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[2012] ZAGPJHC 276
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Amitrix Investments (Pty) Ltd v Brambilla and Another In re: Brambilla and Another v Pecvest 6 (Pty) Ltd and Others (2012/21951) [2012] ZAGPJHC 276 (29 November 2012)
REPUBLIC OF SOUTH AFRICA
SOUTH GAUTENG HIGH COURT
(JOHANNESBURG)
CASE NO: 2012/21951
DATE:29/11/2012
In the
matter between :
AMITRIX
INVESTMENTS (PTY) LIMITED
.................................
Applicant
and
BRAMBILLA:
MATTEO
.................................................................
First Respondent
BRAGANTINI:
ALESSANDRO
…................................................
Second
Respondent
In re:
BRAMBILLA:
MATTEO
…...........................................................
First
Applicant
BRAGANTINI:
ALESSANDRO
…...............................................
Second
Applicant
and
PECVEST
6 (PTY) LIMITED
…....................................................
First
Respondent
BUILDING
ENERGY SpA
….......................................................
Second
Respondent
AMITRIX
INVESTMENTS (PTY) LIMITED
…...........................
Third
Respondent
JUDGMENT
DODSON AJ:
Introduction
This is an interlocutory application in terms of
rule 30A to compel the respondents, Messrs Brambilla and Bragantini,
to produce
a document said to be referred to in their founding
affidavit in the main application. In the main application, the
respondents
as applicants seek an order for the winding up of a
company by the name of Pecvest 6 (Pty) Limited on the grounds that
it will
be just and equitable to do so.
Factual background
Because answering affidavits have not been filed
in the main application and because the background facts were not
adequately
traversed in the interlocutory application, I must rely
on the founding affidavit in the main application to establish the
factual
background. However, I do not understand the facts which are
material to this decision to be in dispute. I will as far as
possible
refer to the parties by name. If I refer to the “the
respondents”, I refer to Brambilla and Bragantini.
In terms of the Renewable Energy Independent
Power Producer Procurement Programme
(“the
procurement programme”), the government invited the submission
of proposals from the private sector for the
finance, construction,
operation and maintenance of renewable energy power generation
facilities.
Building Energy SpA is a corporation registered under the company
laws of Italy and based in Milan. It specialises in the development,
construction and operation of photovoltaic powerplants. It is the
second respondent in the winding up application. Brambilla
is the
group chief financial officer of Building Energy SpA.
Renewable Energy Investments South Africa (Pty) Limited (“REISA”)
is a South African company. In response to the
procurement programme
it went about identifying a suitable site for a facility for
photovoltaic renewable energy power generation.
It identified an
appropriate site in the Northern Cape province. It is known as the
Kathu Project. Along with 52 others, it submitted
a bid in response
to the call for proposals made in terms of the procurement
programme. It was selected as a preferred bidder.
Its Kathu Project
bid comprised the construction and operation of a 75 Megawatt solar
photovoltaic powerplant from which electricity
would be generated
and fed into Eskom’s national grid.
Prior to REISA’s bid submission, Building Energy negotiated
with the shareholders of REISA to purchase its entire share
capital.
The negotiations were successful and Building Energy became the sole
shareholder of REISA. Thereafter it disposed of
40% of its
shareholding to a local buyer to enable REISA to comply with the
procurement programme selection criteria, particularly
those
requiring bidders to achieve certain broad-based black economic
empowerment objectives.
REISA is the project company for the Kathu Project. If it is to go
about the development of the project, it must bring in the
necessary
expertise and capacity to develop the facility and thereafter to
operate and maintain the facility. For purposes of
the development
of the facility, it will be required to enter into an “engineering,
procurement and construction”
contract or EPC contract with an
EPC contractor.
Building Energy has expertise and technical know-how in the field of
renewable energy development. However, in order to enable
it to act
as EPC contractor to REISA, it needed to form a joint venture with
local South African contractors. To this end, it
entered into
negotiations with Amitrix Investments (Pty) Limited (“Amitrix”).
Amitrix is owned as to 70% of its shares
by another Italian company,
CMC Italy, and as to 30% of its shares by the Guma Group whose Chief
Executive Officer is a Mr Robert
Gumede.
The negotiations culminated in the conclusion of
a written joint venture shareholders agreement between Building
Energy, Amitrix
and Pecvest 6 (Pty) Limited (“Pecvest”).
Pecvest was to form the company through which the joint venture
would operate.
The shares in Pecvest are owned as to 50% by Amitrix
and as to the other 50% by Building Energy. Brambilla and
Bragantini, the
respondents in the interolocutory application and
the applicants in the main application, are directors of Pecvest.
During the latter part of 2011, negotiations took place with a view
to the conclusion of “heads of terms” of an envisaged
EPC contract between REISA and Pecvest. It was hoped that these
would be finalised before the bid submission date on 4 November
2011.
However, in the lead-up to the bid, disagreements
surfaced between Building Energy and Amitrix. Apparently, Amitrix
were unhappy
with the profit margins, the risk they were required to
bear and their duty to provide guarantees. The parties were unable
to
settle their differences before the bid date of 4 November 2011.
As a result, the “heads of terms” were not agreed
on.
Nevertheless, on 6 December 2011, REISA was awarded “preferred
bidder status” on the Kathu Project.
The disagreements between the parties continued
into January 2012. The differences were aggravated when it later
allegedly emerged
that Amitrix had entered into an agreement with a
different company, Tozzi Renewable Energy, for purposes of another
bid in respect
of the Olyven Kolk project, a different photovoltaic
renewable energy project. Building Energy had hoped to compete for
this
project too in co-operation with Amitrix, through the
acquisition of a company called Texforce.
The differences culminated in a letter being addressed on 23
February 2012 by Building Energy’s attorneys to Amitrix
cancelling the joint venture agreement between them on the basis of
its alleged repudiation by Amitrix.
Subsequently, Building Energy have concluded a
joint venture agreement with another company, WBHO Construction
(Pty) Limited for
purposes of carrying out the EPC works for the
Kathu Project. It is this joint venture agreement which forms the
subject matter
of the present interlocutory application.
Issues in the
application
In paragraph 87 of the founding affidavit in the
winding up application, Brambilla says the following:
“
Subsequent
to the cancellation of the joint venture agreement by the second
respondent and it becoming clear that there was no prospect
of the
first respondent [ie Pecvest] being contracted by REISA to perform
the EPC contract in respect of the Kathu project, the
second
respondent has pursued its discussions with WBHO and a joint venture
agreement has been concluded on 2 March 2012 to carry
out the EPC
works.”
On the basis of this reference to “a joint venture agreement”
Amitrix issued a notice in terms of rule 35(12) identifying
the
agreement as one of the documents referred to in the founding
affidavit which it required the respondents to produce. The
respondents filed a notice in which they declined to do so. Hence
the current application. The grounds upon which the respondents
oppose the application are as follows:
The respondents argue that no document is referred to in the
affidavit. All that is referred to is the “joint venture
agreement”. That, it is argued, does not make clear reference
to a document;
It is argued that WBHO and Building Energy are parties with a direct
and substantial interest in the interlocutory application
and ought
to have been joined. The respondents point out that Amitrix and WBHO
are competitors, that the order sought will require
the production
of a confidential commercial transaction between Building Energy and
WBHO and that Building Energy (and presumably
therefore Brambilla as
director) is precluded from disclosing its contents to any third
party without the consent of WBHO;
The respondents argue that the terms of the joint
venture agreement are irrelevant to the issues in the main
application and that
those judgments which suggest that documents
requested in terms of rule 35(12) must be produced regardless of
relevance were
clearly wrongly decided.
1
The appropriate starting point in dealing with these contentions is
the non-joinder point because if it is good, the matter cannot
proceed further without the joinder being effected. Amitrix would
have been obliged to join WBHO and Building Energy as parties
if
they have a direct and substantial interest which is affected by the
relief sought in the interlocutory application.
Direct and substantial
interest
In
Aquatur (Pty) Ltd
v Sacks & Others
2
Vivier JA summarised the principles pertaining to
whether or not a party is required to be joined as an interested
party as follows:
“
The
principles applicable to joinder are well established and appear from
decisions such as
Amalgamated
Engineering Union v Minister of Labour
1949
(3) SA 637
(A);
Henri
Viljoen (Pty) Ltd v Awerbuch Bros
1953 (2) SA 151
(O) at 167 C-F, 169 in fin;
Kock
& Schmidt v Alma Modehuis (Edms) Bpk
1959 (3) SA 318
A at 318 D-H;
United
Watch & Diamond Co (Pty) Ltd and Others v Disa Hotel Ltd and
Another
1972 (4) SA 409
C and
Wistyn
Enterprise (Pty) Ltd v Levi Strauss & Co and Another
1986 (4) SA 796
(T) at 801 B-G. For present purposes it is sufficient
to refer to the following summary of these principles by Corbett J in
the
United
Watch & Diamond Co
case supra at 415 E-H:
‘
It
is settled law that the right of a defendant to demand the joinder of
another party and the duty of the Court to order such joinder
or to
ensure that there is waiver of the right to be joined (and this right
and the duty appear to be co-extensive) are limited
to cases of joint
owners, joint contractors and partners and where the other party has
a direct and substantial interest in the
issues involved and the
order which the court might make … In
Henri
Viljoen (Pty) Ltd v Awerbuch Bros
… Horwitz AJP (with whom Van Blerk J concurred) analysed the
concept of such a “direct and substantial interest”
and
after an exhaustive review of the authorities came to the conclusion
that it connoted (see at 169)
‘…
an
interest in the right which is the subject-matter of the litigation
and … not merely a financial interest which is only
an
indirect interest in such litigation.’ ’
This view of what constitutes
a direct and substantial interest has been referred to and adopted in
a number of subsequent decisions
… and it is generally
accepted that what is required is a legal interest in the subject
matter of the action which could
be prejudicially affected by the
judgment of the Court…”
Coming to the facts of this matter, the respondents asserted in
their response to the rule 35(12) notice that Building Energy
“
is
precluded from disclosing the contents [of the joint venture
agreement] to any third party without the consent of WBHO.”
In the answering affidavit in the interlocutory application,
Brambilla says –
“
It is a confidential commercial
transaction, the terms of which neither Building Energy or WBHO
should be compelled to disclose
to the Applicant, especially not in
circumstances where the Applicant is a self-confessed competitor of
WBHO, involved in the
same business of providing construction
services in respect of photovoltaic projects in South Africa.”
Amitrix answered this by saying that confidentiality was no bar to
discovery and further that there was in any event no admissible
evidence of confidentiality. It described the assertion of
confidentiality in the answering affidavit as nothing more than an
opinion.
However, where Amitrix puts up as an annexure to its founding
affidavit in the interlocutory application the respondents’
response to the rule 35(12) notice asserting that they are precluded
from disclosing the contents without the consent of the
WBHO, it
seems to me that that assertion must form the basis for assessing
who ought to be joined.
If, as the assertion suggests, Building Energy and WBHO contracted
on the basis that the agreement would be confidential and
the effect
of the order sought is to force a party who is a director of
Building Energy to breach the confidentiality and place
the
agreement in the hands of a competitor, that in my view gives rise
to a direct and substantial interest in the outcome of
the dispute
from the perspective of Building Energy and WBHO. Their contractual
rights are affected and there is potential prejudice.
It was argued on behalf of Amitrix that the case was analogous to
the situation where a subtenant has no direct and substantial
interest (other than a commercial or financial interest) in a
dispute between landlord and tenant.
3
However those decisions are based on the fact that the subtenant is
not a party to the main lease and only holds rights which
are
derived from the rights of the tenant. In this matter, the parties
whose joinder is under consideration are direct parties
to the
contract in question.
It may well be that it is ultimately held that the confidentiality
for which the parties contracted (if this is so) provides
no basis
for objecting to the production of the written record of the
agreement. I express no view on that. However, the parties
who are
potentially prejudicially affected are entitled to participate in
the debate in that regard, particularly where Building
Energy was
already a party to the main application.
In the circumstances, I am of the view that both Building Energy and
WBHO ought to have been joined as parties to the interlocutory
application and the matter cannot proceed in their absence.
In those circumstances, it was agreed between the parties that the
matter would have to be postponed and their joinder directed.
The respondents argued further that in such event, the wasted costs
of the day’s proceedings ought to be borne by the applicant,
Amitrix. I agree with this submission.
I accordingly make the following order:
The matter is postponed
sine die
;
Building Energy SpA and WBHO Construction (Pty) Limited are joined
as the third and fourth respondents respectively in the
interlocutory application;
The third and fourth respondents so joined must -
if they intend opposing the interlocutory application, file a notice
of intention to oppose within 5 court days of service on
them of
this order by the applicant; and
within 10 court days thereafter, file their answering affidavits, if
any.
The applicant must file its replying affidavit, if any, within 10
court days after the filing of the last answering affidavit
in terms
of paragraph 29.3.2 above or the expiry of the period for doing so,
whichever is earlier;
The applicant is ordered to pay the wasted costs of the proceedings
on 10 October 2012;
Subject to paragraph 29.5, the question of liability for the costs
of the interlocutory application is reserved.
________________
AC DODSON AJ
COUNSEL FOR THE APPLICANT: ADV JR PETER SC
ADV PRJ STRATHERN
INSTRUCTED BY: BRIAN KHAN INC, UMLILO HOUSE, 2
BURNSIDE ISLAND, 110 JAN SMUTS AVENUE, CRAIGHALL PARK, JOHANNESBURG
COUNSEL
FOR THE DEFENDANT: ADV FH ODENDAAL SC
ADV GW GIRDWOOD
INSTRUCTED BY: CLIFFE DEKKER HOFMEYR INC, 1 PROTEA PLACE, SANDTON,
JOHANNESBURG
HEARD:
10
OCTOBER 2012
JUDGMENT
DELIVERED: 29 November 2012
1
Magnum
Aviation Operations v Chairman, National Transport Commission
1984 (2) SA 398
(W);
Machingawuta
and Others v Mogale Alloys (Pty) Ltd and Others
2012
(4) SA 113
(GSJ). Cf
Universal City
Studios v Movie Time
1983 (4) SA 736D
;
Gorfinkel v Gross, Hendler & Frank
1987 (3) SA 766
(C);
Unilever
Plc and another v Polagric (Pty) Ltd
2001
(2) SA 29
(C);
Penta Communications
Services (Pty) Ltd v King and another
2007
(3) SA 471 (C).
2
1989
(1) SA 56
(A) at 62 A-F.
3
United
Watch
above at 417A-D.