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[2011] ZAGPJHC 45
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Iozzo NO and Others v Rocha De Figueirdo NO and Others (2010/728) [2011] ZAGPJHC 45 (15 May 2011)
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IN THE SOUTH GAUTENG
HIGH COURT, JOHANNESBURG
(REPUBLIC OF SOUTH
AFRICA)
CASE
NO:
2010/728
JOHANNESBURG,
15
May 2011
REPORTABLE
BEFORE THE HONOURABLE
JUDGE SPILG
In the matter between:
IOZZO, ANTONIO
N.O.
…....................................................................................
First
Applicant
(In his capacity as
trustee of the
M SHARE
TRUST
)
IOZZO, NICOLA N.O.
….......................................................................................
Second
Applicant
(In her capacity as
trustee of the
M SHARE
TRUST
)
HUTCHINSON, GREGORY
CLYDE
N.O
............................................................
Third
Applicant
(In his capacity as
trustee of the
M SHARE
TRUST
)
and
ROCHA, MARIO ALEXANDRE
…..................................................................
First
Respondent
DE FIGUEIRDO N.O.
(In his capacity as
trustee of the
M R HOLDINGS AND
INVESTMENT TRUST
)
DU PREEZ, TANYA N.O.
…......................................................................
Second Respondent
(In his capacity as
trustee of the
M R HOLDINGS AND
INVESTMENT TRUST
)
AND;
In the counter
application of:
ROCHA, MARIO ALEXANDRE
…...................................................................
First
Applicant in
DE FIGUEIRDO
N.O
....................................................................................
Counter
Application
(In his capacity as
trustee of the
M R HOLDINGS AND
INVESTMENT TRUST
)
DU PREEZ, TANYA N.O.
…......................................................................
Second Applicant in
(In his capacity as
trustee of
the
…..........................................................
Counter
Application
M R HOLDINGS AND
INVESTMENT TRUST
)
And
IOZZO, ANTONIO
N.O.
…...............................................................................
First
Respondent
(In his capacity as
trustee of the
M SHARE
TRUST
)
..............................
in Counter Application
And Others
____________________________________________________________
JUDGMENT
______________________________________________________________
SPILG,
J:
NATURE OF APPLICATION AND
COUNTER-APPLICATION/ INTRODUCTION
This case came by way of a special
allocation. It consists of a main application and a
counter-application running into over 1200
pages. The three
applicants in the main application sue in their representative
capacities as trustees of M ShareTrust. The
trust is a registered
inter
vivos
business trust. The trustees are Antonio Iozzo, Nicola Iozzo and
Gregory Clyde Hutchinson.
The Applicants sue the two trustees
of the M R Holdings and Investment Trust (the “
MRHI
Trust”
), namely
Mario Rocha and Tanya du Preez. Prior to the agreement which forms
the subject matter of the dispute the Respondents
held 40 percent
of the shares in Mont Blanc Projects and Properties (Pty) Ltd (
Mont
Blanc
) and the Applicants
held the balance.
On 28 October 2008 the parties
concluded a written agreement . Antonio and Nicola Iozzo represented
the Applicants and Mario Rocha
(
“Rocha”
)
represented the Respondents. The agreement related to the sale by
the Applicants to the Respondents of its entire 60 percent
shareholding in Mont Blanc for a consideration of R2.2m and also
its loan account claims of R4.8m; ie a total of R7 million
plus
interest.
In terms of the agreement;
The MRI Trust was to pay by way of
electronic funds transfer;
R4 million within 48 hrs of
signature;
R3 million by 15 December 2009.
If payment of the balance was not
made by 15 December 2009, interest would be calculated at the prime
overdraft rate published
and charged by the Company’s
bankers , and in the event of dispute a certificate from the
manager or assistant manager
would suffice;
There were three suspensive
conditions;
Rocha was to sign a suretyship
binding himself as surety and co-principle debtor for the MRI
Trusts obligations;
The Applicants and Meadow Star
Investments 85 (Pty) Ltd were to conclude a settlement agreement
in order to cancel the building
and development contract between
them;
The Respondents were to procure a
resolution from Mont Blanc in terms of which it ratified the sale
concluded on 23 September
2008 to Grant of erf 2258 Douglasdale.
On the effective date (being the
date of signature to the agreement) and against payment of the
deposit, share transfer forms
in negotiable form were to be
delivered to the Respondents;
in the event of default the innocent
party was entitled to either cancel the agreement or claim
specific performance after
affording the other party ten days
written notice to remedy its breach. This was without prejudice to
any other rights, including
any entitlement to claim damages.
The agreement contained a
confidentiality clause precluding disclosure of its contents save as
required by a court (cl 14)
It was also a term of the agreement
that payment of the purchase price was to be “
free
of exchange deduction or set-off
”.
(cl 4.2.3)
There were also non-variation and
non-waiver clauses (cl 9 and cl 10). Although there was not a sole
memorial clause it is
evident from the contents of the agreement and
the surrounding facts presented by the Respondents in their papers
that the
parties contemplated that it was to be the sole memorial
of their agreement. See
Goldblatt
v Freemantle
1920 AD 123
at 128 to 129.
It became common cause that;
the suspensive conditions were
fulfilled or deemed to have been fulfilled;
proper demand was made for payment;
the interest payable as from 15
December 2009 is calculated at 10.5 percent.
The Respondents paid the first amount
of R4 million but refused to pay the second and final amount on the
ground that Iozzo and
others had breached the settlement agreement
by acting in a manner injurious to their interests.
Three days after the final payment
fell due, and on Friday 18 December 2009, Rocha , du Preez and
the Respondents ( ie the
trustees of the MRHI Trust in their
capacities as such) instituted action proceedings against
inter
alia
the Applicants
claiming
contractual
damages totalling in excess of R8 million for a defamatory
publication arising from what they contended was a breach of a
tacit term of the settlement agreement, or alternatively
delictual
damages for defamation.
The Plaintiffs in the action rely on various cessions of these
claims from Mont Blanc to them. In the
case of the Respondents the
cession was for some R4.74 million jointly with the other Plaintiffs
while Rocha claimed a separate
cession for the balance.
In response, on 8 January 2010 the
Applicants brought the present application for payment of the final
amount of R3 million together
with interest and costs.
Subsequently in March 2010 the
Applicants brought an interlocutory application in order to rectify
various matters in its application
and to place the M Share Trust
deed on record.
The Respondents then brought a
counter-application in September 2010. The counterclaim repeated the
claim for damages contained
in its earlier summons and for the first
time the Respondents added a further claim for a reduction of the
purchase price for
the shares and loan account by just under R2.95
million. Subsequently , under a new action instituted only on 28
February 2011
this further claim was pursued. The claim is based on
an alleged fraudulent misrepresentation as to the value of the loan
account,
which it is alleged was overstated by some R1.948 million
, and an actionable non-disclosure of the true value of the
shareholdings
resulting in the consideration for the shares being
overstated by R1 145 150. According to the Respondents the net
result is
that the Respondents have already overpaid an amount of
R93 478.65 for the shares and loan account and are entitled to claim
this amount back.
ISSUES FOR DETERMINATION
There are over fifteen issues raised
by the parties. They include matters such as;
Is M Share Trust properly before the
Court? In particular does the M Share Trust have
locus
standi
to launch the main
application, oppose the counter-application, sell and transfer
ownership of 60 percent shareholding in
Mont Blanc and claim
payment of R3 million?
Furthermore are the decisions made
by the trustees of M Share Trust valid and did the trustees’
decisions comply with
the Trust Deeds requirements?
Was the purchase price based on the
actual value at the time of the shares and loan account and if not
were there actionable
misrepresentations and non-disclosures
entitling the Respondents to a reduction of the purchase price to
an extent that would
wipe out the Applicants claim for the
remaining R3 million?
Did either of the Iozzo brothers
defame Mont Blanc and if so does this give rise to either a
contractual or delictual claim
in favour of the Respondents against
the Applicants both in their representative capacities as trustees
of their respective
trusts (being the parties to the share sale
agreement) and not personally in each cases;
If there was such a breach did Mont
Blanc suffer loss and what is the nature of its loss?
Can there be a valid cession to the
Respondents in respect of the claims
Under the
actio
iniuriarum
?
Under the
actio
legis aquilia
?
For contractual damages?
Was there an impermissible splitting
of claims thereby precluding the cession ?
Can set-off apply ?
Is there a factual dispute to be
referred to evidence or to trial?
Does the lis between the parties in
the action and the lis between the parties in the motion
proceedings require that both cases
be heard together?
What is the effect of the alleged
fraudulent back dating of documents and share certificates by the
Applicants?
Did the M Share Trust actually
acquire its alleged 60 percent shareholding in Mont Blanc at all
and if so then it could only
have been after September 2004,
despite documents reflecting this earlier? However this was not
pursued further when the consequence
of the Respondents being
correct was pointed out during argument, namely that the agreement
would be void and the parties
would have to be restored to the
status quo ante.
In any event no such relief had been sought.
In my view, if the following issues
are answered in favour of the Applicant then it is unnecessary to
deal with any of the other
issues raised;
Do the Applicants have
locus
standi
?
How was the purchase price to be
determined and were there misrepresentations and non-disclosures
about such determination
which resulted in the Respondents paying
an inflated amount for their shares?
Can the Respondents raise a
contractual claim for breach of contract by reason of the alleged
defamation and if so has a case
been made out on the papers that
entitles the Respondents to defeat the Applicants’ claim or
to obtain a stay pending
the resolution of their counterclaim by
way of oral evidence or the final determination of both of the
Respondents’
trial actions ?
Is a defamation claim available
against the Applicant based on pure economic loss?
RULING OF 22 OCTOBER 2010
The Respondents informed this court
that they would be appealing the order of Reyneke AJ given on 22
October 2010 , which was
in the following terms;
Postponing the application sine die
Respondents are to pay the costs on
the attorney and client scale
Fourth Respondent in the
counter-application are to file a Replying Affidavit by 27 October
2010
Heads of argument are to be filed by
3 November 2010.
Even if the appeal is not of a purely
interlocutory order the decision does not affect the proceedings
before me and does not influence
my own deliberations.
APPLICANTS’
LOCUS
STANDI
The Respondents contend that the M
Share Trust is not properly before the court because all business
decisions had to be by unanimous
approval taken by M Share Trust’s
“
executive board of
trustees
”
which included a certain
Naim-Mason. It is common cause that Naim-Mason did not participate
in any of these decisions.
The answer is straight forward. The
facts reveal that the beneficiaries of the M Share Trust had changed
and so too the entitlement
to remain as a trustee or nominate a
person to the executive board of trustees. It is to be borne in mind
that the trust was
established as a business trust with the
beneficiaries themselves being trusts which nominated the trustees.
The supplementary
replying affidavit confirms that letters of
authority were issued on 10 October 2009 to only the three
applicants.
I am satisfied that the point has no
merit.
MISREPRESENTATIONS AND
NON-DISCLOSURES INDUCING INFLATED PURCHASE PRICE
In this regard the Respondents
contend that the purchase price was to reflect the actual value of
the shares and loan account
at the time of sale. They claim that
having regard to the correctly revised financials of Mont Blanc the
purchase price for
a 60% shareholding in Mont Blanc and the
Applicants loan account was R4.8 million but due to fraudulent
misrepresentations regarding
the loan account amount and actionable
non-disclosures in respect of the value of the shares the
Respondents were induced to
believe that the proper purchase price
was R7 million.
There is nothing in the settlement
agreement to suggest that the purchase price was to be based on the
actual value at the time
of the shares, nor anything other than the
agreed amount identified for the loan account. There was also a
significant time lag
between the conclusion of the agreement and the
handing over of risk and effective control of the entire business
on the one
hand and the due date of the significant final lump sum
payment which one would ordinarily expect to increase the
consideration
by some interest factor.
It is apparent that at the time Rocha
would have had a fair knowledge of the value of the shares and the
loan account claims .
After all he was in effective control of the
day to day management and was the person who had the expertise as a
developer, not
the Iozzo’s, on behalf of Mont Blanc.
Moreover the claim that Rocha was
excluded from accessing the books for a few days takes the matter no
further. By his own accounts
he was hands on and would have had a
very good idea of what he was prepared to pay for the uncompleted
developments that formed
the stock in trade of Mont Blanc through
its various SPVs. Moreover he was in contact with his attorneys who
were involved in
counselling him during the negotiations.
The agreement, on the Respondents’
own version, was concluded in order to end the relationship between
the Applicants and
the Respondents which had become acrimonious. In
the truest sense of the word the agreement was a negotiated
settlement to resolve
all the issues between them. In such a case
the purchase price is more likely to be based on a walk away figure
for both parties.
In the case of the Respondents it is to be
expected that they would have regard to what they believed the
value of the business
would be to them. This is borne out by the
actual financial data which reflects that the figure relied upon by
the Respondents
as the correct value for the shares bares no
relationship to even the values placed at the time in their own
hand. On the contrary
the overall purchase consideration appears
eminently reasonable and a far cry from the figures contended for by
the Respondents.
IMPLIED OR TACIT TERM
The Respondents contend that it was
an implied or tacit term of the agreement that not one of the
trustees of the M Share Trust
“
may
take any step or any action, of whatsoever nature, with the aim of
prejudicing the commercial interests of the Mont Blanc
Group or any
person or entity forming part of the Group”
The Respondents’ particulars of
claim also sought to rely on a duty of care owed by the individual
trustees as directors
of a company known as Mont Blanc which was
effectively the holding company in which the Applicants and
Respondents respectively
held a 60% and 40% shareholding. In turn
this company was the sole shareholder of a number of special purpose
vehicles, each
concerned with a separate development project. The
Respondents quite correctly did not pursue this during argument, if
only because,
on any basis, post-agreement there is no such duty of
care owed by the Applicants to the Respondents.
The Applicants contend that no such
term can be imported into the agreement and that in any event the
agreement was intended to
be a final settlement of disputes between
them and therefore comprised the sole memorial of the terms agreed
upon.
Mr Louw SC also submitted in his
comprehensive heads of argument that the term sought to be
introduced was an implied term on
the basis that if anyone were to
ask an officious bystander whether the Iozzo brothers had a duty not
to interfere with the business
interests of Mont Blanc until at
least the balance of the purchase price had been paid then the
answer would have been in the
negative.
Firstly, the term sought to be
imputed is too broad. It is clear that the Applicants could
undertake their own developments which
might compete with Mont Blanc
for occupants. There was no restriction on competition. Accordingly
the term contended for contradicts
the basis of the settlement
between the parties as evidenced in their agreement.
However Mr Louw did not confine his
argument to a tacit term. He also argued that a term can be implied
by law that the seller
was not permitted to destroy the goodwill of
the business sold. He relied on
A
Becker & Co (Pty) Ltd v Becker
1981 (3) SA 406
(A) at 419 ff being the separate concurring
judgment of van Heerden JA which placed emphasis on the
naturalia
of an agreement where
goodwill formed part of the business assets acquired under a sale
agreement and distinguished it from the
entirely separate
provisions concerned with a limited five year restraint of trade
covenant .The majority decision had regard
to the intention of the
parties that could be implied into the contract.
In
Becker
the sellers of a business had strictly complied with the restraint
covenant for its entire duration of five years after which
they
sought to solicit business from their old customers. The court had
to determine whether the parties intended the sale of
the goodwill
to be tied up with the wording of the restraint. Accordingly the
focus was on the goodwill component of a business
comprising its
customer base.
In the present case it is clear that
the purchase price for the shares related to the return that the
Respondents believed could
be achieved once development was
completed by the Mont Blanc SPVs . In order to achieve this
objective Mont Blanc required it’s
funding to remain in
place. It may be argued whether the benefits of a funding
arrangement with one’s banker constitutes
goodwill. I
subscribe to the view that it does by reference to an application of
the considerations referred to in
SIR
v Cadac Engineering Works (Pty) Ltd
1965
(2) SA 511
(A)
and
the case of
IRC v Muller &
Co’s Margarine Ltd
[1901]
AC 217
at 235
which
it applied. Even if it cannot be so classified, the benefit of the
banker customer relationship and the continuation of
the facility
have the same attributes as, or are is sufficiently analogous to,
goodwill as to be treated in the same manner.
During the course of the judgments of
both Muller JA and van Heerden AJA (at the time) reference was
made to the case of
Bergum
v Weber
288 P 2d 623
(also
cited as
136 Cal.App.2d 389)
and
Trego
v Hunt
1896 AC 7
, Lord
MacNaghten at pp22-25.( See
Becker
at 414H to 415 G; 419D to
422C and especially the reference at pp 420H to 421F). In all the
cases mentioned it was held that
a seller who disposes of the
goodwill of his business cannot subsequently act contrary to the
sale and in
Bergum
the
underlying rationale is clearly stated:
“
The law implies in every contract a covenant that neither party will
do anything that will deprive the other of the fruits
of his bargain
“
at p392 of the
Cal.App 2d report.
In my respectful view this is
properly to be construed in our law as a necessary incidence , or
naturalia
,
of an agreement of this nature. In the context of the sale of a
business as a going concern (whether by way of the acquisition
of
its assets or of its shares) it includes everything that can be
properly said would,
objectively
speaking
,
have been taken into account and affected (with the possible
qualifier of materially) the determination of the consideration
payable (compare Cloete JA’s minority concurring judgment in
Commissioner for South
African Revenue Service v SA Silicone Products (Pty) Ltd
[2004] 2 All SA 1
(SCA) at para [27]. In the present case the
preservation of the banker customer relationship with specific
reference to the
continuation of the facility in its existing form
would have been one of the factors determining the price that the
Respondents
were willing to pay and the Applicants would have
appreciated this.
I therefore find that it was a
naturalia
or
an implied term (ie a term implied by law rather than a tacit term
implied by the facts- see
Alfred
McAlpine & Sons (Pty) Ltd v Transvaal Provincial Administration
1974(3) SA 506 (A) at 531
to 532) that the sellers would not do anything to deprive the
purchasers of the fruits of their bargain.
In the present case
refraining from competing in the same industry was not one of
them, but attempting to call up or materially
alter the terms of
Mont Blanc’s banking facilities would be.
DID THE APPLICANTS BREACH THE
IMPLIED TERM AND IF SO DID THE RESPONDENTS SUFFER CONTRACTUAL
DAMAGES
The question that needs to be
considered is whether the Respondents’ can defeat a claim for
payment of the balance of an
agreed purchase price due and payable
on 15 December 2009 for the sale to it by the Applicants’ of
the remaining 60 percent
shareholding in Mont Blanc by raising a
defence based on a defamation which is alleged to have destroyed or
substantially impaired
the goodwill of Mont Blanc.
This requires a consideration of
whether there is enough in the counter-application to indicate at
least prima facie ( in order
to allow the court to consider
exercising its discretion to stay judgment on the application
pending the outcome of the first
trial action instituted) that the
Applicants informed a certain Deon Pienaar that there was a fraud
relating to Mont Blanc’s
facilities with RMB knowing that , or
negligent as to whether or not, he would convey this to RMB with the
result that credit
facilities would be either withdrawn from the
Mont Blanc group, or restructured in a severely prejudicial manner
resulting in
loss which either the Respondents or, at the least Mont
Blanc, is entitled to recover against the Applicants.
It is common cause that the Mont
Blanc Group had obtained a credit facility from Rand Merchant Bank
Ltd (
“RMB”)
of R70 million in order to develop a project known as the
“Illovo
Edge Development”.
It is evident from a reading of the
papers that the Mont Blanc Group was dependant on the facility to
complete the development
, from which it would earn substantial
income and hence profits.
The Respondents contend that Antonio
and Nicola Iozzo conspired to publish untrue statements about the
Mont Blanc group to RMB
in order to induce it to withdraw the credit
facilities or to call for better security . It is also alleged that
in order to
achieve their objective the Iozzo brothers, on an
unknown date forwarded a letter to a Mr Pienaar, who because of his
fiduciary
relationship with RMB was obliged to disclose its contents
to them.
The contents of the letter alleged
that the Mont Blanc Group had been guilty of numerous fraudulent
misrepresentations and had
also fraudulently failed to disclose
certain material facts to RMB. These allegations ranged from
significantly over-valuing
the security it had approved to RMB
and selling units held as security by the bank without its knowledge
to active collusion
by bank employees and the creation of
fictitious lease agreements in order to lead RMB to believe that
there was an adequate
rental income stream to service the interest
repayments. In addition allegations were made that Mont Blanc was
trading recklessly,
could not pay its creditors and that its
members were guilty of fraud and could not be trusted.
The Respondents contend that as a
consequence of this letter RMB required the Mont Blanc Group to
increase its equity contribution
by R21 million. In order to do so
the Group incurred substantial extra costs and suffered significant
loss of profits which
totalled almost R9 million made up of five
claims , one in respect of additional finance costs of R464 920, and
the others concerned
alleged resultant project delay losses of R1.7
million, penalty costs incurred of R849 600, losses incurred in
the forced sale
of another property of some R1.724 million and loss
of profits of some R4.1 million. These amounts were then alleged to
have
been ceded by the Mont Blanc Group (effectively Mont Blanc
itself) to the Respondents in respect of the first four claims
totalling
some R4.74 million and the last claim of some R4.1 million
was ceded to Mario Rocha personally.
Furthermore the Respondents contend
that the Iozzo brothers acted in the course and scope of their
offices as trustees of the
Applicants with the result that it is the
Applicant Trust (so to speak) that is vicariously liable for their
conduct.
In considering this issue I bear in
mind that the Respondents do not have to demonstrate their position
as correct on the ordinary
motion court test of evidence to support
final relief (
Plascon-Evans
Paints Ltd v van Riebeeck Paints (Pty) Ltd
1984(3)
SA 624 (A) at 634H to 635C), nor even on a balance of probabilities
at this stage having regard to the relief they are
seeking. However
the Respondents’ allegations are hearsay and the only person
who can deal with the receipting of the letter
and whether and when
he informed RMB is Mr Pienaar. There is no affidavit from him or an
explanation as to why it has not been
forthcoming. It remains the
Respondents’ duty to explain why a material witness has not
deposed to an affidavit and:
“Most
importantly , and this requirement deserves particular emphasis, the
deponent would have to satisfy the court that
there are reasonable
grounds for believing that the defence would be established”,
per
Cloete JA in
Minister
of Land Affairs v D & F Wevell Trust and others
2008(2)
SA 184 (SCA) at 205B.
However, even if that obstacle can be
traversed the objective facts do not support the Respondents’
allegations
.
I am satisfied
having regard to the approximate date when the offending letter came
into existence and other documentation produced
that the actual
restructuring of funding had nothing to do with the alleged letter,
but was due to the way the Respondents were
conducting the affairs
of the Mont Blanc group. This makes it unnecessary to consider any
of the other difficulties the Respondents
would have had to
overcome, particularly that of seeking to attach vicarious liability
to the Applicants and if possible whether
a liquidated claim should
be stayed pending the outcome of an illiquid counterclaim, albeit
arising from the same agreement.
THE CLAIM BASED ON DEFAMATION
It would have been to the
Respondents advantage to formulate a claim or defence based on a
breach of the very contract upon which
the Applicant bases its claim
for payment of the balance of the purchase price. I have already
rejected the Respondents’
contentions that they are entitled
to a reduction of the purchase price and entitled to damages for the
contractual breach of
an implied term arising from the alleged
defamatory publication.
The question then is whether a
delictual claim based on the contents of the letter being
defamatory of the Respondents can assist
it to stay judgement or
execution of the applicants’ claim.
In my view while the document is
clearly defamatory and any damages suffered would be in the form of
pure economic loss, the Respondents
are, for reasons already given
again unable to demonstrate, even
prima
facie,
a causal link
between the defamation and the alleged losses sustained. On the
contrary the papers before me do not demonstrate
that the contents
of the letter affected Mont Blanc. Again this is revealed by the
chronology of events readily discernable from
the documents and
correspondence produced.
The stay of judgment or of execution
of a judgement on a liquid or liquidated claim pending the
resolution of an illiquid claim
or counter-claim brought by the
other party involves the exercise of a judicial discretion. In my
view there is nothing in the
Respondents papers to set up factual
grounds to support the claims made. On the contrary the Respondents
have demonstrated that
they are prepared to set up palpably
untruthful defences, such as denying that all the suspensive
conditions were fulfilled,
claiming that they were duped and
pressurised into paying more for the shares then they should have,
when they were in de facto
control of the management of the
business. Moreover there has been no discernable adverse consequence
to Mont Blanc. Indeed
the Respondents claim that it has been most
successful and the last thing they would wish is to cancel the sale
and return the
60 percent shareholding to the Applicants.
The way in which the Respondents have
conducted this case and the lack of substantive averments, as
opposed to unsupported heresay
evidence and what can best be
described as speculation, leads me to conclude that there is no
genuine case.
THE CESSIONS TO THE RESPONDENTS
The Applicants seriously challenged
whether there were any genuine cessions and if so whether there
could be a splitting of the
claims .
The matter was postponed to afford
the Respondents an opportunity to remedy the position with
documentary evidence. At the resumed
hearing the Respondents
produced the set of company documents running into hundreds of pages
to deal with this aspect.
In my view it is unnecessary to deal
with this issue save in relation to the costs of the extra hearing
that it necessitated.
The Respondents were aware that the
regularity of the cessions was in issue and they failed to provide
the necessary evidence
timeously. This necessitated the adjournment
which was vital to the Respondents. Without the indulgence the
Respondents could
not rely on any evidence of probative value.
Although the Applicants raised cogent arguments as to demonstrate
that the cessions
to the Respondents were not competent, I will
assume without deciding that the Respondents intended to create a
situation that
would enable them to pursue a claim against the
Applicants. Again, without deciding the issue, it appears possible
for the party
to an agreement to claim directly for damages
sustained as a breach of the implied term not to destroy the fruits
of the bargain,
by reference to prospective dividends or, in this
case, the historic distribution of dividends as and when an SPV had
passed
on its profits through dividends or other means to the
holding company.
This decision does not in any manner
preclude the Respondents from pursuing at their peril either of
their trial actions against
the Applicants or the other defendants
to the litigation. What it does is allow the Applicants to obtain a
judgment now for their
claim upon which they may execute.
ORDER
I consequently made the following
order on 20 April 2011:
The First and Second Respondents
(in the main application) in their capacities as trustees of the MR
Holdings and Investment Trust
are to pay to the Applicants (in the
main application) in their capacities as the trustees of the M Share
Trust;
The sum of R3 000 000.00 (Three
Million Rand);
Interest thereon at the rate of
10.5 percent per annum as from 15 December 2009 to date of
payment;
Costs of suit
The Respondents Counter
Application is dismissed with costs.
_____________________________________________
DATES OF HEARING: 1 to 4 March 2011
and, 23 March 2011
ORDER: 20 April 2011
REASONS FOR JUDGMENT: 15 May 2011
(Revised 16 May 2011)
LEGAL REPRESENTATIVES:
FOR APPLICANT: Adv E Wessels
David Lipshitz and Associates
FOR RESPONDENTS: Adv P Louw SC, Adv H
Louw
J J Nel Attorney