Plattekloof RMS Boerdery (Pty) Ltd v Dahlia Investment Holdings (Pty) Ltd

The respondent, Dahlia Investment Holdings (Pty) Ltd, owned a farm called Plattekloof consisting of eight portions. Two of these portions were leased to the appellant, Plattekloof RMS Boerdery (Pty) Ltd, under a lease agreement dated 13 April 2018. The lease contained clause 10, which granted the appellant a right of pre-emption (first refusal) to purchase the two leased portions on terms no less favourable than those offered by a bona fide third party. On 7 April 2020, the respondent sold the entire farm (all eight portions) to Swellendam Plase (Pty) Ltd for a global purchase price of R17 million. The deed of sale did not allocate individual prices per portion. The appellant learned of this sale on 16 April 2020 and demanded that the respondent comply with clause 10 by offering the two portions to the appellant for R4 million. When the respondent refused, the appellant launched an application for enforcement. The High Court dismissed the application, and the appellant appealed to the Supreme Court of Appeal.

• Whether the sale of the entire farm as a 'package deal' triggered the appellant's right of pre-emption in respect of the two leased portions
• The proper interpretation of clause 10 of the lease agreement
• What remedy is available to the appellant where the right of pre-emption has been triggered but the sale involved a global purchase price for multiple portions including the pre-emption property
• Whether the appellant was entitled to an offer at a specific price (R4 million) or whether the respondent had an obligation to determine in good faith what portion of the global price pertained to the two portions

1. The order of the High Court was varied to the extent that the dismissal of the application was set aside. 2. The respondent was directed to deliver to the appellant, within 10 days, a written offer in terms of clause 10 to purchase the leased premises, based on the deed of sale concluded with Swellendam Plase on 7 April 2020. 3. The appellant was directed to pay the costs of the appeal, including the costs of two counsel.

1. A right of pre-emption over specific property is triggered when that property is sold as part of a package deal involving additional property. Selling the whole necessarily involves selling the part. 2. The content of a right of pre-emption cannot change because of a breach thereof; it remains limited to the specific property over which the right was granted. 3. Where property subject to a right of pre-emption is sold as part of a package deal for a global price, the grantor of the right has a contractual obligation to determine in good faith what portion of the global purchase price pertains to the pre-emption property and to offer that to the right holder on the same terms and conditions. 4. The holder of a right of pre-emption is entitled to an offer to purchase only the specific property subject to the right, not the entire package, even if the third party offer was for the package. 5. A construction of a pre-emptive right that would allow it to be circumvented or rendered nugatory by adding something to an offer would be unbusinesslike and insensible, and not the intention of the parties.

The court made observations about the inappropriateness of determining disputed questions of fact in motion proceedings, reiterating that a respondent's version must be accepted unless it is far-fetched or clearly untenable (citing National Director of Public Prosecutions v Zuma 2009 (2) SA 277 (SCA)). The court also noted that in the particular circumstances, despite the appellant not succeeding on its main claim for a specific R4 million offer, the interests of justice required directing the respondent to comply with clause 10, particularly given that the respondent had been formally requested to make an offer as far back as April 2020 and had never done so. The court emphasized the principle from Mokone v Tassos Properties CC 2017 (5) SA 456 (CC) that court-coerced compliance does nothing more than require a party to honour what they had bargained for.

This case clarifies important principles regarding rights of pre-emption in South African contract law, particularly in the context of property transactions. It establishes that a right of pre-emption over specific property is triggered even when that property is sold as part of a larger 'package deal', preventing parties from circumventing pre-emptive rights through creative structuring. The judgment also clarifies the limits of such rights - the holder is entitled only to the specific property subject to the right, not to the entire package. The case demonstrates the courts' willingness to enforce pre-emptive rights by compelling compliance with contractual obligations, requiring parties to determine in good faith the portion of a global price attributable to pre-emption property. It also illustrates the application of principles of contractual interpretation and the remedies available for breach of preference contracts.