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[2014] ZAGPJHC 3
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Nel v Tshitangano (2012/18758) [2014] ZAGPJHC 3 (7 February 2014)
REPUBLIC OF SOUTH
AFRICA
IN THE SOUTH
GAUTENG HIGH COURT
JOHANNESBURG
CASE
NO: 2012/18758
DATE:
07 FEBRUARY 2014
In the matter
between:
RONALD JOHN
NEL
............................................
Plaintiff
And
MOSES
TSHITANGANO
................................
Defendant
J U
D G M E N T
MOSHIDI, J:
INTRODUCTION
[1] The plaintiff
has instituted action against the defendant for damages for
defamation in the amount of R15 million.
[2] The alleged
defamatory statements were made by the defendant in an answering
affidavit in opposition to a business rescue application
brought by
the plaintiff in terms of the provisions of
sec 131
of the
Companies
Act 71 of 2008
.
[3] The plaintiff,
a businessman, and in person, brought the business rescue application
against a company called Miranda Mineral
Holdings Limited
(“Miranda”). The defendant, as a non-executive director,
was duly authorised by the board of directors
of Miranda to depose to
the answering affidavit in question, on behalf of Miranda. More
about the business rescue application
proceedings and the contents of
the impugned affidavit later.
THE FACTUAL
BACKGROUND
[4] Some factual
background is necessary. From the papers as well as the oral
evidence led, what is stated next is not in dispute
or seriously
challenged. Miranda is listed in the General Mining Sector of the
Johannesburg Stock Exchange Limited (“JSE”).
Miranda is
essentially concerned with the identification, exploration and
development of selected mineral resources, with a major
focus on
coal. In addition to its interests in the coalfields of
KwaZulu-Natal, Miranda has interests in gold, diamonds, base
and
industrial minerals.
[5] In what becomes
of significant importance later, in July 1999, Miranda acquired from
Gold Fields Mining and Development (Pty)
Ltd (“Gold Fields”),
the rights to minerals, excluding the rights to gold, silver and
precious stones, in Remainder
of the Farm Rozynenbosch No 104,
Division of Kenhardt, Northern Cape Province (“Rozynenbosch”).
Rozynenbosch measured
3979,8494 hectares. The purchase price was
R40 000,00 (Forty Thousand Rand).
[6] It is also not
in dispute that during 2010 Miranda sought, without success, funding
from Yakani Investments (Pty) Limited (“Yakani”),
a
shareholder holding at that stage about 32% of the shares in Miranda.
However, subsequent funding was secured through Dr Thaksin
Shinawatra
(“Shinawatra), a Thai businessman. To this end, a written
irrevocable agreement was concluded for an investment
in Miranda by
Shinawatra’s company of R108,6 million. In terms of the
agreement Shinawatra, through his company, Global
P S Telecom
Investment Company Ltd (“Global”), would underwrite a
form of rights issue known as a “clawback”
offer. As a
consequence, shares of about 15% of Miranda’s issued share
capital were allocated to Global against an immediate
payment to
Miranda of R25 million, accompanied by a promise of further funding
of some R83,6 million.
[7] Pursuant to the
clawback agreement, and upon insistence by Shinawatra, the Miranda
board agreed that Global would have three
representatives on its
board. These appointments included the Chief Financial Officer
(“CFO”) and the Chief Executive
Officer (“CEO”)
positions. At the time, the plaintiff was the CEO of Miranda. At the
same time Yakani, a Black Economic
Empowerment (“BEE”)
component of Miranda, insisted on similar representation on the board
of Miranda. It was eventually
agreed that Global would appoint
three directors, Yakani two directors, and Miranda would retain three
directors. The plaintiff
says he thereafter agreed to resign as CEO
in favour of Global’s nominee, Mr Glen Poff, but he remained on
the board. In
this regard the version of the defendant is that since
both Yakani and Global had invested substantially in Miranda, whilst
the
plaintiff held only 4,09% shareholding through his family trust,
Investment Facility Company 44 (“IFC”), the plaintiff
had
no right to continue as CEO.
[8] It is further
not in dispute that during March 2011 Yakani appointed the defendant
to the board to join Mr Gilbert Phalafala
as Yakani’s second
director. There was increasing acrimony between the plaintiff, on
the one hand, and the defendant and
Yakani representatives, on the
other hand, about the conduct and the running of the affairs of
Miranda. This, for a variety of
opposing reasons, including the
contention that the board of Miranda was controlled by Global and
Yakani through their nominees
on the board. On 2 September 2011, the
plaintiff was removed by the board after invoking the provisions of
sec 71
of the
Companies Act 71 of 2008
. The board was reconstituted.
The clawback agreement concluded with Global in August 2010 was
cancelled at the instance of Global
and approved by the board in June
2011. As a consequence, there was no major funding from Global
except short-term loans. The
decision of the board to cancel the
Clawback agreement remains controversial amongst the contending
parties. The acquisition from
Gold Fields involved 894 mining
properties, giving Miranda 158000 hectares of land in the Northern
Cape, North-West Province, Free
State Province, Gauteng Province and
Mpumulanga Province. Of the 894 properties, 54 of the original farms
were identified as sites
with potential mineral wealth. Applications
to explore and possibly exploit these findings were lodged with the
Department of Mineral
Resources. The obtaining of permits from the
Department of Mineral Resources ultimately led Miranda to the JSE in
2005, where
it was reverse-listed in the General Mining Sector of the
main Board. In January 2012, the business rescue proceedings were
terminated
as a result of a settlement agreement (“the
Settlement Agreement”) entered into between the plaintiff and
Miranda and
the other entities involved in the litigation. The above
factors and other facts as identified later in the judgment are
largely
common cause.
THE EVENTS
LEADING TO PRESENT ACTION
[9] With the above
somewhat condensed background, I now turn to the events leading to
the present action. In bringing the urgent
business rescue
application in the North Gauteng High Court, Pretoria, against
Miranda, the plaintiff cited himself as the Deputy
Chairman and
non-executive director of Miranda. In the application, the plaintiff
alleged, inter alia, that Miranda was financially
distressed, and
that it would be just and equitable for financial reasons that
Miranda be placed under supervision and that the
business proceedings
commence. The plaintiff also made other allegations concerning the
Miranda board, Global, Yakani and as well
as the defendant.
[10] One of the
supplementary affidavits relied upon by the plaintiff in the business
rescue application came from Mr Lourens van
Wyk (“Van Wyk”).
The allegations made by Van Wyk were confirmed by the plaintiff in a
confirmatory affidavit. The
defendant was duly authorised by the
board of Miranda to depose to the impugned answering affidavit in
opposing the plaintiff’s
application as supported by Van Wyk.
This led to the current action.
THE PLAINTIFF’S
PARTICULARS OF CLAIM
[11] In the
particulars of claim the plaintiff claims that several of the
allegations made by the defendant in the said affidavit
defamed him.
The alleged defamatory allegations are set out in para 6 of the
plaintiff’s particulars of claim and are, for
the sake of
completeness, reproduced in full immediately below.
[12]
“6.1 Paragraph
17 – In essence Nel had caused the net asset value of Miranda
to be overstated by approximately 80%.
This overstated position was
concealed by Nel and used by him to induced investors to take up
shares in Miranda.
6.2 Paragraph 40.3 –
Global’s agreement to invest was based on the strength of
Miranda’s position. A financial
position that Nel had caused to
be misstated.
6.3 Paragraph 42.2 –
Nel concealed the gross overstatement of Miranda’s financial
position from Global, as he had done
with Yakani and every other
investor since the listing. Global would not have been interested in
investing in Miranda but for
this misrepresentation by Nel.
6.4 Paragraph 51.4 –
Nel was negligent in attending to the conversion of the Old Order
Mineral Rights to New Order Mineral
Rights … The process was
being mismanaged by Investment Facility Company 44. The Company
owned by Nel and used by him
to provide services to Miranda.
6.5 Paragraph 51.5 –
Nel deliberately misled investors as to the value of Miranda’s
mineral rights.
6.6 Paragraph 51.7 –
Nel’s persistence in the appeals is a futile attempt to further
conceal the loss of the rights
from Miranda’s Board, its
shareholders and potential investors.
6.7 Paragraph 61.14
– Nel’s approach was clearly a stratagem to acquire as
many discarded rights as possible in order
to create an illusion of
value.
6.8 Paragraph 52.2.2
– Miranda is investigating if J H van der Merwe participated in
Nel’s concealment of the loss of
the mineral rights.
6.9 Paragraph 53.2 –
Miranda is cleaning up the mess created by Nel.
6.10 Paragraph 54.2
– The mess created by Nel is best illustrated by the
Rozynenbosch debacle. Van Wyk has been misled by
Nel.
6.11 Paragraph 54.6
– Nel must have concealed the refusal from Miranda’s
auditors and its Board.
6.12 Paragraph 54.16
– Nel was deliberately concealing the loss of the mineral
rights from investors.
6.13 Paragraph 54.20
– Miranda has reported its suspicious [sic] of fraud as it is
obliged to do in terms of section 34 of
the Prevention of An
Combatting Corrupt Activities Act No 12 of 2004.
6.14 Paragraph
54.21.6 – Another asset, Yaarl, has a value of R9 million. Nel
failed to mention it would cost approximately
R35 million to develop.
6.15 Paragraph 54.22
– Nel does not appear to have appreciated the abovementioned
difficulties or he chose to ignore them
in order to induce investors
to invest in Miranda.
6.16 Paragraph 54.23
– The above difficulties present a situation where Miranda does
not have a business. Miranda’s
Board (and its shareholders)
believed, based on the representations made by Nel that it was moving
towards a position where it
could sustain itself from the revenues to
be generated by the mining operation of its subsidiaries and in
particular Sesikhona
Uithoek and Burnside. Miranda’s
shareholders were providing funding to develop these assets to a
point where they would
generate revenue. It now appears that the
assets in these subsidiaries are not capable of being developed.
Miranda must find
other means of generating income. Miranda is
currently in the process of identifying and acquiring new assets.
6.17 Paragraph 59.1
– Nel raised funding through rights issues without disclosing
the Rozynenbosch debacle.
6.18 Paragraph 65.3
– The Board is only now, after Nel’s removal as a
director and with the assistance of KPMG, uncovering
the extent of
the misrepresentations made by Nel.
6.19 Paragraph 74.2
– The share price has fallen as a result of the failed clawback
process, business rescue application and
the uncertainty created
thereby amongst investors in relation to the future existence of
Miranda, and the removal of Rozynenbosch
from Miranda’s balance
sheet. All of this is attributable to Nel not the current Board.
6.20 Paragraph 75.5
– Nel had a policy of last minute fundraising that placed
Miranda in difficulty when the clawback process
stalled.
6.21 Paragraph 76.2
– Van Wyk has simply failed to appreciate the real issues and
the extent to which he has been deceived
by Nel.
6.22 Paragraph 85.4
– Global was induced by the misstated financial position to
conclude the clawback agreement.
6.23Paragraph 93.4 –
Global had been misled by Nel and agreed to invest in Miranda based
on the recognition of Rozynenbosch
as an asset on the balance sheet.
6.24 Paragraph 93.4
– Global would have elected to cancel the clawback agreement
based on the misrepresentations and Miranda
would have found itself
without any funding and without a benevolent shareholder in the form
of Global.
6.25 Paragraph 96.2
– In my view it was irresponsible for Nel to have concluded
such an agreement.
6.26 Paragraph 97.2
– The directors are not playing games with Nel. It is
investigating serious misconduct by him. The purpose
of the
investigation is to place Miranda on a sound financial footing by
correcting the damage caused by Nel.
6.27 Paragraph 100.6
– The decline in the share price is directly attributable to
the business rescue application and the
uncovering of the
misstatements of value by Nel.
6.28 Paragraph 102.5
– Despite the business rescue application and Nel’s
misrepresentation.
6.29 Paragraph 105.1
– The Respondent’s shareholders have been deceived by
Nel. Nel faces claims by Miranda and its
shareholders for damages
occasioned by him.
6.30 Paragraph 111.2
– Global and Yakani have been steadfast in their support for
Miranda and to continue to provide support
despite having discovered
Nel’s misconduct.
6.31 Paragraph 120.2
– A significant discovery from the various investigations has
been Nel and IFC’s involvement in
the Rozynenbosch debacle and
the problems relating to Miranda’s prospecting rights.
6.32 Paragraph 121.2
– The Rozynenbosch debacle, for example, relates to an assets
that has been repeatedly and falsely recognised
in Miranda’s
balance sheet at a value of R284 million.
6.33 Paragraph 121.3
– The business rescue application is clearly an attempt by Nel
to regain control of Miranda and to continue
to use it to his
personal benefit.
6.34 Paragraph 130.2
– Miranda is recovering from the disastrous effects of Nel’s
policies and misconduct.
6.35 Paragraph 132.3
– Nel was recently removed from the Board as a result of his
misconduct.”
[13] The particulars
of claim continue to allege in paras 7 to 11 as follows:
“7. The said
statements were untrue, malicious and made with the specific
intention to defame the plaintiff and to injure
his reputation. The
plaintiff avers that the defamatory words were not necessary or
relevant to the litigation of which they formed
part and were not
founded on any reasonable cause.
8. The said
statements meant, were intended to mean and were understood to mean
or contain one or more or all of the following defamatory
inferences,
all of which are defamatory of the plaintiff –
8.1 That the
plaintiff had over a long period of time misrepresented the value of
Miranda’s assets with the specific intent
of defrauding
investors to invest money in Miranda.
8.2 That the
plaintiff had committed a crime.
8.3 That the
plaintiff was dishonest.
8.4 At all material
times, the plaintiff was known to and understood or believed by the
public generally and specifically persons
with whom he had business
dealings that –
8.4.1 The plaintiff
was the former Chief Executive Officer of Miranda Mineral Holdings
Limited; and
8.4.2 The plaintiff
had been a highly respected businessman especially in the field of
mining and mineral exploration.
8.4.3 The plaintiff
had been instrumental in founding Miranda Mineral Holdings Limited
and other businesses over a long period of
time.
8.5 Accordingly the
said statements were intended to mean and were understood to mean one
or more of the following –
8.5.1 That the
plaintiff managed Miranda carelessly, negligently, fraudulently.
8.5.2 That the
plaintiff fraudulently misrepresented values to investors.
8.5.3 That the
plaintiff cannot be trusted generally and specifically with regard to
the running of a public company or any business
for that matter.
8.6 The statement
cost the plaintiff hurt, insult and humiliation and has affected his
reputation and dignity.
9. As a result of
the aforesaid defamatory statements, the plaintiff has suffered
damages in the sum of R15 million.
10. The plaintiff’s
damages are of a non-patrimonial nature in respect of the hurt,
insult and humiliation suffered by him
due to the aforesaid malicious
and defamatory statements made by the defendant.
11. The plaintiff
avers that the defendant acted with malice or improper motives which
evidenced over a long period of time and
which lead to the forfeiture
of any privilege which the defendant may claim in consequent [sic] of
the statements being made in
the course of judicial proceedings.”
THE DEFENDANT’S
PLEA
[14] The defendant
on his turn, in his plea has raised several defences to the
plaintiff’s claim. These include that the
impugned statements
were made in circumstances of qualified privilege; that the
statements were true and in the public interest;
that the publication
of the statements was reasonable; and that pursuant to the business
rescue proceedings, the parties entered
into a written agreement in
terms of which all the disputes between the plaintiff and Miranda
were settled finally. In this regard
the defendant contends that the
Settlement Agreement was inclusive of the statements complained of in
the business rescue proceedings.
THE ORAL EVIDENCE
[15] I now turn to
the evidence led at the trial. The plaintiff testified and also
called to testify as a witness Mr Peter du Preez
(“Du Preez”).
On the other hand, the defendant testified and also called as an
expert witness a forensic auditor,
Mr Allan Greyling (“Greyling”).
In addition to the evidence led, several other documents, including
financial statements
of Miranda, pamphlets, articles, journals,
reports, as well as the plaintiff’s Curriculum Vitae (“CV”),
were
handed up by consent of the parties during the trial. Reference
will be made to some of these documents whenever relevant in the
course of the judgment. Reference will also be made to specific
evidence in relation to the applicable legal principles.
[16] The plaintiff
testified about his business acumen and experience gained over
several years. He admitted readily in extended
cross-examination
that some of the information as contained in his CV was incorrect.
His evidence shows undoubtedly that he had
vast experience in mining
and the development of mines from a feasibility perspective to
becoming fully operational. Although
Afrikaans speaking, he
testified in fluent English throughout. He, however, became somewhat
emotional when he testified on how
he felt hurt, degraded and defamed
by the allegations of the defendant as outlined above. In his view,
the allegations made by
the defendant in essence conveyed that Nel
was deceitful in his conduct of the affairs of Miranda and the
publication of information
from time to time.
[17] Both parties
have in their rather helpful heads of argument succinctly summarised
the extensive evidence. It is therefore unnecessary
to ‘re-invent
the wheel’, particularly in the light of the common cause facts
set out earlier in this judgment.
[18] The plaintiff
is a director of Investment Facility Company 44 (Pty) Ltd (“IFC”).
In this capacity, he spearheaded
the purchase of Miranda, an
associated company from Gold Fields. Miranda holds some 158,000
hectares of precious metals, base
metals and diamond mineral rights.
As the CEO/Managing Director and shareholder of Miranda, the
plaintiff was involved actively
and intimately in the business of
Miranda. He was invited to attend the audit committee of Miranda.
[19] The application
for a prospecting permit in respect of Rozynenbosch was done by the
plaintiff on behalf of Miranda. The plaintiff
was also active in the
reverse-listing of the Proper Group Limited (“Proper”),
which later changed its name to Miranda.
This was all in 2005. What
is of significance for present purposes is that Proper did not rely
on Rozynenbosch as an asset of
any value in the listing save for the
value of certain clay deposits. In this regard, the relevant
documentation in the court bundle
describe the deposit as follows:
“Geological
investigations costing in excess of R11.7 million in current terms
have been conducted on the deposits located
on the farm of 4000
hectares between Kakamas and Kenhardt in the Northern Cape. The
resource size is estimated at 6 million tons,
with estimated in situ
contents of copper (30,000 tons), lead (240,000 tons), zinc (60,000
tons), and silver (31 million ounces).”
[20] The evidence
and documentation also show that in Miranda’s Annual Report
prepared by the plaintiff, as CEO, and dated
30 November 2006,
reflected that the board of directors had placed a value of R284
million as a fee income for Rozynenbosch. In
this regard the 2006
Report at p 5 stated as follows:
“Two
exploration assets have been treated in this way to date:
The first CPR and
valuation, approved by the South African Mineral Resources Committee
(SAMRC) and the JSE, were prepared on the
Turffontein clay deposit in
North West Province. An indicated resource was identified; a
valuation in excess of R22 million was
substantiated. A second CPR
and valuation were prepared during the reporting period on the
Rozynenbosch base metal and silver
deposit in the Northern Cape. An
indicated resource was again identified and Miranda’s
anticipated share of income was valued
at R284 million on 31st August
2006. More detailed information on these two projects, and on
Miranda’s other exploration
assets, is provided in the Mineral
Reserve and Resource Statement.”
For the sake of
completeness, the said Annual Report under the heading, “Valuation
of Rozynenbosch Base Metal Project”
stated as follows:
“At the
beginning of the current financial year, the board commissioned a
Competent Persons Report (CPR) on the Rozynenbosch
deposit, using in
part an extensive data base of geological information produced by the
Gold Fields group and Phelps Dodge dating
back since the mid-1970’s.
The report proved an indicated resource within an estimated in situ
value of R3.6 billion. Furthermore,
an internal project
pre-feasibility study was completed to establish the economic
viability of the project, and therefore the future
cash flows from
which Miranda would earn a royalty income. In terms of International
Financial Reporting Standards (IFRS), the
board placed a value of
R284 million on the fee income that would be earned from Miranda’s
anticipated share of the project’s
revenue and which was
reflected in the company’s February interim results. Details
of the valuation model are available
on the company’s website
at www.mirandaminerals.com.”
[21] The 2006 Report
also mentioned that the conversion application in respect of
Rozynenbosch was under appeal, and that Miranda
possessed intangible
assets to the value of R307 842 000,00 which included Rozynenbosch
which was valued at R284 500 000,00.
[22] The evidence
and the documentation also reveal that the application made by the
plaintiff on behalf of Miranda for a prospecting
right in respect of
Rozynenbosch became controversial during 2006. On 5 July 2006 the
Department of Minerals and Energy addressed
a letter to the Director,
Miranda, in the following terms:
“Kindly be
informed that after careful consideration of your application for a
prospecting right, I, the Deputy Director-General:
Mineral
Regulation have by virtue of powers delegated to me in terms of
section 103(1) of the Mineral and Petroleum Resources
Development
Act, 2002 (Act 28 of 2002) and in terms of section 17(2)(a) thereof,
decided to refuse to grant a prospecting right
in respect of the
abovementioned property for the following reasons:
(a)Failure to comply
with the requirements of section 17(1)(a) and
(b) Read with
Regulation 7(1)(i)
and (j) of the
Mineral and Petroleum Resources
Development Act, 2002
in that the applicant did not prove technical
ability and proof of financial ability as required by
Regulation
5(1)(i)
and (j).”
[23] I shall in due
course return to the implications of the refusal of the prospecting
right in favour of Miranda. For ease of
reference, the
Mineral and
Petroleum Resources Development Act 28 of 2002
, shall henceforth be
referred to as (“the MPRDA”). The evidence further show
that there was a further development
in this regard. That is that,
on 7 October 2007, the Department of Minerals and Energy granted a
prospecting right to a company
called Gumba Resources (Pty) Ltd
(“Gumba”) in respect of Rozynenbosch. This was issued in
terms of
section 17(1)
of the MPRDA. In the context of the present
matter, it is significant to note that
section 16(2)(b)
of the MPRDA
provides that:
“No other
person holds a prospecting right, mining right, mining permit or
retention permit for the same mineral and land.”
[24] On the
evidence, it is not in dispute that in the 2007 and 2008 Annual
Reports Miranda again included Rozynenbosch as an asset.
In respect
of the 2007 Report the annotation at p 58 read:
“… The
effect of the depreciation of the Rand to the US dollar and the rise
in commodity prices, has resulted in the
value of this project
increasing to some R617 million (August 2006 – R410 million).
Given the current boom in commodity
prices and the uncertainty as to
the sustainability of prices over the long term, the board is of the
opinion that the previously
reported value of R284 million is a more
realistically achievable value over the life of the project. The
value of the project
has therefore not been adjusted at year-end.
Shareholders are referred to note 7 of the director’s report
wherein the board
has exercised its rights under the MPRDA to take
the necessary legal action to ensure the conversion of its ‘old
order’
rights to ‘new order’ rights in terms of the
Act.”
In the 2008 Annual
Report p 55, also prepared by the plaintiff, the following was stated
in regard to Rozynenbosch:
“Prior to the
enactment of the Minerals and Petroleum Resources Development of 2002
[sic], certain minerals rights were acquired
from Gold Fields Limited
one of which was the Rozynenbosch project. The new Act required that
all ‘old order’ rights
be converted to ‘new order’
rights and a date of 1st May 2005 was given by which applications
should be made. The holder
of any ‘old order’ rights has
first preference to convert to ‘new order’ rights.
Miranda consequently
applied for the conversion of these rights
within the prescribed period. The group was subsequently advised by
the DME that these
applications had been refused. Consequently the
board of Miranda has exercised its rights in terms of the Act to
appeal against
this decision which the board believes is without
foundation. The appeals have been lodged with the DME and are now in
the process
of being evaluated during which time the DME may not
grant any of these rights to a third party. The board is confident
that the
group will be successful with its appeal and will be granted
new order rights prospecting rights over these properties.”
The contents of this
report must be seen in conjunction with the evidence to the contrary,
and also the letter from the Department
of Minerals and Energy
referred to in para [22] of this judgment, above.
[25] The evidence
and documentation further show that, although there was a change in
the accounting policy in regard to assets
in 2009, the financial
statements of Miranda still reflected Rozynenbosch as an asset. In
his report (Directors’ Report
at p 45), the plaintiff reported,
inter alia, as follows:
“… in
March 2009, Miranda Minerals filed a claim amounting to R284 million
regarding the potential loss of mineral
rights on Rozynenbosch and
lodged an application for compensation. Summons was issued against
government on 18 November 2009 in
the amount of R284 million. The
board has decided to follow this course of action as it represents
the only appropriate legal
means, protecting its rights and ensuring
that it be compensated by government in the event of the
expropriation of its mining
title.”
In addition, and
under the heading, “Litigation Statement”, on the same
page, and in regard to the appeal mentioned
in the 2008 Annual
Report, the plaintiff went on to state that:
“Other than
the appeal process and the legal proceedings related to Rozynenbosch,
the directors are not aware of any other
legal or arbitration
proceedings, including proceedings that are pending or threatened,
that may have or have had in the recent
past, being at least the
previous twelve months, a material effect on the company’s
financial position.”
[26] The Notes to
the actual 2009 Financial Statements confirmed the legal action
contemplated as set out in the plaintiff’s
report. The Notes
expressed the view that the directors of Miranda had assessed the
most likely outcome to be either that the
“new order”
rights would be awarded to Miranda or that the company would be
awarded compensation for having been expropriated.
[27] The evidence
also showed that the 2010 Annual Report and Financial Statements
again showed the Rozynenbosch as an asset of
Miranda. In this regard
it may be useful to reproduce somewhat extensively from the Report
dealing with Rozynenbosch:
“The project
involves a lead, silver, zinc and copper deposit located on the farm
Rozynenbosch in the Kenhardt district of
the Northern Cape. Extensive
exploration by Gold Fields and Phelps Dodge in the 1970’s and
1980’s has resulted in a
clearly defined ore body of about 14
million tonnes, which carries SAMREC indicated resource status.
Based on a “royalty”
business model for the project, the
directors placed a value of R284 million on the project in February
2006. The value has been
calculated by discounting the future cash
flows attributable to Miranda that are based on forecast commodity
prices and exchange
rates over the life of the mine as well as the
market-related, revenue participation income appropriately discounted
for risk.
Applying commodity prices and exchange rates at 31 August
2010 to the model, gives rise to a 70% premium in the project
valuation
over the directors’ valuation, which is based on
long-term prices and exchange rates. In a breakthrough for Miranda
in its
efforts to have its old order mining rights converted, the
Department of Mineral Resources has recently confirmed the legitimacy
of Miranda’s appeal against the initial refusal of the
conversion. Miranda is confident it has a strong case to finally
conclude this matter in its favour during the next six months. On the
assumption that the new order prospecting right is granted,
Miranda
expects to proceed with its exploration programme by conducting
additional drilling to confirm previous results and metallurgical
recoveries, as well as to complete the scoping study. This is
expected to be followed by the completion of a bankable feasibility
study and an upgrade of the project’s indicated resource status
to that of a probable or proven reserve.”
[28] It is also not
in dispute on the evidence that, in the meantime and during 2008, the
company Yakani, duly represented by the
defendant, bought 34% of the
shares in Miranda. These shares were purchased at 63 cents per
share. The total amount of the shares
acquired by Yakani was
approximately R60 million. As set out in the plaintiff’s
business rescue application, and confirmed
by the defendant in his
testimony, the defendant became a director of Miranda during February
2011 only.
[29] It was in his
capacity as a board member of Miranda that the defendant had a
meeting with attorney, Mr J H van der Merwe in
September 2011. The
evidence of the defendant is that it was during this meeting that he
discovered that Miranda did not have
a mineral right in respect of
Rozynenbosch.
[30] As mentioned
under the common cause facts at the commencement of this judgment,
the plaintiff was removed as director of Miranda
during 2011. The
2011 Annual Report of Miranda shows that Mr Andrew Johnson was
subsequently appointed as CEO during August 2011.
The defendant and
his co-director representing Yakani, Mr Gilbert Phalafala, resigned
from the Miranda Board during January 2012.
[31] What is of
particular significance is that in the 2011 Annual Report, following
the departure of the plaintiff, it was for
the first time correctly
reported that no asset value could be ascribed to Rozynenbosch.
Equally significant, is the statement
in this report at p 39 that:
“Notwithstanding
the above, it came to the attention of the Board that the PR in
question has been granted to the third party
whilst the application
by Miranda is still pending. Miranda intends to lodge an appeal
against this decision …”
As noted in
paragraph [23] of the judgment above, the third party beneficiary
referred to is Gumba which was granted the prospecting
right in
respect of Rozynenbosch on 7 October 2007 already.
[32] The rest of the
Report and the reflection of Rozynenbosch is captured as follows:
“In the
reviewed, abridged, provisional of financial results of Miranda for
the year ended 31 August 2011, which were released
in the SENS
announced on 30 November 2011, this asset was reflected as
derecognised. This was resultant upon an interpretation
of the
finalisation of an appeal process regarding an application for a
Prospecting Right (‘PR’) in respect of an unused,
old
order Right subsequent to the implementation of the MPRDA …
Due to the continued uncertainty surrounding the PR and
the outcome
of the application, the Board decided that the asset would remain
derecognised.” (underlining added). SENS refers
to the Stock
Exchange News Services.
[33] Furthermore, on
the evidence and the documentation, the reflection of Rozynenbosch as
a non-asset in the 2010 Annual Report
in the balance sheet of
Miranda, is not in dispute.
[34] In regard to
the 2011 Annual Report and in the annual financial statements of
Miranda, the auditors, Deloitte & Touche,
reported on 24 February
2012, inter alia, as follows:
“In accordance
with our responsibilities in terms of sections 44(2) and 44(3) of the
Auditing Profession Act, we report that
we have identified certain
unlawful acts or omissions committed by persons responsible for the
management of Miranda Mineral Holdings
Limited which constitute a
reportable irregularity in terms of the Auditing Profession Act, and
have reported such matters to the
Independent Regulatory Board for
Auditors. The matters pertaining to the reportable irregularities
are discussed in the Directors’
Report.”
[35] The evidence of
the plaintiff must be seen, not only in the light of the contentions
of the defendant, but also with regard
to the above largely common
cause facts as revealed by the various documentation. The main and
consistent contention of the plaintiff
is that the information
contained in the annual reports as captured above was prepared
carefully and in consultation with other
entities. He said that
other persons/entities, including experts, were involved prior to the
board, including himself, approved
the information. However, towards
the end of cross-examination the plaintiff was driven to make certain
crucial and significant
concessions. These included that if the board
of Miranda and other said external parties/entities were factually
incorrect in including
Rozynenbosch as an asset of value in the
annual reports and financial statements – up to the time it was
subsequently derecognised
– the plaintiff may also have been
incorrect. The plaintiff also conceded readily that if the inclusion
of Rozynenbosch
as an old order mineral right of value in the annual
reports and financial statements was factually incorrect, the entire
board
of Miranda should have been joined in the present action. He,
however, says that he played no part in the preparation of the 2011
Annual Report.
[36] In regard
particularly to the instant action, the plaintiff made a concession
which, in my view, negated profoundly his current
claim. This was
that he could not say with certainty that the defendant acted with
malice in deposing to the impugned answering
affidavit. Neither could
he dispute that the defendant actually took certain steps to verify
the information published in the annual
reports prior to deposing to
the said affidavit. So too, when confronted with the resolution
passed by the Miranda board authorising
the defendant to represent
Miranda and depose to the impugned affidavit, the plaintiff proffered
no reasonable response. His insistence
throughout the trial that the
appeal against the refusal of the mining right permit in respect of
Rozynenbosch by the Department
of Mineral Resources and Development
was still alive and an intangible asset of Miranda in the face of
credible evidence to the
contrary, is mindboggling. The application
for prospecting rights was refused in 2006 and its file had been
closed as showed by
the documentary undisputed evidence. As stated
above, the plaintiff maintained he was not acting and deciding alone
but in consultation
with others, including the audit committee.
However, in evidence he attempted, rather lamely, to absolve himself
from the clear
misrepresentations by saying that Miranda held a
mineral right in respect of Rozynenbosch and that he was corroborated
by the board
and the audit committee.
THE EVIDENCE OF
DU PREEZ
[37] I deal with the
evidence of Du Preez. In the context of the present matter, the
observation that the evidence of Du Preez,
who testified on behalf of
the plaintiff, does not advance in any meaningful manner the case of
the plaintiff, is not out of place
at all. He testified that he knew
and worked with the plaintiff for a long period. In his view, the
plaintiff is incapable ever
to misrepresent or mislead people
associated with him. He was involved when Miranda acquired the ‘old
order’ mining
prospecting rights from Gold Fields. He did not
make decisions relating to Miranda independently but consulted with
others, such
as the board, the executive committee and the
remuneration committee. He saw nothing wrong in the annual reports
and financial
statements showing Rozynenbosch mineral rights as an
intangible asset. As in the case of the plaintiff, Du Preez, for some
unconvincing
reasons, maintains that the appeal to the Department of
Minerals and Energy for prospecting rights of Rozynenbosch was
re-activated
and still alive. This is clearly contrary to the
credible documentary evidence. Furthermore, like the plaintiff, Du
Preez, towards
the end of his cross-examination was driven to make
certain concessions in favour of the defendant. It suffices to say
that he
conceded that his testimony does not establish any malicious
intention on the part of the defendant. This had to be so since on
his own version, Du Preez did not study fully and properly the
defendant’s impugned answering affidavit, and the actual
context in which it was made.
[38] As a
consequence, and as argued by counsel for the defendant, Du Preez was
not an impressive witness on crucial issues, for
a variety of
reasons. This is so in spite of his denial that he was called as a
witness solely to portray the plaintiff in a favourable
light. The
assessment that he evaded questions and asked questions to be
repeated or answered questions in cross-examination by
posing
questions, is not unfair to him. At best for him, the testimony of Du
Preez failed dismally to contribute to a fair and
objective
adjudication of the disputes in this matter.
[39] On the
contrary, the evidence of the defendant and his witness, Greyling,
was extremely impressive, particularly on pertinent
issues and for
numerous reasons. There is no conceivable reason not to accept their
testimony. For example, Greyling, who also
prepared a written expert
report on this matter, testified that for the Miranda board, which
included the plaintiff as the CEO,
to have reflected Rozynenbosch as
an asset in the Annual Reports of 2006 to 2010, amounted to a clear
misrepresentation about the
true financial affairs of Miranda. This
evidence is not only supported by the documentation referred to
above, which is uncontested,
but there is also no other evidence to
counter it. Greyling is an admitted chartered accountant and a
director of accountants at
Law (Proprietary), a company specialising
in forensic accounting. He is often appointed by the High Courts as a
rescue business
practitioner. His expertise as a forensic auditor is
not in question.
39.1 Greyling was
mandated by the defendant to provide an expert accounting opinion,
particularly on the issue whether the accounting
for mineral rights
in respect of Miranda for its financial year 2006 to 31 August 2011
complied with International Financial Reporting
Standards (“IFRS”).
Prior to undertaking his investigation, Greyling was provided with
all the relevant documentation,
including Miranda’s annual
financial statements for 2006 to 2011, the pleadings, the letter from
the Deputy-Director General
of the Department of Mineral and Energy
addressed to the Directors of Miranda dated 5 July 2006 refusing the
application for prospecting
rights in respect of Rozynenbosch, as
well as the relevant IFRS statements and related publications
impacting on the appropriate
accounting for mineral rights.
39.2 In his
impressive evidence, Greyling advanced several cogent reasons for his
opinion. As stated above, Greyling’s opinion
was simply that
the placing of a value of R284 million in respect of Rozynenbosch was
a misrepresentation and misstatement in the
annual financial
statements of Miranda for the financial years ending 31 August 2006
through to 31 August 2010. Furthermore, that
the annual financial
statements for 2011 in fact correctly derecognised the Rozynenbosch
intangible asset for the reasons advanced
in such financial
statement. These reasons were dealt with earlier in this judgment in
paras [31] and [32] above. The misstatements
were subsequently
identified by the auditors, Deloitte and Touche, as “unlawful
acts or omissions”, as set out in para
[34] of this judgment.
In regard to these misrepresentations, Greyling concluded that at
best, the Rozynenbosch intangible asset
should have been disclosed as
a contingent asset only as a note and not in the balance sheet. As a
consequence, the alleged defamatory
statements of the defendant were
relevant and true and in the public interest.
I prefer to deal in
more detail with the defendant’s testimony later in this
judgment below. However, it is to be remembered
that one of the main
defences raised by the defendant to the plaintiff’s action, is
one of qualified privilege when he deposed
to the impugned answering
affidavit. In this regard I deal with some applicable legal
principles directly below.
SOME APPLICABLE
LEGAL PRINCIPLES
[40] It is settled
law that the delict of defamation is the unlawful publication, animo
iniuriandi, of a defamatory statement about
the plaintiff. It is
required of the plaintiff to allege and prove that the statement
complained of refers to him/her. See in
this regard Council For
Medical Schemes v Selfmed Medical Scheme 2011 JDR 1608 (SCA) at para
[52]. Similarly, in Khumalo v Holomisa
[2002] ZACC 12
;
2002 (5) SA 401
(CC), at para
[17], the Court stated that the elements of defamation are:
‘(a) the
wrongful and
(b) intentional
(c) publication of
(d) a defamatory
statement
(e) concerning the
plaintiff.’
See also Neethling
Law of Delict 6 ed at 331.
[41] In the present
matter, it is not in dispute that the impugned statements were in
fact made by the defendant and also published.
There is therefore a
presumption of wrongfulness which calls on the defendant to rebut it
by proving the presence of a ground of
justification. There are
several types of justification such as qualified privilege, truth,
public interest and fair comment.
In the instant matter the
defendant’s main defence is that the statements he made were in
the course of the litigation between
plaintiff and Miranda in
opposing the business rescue application. In Neethling op. cit. at
337, the learned authors state as
follows:
“To enjoy
provisional protection, the defendant need only prove that the
statements were relevant to the matter at issue.
The plaintiff may
then prove that, notwithstanding their relevance, the statements were
not supported by reasonable grounds. In
the absence of relevance or
reasonable grounds, the defendant exceeds the limits of this
privilege and acts wrongfully. If, however,
it is found that the
defendant’s assertions conform to these two requirements, the
plaintiff may nevertheless show that the
defendant exceeded the
limits because he acted without an improper motive.”
[42] As to the test
to the approach, the Court in Borgin v De Villiers and Another
1980
(3) SA 556
(A) at 577D-G said:
“The
particular category of privilege which, in the light of the above
finding, would apply in this case would be that which
arises when a
statement is published by one person in the discharge of a duty or
the protection of a legitimate interest to another
person who has a
similar duty or interest to receive it (see De Waal v Ziervogel
1938
AD 112
at 121-3). The test is an objective one. The Court must
judge the situation by the standard of the ordinary reasonable man,
having
regard to the relationship of the parties and the surrounding
circumstances. The question is did the circumstances in the eyes of
a
reasonable man create a duty or interest which entitled the party
sued to speak in the way in which he did? And in answering
this
question the Court is guided by the criterion as to whether public
policy justifies the publication and requires that it be
found to be
a lawful one. (See generally De Waal v Ziervogel (supra at 122-3);
Benson v Robinson and Co (Pty) Ltd
1967 (1) SA 420
(A) at 426D-F;
Suid-Afrikaanse Uitsaaikorporasie v O’Maley (supra at 420-3)).”
[43] In Zwiegelaar v
Botha
1989 (3) SA 351
(C), the plaintiff sued the defendant for
defamation arising out of a statement made by the defendant while
testifying under oath
at a meeting of creditors of a close
corporation which was in the process of being wound up. In
eventually upholding the defence
of the defendant that the defamatory
words were spoken on a privileged occasion, the Court at 356D-G said:
“Generally, a
witness enjoys a qualified immunity or privilege in respect of
defamatory statements made during the course
of legal proceedings.
This qualified immunity applies not only to proceedings in a Court of
law but also to proceedings before
certain quasi-judicial bodies,
including, for instance, a judicial commission of inquiry (Basner v
Trigger
1946 AD 83
, and apparently any tribunal recognised by law
(see Burchell The Law of Defamation in South Africa at 254). It was
not disputed
that this qualified immunity will generally extend to
inquiries of the kind at which the defendant testified and made the
statement
forming the subject-matter of the present proceedings (cf
Allardice v Dowdle
1965 (1) SA 433
(D) at 436C). The qualified
nature of the immunity is such, however, that once the circumstances
giving rise to the immunity are
established, the plaintiff is
entitled to ‘destroy’ or ‘defeat’ the
immunity or privilege by showing, inter
alia, that the defendant, in
making the defamatory statement, was actuated by malice in the sense
of an improper or indirect motive,
as explained in Basner v Trigger
(supra at 94-5) (see Joubert and Others v Venter (supra at 699)).”
THE DOCUMENTARY
EVIDENCE
[44] Prior to
applying the above legal principles to the facts of the present
matter, it is necessary to deal further with what
the entire
documentary evidence show, and thereafter again with the defendant’s
evidence. The substantial controversy in
this case centers around
Rozynenbosch, its inclusion in Miranda’s annual reports and
financial statements as an asset of
value, as well as Miranda’s
precise interest therein.
[45] Consequently,
it has been argued on behalf of the defendant, correctly so in my
view, that the statements contained in the
2006 Annual Report about
Rozynenbosch, as outlined above, constituted misrepresentations for a
number of reasons. These include
the following: (In this regard I
deliberately propose to borrow much from the heads of argument filed
on behalf of the defendant):
(a) Miranda’s
application for the prospecting right was already declined by the
Department of Minerals and Energy on 5 July
2006. This fact was
dealt with in paragraph [22] above of the judgment. The plaintiff
knew about this as the letter from the
Department of Minerals and
Energy was addressed to “The Director Miranda Minerals (Pty)
Ltd”;
(b) The declined
application was not a conversion application but a new application.
There is some importance in this regard since
there is clearly a vast
difference between a conversion application and a new application in
terms of the MPRDA;
(c) If the old order
right was unused in the one year period before the commencement of
the MPRDA, such right is referred as an
unused old order right. The
holder of an unused old order right had the exclusive right to apply
for a prospecting right in terms
of section 8 of Schedule 2 to the
MPRDA, but it had to be done in terms of a new application and the
applicant’s application
had to comply with the requirements of
the MPRDA. This is so as the holders of unused old order rights, in
terms of the provisions
of the MPRDA, would be deprived of their
rights (apart from the transitional arrangements) and such
deprivation, coupled with the
State’s assumption of custom and
administration of those rights constituted an effective expropriation
thereof. This was
in fact confirmed in the cases of Agri South
Africa v Minister of Minerals and Energy; Van Rooyen v Minister of
Minerals and Energy
2010 (1) SA 104
(GNP) and Agri South Africa v
Minister of Minerals and Energy
2012 (1) SA 171
(GNP);
(d) On the other
hand, if the holder of an old order right had used that prospective
of mining right in the one year period before
the commencement of the
MPRDA, then that right is referred to as a used old order right. In
such an event, the holder of an used
old order right could apply for
a conversion of that right to a new order right without having to
meet the requirements of a new
application provided for in the MPRDA,
but only subject to certain requirements in terms of section 6 of
Schedule 2 to the MPRDA;
(e) As Miranda had
an unused old order right in respect of certain base metals in
respect of Rozynenbosch, it had to make a new
application for new
order rights. There can be no dispute that Nel knew this as he made
a new application for the unused old order
rights in respect of
Rozynenbosch;
(f) As such, it was
a misrepresentation to refer to the application in respect of
Rozynenbosch as a conversion application and not
as a new
application;
(g) According to the
Annual Report for 2006, Rozynenbosch was for lead, silver, zinc and
copper, as stated above. This is a misstatement
as silver was
specifically excluded in the cession and Miranda did not apply for a
new order right in respect of silver;
(h) It was also a
misstatement to refer to “geological investigations costing in
excess of R11.7 million in current terms”
as neither Gold
Fields nor Miranda spent R11,7 million to geological investigations.
Nel admitted this in cross-examination;
(i) Miranda did not
do prospecting at Rozynenbosch, which was a further requirement
before Rozynenbosch could be shown as an asset,
even if Miranda had
the right;
(j) Even if Miranda
had a prospecting right and even if Miranda was prospecting, the
existence of a mining right, including exploration,
could only be
capitalised (shown on the balance sheet as an asset) when the
technical feasibility and commercial viability of extracting
a
mineral resource are demonstrable. It is demonstrable when “proven
reserves” are determined to exist. In the case
of
Rozynenbosch, it was not a proven reserve but at its highest, an
indicated mineral resource.
[46] The evidence
of Greyling who testified on behalf of the defendant was truly
significant. He made it clear that under the
International Financial
Reporting Standards (“IFRS”) entitled International GAAP
2012, Rozynenbosch could not be shown
as an intangible asset or as a
net asset value in the balance sheet, even if the refusal of the
application for the prospecting
right was under appeal, it was still
merely a contingent spes that may be noted but may not be reflected
as an intangible asset
or as a net asset value.
[47] Based on the
above as well as the documentary evidence, it was quite correctly in
my view, pointed out and argued on behalf
of the defendant that there
were several reasons why Rozynenbosch should not have been shown as
an intangible asset to the alleged
value of R284 million in the
financial statements contained in the Annual Report of 2006. It is
clear that Miranda did not have
that right and at best had a pending
appeal, which is not equivalent to a right; Rozynenbosch was not a
proven reserve but at best
an indicated mineral resource; and Miranda
did not actively prospect at Rozynenbosch. In this regard it was
also, correctly in
my view, argued that there was no basis that Nel,
as the heart and sole of Miranda and as the person coming from a
background in
mining, would not have known that Rozynenbosch could
not have been shown as an intangible asset let alone an intangible
asset with
value of R284 million. It was further argued, and also
correctly in my view, that the above explains why Rozynenbosch was
not
shown as an asset in the reverse-listing, as the board of
directors must have known that the reading panel of the JSE would not
have permitted Miranda to rely on Rozynenbosch as an asset. The
evidence of Nel, and in particular Du Preez, showed that the
directors of Miranda became aware of the granting of a prospecting
right to Gumba only by the end of 2009. However, the Annual
Reports
for 2007 for Miranda repeated all the misrepresentations contained in
the Annual Report of 2006. From this it is clear
that a conscious
decision was taken by the board of directors to repeat its reliance
on Rozynenbosch as an asset to the value of
R284 million in the
balance sheet of Miranda. There is merit in the argument that the
probable inference to be made from this
is that they must have known
that the potential investors would not invest in Miranda (by buying
shares in Miranda) in the absence
of the value attributed to
Rozynenbosch as that value constituted more than 80% of the assets of
Miranda. As it appears from the
common cause facts described above,
the Annual Report for 2008 of Miranda repeated the aforesaid
misrepresentations under the pretence
of a potentially successful
appeal against the refusal of Miranda’s application for a
conversion to a new order prospecting
right in respect of
Rozynenbosch.
THE EVIDENCE OF
THE DEFENDANT
[48] I have already
commented briefly on the evidence of the defendant, and as
corroborated, where necessary by his witness, Greyling.
He testified
that he is a qualified chartered accountant and businessman. He is a
director of Yakani, a Black Economic Empowerment
(“BEE”)
Company and became its executive director in 2010. His expertise
include the financial, minerals and telecommunications
sectors. It
is common cause that he later became a member of the Miranda board.
His company, Yakani, also has interests in mining.
[49] He said that
prior to joining Miranda, and during 2008, Yakani was approached on
behalf of Miranda with the invitation to invest
in Miranda. He was
told of Rozynenbosch as an asset valued at R284 million or even more.
In considering the invitation Yakani
relied on the 2006/2007 Annual
Reports of Miranda, the SENS JSE announcements and reports. He took
the trouble to verify the information
supplied about Miranda by
consulting other experts in the field of mining. Thereafter Yakani,
as a BEE Company was convinced that
it was the correct opportunity to
invest in Miranda based on the value placed on Rozynenbosch and that
there was a true and real
right in Rozynenbosch. He understood the
difference between ‘old order’ rights and ‘new
order’ rights perfectly.
[50] As stated
elsewhere in this judgment, it is common cause that Yakani
subsequently proceeded to invest in Miranda by purchasing
shares. At
the time the plaintiff was at the head of Miranda and also the
managing director. Yakani then became involved actively
in the
affairs of Miranda.
[51] It is also
common cause that there was brewing and continuous tension between
Yakani and the plaintiff representing the board
of Miranda. There
were various reasons for the tension. Chief of which were the
defendant’s insistence on information relating
to the assets of
Miranda and the title deeds thereto. Yakani also wanted effective
representation on Miranda’s board. The
information was not
forthcoming. This state of affairs led to an application for the
removal of the plaintiff from the board.
The issue of Rozynenbosch
still listed as an asset of value in the records remained a vexed one
up to 2010. It arose again in
2011 after the defendant had become a
board member of Miranda. In July 2011 the plaintiff ceased to be the
CEO of Miranda. The
plaintiff, unhappy with the defendant’s
probing and demanding information tendencies, threatened to proceed
with the business
rescue application, which he did subsequently. On
the other hand, the defendant and the other board members thought
that the business
rescue application was not justified. This, in
essence, led to the present action.
[52] The defendant
testified that once he became part of the board of Miranda, he
conducted his own investigations into the assets
of Miranda,
including Rozynenbosch. In this regard he consulted with the board’s
attorney, Mr J H van der Merwe. The latter
appraised him of the true
position, namely that Miranda had no mineral rights in respect of
Rozynenbosch and that such right was
given to the company, Gumba, as
stated above. The appeal against the refusal of the mineral right
relied on by Nel was a futile
exercise. In order to satisfy himself,
the defendant testified that he studied the archives, confronted
Miranda’s board about
Rozynenbosch and studied a huge file from
the board. The complete investigations carried out by the defendant
on the affairs and
assets of Miranda were handed over to the
auditors, Deloitte and Touche and the auditors brought out a report
as stated earlier
in this judgment.
[53] In the
defendant’s testimony, the plaintiff’s conduct as well as
the persons or entities he consulted by including
in the annual
reports Rozynenbosch as an asset of value, from 2006 up to 2010, was
a misrepresentation. The plaintiff as CEO and
Managing Director
misrepresented the true state of affairs to the public, shareholders
and investors. He testified that in deposing
to the impugned
answering affidavit, he was merely responding to and rebutting the
misrepresented allegations made by Van Wyk,
as supported by the
plaintiff in the business rescue application. He was duly authorised
by the board of Miranda to do so. He
had no intention at all to
defame the plaintiff, nor malice towards him. Significantly, it was
never put to the defendant in cross-examination
that the alleged
defamatory statements were made by him with any improper motive,
intent or malice.
[54] In my view, the
defendant was truly a genuine and impressive witness. This is also
evident from his CV. He was a consistent
witness throughout. He
rendered his version clearly and eloquently in English. The
explanation he gave about what steps he took
once he discovered the
misrepresentations by the plaintiff and the board in respect of
Rozynenbosch, was reasonable and convincing.
He explained
satisfactorily the alleged defamatory allegations relied upon by the
plaintiff in the context of his affidavit and
opposing plaintiff’s
business rescue application as instructed by the board of Miranda.
The defendant, however, became slightly
confused when cross-examined
on as to at what stage the plaintiff acted as CEO or MD of Miranda.
However, this confusion was later
cleared up on re-examination when
reference was made to the bundle of documents pointing out at which
stage the plaintiff signed
documents on behalf of Miranda in his
capacity as managing director. It is however, significant that during
cross-examination it
was not suggested to the defendant at all that
the alleged defamatory statements were untrue or irrelevant. When
properly construed,
the testimony of the defendant was not only
corroborated by the undisputable documentary evidence, but also by
the acceptable evidence
of Greyling as discussed above.
HAS THE DEFENDANT
PROVED HIS DEFENCE?
[55] Based on the
entirety of the above evidence, the crucial question is whether the
defendant has proved on a balance of probability
all the defences
pleaded by him in particular, the defence based on qualified
privilege. In deciding this question, guidance is
given by the legal
principles set out in paras [41] to [44] of this judgment above. In
addition, the plaintiff’s counsel
relied on, inter alia, Van
der Berg v Coopers and Leybrand Trust (Pty) Ltd and Others
[2000] ZASCA 77
;
2001 (2)
SA 242
(SCA), also reported in
[2001] 1 All SA 425
(A); Burchell,
The Law of Defamation in South Africa; May v Udwin
1981 (1) SA 1
(A); Universiteit van Pretoria v Tommy Meyer Films (Edms) Bpk
1977
(4) SA 376
(T); Homed v Cassim
1973 (2) SA 1
(RAD); and Joubert and
Others v Venter
1985 (1) SA 654
(A). The defendant, on the other
hand, relied on, inter alia, Hardaker v Phillips
2005 (4) SA 515
(SCA); LAWSA Vol 7, 2nd ed para 251; National Media Limited v
Bogoshi [199
8] All SA 347
(SCA) (also reported at
1998 (4) SA 1196
(SCA); and Khumalo and Others v Holomisa
[2002] ZACC 12
;
2002 (5) SA 401
(CC). I
have had regard to all these authorities and case law, as well as
other authorities mentioned later below.
THE PLAINTIFF’S
CONTENTIONS
[56] In the heads of
argument on behalf of the plaintiff, the main contentions can be
summarised as follows: that the defendant
was not entitled to
qualified privilege protection since he clearly called the plaintiff
a ‘deceiver’ based solely
on the annual reports of
Miranda; the personal defamation of the plaintiff leads to one
conclusion only and that is that malice
was glaringly apparent; the
defendant was attacking the plaintiff in order to achieve Yakani’s
stated objective of taking
over control of Miranda; the reference to
the plaintiff as being deceptive etc were not relevant; pertinent or
germane to the
issue of the proceedings, and could not be justified
by the defendant saying that the plaintiff was the driving force
behind Miranda;
and finally, rather interestingly too, the plaintiff
argues that the alleged defamatory statements were based on Miranda’s
approach to Rozynenbosch, which is a complex and technical issue.
SOME ADDITIONAL
LEGAL PRINCIPLES
[57] At the risk of
getting bogged down in legal principles applicable to matters of this
nature, I have to refer to a case decided
some 99 years ago. That is
Rubel v Katzenellen-bogen
1915 CPD 627.
The head note reads:
“A party, who,
in a judicial proceeding, makes an affidavit containing a defamatory
statement of the plaintiff, in a matter
pertinent to the enquiry,
enjoins a qualified privilege, and it is incumbent on the plaintiff
to prove that the words complained
of were used not in the reasonable
and bona fide performance of a duty; that they were used maliciously
with intent to injure,
and that they were false, the defendant not
having any reasonable cause for believing them to be true.”
Some 33 years later,
in Blumenthal v Shore
1948 (3) SA 671
(A) and in ultimately
dismissing the plaintiff’s claim for defamation, the Court said
that:
“There are two
questions which a Court must answer, in deciding whether a defamatory
statement was published on a privileged
occasion, if defamatory
matter apparently unrelated to the purpose of the occasion was
included in the communication:
(a)Did a duty or
interest exist which entitled the person to speak?
(b) Was the speaker
in fact speaking in discharge of his duty or in protection of his
interest?”
See also Hardaker v
Phillips supra in which the SCA held that the statement complained of
fell within the scope of qualified privilege
afforded to witnesses in
judicial proceedings, and enunciated several significant principles,
including that the protection afforded
to a litigant or witness was
not limited to those defamatory statements relevant to an issue in
the ‘true or real sense’.
If that were the case the
protection would be extremely limited and litigation would be a lot
more perilous than it already was.
The Court went further to find
that in that case the defamatory statement was not only a response to
what the respondent had said
in his answering affidavit about his
attitude to drugs but was undoubtedly relevant to that professed
attitude. See also Defamation,
Vol 32 (2012) 5th ed at para 503.
(Cf Tuch and Others NNO v Meyerson and Others NNO
2010 (2) SA 462
(SCA).) The cases of May v Udwin supra; Joubert and Others v Venter
supra, particularly at 699; and Van der Berg v Coopers &
Lybrand
Trust supra, are also exceedingly important on the question of
qualified privilege.
THE APPLICATION
OF THE LEGAL PRINCIPLES TO THE FACTS OF THE INSTANT MATTER
[58] In applying all
of the above legal principles to the facts of the present matter, the
conclusion that the defendant has proved
his defence of qualified
privilege, became irresistible. He has proved that the statements
complained of were made in judicial
proceedings in which he was
responding to the proven misrepresentations of the plaintiff. He was
protecting legitimate interests
of Miranda who had duly authorised
and given him the duty to depose to the impugned answering affidavit.
The statements were also
relevant to the specific proceedings. It
has not been proved that the defamatory statements were made by the
defendant with any
improper motive or with malice, as, correctly in
my view, argued on his behalf. Both the plaintiff and indeed his
witness, Du
Preez, conceded that they could not detect any malice on
the part of the defendant. Significantly, the plaintiff readily
conceded
that, if his present claims have any merit, the whole
Miranda board and those who had a hand in the compilation of the
annual reports
and financial statements should have been part of the
present action. The statements, I find, were also true and in the
public
interests. The argument of the plaintiff to the contrary was
without merit. On the probabilities, the consistent various
misstatements
made in the financial statements of Miranda over
several years, as detailed in the body of this judgment, suggested
that such misrepresentations
were made deliberately. In my view, in
any event, when considered in its entirety, the sum total of the
plaintiff’s complaint
that reference to him as been deceptive,
is doubtfully not defamatory in the circumstances of this case.
Moreover, as dealt with
immediately below, the business rescue
proceedings brought by the plaintiff were later settled. For all
these reasons, I find
that the defendant was protected by privileged
occasion and, he has also proved that the alleged defamatory
statements constituted
a reasonable publication as referred to in
National Media Limited v Bogoshi supra, and Khumalo and Others v
Holomisa supra. The
plaintiff’s action calls to be dismissed
on this ground alone.
THE IMPACT OF THE
SETTLEMENT AGREEMENT
[59] If, however, I
am incorrect in my determination set out above, I am of the view that
the plaintiff cannot succeed in his action
for an additional reason.
This is that, the business rescue application proceedings brought by
the plaintiff against Miranda, which
led to the present action, were
later settled. The Settlement Agreement was in full and final
settlement. As stated earlier in
this judgment, the written
Settlement Agreement, bundle A141-147, was entered into between the
plaintiff and Miranda and other
entities pursuant to the business
rescue application.
[60] In terms of
clause 2 of the Settlement Agreement, the plaintiff not only
undertook to withdraw the business rescue application,
but
significantly, also to, “immediately withdraw all other pending
litigation against the company and abandon any claims
not yet
instituted”. In the definitions’ section of the
Settlement Agreement (clause 1.1.3), “Company”
is defined
as, “… means Miranda Mineral Holdings Limited …”.
Clause 7 of the Settlement Agreement provides
that:
“This
agreement is in full and final settlement of all claims of whatsoever
nature that any of the parties hereto has now
or may in the future
have against any of the other parties hereto.”
[61] In determining
this issue, and for the sake of brevity, it is required that the
basic principles of interpretation of contracts
be applied in order
to ascertain the true meaning of the Settlement Agreement as
enunciated in, inter alia, Coopers & Lybrand
and Others v Bryant
[1995] ZASCA 64
;
1995 (3) SA 761
(A) at 767E-768E. See also Engelbrecht and Another
NNO v Senwes Ltd
2007 (3) SA 29
(SCA) at para [7].
[62] In the present
action, the defendant in his plea contended that the Settlement
Agreement included all the disputes between
the plaintiff and Miranda
in full and final settlement, including the alleged defamatory
statements made by him on behalf of Miranda
in the business rescue
proceedings. On a proper interpretation based on the above legal
principles, the contention of the defendant
in this regard had merit.
In any event, the plaintiff when he testified, conceded, and quite
correctly so in my view, that if
the defendant in fact made the
statements and was duly authorised by Miranda (which is the case),
that would have been included
in the full and final settlement as
envisaged in the Settlement Agreement. On this basis too, the
plaintiff’s action calls
to be dismissed.
THE ABSENCE OF
THE TRANSCRIPT OF THE TRIAL RECORD
[63] Prior to
concluding this judgment, one matter deserves mention. That is that,
during the trial the parties undertook to provide
the Court with a
transcript of the trial record. This never occurred fully,
regrettably. Whilst preparing this judgment during
December 2013, the
parties were contacted to comply with their undertaking but to no
avail. The Court was provided only with a
portion of the
transcription which contains the evidence of Du Preez. In any event,
it was possible to finalise this judgment
based on the Court’s
notes made during and immediately after the trial. This tendency
calls to be discouraged as it clearly
delays the preparation and
finalisation of reserved judgments. I need say no more.
COSTS
[64] I deal briefly
with the question of costs. It is a discretionary matter. There is no
reason why the costs should not follow
the result. The defendant has
achieved substantial success. He is entitled to his costs.
ORDER
[65] In the result
the following order is made:
1.The plaintiff’s
action is dismissed with costs.
D S S MOSHIDI
JUDGE OF THE
SOUTH GAUTENG
HIGH COURT,
JOHANNESBURG
COUNSEL FOR THE
PLAINTIFF B WHITTER
INSTRUCTED
BY GEO ISSEROU AND T L FRIEDMAN INC
COUNSEL FOR THE
DEFENDANT B ROUX SC
INSTRUCTED
BY WERKSMANS INC
DATES OF
HEARING 30 MAY 2013 – 6 JUNE 2013
DATE OF
JUDGMENT 7 FEBRUARY 2014