Gardner v Margo

Tony Ricky Gardner and OTR Mining Ltd concluded a written mandate with Jan Abraham Joubert on 26 February 1998. Joubert mandated Gardner, as his sole agent for three months, to sell 12 853 580 of Joubert’s ordinary shares in OTR in tranches of approximately four million shares per month. Clause 2 of the mandate stated that the amount payable to Joubert would be 40 cents per share, and OTR guaranteed payment of R5 141 432, being 40 cents multiplied by the total number of shares. Joubert later ceded all his rights under the mandate to Roger Hugh Margo. Gardner sold 9.2 million shares and paid Joubert only 40 cents per share, paying the balance of the proceeds to OTR. The remaining shares were not sold. Margo sued Gardner and OTR in the High Court for the unpaid balance of the proceeds and, alternatively, damages for failure to sell the remaining shares, as well as enforcement of the guarantee against OTR. The High Court largely upheld Margo’s claims. Gardner and OTR appealed to the Supreme Court of Appeal.

The appeal was upheld. The judgment of the High Court was set aside, and Margo’s claims against Gardner and OTR were dismissed with costs.

The case is significant for reaffirming South African principles of contractual interpretation, particularly the limits on implying terms by law where they would conflict with express contractual provisions. It also clarifies the interpretation of share sale mandates and the allocation of sale proceeds, as well as the proper contextual approach to contracts involving company insiders and distressed companies.