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[2011] ZAGPJHC 123
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Specialised Utility and Management Services (Pty) Ltd v Dimant [2011] ZAGPJHC 123; A3104/10 (23 September 2011)
NOT
REPORTABLE
SOUTH GAUTENG HIGH COURT, JOHANNESBURG
CASE NO
:
A3104/10
DATE:23/09/2011
In the matter between:
SPECIALISED UTILITY AND MANAGEMENT
SERVICES
(PTY)
LTD
........................................................................
Appellant
and
SIMON
DIMANT
..............................................................................
Respondent
MBHA,J
:
[1] This is an appeal against
the whole of the judgment of Magistrate L L Singh which was handed
down on 11 February 2009 in terms
of which the appellant (defendant
a
quo
) was ordered to
pay the respondent (plaintiff
a
quo
) the sum of R100
000,00 together with interest at the rate of 15,5 percent per annum
from the date of service of the summons to
date of final payment, and
the costs of the action including counsel fees on tariff.
[2] At the commencement of the
appeal, the appellant sought an order condoning the late filing of
the appellant’s application
for the prosecution the appeal. The
application was opposed and after hearing argument, the court decided
to resolve this issue
in
tandem
with the merits
of the matter.
[3] The parties will, for the
sake of convenience, be referred to as in the court below. The
plaintiff caused summons to be issued
against the defendant wherein
he sought payment of R100 000,00 and averred that:
During 2005 the plaintiff
acting personally, and the defendant represented by Blanche and
Schultz, entered into an oral agreement
in terms whereof the
defendant would issue and sell to the plaintiff such number of
shares in the defendant as would amount
to 10 percent of its issued
share capital for the sum of R100 000,00;
On 7 December 2005 the
plaintiff paid a sum of R100 000,00 to the defendant;
In breach of the defendant’s
obligations, the defendant has failed to issue and sell to the
plaintiff such number of shares
in the defendant as would amount to
10 percent of its issued share capital;
As a consequence of the
defendant’s breach, the plaintiff has cancelled alternatively
herewith cancels the agreement;
and
The plaintiff is accordingly
entitled to a refund in the amount of R100 000,00.
[4] The plaintiff also brought,
in the same summons, an alternative enrichment claim against the
defendant in the amount of R100
000,00 alleging
inter
alia
:
That in breach of the oral
agreement in terms of which the plaintiff would purchase a 10
percent shareholding from the defendant
for the amount of R100
000,00 which the plaintiff duly paid to the defendant by way of
cheque which was duly deposited by the
defendant;
The defendant is unwilling to
perform in terms of the agreement and refuses to transfer the
shareholding to the plaintiff.
[5] The defendant’s
defense as pleaded was
inter
alia
:
That a party written and partly
oral agreement was entered into with the defendant during 2005.
The R100 000,00 would be paid
by the plaintiff to the defendant as working capital in developing
and furthering First National
Bank Ltd as a client (“
the
FNB project
”).
The plaintiff would work on and
devote all his time and attention to the FNB project which would be
funded from the plaintiff’s
contribution of R100 000,00 to
the defendant.
When the FNB project made a
profit, the plaintiff would share in such profits;
The plaintiff would receive
repayment, alternatively a return on his contribution from the
profits anticipated in the FNB project;
and
5.6 The defendant denied that
there was any oral agreement during 2005 for the sale of its shares
to the plaintiff, and that the
defendant had been unjustly enriched
as claimed by the plaintiff.
[6] In its affidavit opposing
summary judgment, the defendant also stated:
“
The
amount of R100 000,00 paid by the Plaintiff to the Defendant
was
spent by the Defendant
in
funding the expenditure incurred by the Plaintiff in running the FNB
project.
” (my
emphasis)
[7] It being common cause that
the plaintiff duly paid the sum of R100 000,00 to the defendant on 7
December 2005, the issue for
determination before the court
a
quo
was whether the
R100 000,00 was paid by the plaintiff as a purchase of a 10 percent
shareholding in the defendant, or whether the
aforesaid sum was
intended to be used, as the defendant averred, to fund the FNB
project.
[8] The plaintiff testified on
his behalf and his evidence can be summarised as follows:
He commenced employment with
the defendant, a utility management company in January 2005 at a
salary of R17 000,00 per month.
It was agreed that as the business
grew, other options would be explored.
In December 2005 a new agreement was entered into in terms of
which:
the plaintiff would continue
receiving the same salary of R17 000,00 per month and
the plaintiff would pay R100
000,00 to the defendant in return for which he would receive a 10%
shareholding in the company
and 20% profit sharing from all the
projects undertaken by the company.
On 7 December 2005 the
plaintiff duly paid the defendant R100 000,00. On that day he was
given a draft letter of appointment
setting out his salary and
which also confirmed the shareholding and profit sharing agreement
referred to above. As the said
letter of appointment was merely a
draft he never signed it but he requested that he be furnished with
an official letter of
appointment on the defendant’s
letterhead. His understanding was that the purpose of the document
was to enable him to
become a shareholder in the defendant.
He confirmed that on 13
December 2005 he received a letter from the defendant in which it
was recorded that early in December
2005 he was furnished with a
letter of appointment and a document entitled “
Purchase
of shares
”
which he had to sign. He however stated that save for the draft
letter of appointment referred to above, no other document
was ever
furnished to him.
He denied that there was any
agreement for his R100 000,00 to be utilised to defray the costs of
the FNB project. Furthermore
at the staff Christmas party in
December 2005, Mr Blanche a director of the defendant, announced to
all staff that he had become
a new shareholder in the company.
[9] Mr Blanche, the defendant’s
sole witness in the court
a
quo
confirmed that a
meeting was held during December 2005 at the defendant’s
offices where he, together with Mr Schultz, representing
the company,
presented the plaintiff with three documents, namely a letter
acknowledging receipt of the R100 000,00 paid by the
plaintiff, a
letter of appointment and a shareholder’s agreement. He
testified that:
The R100 000,00 paid by the
plaintiff was to be utilised as working capital on the FNB project;
and
Due to the plaintiff’s
willingness to contribute to the FNB project, the defendant was
prepared to give the plaintiff
a 10% shareholding in the defendant
and a 20% share of profits on all income derived from projects run
by the defendant.
[10] In a detailed analysis of
the evidence, the learned magistrate found that there was indeed an
oral agreement concluded between
the parties during December 2005 in
terms of which the plaintiff would acquire a 10 percent shareholding
in the company in exchange
for his contribution of R100 000,00.
[11] In my view the learned
magistrate was correct in his finding. On the defendant’s own
version as reflected in Blanche’s
testimony, it is clear
that during December 2005 it was specifically agreed that the
plaintiff would acquire a 10 percent shareholding
in the company.
[12] The letter of appointment
referred to above which is B17 in the trial bundle, specifically
states:
“
As
mutually agreed you will receive a 10 percent shareholding in SUMS.
“
“SUMS” is
the acronym for the defendant.
[13] The defendant’s
intention to make the plaintiff a shareholder was put beyond any
doubt when, during cross-examination
counsel for the defendant made
the following proposition to the plaintiff (at page 277):
“
Mr
Dimant the defendant will produce evidence to the effect that a
shareholder’s agreement was provided to you in December
2005,
you were asked to sign the shareholder’s agreement so that
shares can be transferred into your name… what is
your
reaction to that?
”
The plaintiff reacted to this
proposition saying that he was only furnished with a draft and that
he never received an official
letterhead setting out the above
position which he had to sign.
[14] In my view there are other
indicators showing that the intention was to make the plaintiff a
shareholder in the defendant
and that his contribution was never
intended to fund the FNB project. I will refer to just a few:
14.1 The letter of appointment
referred to above which was written by Schultz, a director of the
defendant expressly provides:
“
As
mutually agreed, you will receive 10% shareholding of Specialised
Utility and Management Services, in
return
for a capital
investment of R100 000,00.
”
(my emphasis)
Attached to the letter of
appointment was a document which was produced by the defendant at
the trial entitled “
Purchase
of shares and shareholder’s agreement
”
which the plaintiff had to sign. This document expressly records
the defendant’s intention to make the plaintiff
a shareholder
in the defendant.
In his opening address at the
trial
a quo
,
defendant’s counsel made it clear that the R100 000,00
contribution by the plaintiff was “
an
investment
” in
the company.
Mr Blanche confirmed in his
testimony that at the staff Christmas party in December 2005, it
was announced that the plaintiff
was now a shareholder in the
company.
[15] It is also significant that
the defendant’s case, as presented, differed materially from
the one that was pleaded. For
example, Blanche conceded that the
defence, as pleaded, was incorrect and that the profit share due to
the plaintiff had been agreed
to at the time of conclusion of the
oral agreement in December 2005. The defendant’s plea merely
alleged that the profit
share would have to be agreed to in due
course.
[16] Whilst the defendant’s
plea alleged that the R100 000,00 paid by the plaintiff would be
utilised to fund and develop
the FNB project Blanche, in stark
contrast not only to the plea but also to the averment in the
affidavit opposing summary judgment
that the money was utilized to
fund this project, stated that the R100 000,00 was lying in a
suspense account and had not been
used. Significantly, the
aforementioned money was, according to Blanche, reflected in the
financial statements of the defendant
as being in a loan account to
which the plaintiff was the beneficiary. In my view this puts paid to
the defendant’s claim
that:
The R100 000,00 was intended by
the plaintiff to fund the FNB
project; and
That this amount was utilized
to fund the FNB project.
[17] Blanche’s clear
testimony that the defendant’s intention was to make the
plaintiff a shareholder is completely
contradictory to the
defendant’s plea which makes no mention of any sale of shares
to the plaintiff and, in fact, denied
that such a sale was part of
the oral agreement entered into between the parties.
[18] Finally, although the plea
averred that the plaintiff only worked on the FNB project, Blanche
stated in no uncertain terms
that plaintiff had worked on a number of
projects for the defendant. It accordingly defies logic and common
sense that the plaintiff
would only choose to fund one project
amongst many others on which he worked.
[19] During argument Mr
Booysens, appearing for the appellant, submitted that the
cancellation by the respondent of the oral agreement
and the claim
for unjust enrichment were never proven.
[20] This argument cannot be
sustained:
The cancellation of the oral
agreement was never challenged by
the appellant at the trial; and
The court
a
quo
correctly found
that the appellant was in breach
of a contract and as such the
appellant is liable to refund the respondent the amount paid. In any
event, these are completely
new issues and are not grounds of this
appeal.
[21] It has not been shown that
the learned magistrate misdirected herself in any way when she found
that the plaintiff had on a
balance of probabilities discharged the
requisite
onus
of proving that the defendant was liable to pay him the amount of
R100 000,00.
[22] Regarding the appellant’s
application for condonation for the late prosecution of the appeal, I
have considered the
appellant’s explanation for the delay. The
explanation furnished is that the appellant was encountering cashflow
problems
and was unable to raise R3 500,00 to pay for the transcript.
However, if one considers the fact that the defendant had R100
000,00
in its suspense account which it claims rightfully belonged to
the company, it defies logic and common sense why the defendant was
not able to utilise R3 500,00 of this amount to obtain the record.
Furthermore, the appellant delayed for a period of almost seven
months before lodging the application for the assignment of a date
for the hearing of the appeal.
[20] In my view the delay was quite extensive and no acceptable
explanation for the delay has been proffered.
[21] In the absence of an
acceptable reason for the delay, the application for condonation
cannot be granted.
[22] Counsel for the parties
also asked the court to pronounce on the issue of counsel’s
costs in the magistrate’s
court and that it was desirable that
same be allowed based on the tariff by the Bar Council.
[23] I do not deem it expedient
to deal with this aspect in this case, as amongst others, it was not
an issue in the appeal.
[24] I accordingly make the
following order:
The application for condonation
for the late prosecution of the appeal is refused.
2. The appeal is dismissed with
costs.
_____________________________
B
H MBHA
JUDGE OF THE SOUTH GAUTENG
HIGH COURT, JOHANNESBURG
I
agree:
______________________________
F
KATHREE-SETILOANE
JUDGE OF THE SOUTH GAUTENG
HIGH COURT, JOHANNESBURG