Rajkumar Tahilram v The Trustees for the Time Being of the Lukamber Trust and Another

Mr Rajkumar Tahilram held 30% of shares in A & A Dynamic Distributors (Pty) Ltd (the company), while the Lukamber Trust (the trust) held 70%. The parties had entered into a shareholders agreement on 29 August 2014 which provided that if a shareholder's employment with the company ceased, he was deemed to have offered his shares to the other shareholder. The purchase price was to be the fair market value determined by the company's auditors (Odendaal & Co), and such valuation would be final and binding. Mr Tahilram's employment terminated on 27 March 2018, triggering the share sale mechanism. The parties could not agree on the share value, so the auditor (Mr Herman Odendaal) was appointed to determine fair value. On 4 July 2018 and 13 July 2018, the valuer communicated his written valuation determining the company's fair value at R4.8 million plus value from obsolete stock (which he valued at R4,795,249.18). Both parties initially accepted this valuation. However, when Mr Tahilram brought an application for payment, the trust filed an answering affidavit on 22 July 2019 attaching an amended valuation report dated 16 July 2019 in which the valuer reduced his initial valuation by R1,260,775 for motor vehicles allocated to Mr Kayser (a trustee). The High Court dismissed Mr Tahilram's claim, holding that valuers are not functus officio and can withdraw and amend their valuations.

• Whether an expert valuer becomes functus officio once the valuation has been communicated to the parties
• Whether a valuer is legally permitted to unilaterally withdraw and amend a valuation after it has been communicated to the parties
• The extent to which a court can interfere with an expert valuer's determination
• The distinction between arbitrators (performing quasi-judicial functions) and valuers (performing estimative functions) and its relevance to the functus officio doctrine

The appeal was upheld with costs. The High Court order was set aside and replaced with an order that: (a) The first respondent (the trust) must pay R2,878,574.70 to the appellant (Mr Tahilram), being the purchase consideration for his shares; (b) The first respondent must pay interest at 10.25% per annum a tempore morae from the date of the order until final payment; (c) The first respondent must pay the costs of the application.

Subject to limited exceptions and in the absence of agreement to the contrary or waiver by the parties, whenever parties agree to refer a matter to a valuer for determination, then so long as the valuer arrives at his or her decision honestly and in good faith, the decision is final and binding on the parties once communicated to them. The valuer is then functus officio insofar as the valuation and matters pertaining thereto are concerned. The valuer is not permitted to unilaterally withdraw or cancel the valuation in order to alter or amend it. Only a court has the power to interfere with the valuer's decision in review proceedings, and the judicial ambit of this power is severely circumscribed. The distinction between arbitrators (performing quasi-judicial functions) and valuers (performing estimative functions) has no bearing in principle or logic on whether a valuer becomes functus officio once the determination is made and communicated.

The court made observations about the importance of certainty and finality in commercial contracts, emphasizing that pacta sunt servanda is a foundational principle that should be protected, subject only to public policy exceptions. The court noted that values of finality and certainty are foundational to both administrative law and contract law. The court also observed that allowing valuers to repeatedly withdraw and amend valuations would lead to uncertainty and lack of finality, raising the rhetorical question of how many times a valuer could be permitted to amend a valuation. The court cited with approval academic commentary by retired Justice Carole Lewis on the importance of certainty in commercial contracts. The court also noted that it refused leave to appeal on the arbitration clause question, and that the President of the SCA refused to refer that decision for reconsideration under s 17(2)(f) of the Superior Courts Act.

This case establishes important principles regarding the finality of expert valuations in South African law. It clarifies that expert valuers become functus officio once their valuation is communicated to parties, providing certainty and finality in commercial transactions. The judgment reinforces the sanctity of contractual arrangements (pacta sunt servanda) and limits the ability of valuers to unilaterally alter their determinations. It provides clear guidance on the distinction between the limited exceptions where corrections can be made (clerical, arithmetical errors, clarifications) versus substantive amendments which are impermissible. The decision also clarifies that while arbitrators and valuers perform different functions, both become functus officio once their determinations are communicated. The case is significant for commercial contracts, shareholders agreements, and any contracts involving third-party valuations or determinations. It settles a conflict in the case law between the majority decision in Perdikis and subsequent cases questioning that approach.