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[2015] ZAGPJHC 247
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Siebels Hard Asset Fund Limited v Pouroulis (44754/14) [2015] ZAGPJHC 247 (28 October 2015)
HIGH COURT OF SOUTH
AFRICA
(GAUTENG LOCAL
DIVISION, JOHANNESBURG)
Case No. 44754/14
DATE: 28 OCTOBER 2015
In the matter between:
THE SIEBELS HARD ASSET FUND
LIMITED
..................................................................
Applicant
And
LOUCAS CHRISTOS
POUROULIS
..................................................................................
Respondent
Case Summary: Interpretation of merx
provision of agreement of sale of shares –the description of
the merx - ‘. . .
all the shares purchased by Siebels Hard
Asset Fund in TAR and DAU . . . ‘ - when read in context and
taking into account
the circumstances in which the agreement of sale
came into existence, means the applicant’s 3 311 337 odinary
shares in Transafrika
Resources Limited (TAR), a company registered
and incorporated in Mauritius, converted to 2 848 413 redeemable and
313 008 ordinary
shares in TAR and 299 833 shares in Desert Gold
Ventures Inc (DAU), a company registered and incorporated in Canada.
Practice and Procedure – Founding
Affidavit - facts which should be set out in a founding affidavit are
not only determined
by the relief a party seeks, but also by the
context within which the dispute arose and the nature of the issues
between them.
Practice and Procedure – Replying
Affidavit - an applicant may adduce any evidence in a replying
affidavit that is relevant
to an issue and which serves to refute the
case put up in the answering affidavit.
JUDGMENT
MEYER, J
[1] The applicant, The Siebels Hard
Asset Fund Limited, claims payment from the respondent, Mr Loucas
Christos Pouroulis, of the
sale price in the sum of US$4 842 005,50
or the South African Rand equivalent as at the date of payment for
shares that were sold
by the applicant to the respondent in terms of
a written agreement of sale of shares. The respondent resists the
applicant’s
claim on the basis that the applicant has not
delivered nor tendered to deliver the shares that were contracted for
and purchased
by him and that as a result of the applicant’s
breach or repudiation he has cancelled the agreement of sale.
[2] The applicant, represented by Mr
Joseph Byrne, the chief operating officer of its investment manager,
Green Cay Private Client
Limited, and the respondent, represented by
his attorney, Mr Terry Mahon, concluded a written agreement of sale
comprising of a
written offer dated 24 April 2012 from Mr Mahon on
behalf of the respondent and written acceptance thereof dated 25
April 2012
by Mr Byrne on behalf of the applicant. In terms of the
sale agreement the applicant sold to the respondent, who purchased
from
the applicant, all the shares purchased by the applicant and
owned in Transafrika Resources Limited (TAR), a company registered
and incorporated in Mauritius, and in Desert Gold Ventures Inc (DAU),
a company registered and incorporated in Canada, (the relevant
provision of the sale agreement, the construction of which is
presently in dispute, reads as follows: ‘. . . all the shares
purchased by Siebels Hard Asset Fund in TAR and DAU . . . ‘) at
a purchase price of US$1,50 per share. The purchase by the
respondent of the shares would be effective ‘. . . as soon as
the Tharisa [Tharisa PLC] listing has taken place’.
Tharisa
listed on the Johannesburg Stock Exchange (the JSE) on 10 April 2014.
The purchase consideration would be paid as against
delivery of the
relevant share certificates together with the share transfer forms
signed in blank.
[3] The shares purchased by the
applicant and owned in TAR at the time of the conclusion of the sale
agreement numbered 3 311 337
ordinary shares. The applicant, to the
knowledge of the respondent, had not purchased and did not own any
shares in DAU at that
time. Once the listing of Tharisa had taken
place on the JSE on 10 April 2014, the applicant tendered the
delivery of 313 007
ordinary shares and 2 848 413 redeemable shares
in TAR and 299 833 shares in DAU to the respondent against payment of
the agreed
purchase price.
[4] I now turn to the factual matrix
within which the agreement of sale came into existence on 25 April
2012. The respondent has
been a non-executive director and the
(non-executive) chairman of TAR since 9 November 2007. He is also
the founder (non-executive)
chairman and a non-executive director of
TAR Cyprus. Certain family members of the respondent, being Mrs
Artemis Pouroulis (wife),
Mr Adonis Pouroulis (son), Mr Phoevos
Pouroulis (son and chief executive officer of Tharisa), Ms Salome
Pouroulis (daughter) and
Ms Helene Pouroulis (daughter) are
shareholders of TAR with a combined shareholding of 17.85%.
[5] The board of TAR considered a
capital restructuring of TAR from June 2011 and proposed a change in
its capital structure during
October 2011. During February 2012 the
shareholders of TAR proposed by way of a resolution the change in the
capital structure
of TAR whereby 100 000 000 of the 110 439 412
ordinary shares of TAR would be converted into 100 000 000 redeemable
shares, and
5 000 000 of the 100 000 000 redeemable shares would be
redeemed by TAR, the consideration for which redemption would be two
shares
in DAU for each redeemable share redeemed. The proposed
change in the capital structure of TAR is referred to in shareholder
communications
during February 2012 and thereafter. The effect of
the proposed change in the capital structure of TAR on the
applicant’s
shareholding in TAR was that 2 998 330 of the
applicant’s 3 311 337 ordinary shares in TAR would be converted
into redeemable
shares of which redeemable shares 149 917 would be
redeemed in exchange for 299 833 shares in DAU.
[6] The change in the capital structure
of TAR was implemented and officially recorded with the registered
office of TAU on 17 August
2012. The corporate action resulted
therein that 2 998 330 of the applicant’s 3 311 337 shares in
TAR were converted into
redeemable shares, 149 917 were redeemed and
the applicant was issued with 299 833 shares in DAU. The applicant’s
share
certificate in respect of DAU is dated 10 August 2012.
Delivery of the share certificates relating to these shares in TAR
and
in DAU together with share transfer forms signed in blank are
what the applicant subsequently tendered to the respondent against
payment of the purchase consideration.
[7] The issue now to be decided is
whether the applicant has a contractual right derived from the
agreement of sale to payment of
the amount of US$4 842 005,50 or the
South African Rand equivalent as at the date of payment. This
requires a proper construction
of the agreement of sale. Its
provisions must be interpreted in accordance with the established
principles of interpretation.
(See Natal Joint Municipal Pension Fund
v Endumeni Municipality
2012 (4) SA 593
(SCA) para 18; Bothma-Batho
Transport (Edms) Bpk v S Bothma & Seun Transport (Edms) Bpk
2014
(2) SA 494
(SCA) para 12.)
[8] As to the language used in the
agreement of sale, the merx is described as ‘. . . all the
shares purchased by Siebels
Hard Asset Fund in TAR and DAU . . . ‘.
The number and class or classes of shares are not described. But
contextually we
know that on 1 July 2011 the applicant purchased 3
311 337 ordinary shares in TAR at a purchase price of US$4 967
006,00, which
shares were owned by the applicant at the time of the
conclusion of the agreement of sale and that the applicant, to the
knowledge
of the respondent, had not purchased nor owned shares in
DAU at the time of the conclusion of the agreement of sale.
Furthermore,
the ineluctable inference is that the respondent was
aware prior to the conclusion of the sale agreement of the intended
change
in the capital structure of TAR and the effect of the change
on ‘all the shares purchased by’ the applicant, including
the redemption of shares and the receipt of two ‘consideration’
shares in DAU for each one redeemed.
[9] The shares which the applicant
tendered to the respondent remain ‘the shares purchased by’
the applicant in TAR.
The resolution by which the shareholders of
TAR proposed the change in its capital structure states inter alia
that ‘100
000 000 of the Ordinary Shares of the Company be
converted into Redeemable Shares . . . by altering the terms of issue
of such
shares to make provision for redemption at the option of the
Company’. (Emphasis added.) The merx provision of the
agreement
of sale - ‘. . . all the shares purchased by Siebels
Hard Asset Fund in TAR and DAU . . . ‘ - when read in context
and taking into account the circumstances in which the agreement of
sale came into existence, means the applicant’s 3 311
337
odinary shares in Transafrika Resources Limited (TAR), a company
registered and incorporated in Mauritius, converted to 2 848
413
redeemable and 313 008 ordinary shares in TAR and 299 833 shares in
Desert Gold Ventures Inc (DAU), a company registered and
incorporated
in Canada. These are the same shares which the applicant has
tendered to the respondent against payment of the purchase
consideration.
[10] My conclusion on the
interpretation of the merx provision of the agreement of sale makes
it unnecessary to consider the applicant’s
alternative argument
that, even if the merx had changed, the sale became perfecta upon the
conclusion of the sale agreement –
the provision relating to
the listing of Tharisa, so it is argued, being a time clause and not
a suspensive condition – when
the benefit and risk attaching to
the merx passed to the respondent.
[11] But there remains the respondent’s
argument that ‘the applicant has sought to contend, for the
first time in its
replying affidavit, that what was contracted for
was something other than what is expressly stated to be the merx in
the contract
itself.’ There is no merit in this argument. The
applicant’s case is the converse: that what was contracted for
is on a contextual interpretation of the merx provision of the
agreement of sale precisely the shares which the applicant tendered
to the respondent against payment of the purchase consideration. The
change in the TAR capital structure after the applicant had
purchased
the 3 311 337 shares at US$1.50 per share on 1 July 2011 which had
the effect ‘that the Applicant’s shareholding
in TAR
became 2 848 413 redeemable shares and 313 008 ordinary shares’
and the applicant’s shareholding in DAU, are
matters that were
pertinently raised in the founding affidavit.
[12] It should be borne in mind that
facts which should be set out in a founding affidavit are not only
determined by the relief
a party seeks, but also by the context
within which the dispute arose and the nature of the issues between
them (Reynolds NO v
Mecklenberg (Pty) Ltd
1996 (1) SA 75
(WLD) at p
78 E – J). The respondent’s defence that the applicant
has not delivered nor tendered to deliver that which
was contracted
for was raised for the first time in the respondent’s answering
affidavit and particularly not in the correspondence
from his
attorney that preceded the present application. The only issue
raised by the respondent prior to the filing of his answering
affidavit in regard to non-payment of the purchase consideration to
the applicant is the contention that the respondent’s
shares in
Tharisa ‘are “locked-in” for a period of 12 months
from the listing’ and that the respondent
‘is accordingly
unable to realise any of the shares at this stage’, an issue
that is not persisted with in his answering
affidavit.
[13] In his answering affidavit the
respondent states as follows:
‘As indicated above, our common
intention was for the applicant to sell me 3 311 337 ordinary shares
in TAR. It was never
intended that the amount of 3 311 337 ordinary
shares should be reduced to only 313 008 ordinary shares and that I
would be obliged
to take delivery of 2 848 413 redeemable shares in
lieu of the balance of the ordinary shares which I wished to
purchase’.
And also:
‘I wish to point out, however,
that at the time that Mahon addressed the email of 27 May 2014,
neither he nor I appreciated
the fact that the applicant would be
tendering something different to what I had purchased. . . . As
stated above when the email
of 27 May 2014 was sent, I was not aware
of the restructuring of TAR. Had I been aware of this and the fact
that the applicant
was unable to deliver the 3 311 337 shares, I
would not have made the proposal contained in Manon’s aforesaid
email.’
[14] An applicant may adduce any
evidence in a replying affidavit that is relevant to an issue and
which serves to refute the case
put up in the answering affidavit
(Reiter v Bierberg & Others 1938 SWA 13 at pp 14 – 15).
This is precisely what the
applicant set out to do in its replying
affidavit. It adduced evidence, including documentary evidence,
which serves to refute
the case put up for the first time in the
respondent’s answering affidavit, including the respondent’s
allegations
that the common intention of the parties was for the
applicant to sell to him 3 311 337 ordinary shares in TAR and that he
‘was
not aware of the restructuring of TAR’ when the
email of 27 May 2014 was sent. It is unthinkable, unless explained
(which
did not happen), that the respondent, who as I have mentioned
is the non-executive chairman of TAR and also one of its directors
and whose immediate family members held 17.85% of its shares, would
not have been fully aware prior to the conclusion of the sale
agreement of the intended change in the capital structure of TAR and
after the conclusion of the sale agreement of the change that
was
brought about in its capital structure. The respondent elected not
to make application for the striking out of the allegations
from the
replying affidavit which according to him could and should have been
included in the founding affidavit (Seymour v Seymour
1937 WLD 9
;
Victor v Victor
1938 WLD 16
; Titty’s Bar & Bottle Store v
A.B.C. Garage & Others
1974 (4) SA 362
(TPD) at p 369 A –
B), nor did he seek permission to reply to any such allegation.
[15] In the result the following order
is made:
Judgment is given in favour of the
applicant and against the respondent for:
(a) Payment of the amount of US$4 842
005,50 or the South African Rand equivalent as at the date of
payment.
(b) Interest on the amount of US$4 842
005,50 at the rate of 9% per annum from 11 April 2014 to date of
payment.
(c) Costs of suit, including the costs
of two counsel.
P.A. MEYER
JUDGE OF THE HIGH COURT
DATE OF HEARING: 6 August 2015
DATE OF JUDGMENT: 28 October 2015
APPLICANT’S COUNSEL: Adv A
Subel SC (assisted by Adv L Hollander)
INSTRUCTED BY:Darryl Furman &
Associates, Illovo, Johannesburg
RESPONDENT’S COUNSEL: Adv JG
Wasserman SC (assisted by Adv D Mahon)
INSTRUCTED BY:Terry Mahon Attorneys,
Sandton