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[2015] ZAGPJHC 269
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Cohen v Malembe and Another (13/28876) [2015] ZAGPJHC 269 (17 November 2015)
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IN
THE HIGH COURT OF SOUTH AFRICA
GAUTENG
LOCAL DIVISION, JOHANNESBURG
CASE
NUMBER: 13/28876
DATE:
17 NOVEMBER 2015
In
the matter between:-
MOSHE
COHEN
......................................................................................................................
Applicant
And
PHILIP
KATISHI
MALEBE
......................................................................................
First
Respondent
LUCY
MALEBE
.......................................................................................................
Second
Respondent
JUDGMENT
NALANE
AJ:
INTRODUCTION
[1]
The Applicant seeks an order rectifying an agreement between him and
the Respondents relating to a property in order to correctly
describe
the property. The parties are agreed that the property was
misdescribed and the Erf number should have been recorded as
Erf No
[5……] and the Deed of Transfer as [ST2……….]
[2]
Applicant further alleges that the Respondents are in breach of the
agreement. He seeks relief compelling them to comply by
furnishing
him at their cost with an electrical compliance certificate, to sign
all the documentation, do all things necessary
to give effect to the
agreement and transfer the property to him and to authorise the
Sheriff or his deputy if needs be to sign
the transfer documents on
behalf of the Respondents.
[3]
The Applicant further seeks the usual prayer of costs but on the
scale of attorney and client.
[4] The genesis of
the dispute between the parties is an agreement styled Memorandum of
Agreement of Sale of Immovable Property
(“the Agreement”)
concluded between the Respondents as sellers and the Applicant as
Purchaser of the property. It is
agreed amongst the parties that the
property description in the agreement is incorrect and that the
correct description should
be Erf [5…..] as opposed to Erf
[1…..] and the Deed of Transfer Number is “[T27…….]”
as
opposed to “[T27…….]”. I need not
concern myself with prayer 1 seeking rectification because the
parties
agree that the property was misdescribed in the agreement.
Prayer 1 therefore should succeed.
[5] The Applicant’s
claim is framed simply as a breach of the agreement.
[6] The material
terms of the agreement are as follows:
6.1. The purchase
price of the property will be R4 million which had already been paid
by the Applicant to the Respondents prior
to the date of signature
(see clause 2.1.1).
6.2. The balance,
(if any) in cash would be secured by guarantee against registration
of the property into the name of the purchaser.
6.3. The agreement
is subject to a resolutive condition that the seller will repay the
outstanding loan plus interest in full on
or before the end of March
2009 (“the resolutive condition”). Should the loan be
repaid in full, then the Agreement
shall become null and void.
[7] The purpose of
the application is stated simply as seeking to enforce the Agreement
and to take transfer of the immovable forming
the subject matter of
the Agreement.
[8] The agreement
has a cancellation clause which provides,
inter alia
, that
should either party commit a breach of the agreement the other party
shall be entitled to give notice in writing calling
upon the
purchaser to remedy the breach.
[9] Clause 8.1
provides that the agreement constitutes the entire contract between
the parties and no other conditions, stipulations,
warranties or
representations whatsoever have been made by or on behalf of either
party.
[10] Clause 8.2
provides that no variation of the agreement shall be of any force or
effect unless reduced to writing and signed
by the parties.
[11] On 13 May 2013
attorneys acting on behalf of the Applicant wrote to the Respondents
advising them to attend their offices within
5 working days to sign
the necessary documentation to effect registration of transfer.
[12] It is common
cause that the Respondents never signed any document to effect
transfer.
[13] In their
answering affidavit the Respondents raised a point
in limine
that the founding affidavit served on them was not properly
commissioned. The affidavit which in the court is properly
commissioned
and this point
in limine
is dismissed.
[14] The Respondents
offer a different narrative of this matter. The First Respondent
states in his answering affidavit that he
met the Applicant in 2008
through his erstwhile attorney Mr Peter Sapire (“Sapire”)
when the latter introduced him
to the Applicant. The Applicant denies
that he met the First Respondent in 2008. He alleges that on the
contrary he met him for
the first time after April 2009 after the
First Respondent allegedly failed to repay the R4 million
contemplated in the Agreement.
[15] According to
the First Respondent he has business interests which include Forward
Air and Sea
(Pty) Limited (“Forward”).
This is a company involved in forwarding and clearing, both for
import and exports. Forward
was experiencing financial difficulties
and Sapire collecting moneys on its behalf.
[16] The First
Respondent asked Sapire for an advance of funds on the condition that
once Sapire had recovered from the debtors
he would deduct the moneys
lent to the First Respondent and pay him the difference. Sapire
offered to speak to his friend the Applicant
to lend money to the
First Respondent.
[17] Sapire advised
the First Respondent that the Applicant had agreed to a loan in the
amount of R4 million. He was under the impression
that the Applicant
was Sapire’s friend but it turned out that the Applicant was a
client of Sapire. This information was
initially not disclosed to
him. The Applicant denies this and states that his relationship with
Sapire has always been that of
an attorney and client.
[18] According to
the Respondents instead of the Applicant paying him the R4 million in
terms of the Agreement, he only advanced
the sum of R2 900
000.00.
[19] The Respondent
submits that the agreement is not a genuine purchase and sale
agreement but in essence a surety agreement. The
First Respondent
alleges that he returned the R2 900 000.00 cheque to the
Applicant.
[20] In his replying
affidavit Applicant denies the First Respondent’s version of
events and states that he lent and advanced
the First Respondent
money amounting in total to R5 600 000. Applicant attaches to
his replying affidavit a schedule setting
out copies of cheques drawn
by Afrifocus Securities (Pty) Limited (“Afrifocus “) in
favour of Forward. Afrifocus is
a company owned by the Applicant.
[21] The cheques
allegedly drawn by Applicant in favour of First Respondent are as
follows:
21.1.
A cheque dated 28 August 2008 in the sum of R600 000. This date
is after the date of end of March 2009
on which the R4m was supposed
to be repaid.
21.2.
A cheque dated 14 January 2009 for R2 900 000.00;
21.3.
A cheque dated 29 May 2009 for R200 000.00. The cheque for
R200 000.00 dated 29 May 2009 is dated
long after the end of the
March date contemplated in the resolutive condition contained in the
Agreement.
[22] Another
document is substantiation of the payments to the First Respondent is
something that appears to be an extract from
some records of a bank
indicating electronic transfer of funds in the sums of R200 000.00,
R1 600 000.00, and R100 000.00
paid to Forward. It is
no clear where the funds came from and what they were in respect of.
[23] According to
the Applicant the amount of R5 600 000 advanced to the First
Respondent attracted interest at 3% per month
and there is still a
balance outstanding which will form the subject matter of separate
legal proceedings.
[24] According to
the First Respondent he never received the sum of R4m from the
Applicant and only received R2 900 000 which
he repaid in full.
In substantiation the First Respondent attaches copies of cash
cheques drawn by Forward.
[25] The Applicant
refutes what the First Respondent states and alleges that there was
no punctual payment even of the R2 900
000 advanced to the First
Respondent. He states that only R2 498 000.00 was repaid to
the Applicant over four years,
and that this appears even from the
documents supplied by the First Respondent.
[26] The Respondents
filed a supplementary answering affidavit on the basis that the
Applicant in his replying affidavit had raised
certain issues which
were never raised in the founding affidavit and constitute complete
new evidence. The new issues are that
the Applicant in his reply
stated that he lent and advanced the Respondents through Afrifocus
the sum of R5 600 000. In support
Applicant attached extracts of
bank statements and cheques drawn by Afrifocus.
[27] The First
Respondent alleges that the wrong party has been sued in that the
moneys were not advanced by the Applicant personally
by Afrifocus to
Forward. This point can be dismissed simply. When parties in this
matter lent moneys to each other, (whatever the
quantum) they knew
and appreciated that the moneys were to be used by the First
Respondent for the purposes of his business, Forward,
which had
financial difficulties. It is irrelevant whether the money came from
Afrifocus or whatever other source. As between the
parties they
acknowledge that they lent each other moneys and the dispute is
whether the amount lent is R4 000 000 as alleged
by the
Applicant or R2 900 000 as alleged by the Respondents and
whether it has been repaid.
[28] The Respondents
further allege that the Agreement is not a sale agreement as
indicated but a suretyship Agreement. In my view
nothing turns on how
the parties characterize the agreement and this point cannot succeed.
What is of paramount importance
are the terms and conditions of
the Agreement, and not what it is called.
[29] In our law
there is a rule called the parol evidence rule which is has been
expressed as follows:
“
When a
contract has been reduced to writing, the writing is, in general,
regarded as exclusive memorial of the transaction and in
a suit
between the parties no evidence to prove its terms may be given save
the document or secondary evidence of its contents,
nor may the
contents of such document be contradicted, altered, added to or
varied by parole evidence …
”
[1]
[30]
Whether the Agreement is a surety or a sale can only be determined
with reference to the wording of the contract. The wording
does not
state that it is a suretyship agreement. On the contrary the
agreement is styled “
Memorandum f Agreement of Sale of
Immovable Property
”.
[31] The Respondent
also raised the defence of prescription in respect of the amounts
which were allegedly advanced between 28 August
2008 and 14 September
2009. This ground cannot be sustained in that the Applicant’s
claim is based on a breach of the written
contract and the relief
sought is transfer of the property and not a claim for the separate
amounts advanced. The defence based
on prescription is therefore bad
and is dismissed.
[32] The Respondents
raised a further point that the remedy available to the Applicant was
to sue them for the loan amount advanced
and only in the event that
they failed to pay would he be entitled to issue summons, obtain
judgment and attach the immovable property
in execution. The
Agreement says nothing of the sort. This point is unsustainable. The
Agreement simply states that the amount
of R4 000 000 is
acknowledged by the Respondents to have been advanced to them by the
Applicant and that it was payable by
the end of March 2009, failing
which the property will be sold to the Applicant.
[33]
As
counsel for the Applicant Mr Nowits correctly argued, the condition
relating to repayment is a resolutive condition. A resolutive
condition does not postpone the operation of the obligation: the
obligation operates in full, but it may come to an end if certainty
is reached, in that the condition is fulfilled or in that it
fails.
[2]
This is in contrast to
a suspensive condition which suspends or postpones the full operation
of the obligation which it qualifies
until certainty is reached, in
that the condition is fulfilled or in that it fails.
[3]
[34] The Agreement
in this matter came into operation upon its signature and would only
be rendered null and void in the event that
the loan was repaid. If
the loan is not repaid then the sale part of the agreement becomes
operational.
[35] What is clear
is that the Applicant lent certain sums of money to the Respondents.
The moneys were lent advanced from the period
28 August 2008 up to 14
September 2009. So even after the end of March date fixed for the
repayment of the R4m had passed, the
Applicant continued to advance
more money to the First Respondent. According to the Applicant he
advanced an amount of R1 600 000.00
on 28 July 2009 and a
further amount of R100 000.00 on 14 September 2009. This begs
the question why the Applicant would continue
lending more money to
the First Respondent, if as at the end of March 2009 the First
Respondent was truly in breach of the Agreement.
[36] The
circumstances relating to how the moneys were lent and advanced only
became clearer once the Respondents had filed their
answering
affidavit. In his replying affidavit the Applicant provided more
context and facts relating to how the amounts allegedly
lent were
advanced and when such advances were made.
[37]
It is
incumbent upon a litigant who brings an application to disclose all
the relevant facts in his founding affidavit, particularly
where it
is anticipated that the Respondent may dispute some of the
allegations in the founding affidavit. An applicant should
make out
his case in the founding affidavit and not in reply.
[4]
[38] The First
Respondent alleges that it would have been impossible for him to have
agreed to repay the R4 000 000 within
a space of three months
and that this supports his allegation that the agreement between him
and his erstwhile attorney Sapire
was that the latter will recover
moneys on his behalf and there would be a set off of sorts. This
allegation cannot stand because
the agreement on which the Applicant
relies makes no reference to the role that Sapire would play in the
transaction. The Agreement
is simply between the Applicant and the
Respondents with no reference to Sapire.
[39] It appears from
the Replying Affidavit that the First Respondent provided additional
security to the Applicant in respect of
the R5 600 000 lent and
advanced. Applicant states that he took the additional security in
the form of a member’s interest
in another close corporation
owned by the First Respondent. He was assured by the First Respondent
through Sapire that there are
in fact two units owned by the close
corporation and it turned out that there was only one. It is not
clear what units the Applicant
refers to and what the values thereof
are. It is not apparent from the papers whether the unit is a fixed
property or what its
nature is.
[40] It appears
therefore that the Applicant has recovered at least a part of the
moneys lent and advanced in the form of the member’s
interest
in the close corporation. In addition the Applicant has been paid an
amount on his own version of R2 498 000.00
which is more
than half of the debt. The debt may well have been extinguished, but
this is not clear from the papers.
[41] It would be
unfair to order the transfer of the property from the Respondents to
the Applicant, even assuming that the amount
advanced is R4 000
000 under circumstances where the Applicant may have been repaid in
full. Due to the paucity of facts this
possibility that the
Applicant’s debt may have been extinguished is not unreal.
[42] On the other
hand there is the allegation by the First Respondent that only R2 900
000 has been advanced.
[43] On the version
of the First Respondent he has repaid R2 900 000 to the
Applicant. If the First Respondent is correct then
there is nothing
outstanding to the Applicant. If the Applicant is correct that the
amount advanced is R4 000 000, and that only
R2 498 000.00
has been repaid that would leave a balance of R1 502 000.00.
The agreement is silent regarding
what should happen in the event
that a portion only of the R4 000 000 is repaid. Does it mean
that the Respondents are still
to part with their house even if they
have paid more than half of the loan?
[44] It is therefore
clear that there are many unanswered questions which cannot be
resolved on the papers.
[45]
The
Applicant has urged the court to find that there are no real disputes
of facts in this matter. I am not convinced that the facts
are as
clear as the Applicant alleges. The legal principles applicable in
motion proceedings when there is a dispute of facts on
the papers are
well established.
[5]
Where in
motion proceedings disputes of fact arise a final order can be
granted only if the facts averred in the Applicant’s
affidavits, which have been admitted by the Respondents, together
with the facts alleged by the latter justify such an order.
[6]
[46] On the version
of the Respondents they did not breach the agreement. On their
version they did not receive the R4 000
000 but only
R2 900 000.00 and this they have repaid in full. If the
Respondents are correct, then the Applicant cannot
succeed.
[47] There is an
additional point raised by the Respondents that they were not placed
in
mora
. The Applicant denies that the Agreement contemplates
that in case of breach the Respondents must be placed in
mora
.
[48]
When a
contract fixes a time for performance
mora
is said to arise from the contract itself and no demand is necessary
to place the debtor in
mora
because, figuratively the fixed time makes the demand that would
otherwise have to be made by the creditor.
[7]
When a debtor undertakes to discharge an obligation on a specified
date the creditor need make no demand on the debtor who is in
mora
if he fails to pay on the appointed date.
[8]
[49] In the premises
I am not able to grant the relief sought by the Applicant. I enquired
from both parties what I should do in
the event that I am unable to
resolve the disputes on paper.
[50] The First
Respondent also made allegations that the reason he signed the
agreement was because he was placed under duress by
the Applicant and
Sapire. These allegations are denied by the Applicant. When I asked
Mr Malema, counsel for the First Respondent
regarding what duress was
placed on the Applicant it appeared that the First Respondent was
under tremendous financial pressure
to sign. It therefore appears to
me that the duress alluded to is the financial pressure that the
First Respondent was under. Respondents
signed the Agreement
voluntarily. First Respondent is not an unsophisticated person. He is
an astute businessman who signed because
he wanted money to rescue
his business.
[51]
The
First Respondent also raised the defence that the Applicant should
have registered as a creditor provider in terms of the National
Credit Act
[9]
. There is no
substance to this point. Applicant is not a credit provider as
defined
[10]
and the Agreement
does not fall within any of the defined categories of credit
agreement
[11]
.
[52] I am of the
view that this matter should be referred to trial. The fundamental
dispute is how much was actually advanced by
the Applicant to the
Respondents. Even though the agreement records that R4 000 000
was advanced the parties are agreed that
at least more than half of
the money loaned has been repaid. Of the balance the Applicant may
have recovered either a portion or
the whole by taking the security
of the unit owned by a close corporation, which First Respondent
ceded to him. These facts can
only be properly ventilated in a trial.
[53] In the premises
I grant the following order:
1. The dispute
between the Applicant and the Respondents is referred to trial.
2. The papers in
this application shall serve as pleadings in the action.
3. The parties may
supplement or amend the papers as may be necessary.
4. Costs will be in
the cause.
Nalane,
AJ
Acting
Judge of the High Court of South Africa
Appearances:
For Applicant:
Adv Nowits
Instructed by:
Nowitz Attorneys
For
Respondents: Adv VMJ Malema
Instructed by:
Kgasago Attorneys
Date
of hearing: 07 October 2015
Date of
judgment: 17 November 2015
[1]
Union
Government v Vianini Ferro-Concrete Pipes (Pty) Limited
1941 AD 43
at 47; Dreyer v AXZS Industries (Pty) Limited
2006 5 SA 548
(SCA) at
554 B - A; Van der Merwe et al Contract General Principles 3
rd
Edition p.173
[2]
Van
der Merwe supra p.289
[3]
Van
der Merwe supra
[4]
Primedia
Broadcasting Ltd and Others v Speaker of the National Assembly and
Others
2015 (4) SA 525
(WCC) at p 541 – 542 par 26
[5]
Plascon
Evans Paint Limited v Van Riebeck Paints (Pty) Limited
1984 (3) SA
623A
at 634
[6]
National
Director of Public Prosecutor v Zuma
[2009] ZASCA 1
;
2009 (2) SA 277
(SCA) at 290
par 26
[7]
Christ
ie
The
Law of Contract in South Africa
6
th
Edition p.519
[8]
Laws
v Rutherford
1924 AD 261
at 262
[9]
Act 34 of 2005
[10]
credit
provider'
,
in respect of a credit agreement to which this Act applies, means-
(a)
the
party who supplies goods or services under a discount transaction,
incidental credit agreement or instalment
agreement;
(b)
the
party who advances money or credit under a pawn transaction;
(c)
the
party who extends credit under a credit facility;
(d)
the
mortgagee under a mortgage agreement;
(e)
the
lender under a secured loan;
(f)
the
lessor under a lease;
(g)
the
party to whom an assurance or promise is made under a credit
guarantee;
(h)
the
party who advances money or credit to another under any other credit
agreement; or
(i)
any
other person who acquires the rights of a credit provider under a
credit agreement after it has been entered
into;
[11]
Section
8
Credit agreements
(1) Subject to
subsection (2), an agreement constitutes a credit agreement for the
purposes of this Act if it is-
(a)
a
credit facility, as described in subsection (3);
(b)
a
credit transaction, as described in subsection (4);
(c)
a
credit guarantee, as described in subsection (5); or
(d)
any
combination of the above.