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

Shakawa Hunting & Game Lodge (Pty) Ltd (represented by Peter Wilkinson, sole shareholder and director) and Askari Adventures CC (represented by Paul Ferreira, sole member) entered into a written agreement on 1 March 2004. The agreement provided that Ferreira on behalf of Askari would receive an amount not less than 10% of the "value" of Shakawa if the company was sold or if Wilkinson passed away, with the 10% sharing to be calculated after deduction of costs such as legal fees and agent's commission. Askari operated as an outfitter conducting safaris on Shakawa's property. In January 2011, Wilkinson sold five adjoining farms and the entire business operation in Shakawa as a going concern for R32,500,000. At the time of the sale, Wilkinson had a loan account of R28,270,000 in Shakawa. Askari claimed R3,230,600 (being 10% of R32,500,000 less legal fees of R100,000 and severance payment of R94,000). Shakawa contended that Askari was only entitled to R403,600, arguing that Wilkinson's loan account should be deducted as a liability before calculating the 10% share. The High Court granted Askari the full amount claimed.

• What is the proper interpretation of the term 'value' in clause 1 of the agreement?
• Whether the value of Shakawa should be calculated as the gross selling price of the assets or the selling price less liabilities (including Wilkinson's loan account)?
• What is the meaning of 'costs' in clause 2 of the agreement and whether Wilkinson's loan account constitutes a cost or a liability?
• Whether Shakawa should be precluded from arguing that the loan account is a liability rather than a cost based on its pleadings?
• Whether Shakawa's counterclaim for damages arising from the retention of funds has merit?

The appeal was upheld in part. Paragraph 1 of the High Court order was set aside and replaced with an order that Shakawa pay Askari R403,600 (instead of R3,230,600) with interest at 15.5% per annum a tempore morae to date of final payment. Askari was ordered to pay the costs of the appeal. The High Court's costs order in favor of Askari remained unaltered.

When interpreting a contract, all clauses must be read together in the context of the document as a whole, and no clause should be interpreted in isolation. The "value" of a company for purposes of determining a percentage share entitlement means the value of its assets less its liabilities, not merely the gross selling price of its assets. A shareholder's loan account constitutes a liability of the company that must be deducted when calculating the company's value. The interpretation of a contract is an objective exercise focused on ascertaining the meaning of the language used in the contract; evidence of what parties subjectively intended or believed the contract meant is irrelevant and inadmissible for interpretation purposes.

The Court noted (without needing to decide the point definitively) that it would be "inconceivable" that the parties would have agreed to different treatment depending on whether the company itself was sold versus its shares being sold - suggesting that consistency in commercial interpretation across similar scenarios is to be preferred. The Court also observed that Nel's testimony about accounting parlance (calling a loan account a "cost") demonstrated the difference between accounting terminology and legal interpretation - what may be termed a "cost" in accounting practice does not necessarily fall within the meaning of "costs" in a contractual clause dealing with deductions. The Court made brief observations about the requirements for tender and payment into court under the Uniform Rules, noting that a mere allegation of tender in a plea, without repetition of the tender or compliance with Rule 34, is insufficient to affect costs consequences.

This case is significant for its application and clarification of the principles of contractual interpretation in South African law, particularly following the seminal judgment in Natal Joint Municipal Pension Fund v Endumeni Municipality. The judgment emphasizes that: (1) contracts must be interpreted by reading provisions in the context of the document as a whole; (2) interpretation is an objective exercise focused on the meaning of the language used, not the subjective intention of the parties; (3) ex post facto testimony by parties about what they believed a contract meant is irrelevant to interpretation; (4) courts must attribute meaning to words having regard to context, ordinary grammar and syntax, the apparent purpose, and circumstances of the document's creation. The case provides guidance on distinguishing between the value of company assets versus the value of the company itself (assets less liabilities), a distinction important in share valuation and business sale contexts.