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[2011] ZAGPJHC 91
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Jozistat (Pty) Ltd v Topaz Sky Trading 217 (Pty) Ltd and Another (2011/29988) [2011] ZAGPJHC 91 (17 August 2011)
SOUTH GAUTENG HIGH COURT,
JOHANNESBURG
CASE NO: 2011/29988
DATE:17/08/2011
In the matter between:
JOZISTAT
(PTY)
LTD
.........................................................................
Applicant
And
TOPAZ
SKY TRADING 217 (PTY) LTD
................................
First Respondent
VIVIENNE
KORZIA ATTORNEYS
.....................................
Second
Respondent
J U D G M E N T
WEPENER, J
:
[1] This is an urgent application in which the applicant seeks to
compel the first respondent to deliver clearance certificates
to it
in respect of certain properties which the applicant alleges it is
entitled to transfer into its name.
[2] At the outset of the matter
Mr Aucamp, who appears for the first respondent, raised a point
in
limine
that no case
for relief was made out in the founding affidavit.
[3] The approach to be taken in
such matters has been set out in Bowman N.O. v De Souza Roldao
1988
(4) SA 326
T at 327.
“
In
limine
Mr
Zeiss
,
who appears for the respondent, argued that the applicant has not
made out a case in the founding affidavit to entitle him to
any
relief in terms of the notice of motion; he submits that there is a
material and fatal
lacuna
in
the founding affidavit which cannot be cured.
Generally
speaking, an applicant must stand or fall by his founding affidavit;
he is not allowed to make out his case or rely upon
new grounds in
the replying affidavit. See, for example,
Director
of Hospital Services v Mistry
1979 (1) SA 626
(A) at 635
in
fin
-
636 where Diemont JA said the following:
'When,
as in this case, the proceedings are launched by way of notice of
motion, it is to the founding affidavit which a Judge will
look to
determine what the complaint is. As was pointed out by Krause J in
Pountas'
Trustee v
Lahanas
1924
WLD 67
at 68
and
as has been said in many other cases
"... an applicant must
stand or fall by his petition and the facts alleged therein and that,
although sometimes it is permissible
to supplement the allegations
contained in the petition, still the main foundation of the
application is the allegation of facts
stated therein, because those
are the facts which the respondent is called upon either to affirm or
deny".
Since it is clear that the
applicant stands or falls by his petition and the facts therein
alleged
"it is not permissible
to make out new grounds for the application in the replying
affidavit".'
What
should be set out in the founding affidavit and the particularity
required has been dealt with in a number of
cases;
see, for example,
Joseph
and Jeans v Spitz and
Others
1931
WLD 48
;
Victor
v Victor
1938
WLD 16
at 17
and
Titty's
Bar and Bottle Store (Pty) Ltd v ABC Garage (Pty) Ltd and Others
1974
(4) SA 362
(T) at 369B. Each
case
will depend on its own facts. The correct approach is set out in the
Titty's
Bar
case
supra
as
follows:
'It lies, of course, in the
discretion of the Court in each particular case to decide whether the
applicant's founding affidavit
contains sufficient allegations for
the establishment of his case. Courts do not normally countenance a
mere skeleton of a case
in the founding affidavit, which skeleton is
then sought to be covered in flesh in the replying affidavit.'
This type of objection must
be considered on the basis of an exception to a declaration or a
combined summons.
The relevant considerations
are:
(a) the founding affidavit
alone is to be taken into account;
(b) the allegations in the
founding affidavit must be accepted as established facts;
(c) are
these allegations, if proved, sufficient to warrant a finding in
favour of the applicant?
”
[4] The relevant facts of the
matter can be summarised as follows: The applicant, a company, seeks
an order directing the first
respondent to forthwith make payment of
the outstanding clearance amounts as furnished by the Rustenburg City
Council for the issue
of clearance certificates in relation to
properties which the applicant alleges it is entitled to transfer
into its name. The deed
of sale reads that it is made and entered
into between the first respondent as seller and Mohamed Ameen Daya
“To an behalf
of a cc or company to be formed” .
[5] Although the words “To
and behalf” are non-sensical on their own, the parties accepted
that it meant acting on behalf
of a cc or company to be formed.
[6] At the end of the document there is a space for the signature of
the purchaser. Below the signature the following words appear:
“acting for and on behalf of a cc or a co to be formed”.
[7] Ms Ternent on behalf of the
applicant argued that having regard to the matter of
Martian
Entertainments (Pty) Ltd v Berger
1949 (4) SA (EDL) 582, the use of the word “acting on behalf
of” should be given a proper meaning by having regard
to the
terms of the agreement itself as well as the admissible evidence,
which is available.
[8] Approaching the matter as an
exception one only has regard to the founding affidavit and the
annexures thereto. If regard is
had thereto, the first impression
gained is that Daya acted on behalf of a close corporation or a
company to be formed. He says
so in so many words below his
signature. Ms Ternent referred me to two clauses of the agreement,
which according to the argument
shows that the terms of the agreement
support the fact that Daya did not act as representative of the
company or close corporation
to be formed, but as a principal on
behalf of a third party.
[9] This argument is necessary by
virtue of the provisions of section 35 of the Companies Act, 61 of
1973 (the Companies Act) which
is common cause is the applicable Act.
S 35 reads:
“
Any
contract made in writing by a person professing to act as agent or
trustee for a company not yet incorporated shall be capable
of being
ratified or adopted by or otherwise made binding upon and enforceable
by such company after it has been duly incorporated
as if it had been
duly incorporated at the time when the contract was made and such
contract had been made without its authority:
Provided that the
memorandum on its registration contains as an object of such company
the ratification or adoption of or the
acquisition of rights and
obligations in respect of such contract, and that such contract has
been lodged with the Registrar together
with the registration of the
memorandum and articles of the company
”.
[10] It is common cause that the
applicant which is alleged to be the company that was formed, did not
provide that its memorandum
upon registration, contained as a object
the ratification or adoption of the acquisition of the rights and
obligations in respect
of the contract.
[11] In short, it is common cause
that the applicant’s actions fall short of the requirements of
S 35 of the Companies Act.
The result thereof is that the contract
purportedly entered into by the applicant before it came into
existence is a nullity (see
Swart
v Mbutzi Development (Edms) Bpk
1975 (1) SA 544
(T) and
Steenkamp
N.O. v Provincial Tender Board (Eastern Cape)
2006 (3) SA 151
(SCA) at 170 – 171.
[12] Meskin, in
Henochsberg
on the Companies Act
,
says as follows at page 60:
“
Moreover,
under the common law, the relationship of principal and agent cannot
exist where the principal is non existent: Thus,
a contract
purportedly entered into by an agent on behalf of a non-existent
company is also a nullity and it is incapable of being
ratified by
the company after its incorporation because ratification is possible
only where at the time the contract is concluded
the relationship of
principal or agent already exists (Kelner v Baxter
(1866) LR 2 CP
174
; McCullogh v Fernwood Estate Ltd
1920 AD 204
AT 207-208, 213 to
214; Sentrale Kunsmis Korporasie (Edms) Bpk v NKP Kunsmisverspreiders
(Edms) Bpk
1970 (3) SA 367
(A) at 348, 396…
”.
[13] If Daya acted as an agent on
behalf of the company to be formed the matter is at an end and the
purported ratification by the
applicant in absence of compliance with
s 35 of the Companies Act is of no force and effect.
[14] However, Ms Ternent argued
that, having regard to what was said in
McCullogh
v Fernwood Estate
supra, at 205 – 209 there exists a
stipulatio
alteri
where a
contract made by a person (Daya) as principal in his own right with a
second person, (first respondent) for the benefit
of a third party
(the applicant) and that such agreement does not fall foul of the
provisions of s 35 of the Companies Act.
[15] However, the two clauses to
which Ms Ternent referred to for the argument that they, read
together with the evidence, show
that Daya acted as principal and not
as agent do in my view no assist the applicant. The clauses are 5.1
and 5.1.1 which clauses
refer to the plural “purchasers”
and not only to a “purchaser”.
[16] The use of the plural
“purchasers” does not in my view assist the applicant.
The reference does not make Daya a
principal or co-purchaser. The
terms of the agreement do not consequently assist the applicant to
ward off the consequence as was
found in the
Martian
case referred to supra at 590; “In that case the purchasers
where described in the heading of the contract as purchasers
“for
and on behalf of a limited liability company to be formed.”
“That”, said the learned Judge “
prima
facie
looks as if they
were acting as agents of the company about to be formed”, and
no doubt he had in mind the words of Innes
CJ in
Lindt
v Spicer Bros (Africa) Ltd
(1917) AD 147
at p 151 – “to say that a man entered into
a contract, acting on behalf of another, is to allege in the absence
of
any qualifying statement that he entered into it as the agent of
that other”.
[17] Although Ms Ternent argued
that the agreement does not utilise the word “agent” I am
mindful of what Trollip JA
said in
Sentrale
Kunsmis
Verspreiders
supra
at 397 G that when using the expression, “a person professing
to act as an agent or a trustee” means a person who acts
as an
agent for the company, whether he called himself an agent or a
trustee”.
[18] The further argument on
behalf of the applicant is that pursuant to the judgment in the
Martian
case
supra
,
regard should also be had to the admissible evidence. In this regard
it was argued that Daya, and not the company to be formed,
made the
initial payment of the deposit. In my view that does not elevate Daya
from an agent which he professed to be to a principal
who entered
into the contract. Significantly, the agreement is silent as to the
liability of Daya in the vent of the company not
being formed. One
would have expected a provision which provided that Daya would incur
personal liability had that been the intention
of the parties.
[19] I am consequently unable to
conclude that Daya acted as principal in the sense that he entered
into the agreement on the basis
of a
stipulatio
alteri
i.e. the
contract made by Daya as principal in his own right with the seller
for the benefit of a company to be formed.
[20] Indeed, it is not the applicant’s case on the founding
papers that such a contract came into existence. Its case was
set out
in the founding affidavit in clear terms as follows: “On 1
October 2010, and at Johannesburg, the applicant, represented
by me,
acting for and on behalf of a company to be formed, and the first
respondent, represented by Prokas, entered into a written
deed of
sale…”.
[21] There is no suggestion by
Daya of an agreement entered into by him as principal for the benefit
of a company to be formed.
[22] The result is that the
applicant has not made a case in its founding affidavit to show a
stipulatio alteri
and the exception or point
in
limine
taken by Mr
Aucamp, is well taken. The allegations in the founding affidavit are
insufficient to find in favour of the applicant
in relation to the
stipulatio alteri
argument.
[23] As s result of the fact that
the agreement falls foul of s 35 of the Companies Act and that the
stipulatio alteri
argument fails, it is not necessary to decide the other issues argued
before me including the application to supplement the replying
affidavit.
[34] In all the circumstances the application is dismissed with
costs.
Date delivered 17/08/2011
COUNSEL FOR THE APPLICANT: TERNENT P V
ATTORNEY FOR THE
APPLICANT: WADEE ATTORNEYS
COUNSEL FOR RESPONDENT: AUCAMP S
ATTORNEYS FOR RESPONDENT: KIM
SCHREUDER ATTORNEYS