinson sold Shakawa’s farms and business as a going concern for R32.5 million. Askari claimed it was entitled to approximately R3.23 million, calculated as 10% of the gross selling price less limited costs. Shakawa contended that the value of the company had first to be determined by deducting liabilities, including Wilkinson’s substantial loan account, before applying the 10% and further deducting costs, resulting in a payment of R403 600. The High Court accepted Askari’s interpretation and awarded the higher amount, prompting this appeal.

The appeal was upheld in part. The High Court’s order was replaced with an order directing Shakawa to pay Askari R403 600 plus interest at 15.5% per annum a tempore morae. The High Court costs order in favour of Askari was left intact, and Askari was ordered to pay the costs of the appeal.

The case reaffirms the Endumeni principle of contractual interpretation, emphasising that courts must consider the contract as a whole and determine the objective meaning of its language rather than the parties’ subjective intentions. It clarifies that, absent clear wording to the contrary, the 'value' of a company refers to its net value (assets minus liabilities) and not merely the gross selling price of its assets.