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[2016] ZASCA 195
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Zephan (Pty) Ltd and Others v De Lange (1068/2015) [2016] ZASCA 195 (2 December 2016)
THE
SUPREME COURT OF APPEAL OF SOUTH AFRICA
JUDGMENT
Not
Reportable
Case
No: 1068/2015
In
the matter between:
ZEPHAN (PTY)
LTD
FIRST APPELLANT
NICOLAS GEORGIOU
NO
SECOND APPELLANT
MAUREEN LYNETTE GEORGIOU
NO
THIRD APPELLANT
JOE CHEMALY NO
FOURTH APPELLANT
NICOLAS
GEORGIOU
FIFTH APPELLANT
and
ANNE-MARIE LEONIE DE
LANGE
RESPONDENT
Neutral
Citation:
Zephan
v De Lange
(1068/2015)
[2016] ZASCA 195
(2 December 2016).
Coram:
Bosielo, Dambuza
and Van der Merwe JJA and Schoeman and
Nicholls AJJA
Heard:
8 November 2016
Delivered:
2
December 2016
Summary:
Summary
judgment: in opposing summary judgment application a defendant must
set out in the answering affidavit the facts which,
it contends,
constitute a bona fide defence: where all facts pleaded in the
particulars of claim were admitted and no further facts
alleged in
answering affidavit the bona fide defence could be determined on the
papers: contract: acceptance of a
stipulatio
alteri
benefit
by a third party: the agreement was enforceable against the second
party: business rescue proceedings relating to first
party to a
stipulatio
alteri
contract were irrelevant where the benefit had been accepted the
third party.
ORDER
On
appeal from:
Gauteng
Division, Pretoria (Hiemstra AJ sitting as court of first instance):
The
appeal is dismissed with costs including costs consequent upon the
employment of two counsel where applicable.
JUDGMENT
Dambuza
JA (Bosielo and Van der Merwe JJA and Schoeman and Nicholls AJJA
concurring):
[1]
This appeal, with leave of the court a quo, is against a judgment of
the Gauteng Division, Pretoria (Hiemstra AJ) in terms of
which
summary judgment was granted against the five appellants, jointly and
severally, for R520 000 plus interest. The issue
is whether, in
view of the affidavits filed by the appellants in opposition to the
summary judgment application, the court a quo
was correct in granting
summary judgment. More specifically, whether the facts set out in the
appellants’ answering affidavit
in opposition to the
application for summary disclosed a bona fide defence.
[2]
Underlying the action brought by the respondent, Mrs Anne-Marie De
Lange, against the appellants in the court a quo are two
agreements.
The first is essentially an agreement of sale or an investment
agreement in terms of which Mrs De Lange bought 1 000
shares in
a company known as Highveld Syndication No 21 Ltd (HS 21). The terms
of the investment agreement were embodied in a prospectus
registered
with the Registrar of Companies and Close Corporations, on 9 February
2009. The prospectus accompanied an offer by HS
21 to the public for
subscription to 1 091 512 ordinary shares with a par value
of 100 cents each at an issue price of
100 cents each, plus a linked
loan account of R999 per share. The offer opened at 09h00 on 11 May
2009 and closed on 10 August
2009. Although Mrs De Lange’s
offer to buy shares in HS 21 was made on 18 November 2008, the
investment agreement was only
concluded on the issue of the share
certificate on 25 June 2009.
[3]
In terms of the investment agreement, Mrs De Lange was entitled to
sell her shares after purchasing them, but, at the expiry
of five
years from the investment date, she would be compelled to sell them
as provided in a second agreement, the buy-back agreement.
Clause 16
of the investment agreement recorded that amongst the material
contracts that HS 21 had already concluded since its incorporation
on
5 August 2005, was a head lease agreement and the buy-back agreement,
both concluded with Zelpy 2095 (Pty) Ltd which subsequently
changed its name to Zephan (Pty) Ltd, the first appellant, (Zephan).
[4]
The buy-back agreement was concluded on 13 December 2008, which was,
again, prior to the opening date of the share offer. It
was concluded
between four parties, namely, HS 21, Zephan, the N Georgiou Trust
(the Trust), and Mr Nicolas Georgiou. In terms
of the buy-back
agreement Zephan, the Trust and Mr Georgiou, jointly and severally
undertook to buy the shares sold by HS 21 five
years after the
investment date.
[5]
Mrs De Lange’s investment agreement was one amongst many
similar agreements in terms of which individual investors invested
inter alia in the HS 21 and Highveld Syndication No 22 Limited (HS
22) (the HS companies). These companies conducted the business
of
property syndication. The head lease and the buy-back agreement were
advertised as ‘insurance’ for the investment
as it
provided investors with peace of mind in the knowledge that their
money was safe and was assured of guaranteed yields. The
investors
would earn 12.5 per cent income per annum on their investment, from
the date of investment. All costs, including commissions
were paid
for by the promoter.
[6]
In respect of Mrs De Lange’s investment agreement, the five
year term had expired. She then became one of 46 investors
who
instituted action against the appellants seeking performance by them
in terms of the buy-back agreement. The aggregate amount
claimed in
the 46 actions is R29 955 000. When the appellants filed
notices of their intention to defend the claims,
the 46 plaintiffs
applied for summary judgment. In the court a quo the parties agreed
that a judgment in Mrs De Lange’s case
would be determinative
of the issues in all other cases.
[7]
In opposing Mrs De Lange’s application for summary judgment,
the appellants advanced, broadly, two defences. The first
was that
the buy-back agreement created no contractual nexus between Mrs De
Lange and the appellants and therefore there was no
basis for her
claim for specific performance against the appellants. The argument
was that, for enforceability the buy-back agreement
had to create
benefits and obligations for both parties thereto. In this instance
it did not – it only consisted of an undertaking
by the
appellants to the HS companies that they would buy the appellants’
shares. But the HS companies could not enforce
that obligation, so it
was argued. Regarding enforceability, the appellants also contended
that for the agreement to be enforceable
by Mrs De Lange against
them, it would have had to manifest an intention that the HS
companies be replaced by Mrs De Lange in the
buy-back agreement. The
second defence was that, even if the buy-back agreement could be
regarded as a proper basis for Mrs De
Lange’s claim, that
agreement had been superseded by the pending business rescue of the
HS companies. The contention was
that because the majority of the
shareholders in the HS companies had voted in favour of a business
rescue plan (BRP) which restructured
the rights that they had prior
to the passing thereof, in favour of the rights set out in the
business plan, the buy-back agreement
had become unenforceable.
[8]
In granting summary judgment the court a quo found that there was no
reason why the HS companies would not have been able to
enforce the
agreement as they would have been obliged to repurchase the shares if
the appellants did not honour their obligations
under the buy-back
agreement. The court also found that when Mrs De Lange accepted the
benefit, HS 21 was relieved of its obligation
to repurchase the
shares and was replaced by Zephan and/or the appellants in respect
thereof. The court also dismissed a rather
belated argument of
unenforceability by the appellants based on the fact that the
buy-back agreement had not yet come into existence
when Mrs De Lange
accepted the benefit. As to the defence relating to restructuring of
the shareholders’ rights through the
BRP, the court a quo found
that the BRP could not be a novation or waiver of rights under the
buy-back agreement. It had not been
signed by the parties to the
buy-back agreement as provided for in the non-variation clause
contained in the buy-back agreement.
[9]
In this court the appellants’ argument was essentially a revamp
of the defences raised in the court a quo. Broadly, the
appellants’
three-pronged argument before us was that firstly, the buy-back
benefit could not be validly accepted before
it was created. This
related to the fact that according to them, the sale of shares was
concluded on 18 November 2008, prior to
the conclusion of the
buy-back agreement on 13 December 2008. The second submission was
that, in the light of the contents of the
appellants’ affidavit
resisting summary judgment, the elements essential for establishing
stipulatio
alteri
could be impugned by further evidence. Therefore the court a quo
should have refused summary judgment so that such further evidence
could be led at trial. The third argument was that the finding of the
court a quo, that the BRP did not restructure Mrs De Lange’s
rights under the buy-back agreement was wrong.
[10]
It was not in dispute before the court a quo that Mrs De Lange’s
claim fell within the rubric of claims in respect of
which a court
may grant summary judgement. The issue was whether the appellants had
tendered a bona fide defence. Rule 32 (3) of
the Uniform Rules of
Court provides that a defendant seeking to avoid summary judgment may
satisfy the court by affidavit, that
he has a bona fide defence to
the action. It is trite that the word ‘satisfy does not mean
prove’.
[1]
What is required is that in his affidavit the defendant sets out
facts which, if proved at trial, will constitute an answer to
the
plaintiff’s claim.
[2]
[11]
The facts set out in the appellants’ affidavit are not in
dispute. Essentially they are a presentation of the terms of
the
agreements. Having set out ‘material background facts’ in
the answering affidavit, the appellants specifically
stated that:
‘
11.
The defendants do not deny:
11.1
The plaintiff’s acquisition and ownership of the shares in the
relevant Highveld Syndication
Company, as pleaded.
11.2
The identity and citation of the defendants.
11.3
The Court’s jurisdiction to adjudicate upon the plaintiff’s
claim.
11.4
The registration by the then Registrar of Companies and Close
Corporations of the prospectus in respect
of the relevant Highveld
Syndication Company, or the terms of the prospectus as quoted in the
plaintiff’s particulars of
claim.
11.5
The
conclusion and terms of the buy-back agreement relied upon by the
plaintiff and attached as an annexure to the plaintiff’s
particulars of claim.
’
(My emphasis.)
[12]
Nowhere in the answering affidavits do the appellants allege, as the
basis of their defences, facts that are not contained
in the buy-back
agreement. All their defences are legal points founded on the agreed
terms of the buy-back agreement and the contents
of the BRP. In this
sense the appellants disclosed the nature and grounds of their
defence. If there were any facts that could
disclose a further
defence it was incumbent upon them to disclose such facts. It would
have been wrong for the court to consider,
without any basis, whether
there could be other facts which could disclose a further defence.
Such approach would defeat the purpose
of the Rule. The inquiry
in the court a quo was limited to considering whether the legal
conclusions advanced by the appellants
as their bona fide defence,
based on the terms of the buy-back agreement, constituted a defence
good in law.
[3]
The appellants did not even attempt to suggest what such further
evidence or facts could be. Their contention that, in the light
of
the contents of their affidavit resisting summary judgment, the
elements essential for establishing a
stipulatio
alteri
could be impugned, is without merit.
[13]
The defence that the buy-back agreement was unenforceable, because it
was concluded about a month after Mrs De Lange accepted
the benefit
flowing from it, cannot constitute a defence good in law. The offer
made by Mrs de Lange could not have been accepted
prior to the
opening of the share offer on 11 May 2009. All that happened on 18
November 2008 was that Mrs De Lange made an offer.
In the particulars
of claim Mrs De Lange pleaded that her application was accepted and
share certificate no HFS 212 4500 was
issued to her and in so
doing she accepted the benefit. The share certificate is dated 25
June 2009. It is incorrect therefore
to say that the benefit was
accepted before it came into existence.
[14]
It is clear from the terms of the buy-back agreement that it was
intended to benefit Mrs De Lange and other shareholders and
that on
adoption thereof they became party to the contract. (See
Joel
Melamen
& Hurwitz Incorporated v Clevelant Estates (Pty) Ltd; Joel
Melamen
& Hurwitz Incorporated v Vorner Investments (Pty) Ltd
[1984] ZASCA 4
;
1984
(3) SA 155
(A).)
[15]
In the preamble the buy- back agreement states that:
‘
WHEREAS
the FIRST party had its shares marketed at R1.00 per share with a
linked loan account of R999.00 by means of a public placing,
and
WHEREAS
the SECOND, THIRD & FOURTH parties jointly and severally had
given an undertaking to the FIRST party to repurchase all
of the
shares sold by the FIRST party five years after the investment had
been made by the original purchaser; and
NOW
THEREFORE WITNESSES:
1
The
SECOND, THIRD & FOURTH PARTY, jointly and severally, hereby
irrevocably undertakes to repurchase all of the shares sold
by the
FIRST party to the original purchasers of the shares five years after
the individual initial purchase dates (herein after
referred to as
the “Repurchase date” at R1.00 per share with a link loan
account of R999.00.’
[16]
The buy-back
agreement is a simple nine clause agreement in which all the terms
relate to the buy-back clause (clause 1). It sets
out
expressly
that the second, third and fourth parties (Zephan, the Trust and Mr
Georgiou) undertook to the first party, HS 21, to
buy Mrs De Lange’s
shares at the expiry of the five year period. As stated above they
confirmed that ‘the
conclusion
and terms of the buy-back agreement relied on by the plaintiff and
attached as an annexure to the particulars of claim’
.
Mrs De Lange
accepted this benefit and was therefore bound to look to the
appellants for performance of the obligation. The five
year term from
the purchase date having expired, Mrs De Lange’s claim for the
appellants to perform in discharge of this
obligation was properly
made. Contrary to the submission by counsel for the appellants, this
obligation was not conditional upon
anything else.
[17]
Regarding the defence that the rights of the shareholders had been
restructured in the business rescue plan, the common cause
background
was that in 2008 the Governor of the Reserve Bank had, in terms of
the
South African Reserve Bank Act 90 of 1989
, directed that Pickvest
Syndications (Pty) Ltd, which had promoted the offer issued by the HS
companies, be investigated on suspicion
of having conducted the
business of a bank. Zephan then cancelled the head lease agreement
referred to above. This led or contributed
to the HS companies
experiencing financial difficulties. In 2010 the HS companies were
placed under business rescue. The business
rescue plan was signed and
published on 30 November 2011. It reveals that prior thereto, on 21
September 2011, the first meeting
of the creditors of the HS
companies took place and the business rescue practitioner formed the
view that the rescue plan would
yield a better return than
liquidation. Orthotouch Limited, of which Mr Georgiou was a director,
was to buy the HS companies’
properties. A further consultation
with creditors was due to be convened in terms of
s 150
of the
Companies Act 71 of 2008
and the offer was to be considered in terms
of
s 152
of the
Companies Act. There
is no evidence that such a
meeting did take place.
[18]
In the part on which the appellants rely, the business plan provides
that the fixed interest of 12.5 per cent per annum would
now be
reduced 6.00 per cent per annum during the first year, 6.25 per cent
per annum during the second year, 6,50 per cent per
annum in the
third year, 6,75 per cent per annum in the fourth year and 7.00 per
cent per annum in the fifth year. It further states
that:
‘
The
effect of this business plan upon shareholders is that the owners of
the linked units on the fifth anniversary of the acceptance
of the
offer and adoption of this plan, against payment to them of the
amount of their investment shall transfer to Orthotouch
all their
shares and cede to Orthotouch all their claims in and against the
companies.’
[19]
The BRP relates only to the restructuring of the business of the HS
companies and not the appellants. When the HS companies
went into
business rescue the appellants were the primary carriers of the
obligation to buy back Mrs De Lange’s shares. The
fact that the
HS companies might have been in business rescue was irrelevant to the
appellants’ discharge of their obligations
under the buy-back
agreement. Neither was the fact that she had accepted payments of the
reduced annual interest. Such interest
was never part of the buy-back
agreement. There could be no basis for a finding that Mrs De Lange
had compromised her rights under
the buy-back agreement.
[20]
In the result, the appeal is dismissed with costs including costs
consequent upon the employment of two counsel where applicable.
________________________
N
DAMBUZA
JUDGE
OF APPEAL
APPEARANCES:
For
the Appellant:
P F Rossouw SC and M Mostert
Instructed by:
Kyriacou Incorporated, Melrose North
c/o E G Cooper Majiedt Inc,
Bloemfontein
For
the Respondent:
A P Joubert SC and L Bolt
Instructed by:
Le Grange Attorneys, Pretoria
c/o
Symington & De Kok, Bloemfontein
[1]
D E v
an
Loggerenberg and E Bertelsmann;
Erasmus
Superior Court Practice
,
(2015) at D1-409, and the authorities cited therein.
[2]
Ibid.
[3]
Maharaj v
Barclays National Bank Ltd
1976
(1) SA 418
(A).