About SAFLII
Databases
Search
Terms of Use
RSS Feeds
South Africa: South Gauteng High Court, Johannesburg
SAFLII
>>
Databases
>>
South Africa: South Gauteng High Court, Johannesburg
>>
2016
>>
[2016] ZAGPJHC 7
|

|

Padayachee v Adhu Investments CC and Others (16892/2012) [2016] ZAGPJHC 7; [2016] 2 All SA 555 (GJ) (28 January 2016)

REPUBLIC
OF SOUTH AFRICA
IN
THE HIGH COURT OF SOUTH AFRICA
GAUTENG
LOCAL DIVISION, JOHANNESBURG
Case
number:
16892/2012
DATE:
28 JANUARY 2016
In
the matter between:-
KUMARAN
PADAYACHEE
......................................................................................................
Plaintiff
And
ADHU
INVESTMENTS
CC
..............................................................................................
1
st
Defendant
HUGO
HEINRICH
KNOETZE
.......................................................................................
2
nd
Defendant
LIVISPEX
(PTY)
LIMITED
.............................................................................................
3
rd
Defendant
JUDGMENT
OPPERMAN
AJ
introduction
[1]
The plaintiff, (“Mr. Padayachee”)
instituted action against the first and second defendants (“Mr
Knoetze”
and “Adhu”), for damages caused by them to
him by diverting and preventing payment to Mr Padayachee of a fee of
R2.5
million (“the fee”).  The fee was originally
payable to him personally in terms of an agreement (“the exit

agreement”) concluded on 28 July 2010 by Mr Padayachee, a
company which he controlled, Spartan Finance Holdings (Pty) Limited

(“Spartan”), another individual, Mr Knoetze, a company
controlled by Mr Knoetze, Adhu and a company which was to serve
as a
vehicle for Messrs Padayachee and Knoetze via their respective
companies (Spartan and Adhu) to enable a company called Teleosis

Capital (Pty) Limited (“Teleosis”) to acquire a valuable
shareholding in another company. Had things gone according
to plan,
as they seldom do in human affairs, Teleosis would have paid Mr
Padayachee a fee of R2.5m for assisting in the raising
of the funds
from a funder to facilitate this entire transaction and Mr Padayachee
would have exited stage left. This was not to
be. Many a twist was
hidden behind the scenes, only to be revealed much later when the
machinery of the courts, subpoena, discovery
and cross-examination
entered onto the stage in the hands of skilful and determined
lawyers.
[2]
The exit agreement flowed from a fall out
between Mr Knoetze and Mr Padayachee. They had, before they fell out,
planned a BEE transaction
in terms of which their joint venture
company, Teleosis, was to acquire 51% of the shares in a valuable
company known as Advanced
Fire Suppression Technologies (Pty) Limited
(“AFST”). The shareholding in Teleosis was, if all had
gone according to
plan, to be held by Mr Knoetze’s company Adhu
and Mr Padayachee’s company, Spartan, in the proportions 49% to
51% respectively.
Spartan was to fulfil the role of BEE partner. It
was because they fell out that Mr Padayachee and Spartan decided to
exit. Although
it sounds peculiar (and it is not the only peculiar
feature of this matter) they entered into the exit agreement.
[3]
Mr Padayachee’s claim for damages was
based on two grounds: Mr Knoetze and Adhu failed to take steps to
progress the AFST
transaction to its final end when able to do so and
failed to perform such acts as might be necessary to give effect to
the terms
of the exit agreement. As mentioned, the exit agreement
recorded an obligation on Teleosis to pay Mr Padayachee R2.5million
if
he successfully raised the funds needed for Teleosis to acquire
the targeted shareholding in AFST. In the alternative, Mr Padayachee

pleaded that Mr Knoetze had in effect achieved the completion of the
AFST transaction, but had replaced Teleosis for this purpose
with the
third defendant, Livispex (Pty) Ltd (“Livispex”), and in
so doing failed to procure that the obligations owed
by Teleosis to
Mr Padayachee were fulfilled by Livispex, when Mr Knoetze could and
should have caused it to do so.
[4]
Mr Padayachee further pleaded that Mr
Knoetze or Mr Knoetze and Adhu, unlawfully prevented Livispex from
paying him the fee.
[5]
Mr Padayachee does not persist with the
ground that Mr Knoetze and Adhu failed to take steps to progress the
AFST transaction to
its final end when able to do so.
[6]
On or about 17 December 2014 and by means
of an application for joinder and a substantial amendment to the
particulars of claim,
Mr Padayachee levelled his claim against
Livispex, claiming payment of the fee of R2.5m on the basis of a
stipulatio alteri, contending
that in an agreement between  Standard
Bank of South Africa (“SBSA”) and Livispex they had
included that fee in
the capital amount of the loan being made by
SBSA to Livispex  to pay for target shares in AFST.
[7]
In support of his claim based on the
stipulatio alteri, Mr Padayachee relied on documents that had been
provided by SBSA in January
2014, pursuant to the subpoenas issued
against it, in particular a written motivation by SBSA’s
“Equity and Leveraged
Finance Department” to its Credit
Department which provided that a portion of the loan funding to
Livispex would comprise
the fee due to Mr Padayachee, and the medium
term loan agreement concluded between SBSA and Livispex, (“the
loan agreement”)
in terms of which SBSA loaned Livispex an
amount of R63.4 million.
[8]
In their amended plea Mr Knoetze and Adhu
admitted the conclusion of the exit agreement, but denied that the
conditions necessary
for payment of the fee were met. They denied
that Mr Padayachee had done what was required of him (i.e. the
rendering of certain
consulting services) for payment of the fee.
They pleaded that after the conclusion of the exit
agreement, Livispex purchased the assets and business of AFST “which
acquisition
was funded partly by a loan granted to Livispex by SBSA.”
In its plea, Livispex identified its direct and indirect
shareholders,
admitted the conclusion of the loan agreement and its
terms but denied the remaining allegations and also raised a special
plea
of prescription. Livispex’s prescription defence was to
turn into a central pillar of the defence presented in the trial.
The
allegation that Livispex owed the obligation to pay the R2.5m fee was
at the end of the day resisted on two broad grounds,
prescription and
that Mr Padayachee had not performed in terms of the exit agreement.
[9]
To the prescription point Mr Padayachee
replicated, relying on section 12(3) of the Prescription Act 68 of
1969 (“the
Prescription Act&rdquo
;). During argument, an
amendment to the replication was sought, relying on
section 12(2)
of
the
Prescription Act. The
amendment was unopposed and was granted.
[10]
Two bundles of documents were prepared for
the trial, and introduced as volumes 1 and 2. The defendants
introduced certain other
documents which were admitted by agreement
as volume 3. During the trial it was agreed between the parties that
the full contents
of various written agreements concluded on 14
and/or 20 July 2010 (bundle 2 pages 396 – 596 “the
transaction agreements”),
could be relied on in argument by any
of the parties, irrespective as to whether any agreement or provision
thereof had been introduced
into evidence through the mouth of a
witness or not.
[11]
The parties agreed that the documents were
what they purported to be, that copies could be used in place of
originals and that documents
would not be regarded as having been
adduced in evidence unless referred to in evidence or agreed to form
part of the record.
[12]
The plaintiff called five witnesses; Mr
Padayachee, three witnesses employed by SBSA during 2010: Mr Gaarekwe
Penyenye, (“Mr
Penyenye”), Mr Mohammed Sabi (“Mr
Sabi”) and Mr Kreneshin Naidoo (“Mr Naidoo”), and
Mr Padayachees’
attorney, Mrs Jonet Crone (“Mrs Crone”).
[13]
The defendants called two witnesses, Mr
Knoetze and a certain Mr Willem Frederick (Barries) Barnard (“Mr
Barnard”).
SUMMARY
OF THE EVIDENCE
Mr Padayachee
[14]
Mr Padayachee explained that he was a
businessman involved in financing small and medium businesses and had
been doing this for
approximately 20 years. During 2010 he was,
amongst other things, a director of Spartan. He was interested in
acquiring shares
in AFST. AFST’s business involved the
servicing of the mining industry through fire suppression. AFST had a
distributorship
agreement with an international company called Tyco.
Teleosis was a shelf company. It was decided that Teleosis, the shelf
company
of which Mr Padayachee was a director, would be used to house
his and Mr Knoetze’s business interests. Mr Knoetze became the

chief executive officer (“CEO”) as well as a director of
Teleosis.
[15]
On the 8
th
of February 2010, Mr Knoetze, on behalf of Teleosis, and Mr Barnard
on behalf of AFST, signed a memorandum which contained a proposal
for
the acquisition of a 51% stake in AFST. The document recorded that
the purchase consideration would be R 82.9 million for the
51% stake
and that payment would be made in three stages. An initial 50% of the
consideration would be paid on conclusion of the
transaction. The
remainder of the purchase price would be paid in two equal
instalments at the end of each financial year starting
with the
financial year ending 2011. Should the warranties not be met, this
payment would be adjusted downward on a rand for rand
basis. The
remaining 50% would be held by the financial institution funding the
transaction on a secure money market instrument.
Teleosis would hold
51% of the shareholding in AFST and the existing shareholders of AFST
would hold the remaining 49%.
[16]
The distributor sales agreement between
AFST and Tyco provided in article XIII part B as follows:
“
In
the event Distributor transfers, sells or assigns ownership of fifty
percent (50%) or more of its interest therein to any third
party,
whether by consolidation, merger, or otherwise, TYCO SAFETY PRODUCTS
reserves the right to continue or terminate this Agreement
.”
[17]
Mr Padayachee testified that he had been
approached by Mr Knoetze as he had an existing business enterprise or
group, and accordingly
had some form of capital and could thus pay
for salaries, the rent and provide a form of drawing for Mr Knoetze
during the initial
phase, in short to provide capital. Another
important reason why he, Mr Padayachee had been approached was that
he had existing,
and well established, relationships with the
funders. Lastly, he was approached as he, Mr Padayachee, would fulfil
the Black Economic
Empowerment (“BEE”) component of this
transaction.
[18]
Mr Padayachee testified that he had in fact
in respect of this matter, engaged three banks, being First National
Bank (“FNB”),
Investec and SBSA.
[19]
Mr Padayachee explained that he had
arranged for business premises at one of the properties that he
owned, that he and Mr Knoetze
had hired an assistant and that he, Mr
Padayachee, had created a facility to pay for a monthly drawing for
Mr Knoetze (Mr Padayachee
was the one who funded this). He also
introduced Mr Knoetze to some of his network of contacts to develop
the new business venture.
He explained that at that stage, Mr Knoetze
did not have any relationship with SBSA.
[20]
Mr Padayachee called for a meeting with
SBSA where Mr Knoetze and he were present and Mr Knoetze explained
the AFST transaction
to SBSA. This introduction ultimately lead to
the SBSA providing funding for the transaction.
[21]
On the 19
th
April 2010 and at the time that Mr Knoetze and Mr Padayachee were
both directors of Teleosis, Teleosis received a letter from SBSA

referred to by Mr Padayachee as an initial term sheet (“initial
term sheet”). Mr Padayachee had received this initial
term
sheet due to the fact that he had approached Mr Zair Cassim and Mr
Naidoo. Mr Zair Cassim was the previous head of leverage
finance of
SBSA and Mr Naidoo was the subsequent head. The initial term sheet
proposed that the security which was to be provided
by Teleosis was
to include:
Unrestricted
Cession of Book Debts.
Notarial
General Bond over all moveable Plant and Equipment held in the name
of the Borrower wherever situated.
Reducing Limited
Suretyships (linked to the capital amount outstanding, including
accrued interest and recovery costs) issued
by Teleosis Capital. The
bank to take relevant consideration of the security held in the
event of exercising such suretyship.
Unrestricted
Cession and Pledge of a cash investment in the amount of at least R
42, 250 million for the first 12 months of the
Term Loan, thereafter
reducing to R 21,125 million for an additional 12 months
.”
[22]
Mr Padayachee testified that what the last
bullet point in fact meant was that SBSA required that half the
facility be pledged back
to them. SBSA’s fee for the
transaction would amount to R 750 000. The initial term sheet
further provided that any
legal costs incurred from date of
acceptance would be borne by Teleosis and that the document should
not be construed as an offer
for finance from SBSA, nor should it be
considered as a commitment from SBSA. Mr Padayachee testified that it
was never anticipated
that the borrower would get the full
approximately R 85 million up front. In support of this he referred
to a document prepared
by Webber Wentzel Attorneys dated the 6
th
of April 2010, which document had become available to Mr Padayachee
after the discovery process had been completed, which at page
26
thereof, confirmed that only R 41. 45 million would be paid up front
by SBSA. He  referred to an SBSA document dated the
9
th
of April 2010 (this was also a document, the content of which became
known to Mr Padayachee after it had been procured under subpoena)
in
which it was recorded that 50% of the transaction value, ie R 41,
450 000 would be paid over to the sellers on day 1 of
the
transaction. The balance would be paid to the sellers but be ceded
back to SBSA assuming certain profit and cash flow warranties
were
met.
[23]
On the 9
th
June 2010, Mr Padayachee received a letter of resignation from Mr
Knoetze. He and Mr Knoetze discussed some terms and the amount
which
Mr Padayachee would receive for exiting the AFST transaction. They
agreed on R 2.5 million.
[24]
On the 28
th
day of July 2010 Mr Padayachee, Spartan, Mr Knoetze, Adhu and
Teleosis concluded an agreement dealing with how the parties would

dissolve their relationship (the exit agreement). In order to fully
understand the exit agreement, it is necessary to quote extensively

therefrom. I accordingly quote the salient features:
“
2.
BACKGROUND
2.1
SFH [Spartan Financial Holdings (Pty) Ltd, Mr Padayachee’s
company] currently holds
60% (sixty percent) of the shares in
Teleosis.
2.2
Adhu [Mr Knoetze’s company] currently holds 40% (forty percent)
of the shares in Teleosis.
2.3
Padayachee is a director of SFH and Teleosis.
2.4
Knoetze was the Chief Executive Officer of Teleosis. Knoetze resigned
as the Chief Executive
Officer and director of Teleosis on 11 June
2010.
……
2.7
SFH and Adhu together with Padayachee and Knoetze have invested time,
effort and resources
to arrange and facilitate that Teleosis purchase
51% (fifty one percent) of the shares of the existing shareholders of
AFST.
2.8
The 51% (fifty one percent) acquisition contemplated in clause 2.7
would meet the black
economic empowerment requirements of AFST.
3.
RECORDAL
3.1
The Parties acknowledge and agree that the successful conclusion of
the AFST transaction
is founded on Knoetze and Padayachee in their
respective individual capacities, irrespective of the roles played by
SFH, Adhu and
Teleosis.
3.2
Padayachee and Knoetze agreed to work together in good faith, with
complete trust and by
exercising sound and honest commercial dealings
with each other and third parties and by sharing common business
goals and objectives.
3.3
The Parties have progressed the AFST transaction to an advanced
stage.
…
.
3.5
The Parties hereby agree that they shall state that the relationship
was dissolved as a
result of the Parties sharing differing business
philosophies should any enquiries be made or queries raised by third
parties of
whatsoever nature regarding the dissolution of the
relationship and when Padayachee and Knoetze fulfil the terms of this
agreement
as contemplated in clauses 5 and 6.
…
.
4.
TELEOSIS
4.1
SFH will transfer its shares in Teleosis for R 1.00 (one rand) to
Adhu.
4.2
In order to give effect to the transfer of shares contemplated in
clause 4.1, an appropriate
agreement shall be drafted by SFH, if
necessary.
…
.
4.5
Teleosis hereby appoints Padayachee as a consultant. Padayachee will
render consulting services
to Teleosis on the AFST transaction.
4.6
The consulting services to be rendered by Padayachee are recorded in
clause 5.
4.7
Teleosis undertakes to pay Padayachee R 2.5 million for rendering
consulting services to
Teleosis on the basis that the AFST
transaction is finally concluded and subject to clause 4.8.
4.8
Teleosis shall pay Padayachee the R 2.5 million as contemplated in
clause 4.7, without deduction
of set-off as follows:
4.8.1
The consulting service fee will be due and payable if said service is
capitalized as part of the funding
arrangement from the financial
institution. The funders will be approached on the specific basis to
also fund this R 2.5 million
fee.
…
.
4.8.2
If the AFST transaction is not concluded and the Parties referred to
in clause 4.11 have settled the expenses
and liabilities contemplated
in clause 4.9 in the agreed upon percentages, the Parties shall take
the necessary steps to place
Teleosis into voluntary liquidation. The
Parties shall cooperate in good faith and sign all documents that are
necessary to place
Teleosis into voluntary liquidation.
5.
PADAYACHEE’S DUTIES
5.1
Padayachee shall facilitate the Funders continue to participate in
the AFST transaction.
5.2
Padayachee shall do all that is reasonably necessary and within the
power of Padayachee
to progress the AFST transaction to its final
end.
6.
KNOETZE AND ADHU’S OBLIGATIONS
6.1
Knoetze and Adhu undertake to source and secure a Replacement BEE
shareholder.
6.2
Knoetze and Adhu shall do all that is required to progress the AFST
transaction to its final
end.
…
.
8.
BREACH
8.1
Save where express provision is made therefore, if any Party commits
a material breach of
any material provision or term of this Agreement
and:
8.1.1
If the breach is incapable of being remedied by the payment of
compensation of otherwise or if the defaulting
Party fails to cause
such state of affairs to cease to exist; or
8.1.2
If it Is capable of being remedied by the payment of compensation or
otherwise, the defaulting Party fails
to pay such compensation or to
remedy any such breach.
within
14 (fourteen) days (or such longer period as may be reasonable in the
circumstances) of the receipt of written notice calling
upon it to do
so, then the aggrieved Party shall be entitled, in addition to any
other remedy available to it at law, to cancel
this Agreement or to
claim specific performance, in either event without prejudice to the
aggrieved Party’s rights to claim
damages.
10.
IMPLEMENTATION AND GOOD FAITH
10.1
The Parties undertake to do all such things, perform all such acts
and take all steps to procure the
doing of all such things and the
performance of all such acts, as may be necessary or incidental to
give or conducive to the giving
of effect to the terms, conditions
and import of this Agreement.
10.2
The Parties shall at all times during the continuance of this
Agreement observe the principles of good
faith towards one another in
the performance of their obligations in terms of this Agreement. This
implies, without limiting the
generality of the aforegoing, that
they:
10.2.1
will at all times during the term of this Agreement act reasonably,
honestly and in good faith;
10.2.2
will perform their obligations arising from this Agreement diligently
and with reasonable care; and
10.2.3
make full disclosure to each other of any matter that may affect the
execution of this Agreement
.”
[25]
Although clause 4.1 of the exit agreement
provides that Spartan would transfer its shares in Teleosis for R1.00
to Adhu, Mr Padayachee
said that he had never received a demand or
request by Mr Knoetze at any stage to do this nor had he ever
received any requests
to assist with the voluntary liquidation of
Teleosis as envisaged in clause 4.13 of the exit agreement.
[26]
Mr Padayachee explained that the consulting
services which he was required to render, as envisaged in clause 4.5
of the exit agreement,
were that he was to engage with SBSA and make
them comfortable with the AFST transaction so that it could continue
despite Mr Padayachee
withdrawing.
[27]
The replacement BEE shareholder, as
envisaged in terms of clause 6.1 of the exit agreement, was Ms Sindi
Mobasa Koyana (“Ms
Koyana”), although Mr Padayachee would
only get confirmation of this fact much later.
[28]
Mr Padayachee testified that after the
conclusion of the exit agreement he arranged a meeting with SBSA.
Messrs Naidoo, Penyenye
and Knoetze were present. He urged Mr Naidoo
to continue with the AFST transaction and assured him that he, Mr
Padayachee, would
continue to support the AFST transaction. He also
advised him that they had concluded a formal exit agreement and that
his fee
of       R2.5 million was to be
capitalised into the funding which would be made available to the

borrower. Mr Knoetze also requested that it be capitalised into the
funding which was to be made available. SBSA was advised that
a new
BEE partner would be introduced.
[29]
Mr Padayachee made reference to a letter
which was addressed by Mr Knoetze to Mr Naidoo of SBSA on the 9
th
of August 2010. This too was a document which only became available
to Mr Padayachee in preparation of the trial and after SBSA
had been
subpoenaed to produce documents. In this letter Mr Knoetze records:
“
The
Transaction Structure Memorandum done by Webber Wentzel is also
finalized and you can contact WW for the final copy for your
legal
department.
As discussed with Kumaran,
the only change to the Term Sheet is the R 2.5m fee payable to
Kumaran.
This
amount needs to be capitalized to the overall funding
.
(emphasis provided)
[30]
Mr Padayachee, whose first name is Kumaran,
referred to a shareholders’ agreement concluded between
Varsiworx Investments
(Pty) Limited (“Varsiworx”),
Livisize (Pty) Limited (“Livisize”), Livisys (Pty)
Limited (“Livisys”),
Livispex and Livisize’s
Shareholders, which agreement was concluded on 14 July 2010 (“the
shareholders agreement”).
Varsiworx is described as the BEE
company. Mr Padayachee then made reference to a revised term sheet
which was attached to an email
from Mr Penyenye dated the 2
nd
of September 2011. The borrower is described as Livispex. In clause
2.1.20 of the revised term sheet, Teleosis has been deleted
and
replaced with Varsiworx and 51% has been deleted and replaced with
49.5%.
[31]
At pages 396 to 596 of volume 2 appear 9
agreements consisting of the shareholders agreement, sale of shares
agreements, marketing
and agency agreements, sale of business
agreements, reorganisation agreements all concluded during July 2010
but no later than
the 20
th
of July 2010 and all relating to the sale of shares by AFST to
Livispex (these suite of agreements have previously been defined

herein as “the transaction agreements”). Mr Padayachee
testified that neither the content, nor the existence of the

transaction agreements had been drawn to his attention by Mr Knoetze
at the time of the conclusion of the exit agreement. He explained

that he was completely oblivious to the fact that the transaction
agreements had already been concluded by the time the exit agreement

was signed.
[32]
Mr Padayachee explained that he had
subsequently discovered that on the 29
th
October 2010, the loan agreement had been concluded between SBSA and
Livispex. He only became aware of this when the SBSA provided
this
document to his attorneys under subpoena.
[33]
Mr Padayachee testified that he had
contacted SBSA from time to time to establish whether the AFST
transaction had been concluded.
On the 6
th
October 2010 he forwarded an sms which he had received from Mr
Naidoo, representing SBSA, to his attorney. The sms reads:
“
Things
are moving along. We have the final sanction. Draft agreements are
being reviewed by our credit and compliance and should
be distributed
shortly. Kreneshin
”
[34]
Mr Padayachee referred to a credit
application of the SBSA dated the 2
nd
of September 2010 (the content of this document was confirmed by Mr
Penyenye). The customer is identified as AFST and as a “new

client”. Non-executive directors are identified as Ms Koyana
and Mr Knoetze. The BEE percentage is stated as 49.5% and the
entity
identified as Varsiworx. The facility is categorised as a medium term
loan of R 63.4 million. The parties are then mentioned
and the
following is recorded about Teleosis:
“
Teleosis
Capital was initially earmarked to participate in the transaction. It
is a specialised Black Investment and Turnaround
house operating in
Southern Africa. The company is 60% black owned through Spartan
Finance Holdings. However the latter is being
unwound with Hugo
Knoetze buying out Spartan from Teleosis Capital. This has arisen due
to the shareholders diverging in strategic
direction. K Padayachee
will focus on his core business – Spartan Technologies
.”
[35]
Mr Padayachee testified that it is evident that at
some point the shareholding percentage changed from 51% to 49.5%. He
does not
know when that occurred and he was certainly not told about
this change at the time.
[36]
Mr Padayachee referred to an email from Mr
Penyenye dated 6 September 2010 in which he recorded the following:
“
3.
Under 8.1.9 please read the Tyco agreement, we don’t need their
consent, that
was the whole reason we moved from 51% to 49.5%, so
please delete this clause, as I indicated we would have waited 6
months if
this was over 50% and it would have been a “deal
breaker” [I am comfortable with Hugo’s suggestion, please
confirm
you are
]”
[37]
Mr Padayachee referred to a further “AFST
Structure Motivation to Credit” draft agreement prepared by
SBSA dated the
28
th
October 2010 which document reflected that Varsiworx had approached
SBSA to fund R 63.4 million of the R 83. 4 million purchase

consideration of a 49.5% stake in AFST. The document also records the
following:
“
Newco
would acquire the assets of AFST for R 80.9 m. Further Transaction
Costs of R 2.5 m would be capitalised under the transaction
bringing
the Enterprise Value to  R 83.4 m for a 49.5% stake in Newco.
In
funding the transaction SBSA would provide an MTL for R 63.4 m. The
vendors would inject a shareholder loan of R 20 m for the
total
purchase consideration of       R 83.4
m.
In
addition R 20.225 m of the loan, extended by SBSA, in funding the
transaction would be pledged back to the bank and released
in
tranches upon certain warranties being met…….
The
shareholders would thus retain R 40.9 m of the cash upfront, with a
further         R
20.2 m
being released upon meeting of warranties and a further R 20m in
shareholder loans being repaid only once all of SBSA’s
debt
has been expunged
.”
As pointed out
earlier, the document reflects that the R 2.5 million agreed to in
the exit agreement had been capitalised as part
of the proposed
medium term loan.
[38]
Mr Padayachee testified that towards the
end of 2010 SBSA had advised him that the transaction had been
finalised but would not
disclose the details or the identity of the
parties concerned. Mr Padayachee’s attorneys of record
accordingly addressed
a letter to Prinsloo, Tindel and Andropolis
Incorporated (‘PTA’), the attorneys initially engaged on
behalf of both
SBSA and Teleosis, in which it was recorded that it
had come to Mr Padayachee’s attention that Mr Knoetze had
diverted the
AFST transaction from Teleosis elsewhere. It recorded on
Mr Padayachee’s behalf that he was not aware as to a) how the
diversion
took place, and b) who the ultimate beneficiary of the AFST
transaction was. His attorneys accordingly asked who the beneficiary

of the AFST transaction was and whether SBSA had advanced the sum of
R 2.5 million. He testified that no written response had been

received. On the 17
th
February 2011 Mr Padayachee had instructed his attorneys to address a
letter to Mr Knoetze and Adhu and to copy Ms Koyana in on
such
communication. In such letter Mr Padayachee demanded payment of the
sum of R 2.5 million and tendered Spartan’s reciprocal

performance in terms of the exit agreement against payment of the sum
of R 2.5 million. It also recorded that should payment not
be made,
he would like to know how and in what circumstances the AFST
transaction was not dealt with in terms of the exit agreement.
This
letter afforded Mr Knoetze and Adhu six days in which to perform
their obligations (“the letter of demand”).
[39]
The letter of demand was responded to by
alleging that Mr Padayachee had not complied with his obligations in
terms of paragraphs
4.7 and 4.8 of the exit agreement. No reference
to Livispex is made in this response.
[40]
Mr Padayachee then dealt with certain
features contained in Mr Knoetze’s affidavit resisting summary
judgement. In paragraph
10.2 of the affidavit resisting summary
judgement Mr Knoetze stated under oath that the transaction
ultimately concluded was very
different from the AFST transaction
envisaged in the exit agreement. The funding needed to complete the
AFST transaction as envisaged
in the exit agreement was, so Mr
Knoetze stated, R 85.4 million which amount would have included Mr
Padayachee’s consultancy
fee of R 2.5 million. He advised that
the only capital that AFST was able to raise was R 63 million. Mr
Padayachee drew attention
to annexure “A” of the exit
agreement which provided in clause 3.1 thereof that the terms and
conditions of the loan
were still to be agreed upon. That being so,
there could not be any “difference”.
[41]
In paragraph 12 of the affidavit resisting
summary judgement, Mr Knoetze stated the following:
“
I
further submit that a further condition precedent, namely the
capitalization of his consultancy fee in
Teleosis
did not eventuate as a result of the fact that the plaintiff did not
execute the consultancy duties imposed upon him by the contract
.”
[42]
Mr Padayachee was cross-examined
extensively. It was put to him that he did not comply with his
obligations in terms of the exit
agreement. It was suggested that he
was obliged to procure funding of R 84.5 million for a 51%
shareholding. Mr Padayachee’s
response was twofold, firstly he
contended that the exit agreement did not provide that he was to
obtain such funding indeed, the
exit agreement expressly provided
that the funding to be procured was still to be agreed upon and
secondly that he was never given
notice nor advised that he was in
breach of the exit agreement.
[43]
Mr Padayachee was also cross examined on
the issue of prescription. He explained that he became concerned
about the fact that he
had not been paid when, during December of
2010, he contacted SBSA and was advised that the AFST transaction had
been finalised.
Mr Naidoo had expressed his surprise about the
non-payment of the R 2.5 million to Mr Padayachee. Mr Padayachee was
criticized
in this trial for not phoning Mr Knoetze or Mr Barnard to
establish the particulars of the transaction. He responded that he
had
requested his attorneys to do so. He conceded that he had not
called Mr Barnard nor Mr Jacobs. He said that he did not think it
was
proper. The dispute was between him and Mr Knoetze. He was also
criticized for not having contacted Ms Koyana. He again said
that he
had requested his attorneys to engage her. He was criticized for not
doing company searches at the registrar of companies
to establish who
the directors of the various companies were. He explained that he had
done a Google search and had found that
Mr Knoetze and Ms Koyana were
involved in a company called New Advanced Capital. Mr Padayachee
testified that it was clear to him
that the transaction had been
diverted and that these individuals were part of Mr Knoetzes’
grouping. Mr Knoetze was not
cooperating with him and he had no
reason to believe that they would cooperate. Besides, his attorney
had sent a letter to Mr Knoetze
who hadn’t provided the detail
of the AFST transaction. Such letter had been copied to Ms Koyana who
similarly hadn’t
responded.
Mr Garikwe
Penyenye
[44]
Mr Penyenye testified that he was a manager
in commercial banking at SBSA. He was introduced to the AFST
transaction during 2010
when he met with Mr Knoetze, Mr Padayachee
and Mr Naidoo at Spartan’s premises in Craighall Park. He was
told that Mr Padayachee
would walk away from the AFST transaction,
that Mr Knoetze would continue with it and that at a later stage, an
alternative BEE
partner was to be introduced.
[45]
He identified an email which he had
received on the 11
th
August 2010 from Mr Knoetze referred to paragraph [29] above.
[46]
Mr Penyenye confirmed that on the 16
th
August 2010 he had received the final version of the proposed AFST
BEE transaction and that the memorandum had recorded amongst
other
things:
“
3.5.2
R40.2 million of the R80.4 million will remain outstanding on loan
account (“the AFST Shareholders Loan”)
with effect from
the closing date. The remaining R40.2 million of the purchase
consideration payable to the AFST Shareholders in
respect of their
49.5% equity stake in AFST will only become unconditionally payable
in two tranches subject to pre-determined
earnings hurdles being
achieved in the first and second year, post the transaction, in
respect of the business going forward.”
He confirmed that
the change in the BEE partner and the change in the shareholding from
51% to 49.5% did not concern the bank overly
and that SBSA had been
willing to proceed with the AFST transaction.
[47]
On the 23
rd
August 2010 Mr Penyenye received an email from Mr Knoetze in which he
advised:
“
As
the transaction stands STD Bank was willing to fund the deal
(obviously with a change in partnership from Kumaran to Sindi it

slightly changed as you needed to get comfort from Sindi being the
partner). We discussed the option of a vendor loan of R 20m
at a
recent board meeting with AFST and believed that it will speed up the
process of 4 weeks to pay-out ….”
[48]
On the 2
nd
of September 2010 Mr Penyenye forwarded a first draft of a Term Sheet
in which Livispex was identified as the borrower in respect
of the
AFST transaction. The transaction agreements were mentioned in
paragraph 9.1.5 of such Term Sheet by name. On the very same
day, ie
the 2
nd
of September 2010, Mr Penyenye had also circulated a credit
application internally which reflected Teleosis as the party
initially
earmarked to participate in the AFST transaction.
[49]
He testified further that it was himself,
Mr Saul and Mr Naidoo who were the three role players in the leverage
finance department
who had put this deal together. He stated that the
borrower would only ever receive the sum of R 40.9 million in cash up
front.
This was the same from the outset. It was never anticipated
that the borrower would receive the entire amount up front. He also

confirmed that he was the author of the email dated the 6
th
September 2010 in which he recorded that the reason the transaction
was changed from a 51% to a 49.5% shareholding was because
Tyco’s
co-operation and consent was not required in the event of the
acquisition of a shareholding less than 50%. He also
confirmed that
he was the author of a mail dated the 27
th
September 2010 in which he was asked for the confirmation of the
identity of the borrower and that he had responded that it was

Levispex.
[50]
Much time during cross examination was
spent in trying to extract a concession from Mr Penyenye that the
transaction, in the terms
it was ultimately couched, was more onerous
to the borrower than the transaction as contemplated in the initial
term sheet. With
reference to the sale of business agreement in
respect of the ASFT transaction, Mr Penyenye testified that it was
less onerous
if the borrower had to pay R63 million up front as
opposed to R84 million, but that in any event, Livispex was only
obliged to
pay R40 million up front as this was what the agreement
obliged it to do.
Mr Mohamed Sabi
[51]
Mr Sabi testified that he was at the time
of testifying, employed by a company called Sphere Holdings which
company is not directly
connected to SBSA. During 2010 he was
employed by SBSA in its leverage finance department. He confirmed
that he was the author
of the email dated the 19
th
April 2010 and referred to hereinbefore as the initial term sheet
(see par. [21] above). He confirmed that it was not a legally
binding
document but contained the framework of a possible financing
structuring arrangement. He identified the transaction structuring

memorandum dated the 6
th
April 2010 which document was prepared by Webber Wentzel on
instructions of Teleosis, AFST and their advisors. He also confirmed

that on the 6
th
of May 2010 he had received a further version, version 2 of the
transaction structuring memorandum which document was dated the
21
st
of April 2010. During cross examination Mr Sabi explained that in
terms of the initial term sheet, the entire amount of R 84.5
million
would have been paid to the borrower. However, half of that, in other
words R 42. 25 million would have been pledged back,
after 12 months
R 21. 25 million would have been released and after a further 12
months the balance.
Mr Krinesha
Naidoo
[52]
Mr Naidoo testified that he was, at the
time of testifying, working for Internet Solutions which is not
directly related to SBSA.
During 2010 he became involved in the AFST
transaction. He didn’t know Mr Knoetze but did know Mr
Padayachee and had worked
with him before. He testified that he had
had sight of both version 1 and version 2 of the proposed AFST BEE
transactions dated
6 April 2001 (version 1) and 21 April 2002
(version 2). He confirmed Mr Sabi’s understanding of the amount
of monies that
would be paid over initially. He amplified this by
explaining that the release of the funds were dependant on the
achievement of
profit and cash flow targets and that this was clearly
recorded in the credit application for facilities form which had been
sent
to him by Mr Sabi on 22 May 2010, this was recorded in paragraph
4 under item 16.
[53]
He further testified that he was aware of a
fall-out between Mr Padayachee and Mr Knoetze. He was called to a
meeting at Mr Padaychee’s
offices and he was told that Mr
Padayachee was to receive R 2.5 million. Mr Knoetze would introduce a
new BEE partner. On 9 August
2010 he received a mail from Mr Knoetze,
the content of which has been quoted above (para [29]). In this
letter the identity of
the replacement BEE partner is disclosed, he
was requested to reinitiate the process to finalise the funding and
to capitalise
the amount of R 2.5 million payable to Mr Padayachee.
This document further confirmed that R40.2 million would be paid up
front
and the balance would only become unconditionally payable in
two tranches subject to predetermined earning hurdles being achieved

in the first and second year post the transaction.
[54]
Mr Naidoo also confirmed that he received
an email from Mr Knoetze on the 23
rd
of August 2010 in which Mr Knoetze advised that a vendor loan of R 20
million had been discussed at a recent board meeting. Mr
Naidoo
explained that he understood this to be a shareholder’s loan.
He was referred to the AFST structure motivation to
credit dated the
28
th
October 2010 in which the following appears:
“
The
balance of R20m (R80.9m less R60.9m) (defined in the Business Sale
Agreement (“BSA”) as a “Third Tranche”)
of
the Purchase Consideration will be differed and only become due upon
achievement of pre-agreed warranties (“herein defined
as
“agterskot””)
The
seller will be entitled to a further amount of up to R20m in 2013
(“agterskot”) in the event certain profit warranties
are
met. This obligation does not arise from the onset (day 1) but only
arises in the event that the seller meets set warranties.”
He
was referred to the first draft term sheet dated the 2
nd
of September 2010 in which the R 84 million was crossed out and
replaced with R 63 million. He confirmed that this change was
consistent with the introduction of the shareholder’s loan. He
confirmed that he had received a mail on the 6
th
of September 2010 from Mr Penyenye in which he was advised that the
whole reason the shareholding was changed from 51% to 49.5%
was
because Tyco’s consent in respect of the replacement of the BEE
partner would not be required in the event of a sale
of shareholding
less than 50%. He testified that the credit application for
facilities dated 11 October 2011 reflected that AFST
was a new
client. The transaction was supported by Mr Penyenye, Mr  Saul
and himself and the loan amount included a fee of
R 1 million for
SBSA and R 2.5 million for Mr Padayachee. In considering this
transaction, Mr Naidoo testified that he had to have
regard to a
number of transactions which included the shareholders agreement in
which the BEE company was identified as Varsiworx.
The Sale of
Business Agreement was one of the agreements that he had regard to
which reflected, in clause 8.3.1.4, that the purchaser
(Livispex) was
to pay an amount of R 40 218 750 up front. He also had regard to
the reorganisation agreement which recorded
in paragraph 2.1.3 “
BEE
company is a BEE investor wishing to acquire 49.5% of the shares in
AFST
…
.”   He
recalls that he sent Mr Padayachee an sms on the 6
th
October 2010 confirming that the transaction had almost been
finalised. He acknowledged receipt of the letter dated the 29
th
June 2011 addressed by Mr Padayachee’s attorneys of record to
SBSA and that he had responded thereto on the 13
th
July 2011.
Ms J Crone
[55]
Ms Crone testified that she is an attorney
employed by Brian Kahn Incorporated, Mr Padayachee’s attorneys,
as an associate.
She testified that on the 9
th
of February 2011 she had addressed a letter to Mr D Andropoulos of
PTA attorneys, in which she sought to ascertain who the beneficiary

of the AFST transaction was, whether the R 2.5 million had been paid,
and if so, to whom. She testified that there were telephonic

discussions with Mr Andropoulos pursuant to the letter but that no
answers to the questions posed had been received. She explained
that
Mr Andropoulos had expressed the view that the information sought was
privileged. On the 17
th
of February 2011 she had caused a letter to be written to Mr Knoetze
and Adhu. Ms Koyana was copied in on this letter. In this
letter she
sought the same information as was requested from Mr Andropoulos. She
sent a similar letter to Ms Koyana, on 4 March
2011 but did not
receive responses from Ms Koyana although Mr Knoetze’s
attorneys had responded without disclosing the identity
of the
beneficiary.
[56]
She testified that she had conducted a
number of CPI searches and had found a number of companies in which
Ms Koyana and Mr Knoetze
were directors. The search did not, however,
shed any light on the identity of the beneficiary of the AFST
transaction. The search
results were contained in the court bundle
and it appeared that the search in respect of AFST, had been done on
the 28
th
January 2011. The search for Mr Knoetze yielded 30 company names in
which of those 30, Mr Knoetze was still active in 12 of them.
This
search was conducted on the 22
nd
February 2012. Particulars of claim were drafted in May of 2012 and a
trial date was procured for 29 January 2014. This trial date
was
obtained from the Registrar on 4 March 2013. Subpoenas were then
served on SBSA on 12 November 2013. On 17 January 2014 she
received
documents from SBSA. She had received the various term sheets, the
drafts, the applications for credit and such documents.
She also
received three versions of the transactions as embodied in the Webber
Wentzel documents. She had also asked Webber Wentzel
for the
documents who had similarly claimed privilege on behalf of their
clients. The actual transaction agreements that comprised
the vast
majority of volume 2, were obtained from the defendant’s
attorneys which she received approximately a week after
the SBSAs
documents had been received. Those documents were procured pursuant
to the discovery process. The loan agreement  ultimately

concluded with Livispex, was received from SBSA on or about the 17
th
January 2014. She explained that during September 2011 the firm had
written to Tyco in order to establish which entity the business

opportunity had been diverted to. This had yielded no response. The
letter written to Mr Naidoo on the 29
th
June 2011 and his response thereto she also confirmed.
[57]
It was put to her that the most obvious
route to have followed was to explore New Wave Advanced Capital (Pty)
Limited as Mr Padayachee
had already identified that Mr Knoetze and
Ms Koyana were involved with this company. Ms Crone disputed this.
She testified that
the most obvious route was to ask Mr Knoetze and
Ms Koyana directly. Ms Crone was criticised for not doing the company
search in
respect of Mr Knoetze prior to 22 February 2012. During
re-examination it was pointed out that Livispex is not one of the 30
companies
that came up when the search of Mr Knoetze was done. It was
further pointed out from documents in the bundles that the directors

of Livispex were Mr Jacobs and Ms  Koyana. Thus, even if the
search had been done in February 2011, it would not have assisted
Ms
Crone in establishing that Livispex was the ultimate borrower.
Mr Padayachee
[58]
By agreement between the parties Mr
Padayachee was recalled to be cross examined on certain documents
which only became available
during the trial. On 24 April 2010 Mr
Knoetze and Mr Jacobs were sent the re-organisation agreement, the
AFSM sale agreement and
the AFST sale agreement. The point which was
made was that the identity of Livispex appear from these documents
and Mr Padayachee
had knowledge of Livispex or ought to have had
knowledge. Mr Padayachee responded saying that they had not been sent
to him and
he had not seen them.
[59]
This concluded the evidence for the
Plaintiff.
[60]
The defendants called two witnesses, Mr
Knoetze and Mr Barnard.
Mr Hugo Heinrich
Knoetze
[61]
Mr Knoetze testified that he had a B.Comm
in banking finance, a B.Comm honours in financial management, a
certificate in corporate
finance and a Masters in Business
Administration. Mr Knoetze testified in much detail about the
background to the AFST transaction
and how he and Mr Padayachee came
to be involved in this enterprise. In short though, he confirmed that
Teleosis had been a shelf
company, that Spartan owned 60% of the
shares in Teleosis and Adhu  40%. He explained how important the
BEE situation was
for AFST and how Mr Barnard, who was really the man
behind AFST, had built the company up from nothing over a period of
10 years
since 2000, to a significant organisation. There was urgency
in getting the company BEE compliant.
[62]
He testified that he was the person who
liaised with PTA Attorneys and that agreements had, prior to the
break-up between him and
Mr Padayachee, been prepared by this firm of
attorneys.
[63]
He also explained and confirmed that it was
part of the distribution agreement between AFST and Tyco, that as
soon as there was
a shareholder change of more than 50%, Tyco had to
consent, ie a vetting of the shareholders had to occur and that this
procedure
could take a long time.
[64]
He confirmed that he had had a fall out
with Mr Padayachee and that they had had no communications with one
another save for one
email in which he had pleaded with him to
reconsider his position. He testified that he continued with the AFST
transaction on
behalf of another party and not Teleosis. He explained
that Mr Padayachee had not complied with his obligations in terms of
the
exit agreement. He testified that Mr Padayachee had been obliged
to provide funding in the amount of

R 84 million and to render a service, ie to bring the AFST
transaction to its conclusion which meant that he should assist with

the transaction structure as well as giving comfort to Mr Barnard,
all of which he had not done. He testified that he had complied
with
his obligations in terms of the exit agreement by progressing the
AFST transaction to its final end. He explained that a decision
was
taken not to acquire 51% of the shareholding of AFST but rather 49.5%
because if they had to go through the vetting procedure
again, the
transaction would be delayed.
[65]
He confirmed that on 9 August 2010 he had
sent an email to, amongst other recipients, Mr Naidoo in which he
requested that the R
2.5 million fee payable to Mr Padayachee be
capitalised. He testified that the borrower would have to pay
the
R 2.5 million and that that
amount was ultimately capitalised. He felt that Mr Padaychee had not
fulfilled his obligations in terms
of the exit agreement. He had
taken legal advice and during December 2010/ January 2011 had decided
not to pay Mr Padayachee. Mr
Knoetze conceded that the transaction
agreements had all been signed between the period 14 to 20 July 2010
and prior to the conclusion
of the exit agreement. He conceded that
in terms of clause 1.3.62 of the sale of business agreement of AFST,
the funding envisaged
was R 60 million.
[66]
The transaction agreements had, by the end
of July 2010, already been concluded and it had already been agreed
that Varsiworx (and
not Teleosis) would acquire 49.5%. Mr Knoetze was
asked why this was not drawn to Mr Padayachee’s attention when
the exit
agreement was concluded.  Mr Knoetze said that it was
done as a back up. He testified that he and Mr Padayachee had agreed

that Mr Padayachee would phone Mr Barnard and that Mr Barnard had
indicated to Mr Knoetze that he, Mr Padayachee, had left a message

with Mr Barnard that he would drive the process to 51%. It was
pointed out to Mr Knoetze that this version had never been put to
Mr
Padayachee during his cross examination. He could not explain why his
counsel had failed to do so.
[67]
Mr Knoetze testified that when Spartan was
brought in as the 60% partner of Teleosis, it had paid Mr Knoetze’s
drawings in
the sum of R 50 000 per month for a period of time.
All this money came from Teleosis which ultimately came from Mr
Padayachee.
[68]
He further testified that Mr Penyenye had
indicated that the R 84.5 million might be difficult if Varsiworx
replaced Teleosis. It
was then put to him that this was never
traversed with Mr Penyenye during his cross examination. He could not
explain why this
had not been done. Moreover, it was pointed out to
Mr Knoetze that Mr Penyenye had testified that he only became
involved when
the amount was                 R
63 million, he
hadn’t been involved with the transaction when
it was going to be R 84 million.
[69]
Mr Knoetze was cross examined on his
affidavit resisting summary judgement in which he had stated that the
fee of R 2.5 million
had to have been capitalised in Teleosis in
order for Mr Padayachee to receive it, whereas his evidence during
the trial was that
it did not matter whether the fee was capitalised
in Teleosis or another company. Mr Knoetze could not explain this
discrepancy.
[70]
Mr Knoetze testified that he had complied
with his obligations in terms of the exit agreement by bringing about
a transaction in
which a 49.5% shareholding in AFST had been acquired
whereas Mr Padayachee had breached the very same agreement by not
bringing
about a transaction in which 51% shareholding of AFST had
been acquired. He was requested to explain the anomaly. He was unable

to.
[71]
It was suggested to Mr Knoetze that at the
time of the conclusion of the exit agreement, the only concern he, Mr
Knoetze, had was
that the funders who had previously shown a
willingness to negotiate and take the transaction to the next level,
might withdraw
because of Mr Padayachee’s exit. It was
suggested to him that that was the reason why he signed the exit
agreement. It was
suggested to him that what Mr Padayachee was
required to do was to secure the funders’ continued involvement
in the transaction
and nothing else. He disagreed with this,
contending that the transaction agreements dealt with a completely
different transaction
and that Mr Padayachee was obliged to secure
funding for R 84 million for a 51% shareholding.
[72]
It was suggested to Mr Knoetze that the
exit agreement provided that he and Adhu would source and secure a
replacement BEE shareholder
but that at the time of the conclusion of
the exit agreement, a replacement BEE shareholder had already been
sourced and secured,
ie Ms Koyana. He was criticized for not having
told Mr Padayachee of this development. He said that he had done so.
He was asked
to explain why, if he knew the identity of the BEE
partner, Mr Padayachee would go and see his attorneys at the end of
January
2011 and instruct them to find the information and why he
would look at websites to try find the identity of the replacement
BEE
partner. Mr Knoetze could not explain this.
[73]
Mr Knoetze conceded that he hadn’t
written a letter of demand calling upon Mr Padayachee to remedy his
breaches in terms of
the exit agreement. It was suggested to him that
this hadn’t been done because Mr Knoetze did not hold the view
that Mr Padayachee
had breached the exit agreement. Mr Padayachee had
made sure that SBSA was still fully behind the AFST transaction and
therefore
there was no need to write a letter giving notice to remedy
a breach of contract. Mr Knoetze denied this proposition.
[74]
During cross examination Mr Knoetze added
another obligation for Mr Padayachee to comply with in terms of the
exit agreement. He
testified that he was required to contact Tyco and
to advise them that he had fallen out of the picture but that they
should not
be concerned about it as Mr Knoetze was going to get a
replacement BEE partner. It was put to Mr Knoetze that this was never
put
to Mr Padayachee during his cross examination nor did Mr Knoetze
ever send him an sms or some communication that he had failed to

comply with this obligation. Mr Knoetze could not explain this.
[75]
Mr Knoetze was cross examined on the fact
that according to him Mr Padayachee was obliged to deal with SBSA,
deal with Tyco and
appease Mr Barnard but from 28 July 2010 until 29
October 2010 when the loan agreement  was concluded, he did
nothing, and
that such a proposition was highly improbable. Mr
Knoetze could not explain or refute this.
[76]
Mr Knoetze testified that the AFST
transaction envisaged in paragraph 5.2 of the exit agreement was the
same AFST transaction envisaged
in paragraph 6.2 of the exit
agreement.
Mr Willem
Fredrick (Barries) Barnard
[77]
Mr Barnard, the chief executive officer of
AFST, testified that during the first part of 2010 they were trying
to secure a BEE partner.
During April 2010 he met Mr Padayachee at a
meeting where the future structure of the transaction was discussed.
The Tyco vetting
procedure was concluded on 25 May 2010. During May
he was told that Mr Knoetze had fallen out with Mr Padayachee and
that he, Mr
Knoetze, would secure an alternative BEE partner. In
order to sell a 51% shareholding, the vetting procedure with Tyco
would have
had to have recommenced. AFST would have had to spend
another $ 20 000 (twenty thousand dollars) and another four
months waiting
for that approval. They decided not to go this route
but to rather sell 49,5% of the shareholding only.
[78]
After the 25
th
May 2010, Mr Barnard had no further contact with Mr Padayachee. He
expected contact and expected Mr Padayachee to apologise to
him. He
wanted him to clear the air.
[79]
That concluded the evidence for the
defendants.
[80]
The parties agreed that Ms Koyana would not
be required to testify and that references to her in evidence, which
would otherwise
amount to hearsay, would be permitted as if they were
not hearsay.
COMMON CAUSE
FACTS
[81]
The undisputed version which unfolds from
all this evidence is the following: Using Teleosis as their vehicle,
Mr. Padayachee and
Mr. Knoetze, intended acquiring 51% of the shares
in AFST. AFST needed to acquire a BEE shareholder to satisfy its
customers and
the imperatives of the mining industry in which it
operated. In terms of AFST’s agreement with Tyco a change of a
majority
share in AFST would allow Tyco to terminate the agreement.
Accordingly Tyco’s permission was required for the sale by AFST

of 51% of its shares.
[82]
Prior to Mr. Padayachee introducing Mr.
Knoetze to SBSA, the latter had no business relationship with SBSA.
SBSA and other funders
were approached to fund the AFST transaction.
The funding document indicated that funding would be sought based on
a purchase consideration
of R82.9 million for a 51% stake in the AFST
business. At this initial stage, it was intended that only 50% of the
consideration
would be paid as an upfront payment on conclusion of
the transaction. Whilst the balance of the purchase price would be
paid in
two equal instalments, if certain warranties were not met
this payment would be adjusted downward. It was also anticipated that

the balance would be held by the funder on a secure money market
instrument.
[83]
At the outset, Mr. Padayachee and Mr.
Knoetze, through Teleosis appointed PTA attorneys to attend to the
legal aspects of the transaction.
Attorneys Webber Wentzel were
appointed in turn to attend to structure the transaction from a
taxation perspective.
[84]
On 6 April 2010, attorneys Webber Wentzel
prepared the first version of a transaction structuring memorandum
which anticipated that
Teleosis would, indirectly acquire 51% of the
shares in AFST, thus giving effect to the BEE transaction.
Importantly, this memorandum
also envisaged that the borrower,
Teleosis, would only initially obtain half of the capital amount
sought. The transaction envisaged
a step by step restructuring and
reorganisation in terms of which Teleosis would hold 51% of the
shares in a “Newco”
which in turn would hold 100% of the
shares in AFST.
[85]
Pursuant to Teleosis’ approach to
SBSA and on 19 April 2010, Mr Sabi on behalf of SBSA’s
Leveraged Finance department
addressed a letter to the directors of
Teleosis, to finance a term loan facility of R84.5 million in order
to fund the proposed
buy-out of 51% of the shares in AFST by
Teleosis. This document, the initial term sheet, was not a legally
binding document and
at best, if accepted by the borrower, would
constitute an agreement by it to allow SBSA to proceed to the next
phases of the financing
transaction.
[86]
The initial term sheet envisaged a
transaction where the borrower would only receive 50% of the capital
upfront with the balance
to be paid over two years.
[87]
A second version of the transaction
structuring memorandum was prepared on 21 April 2010. During the
period April and May 2010,
much was done to progress the AFST
transaction to its final conclusion, although it is clear that this
process was driven by Mr
Knoetze and Mr Jacobs. Whilst Mr Padayachee
was involved in the process, Teleosis conducted its business from
Spartan’s premises
in Craighall and it paid the expenses of
Teleosis.
[88]
Around the end of May 2010 a fall out
occurred between Mr. Padayachee and Mr. Knoetze. Mr. Padayachee
indicated that he wished to
cease his involvement in the partnership
housed in Teleosis. Mr. Knoetze resigned as a director of Teleosis on
9 June 2010.
[89]
Mr Padayachee’s exit required the
identification and introduction of a replacement BEE shareholder for
the AFST transaction
to progress to its conclusion. It is clear from
the evidence that Mr. Padayachee was not involved in any significant
manner in
the furtherance of the AFST transaction during June and
July 2010. The evidence of Mr. Knoetze is that as early as end June
or
early July 2010, he and Mr. Barnard of AFST had discussed
deferring a portion of the funding (R20 million) as a vendor loan.
[90]
Unbeknown to Mr Padayachee, Mr Knoetze, Mr
Barnard and Ms Koyana (in various capacities) concluded a series of
agreements on 14/20
July 2010, (the transaction agreements). The
transaction agreements are in line with the reorganised structure
envisaged by the
various transaction structuring memoranda prepared
by Webber Wentzel in April 2010, save for  he following
differences a)
Mr. Knoetze (at the behest of Ms Koyana) had decided
to remove Teleosis from the reorganised structure (Teleosis had been
substituted
by Varsiworx b) Livispex had been introduced as the
proposed borrower and operating company to acquire AFST’s
business c)
the BEE shareholding to be acquired  in AFST was no
longer 51% but 49.5%; and d) the loan funding required was now
approximately
R60 million.
[91]
The exit agreement, , was concluded on 27
and 28 July 2010. It appears that Mr. Padayachee, Spartan and
Teleosis (represented by
Mr. Padayachee) signed the exit agreement on
27 July 2010 whilst Mr. Knoetze and Adhu signed it on 28 July 2010.
The evidence has
also shown that whilst the exit agreement was
negotiated between Mr Padayachee and Mr Knoetze, Mr. Padayachee took
the lead and
instructed attorneys Kramer & Viljoen to prepare it.
[92]
From the evidence of both Mr.
Padayachee and Mr. Knoetze, the latter did not, whether before the
conclusion of the exit agreement,
at the time of its conclusion or at
any time thereafter, advise Mr. Padayachee a)- of the conclusion of
the transaction agreements
on 14 and 20 July 2010; b) that the
transaction agreements were based on the acquisition of a 49.5% share
in AFST (not a 51% share);
c) that Teleosis was no longer part of the
reorganised structure; and d) that Ms Koyana had already been
identified and introduced
into the transaction agreements as the
effective BEE shareholder.
[93]
Nothing more needed to be done regarding
Tyco, because the transaction agreements had already been concluded
on the basis that a
49.5% share would be acquired, something which
would not require Tyco’s approval.
[94]
Shortly after the conclusion of the exit
agreement, Mr. Padayachee hosted a meeting at Spartan’s
offices, attended by himself,
Mr. Knoetze, Mr. Naidoo and Mr.
Penyenye. At this meeting SBSA was advised of the withdrawal of Mr.
Padayachee from the AFST transaction
and also of the fact that Mr.
Padayachee would be paid a fee.
[95]
On 9 August 2010, Mr. Knoetze wrote a
letter to Mr. Naidoo which was also to be brought to the attention of
Mr. Penyenye, asking
SBSA to reinitiate the process in order to
finalize the payout (funding to shareholders). In this email Mr.
Knoetze recorded that
the only change to the term sheet was the R2.5
million fee payable to Mr Padayachee.
[96]
The finalised transaction structure
memorandum prepared by Webber Wentzel envisaged an initial payment of
only R40.2 million (with
the balance to be deferred) and that the new
BEE Co (Varsiworx in substitution for Teleosis) was acquiring 49.5%
of the shares
in AFST (through a new structure).
[97]
On 23 August 2010, Mr. Knoetze addressed an
email to Mr. Penyenye, referring to the fact that at a recent meeting
with AFST, discussions
had arisen concerning the option of a vendor
loan of R20 million.  According to Mr Knoetze this had been
discussed with Mr
Barnard as early as late June/early July 2010.
[98]
On 2 September 2010, SBSA prepared an
undated term sheet in which Livispex was identified as the borrower,
the reference to Teleosis
was deleted and replaced with Varsiworx and
the loan amount of R84.5 million was deleted and replaced with an
amount of R63.4 million.
[99]
On 28 October 2010, SBSA’s “Equity
and Leveraged Finance” department addressed a motivation letter
to its credit
department. Mr. Penyenye and Mr. Naidoo testified as to
their involvement in this process and confirmed that included in the
loan
finance to be provided was an amount of R2.5 million
specifically earmarked as Mr. Padayachee’s payment. The
motivation letter
refers to the amended structure and the deferred
shareholders loan of R20 million.
[100]
On 29 October 2010 SBSA, represented by Mrs
Khoulla Michael and Livispex, represented by Messrs Knoetze and
Barnard concluded the
loan agreement . The loan agreement
specifically refers to the final Transaction Structuring
Memorandum, which was prepared
by Webber Wentzel dated 16 August
2010. The loan agreement  provides for funding of R63.4 million
and the evidence of the
SBSA was that an initial “nett”
payment or R40.9 million would be available to the borrower
(Livispex).
[101]
An amount of R43.4 million was paid to
Livispex on 1 December 2010 by SBSA.
[102]
Mr. Padayachee became concerned during late
December 2010 and early January 2011 when he had not been paid and
his evidence was
that he attempted to contact Mr. Knoetze. During
January 2011, Mr. Padayachee contacted his attorneys and advised them
of his concerns.
[103]
On 9 February 2011, BKI addressed a letter
to PTA attorneys. In this letter enquiries were made as to the
identity of the beneficiary
of the AFST transaction and whether SBSA
had paid the sum of R2.5 million in the circumstances envisaged in
clause 4.8.1 of the
exit agreement. Mrs Crone, an attorney at BKI,
testified that there was no response of any substance to this letter.
[104]
After conducting a google search and
ascertaining that Mr. Knoetze and Ms Koyana were directors of a
company known as Advanced Capital
Mr. Padayachee instructed BKI to
address a letter to Mr. Knoetze, Adhu and Ms Koyana. From the
contents of this letter which Mrs
Crone settled, it is clear that Mr.
Padayachee and BKI were unaware of the identity of the beneficiary of
the AFST transaction.
[105]
When given an opportunity to set out their
version of events in response to BKI’s letter of 17 February
2010, Mr. Knoetze
and Adhu instructed their attorney, Mr Nixon, to
respond in terse and non-committal terms. All Mr Nixon effectively
stated was
that Mr. Padayachee had not complied with his obligations
in terms of paragraphs 4.7 and 4.8 of the exit agreement. This letter

(written on the instructions of Mr Knoetze) when read in conjunction
with clause 4.8 of the exit agreement appears intended to
convey that
the fee was not capitalised as part of the funding and accordingly
not payable.
[106]
From the conclusion of the exit agreement
until February 2011 (when there was correspondence between Mr
Padayachee’s attorneys
(“BKI”) and Mr Knoetze’s
attorney (“Mr Nixon”), Mr. Knoetze made no demand on Mr
Padayachee to do
anything in connection with the finalisation of the
AFST transaction. Mr Knoetze never called on Mr Padayachee to do
anything more
regarding the participation of SBSA in the transaction.
In particular Mr Knoetze at no time sought to invoke the breach
clause
provided for in clause 8 of the exit agreement.
[107]
BKI, Mr Padayachee’s attorneys,
sought the assistance of SBSA and addressed a letter to Mr. Naidoo.
Mr. Naidoo responded by
recording that a meeting had been held at
which the SBSA was advised of the termination of Mr. Padayachee’s
involvement in
the transaction, that a consultation fee would be
payable to him and that SBSA had been requested to include the amount
of the
fee in the transaction funding. Mr Naidoo had declined to
provide any further information.
THE ISSUES
[108]
The issues for determination in this matter
are:
a.
What were Mr Padayachee’s obligations
in terms of the exit agreement and did he comply with his
obligations?
b.
Did Mr Knoetze breach the exit agreement?
c.
If so, was Mr Padayachee obliged to comply
with the breach clause in the exit agreement and did he?
d.
Does the loan agreement  create a
stipulatio alteri
in
favour of Mr Padayachee which he accepted?
e.
Is Mr Padayachee entitled to rely on the
provisions of either
sections 12(2)
or (3) of the
Prescription Act in
respect of his claim against Livispex?
ASSESSMENT OF
EVIDENCE
[109]
This Court is to approach the factual
disputes which exist between the evidence adduced on behalf of the
plaintiff, and the evidence
presented on behalf of the defendants, by
applying the principles enunciated in the decision of
Stellenbosch
Farmers Winery Group Ltd and Another v Martell et Cie and Others
2003
(1) SA 11
at 14I-15D where Nienaber JA held as follows:
"To
come to a conclusion on the disputed issues a court must make
findings on (a) the credibility of the various factual witnesses;
(b)
their reliability; and (c) the probabilities. As to (a), the court's
finding on the credibility of a particular witness will
depend on its
impression about the veracity of the witness. That in turn will
depend on a variety of subsidiary factors, not necessarily
in order
of importance, such as (i) the witness' candour and demeanour in the
witness-box, (ii) his bias, latent and blatant, (iii)
internal
contradictions in his evidence, (iv) external contradictions with
what was pleaded or put on his behalf, or with established
fact or
with his own extracurial statements or actions, (v) the probability
or improbability of particular aspects of his version,
(vi) the
calibre and cogency of his performance compared to that of other
witnesses testifying about the same incident or events.
As to (b), a
witness' reliability will depend, apart from the factors mentioned
under (a)(ii), (iv) and (v) above, on (i) the opportunities
he had to
experience or observe the event in question and (ii) the quality,
integrity and independence of his recall thereof. As
to (c), this
necessitates an analysis and evaluation of the probability or
improbability of each party's version on each of the
disputed issues.
In the light of its assessment of (a), (b) and (c) the court will
then, as a final step, determine whether the
party burdened with the
onus of proof has succeeded in discharging it. The hard case, which
will doubtless be the rare one, occurs
when a court's credibility
findings compel it in one direction and its evaluation of the general
probabilities in another. The
more convincing the former, the less
convincing will be the latter. But when all factors are equipoised
probabilities prevail."
Mr
Padayachee’s obligations
[110]
Mr Padayachee considered his obligations in
terms of the exit agreement to be that he was to engage with SBSA,
advise them of his
intended withdrawal from the AFST transaction and
reassure them that his withdrawal from the AFST transaction would not
impact
adversely on such transaction. Mr Knoetze testified that in
terms of the exit agreement Mr Padayachee was obliged to provide
funding
in the amount of R 84 million, bring the AFST transaction to
its conclusion which required Mr Padayachee to procure  a 51%

shareholding of AFST, provide comfort to Mr Barnard and advise Tyco
that he was withdrawing from the AFST transaction but reassure
them
that the transaction would still be proceeding.
[111]
Clauses 5 and 6 containing the duties and
obligations of Mr Padayachee and Mr Knoetze, have been quoted above
(para [24]). The first
question which falls for determination is
whether the evidence of Mr Padayachee and Mr Knoetze, over and above
that which is recorded
in these clauses in relation to what their
obligations are, is admissible in evidence.
[112]
Evidence about what the parties thought
their obligations are, which is at variance with the express
provisions of the exit agreement,
would for the reasons set out below
be inadmissible as offending the integration rule (a sub-rule of the
parole evidence rule).
This is so as, amongst other reasons, the
parties elected to reduce the exit agreement to writing and agreed in
clause 14 thereof
that the exit agreement would contain all the
express provisions agreed to by the parties.
[113]
In
Bothma-Batho
Transport (Edms) Bpk v S Bothma & Seun Transport (Edms) Bpk
2014 (2) SA 494
(SCA) it was confirmed in para [12] (with reference
to the summary in paragraph [18] of
Natal
Joint Municipal Pension Fund v Endumeni Municipality
2012 (4) SA 593
(SCA)  that the approach to interpretation
summarised in
Coopers
& Lybrand v Bryant,
[1995] ZASCA 64
;
1995
(3) SA 761
(A) “is no longer consistent with the approach to
interpretation now adopted by South African courts in relation to
contracts
…”. The “new” approach, which has
been followed in a number of subsequent cases,
[1]
may be summarised as follows.
a.
Interpretation
is an exercise in ascertaining the “objective”
[2]
“meaning of the language of the provision itself” - it is
not aimed at determining the intention of the parties, whether
common
or otherwise, which is an “unrelated” concept,
[3]
that has “no bearing on the analysis”
[4]
and is “irrelevant”.
b.
“
Interpretation
is a matter of law and not of fact and … is a matter for the
court and not for witnesses”.
[5]
c.
The
meaning of a provision is determined with reference to its language
and in the light of its factual context, which includes
what has
previously been referred to as “background circumstances”
and “surrounding circumstances”.
[6]
Since interpretation is “one unitary exercise”,
[7]
the process requires the court “from the outset” to
consider the language and context of the provision together,
[8]
“whether or not there is any possible ambiguity”.
d.
The factual context is ascertained by
reading the provision having regard to:
i.the
document as a whole; and
ii.the
circumstances attendant upon its coming into existence.
[9]
e.
Consideration
must be given to the following four aspects:
[10]
i.
“
the
language used in the light of the ordinary rules of grammar and
syntax”, although it must be recognised that words seldom
have
a single meaning;
ii.
“
the
context in which the provision appears” (including the
provisions of the “document as a whole”);
iii.
“
the
apparent purpose to which [the provision] is directed”; and
iv.
“
the
material known to those responsible for its production”.
f.
The
“inevitable point of departure”
[11]
is the language of the provision and where “more than one
meaning is possible each possibility [i.e. each possible meaning]

must be weighed in the light of all these factors”.
[12]
Where the court “is faced with two or more possible meanings
that are to a greater or lesser degree available on the language
used
… the apparent purpose of the provision and the context in
which it occurs will be important guides to the correct

interpretation”.
[13]
g.
It
is, however, inappropriate to “do violence to the language …
by placing upon it a meaning of which it is not reasonably

capable”
[14]
and the
language should not be “unduly strained”.
[15]
Thus, while context may no longer be sacrificed at the altar of
language, a cautionary note should be sounded against overcorrecting

by giving context an exaggerated importance in order to distort and
strain the language used in a document.   The document

should be given a meaning of which it is reasonably capable.
The language adopted must be respected and some measure of fidelity

must be shown towards it.
[16]
h.
Although
extrinsic evidence of a provision’s context, purpose and
material known to those responsible for its production is
admissible,
“one must use it as conservatively as possible”.
[17]
The reason for this admonishment is clearly to avoid unnecessarily
taking up court time and parties’ costs in pursuit of
extrinsic
evidence in cases where a clear answer is provided by the intrinsic
evidence such as the document as a whole, the provision’s

immediate context or its apparent purpose.
i.
Finally,
a sensible meaning should be preferred to one “that leads to
insensible or unbusinesslike results”, or one
that undermines
the apparent purpose.
[18]
In
Johston v Leal
,
1980 (3) SA 927
(AD) Corbett JA observed at 942 H – 943B as
follows :
"As has been indicated, the
parol evidence rule is not a single rule.
It
in fact branches into two independent rules, or sets of rules: (1)
the integration rule, described above, which defines the limits
of
the contract, and (2) the rule, or set of rules, which determines
when and to what extent extrinsic evidence may be adduced
to explain
or affect the meaning of the words contained in a written
contract: see, for example, the exposition by
SCHREINER JA in Delmas Milling Co Ltd v Du Plessis
1955 (3) SA 447
(A) at 453 - 5. (For convenience I shall call this latter rule "the
interpretation rule".) Neither rule, in my opinion,
affects the
matter under consideration."
[114]
While
the “new” approach to interpretation referred to herein
has clearly abolished one of the “branches”
of the parol
evidence rule i.e. the “interpretation rule”, which
stated that extrinsic evidence was not admissible
in order to
determine the meaning of a written instrument,
[19]
it in no way affects the operation of the other “branch”
of the parol evidence rule, being the so-called “integration

rule”, which determines the content or (in the words of Corbett
JA in Johnston v Leal), the “limits”
[20]
of a written instrument.
[115]
It
is apparent from
KPMG
v Securefin
[21]
(which was specifically identified by Wallis JA in
Bothma-Batho
as
being representative of the “new” approach to
interpretation)
[22]
that the
integration rule remains good law
[23]
[116]
Mr Padayachee was, in terms of clause 5.1
of the exit agreement, obliged to facilitate that the funders
continue to participate
in the AFST transaction. Funders is defined
in clause 1.2.4 as meaning:
“
Investec
Limited or Standard Bank of South Africa Limited or any other funder
of whatsoever nature.”
[117]
Mr Padayachee testified that he facilitated
the continued participation of SBSA by calling for a meeting with Mr
Naidoo and Mr Penyenye
which meeting resulted in the continued
participation of SBSA in the AFST transaction. Any evidence of Mr
Knoetze imposing an obligation
on Mr Padayachee to do anything more
than to facilitate continued participation in the AFST transaction,
would materially change
the nature of his obligations. In my view,
any evidence adduced by Mr Knoetze tending to suggest that Mr
Padayachee was obliged
to procure a 51% shareholding in AFST and to
obtain funding for the sum of R80.5 million would be inadmissible as
contravening
the parole evidence rule.
[118]
However, even if it were to be considered
admissible, I would reject such version on the basis that Mr
Knoetze’s evidence
in this regard was neither credible nor
reliable.
[119]
The phrase “AFST transaction”
is used in clauses 5.1, 5.2 and 6.2 of the exit agreement which
(clauses embody the obligations
of Mr Padayachee and Mr Knoetze.) Mr
Knoetze was asked whether the meaning to be ascribed to “AFST
transaction” in
clauses 5 and 6 were the same. He said that it
was the same. He also said that he had complied with his obligations
in terms of
the exit agreement. His evidence is however that Mr
Padayachee did not comply with his obligations in terms of the exit
agreement.
Importing Mr Knoetze’s evidence into clauses 5 and 6
of the exit agreement, they would read something like this:
“
5.1
Padayachee shall facilitate that the Funders continue to participate
in the AFST transaction in
that he will procure 51% of the
shareholding of AFST and obtain R 84.5 million funding in respect
thereof.
5.2
Padayachee shall do all that is reasonably necessary and within the
power of Padayachee
to progress the AFST transaction, ie to procure
51% of the shareholding of AFST and obtain R 84.5 million funding in
respect thereof,
to its final end.
6.1
Knoetze and Adhu undertake to source and secure a Replacement BEE
shareholder.
6.2
Knoetze and Adhu shall do all that is required to progress the AFST
transaction, ie to procure
a 49.5% shareholding in AFST and to obtain
funding in the amount of R 60 million, to its final end
.”
[120]
From the above exercise the anomaly is
abundantly clear;  there is simply no scope for importing
different meanings to the
phrase “AFST transaction”
appearing in clauses 5 and 6 of the exit agreement. The phrase “AFST
transaction”
is used in several places in the exit agreement so
for example it is used in clause 3.3, 4.3, 4.5, 4.11, 4.12, 4.13.
Then in paragraph
2.9 the following is recorded:
“
The
Parties have agreed that all further information that the Parties may
wish to refer to in so far as the AFST transaction is
concerned shall
be attached hereto as Annexure “A”, same being the
Memorandum in Relation to the Proposed Transaction
.
“
Clause
3 of Annexure “A” provides
“
Proposed
transaction steps – in order to acquire its interest in the
AFST business Teleosis [or Newco to be confirmed] will
receive
funding from a financial institution on terms and conditions
still
to be agreed
in order to ensure that
the interest on such funding is deductible, and for certain other
reasons, the parties have determined
that the proposed transaction
should be initiated through AFST disposing of its business …
to Newco …
”
(own emphasis)
[121]
It is thus clear that at the time of the
conclusion of the exit agreement, neither the funding, nor the terms
and conditions of
such funding, had been finalised. Clause 5.1 in
view of the provisions contained in Annexure “A” to the
exit agreement
is simply incapable of being read to impose an
obligation on Mr Padayachee to procure funding of R 84.5 million for
a shareholding
of 51%.
[122]
Adv Mulligan, on behalf of the defendants,
argued that the acceptance of Mr Padayachee’s evidence in
regard to what his obligations
entailed, would render clause 5.2
meaningless. I disagree. Mr Padayachee is to do all that is
‘reasonably necessary’
to progress the AFST transaction
to its final end. This would include, in addition to what he was
obliged to do in terms of clause
5.1 ie to facilitate that SBSA
continue to participate in the AFST transaction, to intervene should
problems be encountered with
the funding or some unforeseeable event
over which Mr Padayachee might be able to exert some influence,
arise. Mr Knoetze’s
obligations, as contained in clause 6.2,
are far more onerous. He is required to do ‘
all
that is required to progress the AFST
transaction to its final end’ (own emphasis). Thus he, Mr
Knoetze, is required to drive
the transaction – which is
exactly what occurred. There is further no evidence of any parallel
AFST transaction during 2010
or any AFST transaction other than the
one actually concluded. The funder (SBSA) initially introduced by Mr
Padayachee (and reassured
by him at the meeting consequent upon the
exit agreement) had already agreed to loan Livispex R 63.4 million
and had committed
itself in this regard.
[123]
From the evidence of both Mr Padayachee and
Mr Knoetze, the latter did not, whether before the conclusion of the
exit agreement,
at the time of its conclusion or at any time
thereafter, advise Mr Padayachee of the conclusion of the transaction
agreements,
that the transaction agreements were based on the
acquisition of a 49.5% share in AFST (not a 51% share), that Teleosis
was no
longer part of the re-organised structure and that Ms Koyana
had already been identified and introduced into the transaction
agreements
as the effective BEE shareholder. Mr Knoetze’s
evidence that he did not tell Mr Padayachee of the existence of the
transaction
agreements gives rise to only one of two probable
explanations: 1) Mr Knoetze deliberately intended to mislead Mr
Padayachee in
the conclusion of the exit agreement to provide himself
with an excuse for not paying the fee; or 2) The fact that the AFST
transaction
was one where a 49.5% shareholding was to be acquired as
opposed to 51% shareholding did not have any bearing on the fee
payable
to Mr Padayachee. The relevance of the transaction agreements
and the timing of their conclusion (in that they pre-dated the exit

agreement) and that they were kept secret from Mr Padayachee is that
they show the AFST transaction had been effectively concluded,
where
the only outstanding aspect was loan funding (of approximately R60
million).
[124]
Mr Knoetze, during cross examination,
testified that he and Mr Padayachee had agreed that Mr Padayachee
would phone Mr Barnard and
that Mr Barnard had indicated to Mr
Knoetze that he, Mr Padayachee, had left a message with Mr Barnard
saying that he would drive
the process to 51%. Of course as the
process ultimately did not result in a 51% share transfer this would,
if true, tend to show
that Mr Padayachee had not attained the agreed
performance that would entitle him to the fee. It was pointed out to
Mr Knoetze
that this version had never been put to Mr Padayachee
during his cross examination. Mr Knoetze could not explain why this
had not
occurred. The inference of this failure is of course that the
evidence tendered in this regard during cross examination was a
fabrication
to create false grounds for not paying the fee. That it
was indeed a fabrication is supported by the failure of Mr Barnard,
who
is called as a witness, to testify and confirm this undertaking
allegedly given to him via the alleged message.
[125]
Mr Knoetze explained that the reason why
the SBSA reduced the proposed funding from R 84.5 million to R 63
million was because Mr
Penyenye had indicated that the replacement of
Teleosis with Varsiworx would pose a problem. Once again it was put
to Mr Knoetze
that this was never traversed with Mr Penyenye during
his cross examination. Once again the suggestion was that this was a
recent
fabrication. That it was a fabrication is confirmed by the
fact that Mr Penyenye testified that he only became involved in the
AFST transaction at the time that the funding contemplated was
already R 63 million. In other words he was not involved at all with

the decision to reduce the funding from R 84.5 million to R 63
million.
[126]
Mr Knoetze in his affidavit resisting
summary judgement, had stated that for payment to have been made to
Mr Padayachee, the fee
of R 2.5 million had to have been capitalised
in Teleosis. As this did not occur Mr Padayachee was not entitled to
the fee. His
evidence during the trial however was whether the fee
was capitalised in Teleosis or any other company did not matter. It
was put
to Mr Knoetze that  at the time of the conclusion of the
exit agreement the only concern he, Mr Knoetze, had was that the
funders who had previously shown a willingness to negotiate and take
the transaction to the next level,  might withdraw because
of Mr
Padayachee’s exit. It was put to him that that is the reason
why he signed the exit agreement. It was also suggested
that what Mr
Padayachee was required to do was to secure the funders’
continued involvement in the transaction and nothing
else. This
proposition is, on the evidence, overwhelmingly probable. This mind
set would explain why no letter had been sent by
Mr Knoetze calling
upon Mr Padayachee to remedy his alleged breaches of the exit
agreement. In Mr Knoetze’s mind, Mr Padayachee
had secured the
funders continued involvement. Mr Knoetze did not genuinely believe
that Mr Padayachee had breached the agreement.
Mr Padayachee did not
obstruct nor scupper the deal in any way, and had done all that he
was required to do. The most probable
construction of the facts leads
one to conclude that Mr Knoetze did not tell Mr Padayachee of the
existence of the transaction
agreements at the time of the conclusion
of the exit agreement because such transactions and their content had
no bearing on the
fee payable to Mr Padayachee.
[127]
Mr Knoetze, during cross-examination added
a further obligation with which Mr Padayachee was allegedly to
comply. He testified that
he was required to contact Tyco and to
advise them that he, Mr Padayachee, had fallen out of the picture but
that they should not
be concerned about it as Mr Knoetze was going to
secure a replacement BEE partner. This fact was also never put to Mr
Padayachee
during his cross examination nor did Mr Knoetze ever send
Mr Padaaychee an sms or some other form of communication to call upon

him to comply with this obligation.
[128]
Mr Padayachee, from the time of the
conclusion of the exit agreement ie 28 July 2010 until the conclusion
of the loan agreement,
ie 29 October 2010, had done nothing other
than convene a meeting with the representatives of SBSA. It was
highly improbable that
Mr Padayachee would have made no contact with
Tyco and would not have sought to appease Mr Barnard during this
period if that was
indeed what he was obliged to do. It accordingly
follows that the parties did not view these acts as forming part of
Mr Padayachee’s
obligations.
[129]
Having regard to the contradictions in the
evidence of Mr Knoetze referred to herein, the probabilities referred
to herein and the
calibre and cogency of the evidence adduced by Mr
Knoetze, I have little hesitation in rejecting his evidence in so far
as it conflicts
with that of Mr Padayachee. I accordingly find that
Mr Padayachee’s obligations in terms of the exit agreement did
not include
those contended for by Mr Knoetze, that Mr Padayachee
complied with his obligations in terms of the exit agreement and that
Mr
Padayachee was not in breach of his obligations.
Mr Knoetze’s
obligations
[130]
Clause 10 of the exit agreement houses the
implementation and good faith provisions. It has been quoted in full
above (para [24]).
Of particular importance to the current enquiry
though is clause 10.2.3 which provides that full disclosure to each
other (the
parties to the exit agreement) should be made of any
matter that may effect the execution of the exit agreement. At the
time the
exit agreement was concluded, Teleosis was identified as the
vehicle through which the AFST transaction was funded. However, 2
weeks prior to the conclusion of the exit agreement, Livispex was
named as such vehicle in the duly executed transaction documents.

That this fact might influence the execution of the exit agreement
goes without saying. Mr Knoetze didn’t disclose this fact.
He
didn’t do so in his initial plea to the un-amended particulars
of claim either, nor did he disclose it in his affidavit
resisting
summary judgement. In my view he should have disclosed this fact
prior to the conclusion of the exit agreement on 28
July 2010 but at
best for him no later than 29 October 2010 when the loan agreement
was signed. His explanation for not doing
so, ie that there was
a parallel but different obligation on Mr Padayachee and that these
transactions were put in place as a “back
stop” only, has
already been rejected.
[131]
On Mr Knoetze’s version, at some
point the funding changed from R 84.5 million to R 63 Million and
according to him, Mr Padayachee
had the obligation to procure funding
for R 84.5 million, thus as soon as this information became known to
him, a situation as
envisaged in clause 10.2.3 arose. Clearly,
reduced funding might effect the execution of the exit agreement. He
did not disclose
this information to Mr Padayachee.
[132]
Mr Barnard, the primary decision maker of
AFST and it’s shareholders testified that when Mr Padayachee
fell out of the picture
so too did the 51% option as they did not
want to wait another 4 months nor did they want to spend $20 000 for
the vetting procedure
to be redone by Tyco. Thus, and at the time of
the conclusion of the exit agreement, Mr Knoetze could not have held
the view that
the acquisition of a 51% shareholding was possible or
viable. Assuming, without accepting, that he did hold this view at
the time
of the conclusion of the exit agreement, it should have
become patently clear soon thereafter that the 51% route was
completely
unattainable. He had this knowledge and in terms of clause
10.2.3 was obliged to communicate such information which he did not
do.
[133]
The AFST transaction was completed by
utilising Levispex. Mr Knoetze failed to procure that the obligations
owed by Teleosis to
Mr Padayachee in terms of clause 4.8 of the exit
agreement were fulfilled by Levispex, when Mr Knoetze could and
should have done
so. Both Mr Knoetze and Ms Koyana were directors of
Livispex. Mr Knoetze decided in about October 2010 that Mr Padayachee
had not
performed in terms of the exit agreement and that he was not
entitled to the consulting services fee. Mr Knoetze’s evidence

was that it was always his intention that Teleosis or any other party
that obtained the funding, pay Mr Padayachee the fee, provided
that
Mr Padayachee did what was required of him.
[134]
This court has found that Mr Padayachee did
what was required of him. That being so, Mr Knoetze and Adhu ought to
have procured
compliance by Levispex of the obligations owed by
Teleosis to Mr Padayachee in terms of clause 4.8 of the exit
agreement. Mr Knoetze
and/or Adhu nonetheless prevented Levispex from
paying Mr Padayachee the sum of R 2.5 million contemplated by the
exit agreement.
Such conduct by them constituted a breach of their
obligations under clauses 6 and 10 of the exit agreement and, bar the
provisions
of the breach clause discussed hereinafter, renders them
liable to Mr Padayachee in damages equivalent to the sum that would
have
been payable to Mr Padayachee by Teleosis ie R 2.5 million, had
Mr Knoetze and Adhu not breached their obligations.
Compliance with
the notice to remedy breach clause
[135]
The breach clause, clause 8 of the exit
agreement, provides that a period of 14 days should be afforded to
the defaulting party
to remedy the breach. The letter of 17 February
2011 only afforded Mr Knoetze and Adhu 6 days within to remedy the
alleged breach.
The defendants argued that Mr Padayachee had not
complied with the provisions of the breach clause which
non-compliance is fatal
to his claim.
[136]
The breach clause, properly construed, only
requires notice to be given if a claim for either specific
performance or cancellation
of the exit agreement is to ensue.
[137]
Specific performance lies against Teleosis.
No claim is made in these proceedings against it. The exit agreement
has also not been
cancelled. It follows that clause 8 has no
application in this matter and did not oblige Mr Padayachee to invoke
it prior to claiming
damages from Mr Knoetze and Adhu for their
conduct in preventing Levispex from paying Mr Padayachee the fee.
[138]
Even if I am wrong in this conclusion , the
letter of 17 February 2011 is in its terms a letter of demand, based
on the failure
by Mr Knoetze and Adhu to perform in terms of the exit
agreement. The terms of the breach clause, (if applicable) would only
have
prevented Mr Padayachee from pursuing his claim prior to the
expiry of a period of 14 days from the date of receipt of the letter

of demand.  The action was only instituted the following year.
In
Godbold v Tomson
,
1979 (1) SA 61
(D&CLD), Fannin, J held  as follows at 65B-D
:
“
The
right of election to cancel the contract (or to enforce it) arises if
the purchaser continues, for more than 14 days after the
date of the
written notice, in his default - that is to say in the default which
he is called upon by the notice to remedy. There
is, however, no
necessity to specify in the notice the period within which the
default must be remedied (see Tangney and Others
v Zive's
Trustee,
1961
(1) SA 449
(W)
at p. 453G and Chatrooghoon v Desai and Others,
1951
(4) SA 122
(N)
).
The question for decision is always whether the conditions on which
the right to cancel was dependent have been fulfilled (Rautenbach
v
Venner,
1928 T.P.D. 26
at p. 31). The purpose of such a notice is
to inform the recipient of what he is required to do in order to
avoid the consequences
of default, and if it is in such terms as to
leave him in doubt as to the details of what is required of him, then
it may be that
it will be held that the notice is not one such as is
contemplated by the contract (Rautenbach's case, supra at p. 31).
In
Tangney and
Others v Zive’s Trustee
,
1961 (1) SA 449
(WLD) at 453F –
H, Kuper J held as follows:
“
Clause
16 provided that the applicants would be entitled to claim forfeiture
if the insolvent failed to remedy a breach within 14
days after
notice in writing given by them to the insolvent to remedy the
breach. The notice of the 18th August, 1960 in fact gave
the trustee
14 days from the date of the letter and it was common cause that if
the terms of the letter required 14 days' notice
to be given that the
time given in the letter was incorrect and ineffective. In my view,
the clause only required a notice
in writing to be given to
remedy the breach and there was no necessity to specify in the notice
the period within which the breach
was to be remedied. Nor does the
fact that an inadequate period was specified invalidate the notice.”
[139]
The letter of demand dated 17 February 2011
is clear in its terms.  It calls upon Mr Knoetze and Adhu to pay
Mr Padayachee
R 2.5 million. The fact that it calls upon them in
terms more peremptory than clause 8 (the breach clause) actually
authorises,
does not invalidate the notice. The defendants’
reliance on a supposed non-compliance with clause 8 of the exit
agreement
is accordingly misplaced.
Stipulatio alteri
[140]
On 9 August 2010, Mr. Knoetze wrote a
letter to Mr. Naidoo which was also to be brought to the attention of
Mr. Penyenye, asking
SBSA to re-initiate the process in order to
finalize the payout (funding to shareholders). I have quoted  this
email above
at par [21].
[141]
On 28 October 2010, SBSA’s “Equity
and Leveraged Finance” department addressed a motivation letter
to its credit
department. Mr. Penyenye and Mr. Naidoo testified as to
their involvement in this process and confirmed that included in the
loan
finance to be provided was an amount of R2.5 million
specifically earmarked as Mr. Padayachee’s payment. In terms of
the
proposed structure the initial loan amount was for R40.9 million
and any remaining amounts would be subject to profit warranties.
Mr.
Knoetze never advised either Mr. Padayachee or SBSA of any change in
circumstances and it is clear that the intention of Mr
Knoetze and
SBSA was that the amount of R2.5 million was an amount included for
the benefit of Mr. Padayachee and payable to him.
The only
prerequisite for payment to Mr. Padayachee of the fee was that it was
to be capitalised as part of the funding arrangement
.
[142]
On 29 October 2010 SBSA, represented by Mrs
Khoulla Michael and Livispex, represented by Messrs Knoetze and
Barnard, concluded the
loan agreement . The loan agreement
specifically refers to the final Transaction Structuring
Memorandum, which was prepared
by Webber Wentzel dated 16 August
2010. The loan agreement  provides for funding of R63.4 million
and the evidence of the
SBSA was that an initial “nett”
payment or R40.9 million would be available for the borrower
Livispex.
[143]
Mr Knoetze testified that an amount of
R43.4 million was paid to Livispex on 1 December 2010 by SBSA. The
contents of the motivation
letter dated 28 October 2010, supported by
the evidence of Messrs Penyenye and Naidoo, show that the sum of
R43.4 million included
the R2.5 million fee.
[144]
Mr Padayachee could claim the benefit from
Livispex provided that it was capitalised to the overall funding,
(which it was). Mr
Padayachee became aware of the stipulation and
accepted it. This acceptance was communicated to Livispex in terms of
the amended
particulars of claim. The existence of the stipulation
clearly emerges when considering the amount of the loan funding
payable
in terms of the loan agreement , the basis on which the loan
amount was arrived at in the loan agreement  and when considered

in the context of the motivation letter (which spells out the
computation of the loan amount). Both SBSA and Livispex have
performed
in terms of the loan agreement .
Prescription
[145]
Levispex has raised a defence of
prescription contending that Mr Padayachee’s claim, on his
evidence became due either on
the conclusion of the loan agreement
(28 October 2010) or when SBSA paid Levispex the first transfer
of funds which occurred
on 1 December 2010.  The action against
Livispex was instituted during November 2014 which is more than 3
years after the
debt became due and the claim against Levispex has
thus become prescribed. Without anything further this would have been
the end
of the claim against Levispex.
[146]
Mr Padayachee replicated to this defence
relying on facts to support reliance on
section 12(3)
of the
Prescription Act. At
the commencement of argument, Adv Strathern,
representing Mr Padayachee, moved for an amendment introducing facts
to support reliance
on
section 12(2)
as well. The amendment was not
opposed and the amendment was granted.
[147]
Section 12
of the
Prescription Act provides
inter alia as follows:
(1)Subject
to the provisions of
subsections
(2)
,
(3)
,
and (4), prescription shall commence to run as soon as the debt is
due.
(2)If
the debtor wilfully prevents the creditor from coming to know of the
existence of the debt, prescription shall not commence
to run until
the creditor becomes aware of the existence of the debt.
(3)A
debt shall not be deemed to be due until the creditor has knowledge
of the identity of the debtor and of the facts from which
the debt
arises: Provided that a creditor shall be deemed to have such
knowledge if he could have acquired it by exercising reasonable
care.
[148]
Adv Strathern argued that Mr. Padayachee
could not reasonably have ascertained the identity of Livispex as his
debtor, in terms
of his claim against it or of the facts giving rise
to that claim. He pointed out that Mrs Crone took all reasonable
steps to ascertain
the identity of the ultimate beneficiary of the
loan. I agree. Mrs Crone wrote to Mr Knoetze and Adhu (the letter
dated 17 February
2011) which she copied Ms Koyana in on. She wrote
to SBSA. She wrote to TPA attorneys. She again wrote to Ms Koyana
during September
2011. She also wrote to Tyco. In every instance she
was blocked by the wall of privilege or other obstruction.  She
conducted
CPI searches. The list of directors setting out Mr
Knoetze’s directorships identifies 30 companies but does not
identify
Livispex. In addition there was no evidence to suggest that
Livispex was ever identified as the recipient of the SBSA loan on any

website.
[149]
The various term sheets, Mr. Knoetze’s
emails to SBSA, the motivation to SBSA’s credit department and
the loan agreement,
were only produced under subpoena in anticipation
of the trial proceeding in January 2014. Mrs. Crone also testified
that the transaction
agreements, some of which identify Livispex as
the borrower (Opco), were only made available by Mr. Nixon pursuant
to the discovery
process a few days after the documents from SBSA had
been received.
[150]
Mr Padayachee was criticized for not
contacting Mr Barnard or Mr Jacobs. It is extraordinary that the
defendants should suggest
that “reasonable care”, as used
in
section 12(3)
of the
Prescription Act, and
as to be applied in
this matter should mean that even though Mr Padayachee through his
attorneys asked the defendants directly
for the identity of Levispex
and they had refused to disclose the information, he was obliged to
explore other avenues. This proposition
is particularly astonishing
under circumstances where the defendants didn’t even disclose
the identity of Levispex in their
affidavit resisting summary
judgment.
[151]
Mr Padayachee’s undisputed evidence
is that he only got knowledge of the identity of Levispex when SBSA
disclosed the loan
agreement under subpoena in preparation for the
January 2014 hearing. Irrespective as to any suspicion or opinion,
prescription
only starts to run when knowledge of the identity of the
debtor is acquired - see
Minister of
Finance and Others v Gore NO
,
2007 (1)
SA 111
(SCA). During cross examination of Mr Padayachee it was
suggested that he could have had access to the information prior to
the
break up. That may be so, but he testified that he did in fact
not have access as Mr Knoetze was the person who had liaised with

Webber Wentzel and PTA attorneys and when he realised he needed the
documents to ascertain the identity of the beneficiary, access
to
such documents and information was denied.
[152]
Mr Knoetze was asked for the required
information, he failed to provide it. In his affidavit resisting
summary judgment, he failed
to disclose the identity of Livispex. In
his initial plea, he failed to disclose the identity of Livispex. In
my view, Mr Knoetze
wilfully prevented Mr Padayachee from coming to
know of the identity of Levispex, which is the party which  owes
the debt.
[153]
I accordingly find that Mr Padayachee’s
claim against Levispex has, by virtue of both the provisions of
sections 12(2)
and (3) of the
Prescription Act, not prescribed
.
COSTS
[154]
Costs are sought as between attorney and
client. The facts of this case in my view warrant a punitive costs
order. Mr Knoetze has
defended the matter by being untruthful
particularly in his affidavit resisting summary judgment. The
ineluctable inference to
be drawn from the contents of that affidavit
is that Mr Knoetze deliberately lied under oath. The allegations in
paragraph 10 of
the affidavit resisting summary judgment are simply
false. No mention is made of the fact that Livispex raised the
capital loan.
Instead, reference is made to a loan raised by Advanced
Capital (Pty) Limited which is neither a party to any of the
transaction
agreements nor the borrower in terms of the loan
agreement . The only inference to be drawn is that Mr Knoetze set out
to hide
the truth in a dishonest and deceitful way.
[155]
Although Mr Jacobs representing Levispex
was present during the hearing, he did not testify. I must assume
that he knew that the
R2.5 million Levispex received was owing to Mr
Padayachee and was content with denying him what was rightfully owing
to him. I
accordingly draw no distinction between the different
defendants in respect of the costs order to be granted.
ORDER
[156]
The exit agreement incorrectly refers to
the first defendant as ‘ADHU Investments 243 CC’ whereas
it should be ‘ADHU
Investments CC’. The order for
rectification hereof was not opposed.
[157]
I accordingly grant the following order:
Judgement
is granted against the first, second and third defendants, jointly
and severally, the one paying the other to be absolved
in the
following terms:
a.
The exit agreement dated the 28
th
of July 2010 is rectified by the deletion on page 1, in clause 1.2.2
and on page 14 thereof of the words ‘ADHU Investments
243 CC’
and the substitution thereof by the words ‘Adhu Investments
CC’;
b.
Payment of the sum of R 2 500 000 to the
plaintiff;
c.
Interest on the sum of R 2 500 000 at 15.5%
per annum from 1 December 2010 to 1 August 2014 and thereafter at 9%
per annum to date
of payment;
d.
Costs of the action as between attorney and
client.
I
OPPERMAN Acting Judge of the High Court
Gauteng
Local Division, Johannesburg
Heard:
12 November 2015
Judgment
delivered: 28 January 2016
Appearances:
For
Plaintiff: Adv Paul Strathern S.C.
Instructed
by: Brian Kahn Inc
For
Respondent: Adv SLP Mulligan
Instructed
by: Mark Nixon Attorney
[1]
See
for example
Communicare
and Others v Khan and Another
2013 (4) SA 482
(SCA) at para 31;
Kwazulu-Natal
Joint Liaison Committee v MEC for Education, Kwazulu-Natal and
Others
2013 (4) SA 262
(CC) per Nkabinde J;
Strydom
v Engen Petroleum Ltd
2013 (2) SA 187
(SCA);
National
Credit Regulator v Opperman & Others
2013 (2) SA 1
(CC) per Cameron JA (dissenting);
Hubbard
v Cool Ideas
1186
CC
2013 (5) SA 112
(SCA) at para 14; CA Focus CC v
Village
Freezer t/a Ashmel Spar
2013 (6) SA 549
(SCA);
Cape
Town Municipality v SA Pension Fund
2014
(2) SA 365
(SCA);
Mansingh
v General Council of the Bar and Others
2014 (2) SA 26 (CC).
[2]
Endumeni
(above) para 18.
[3]
Endumeni
(above) paras 20 – 24.
[4]
CA
Focus
(above) para 18.
[5]
KPMG
Chartered Accountants (SA) v Securefin Ltd and Another
2009 (4) SA 399
(SCA) para 39.
[6]
KPMG
(above)
para 39;
Bothma-Batho
(above) para 12.
[7]
Bothma-Batho
(above) para 12.
[8]
Endumeni
(above) para 24;
KPMG
(
above)
para 16.
[9]
Endumeni
(above) para 18.
[10]
Endumeni
(above) para 18.
[11]
Kwazulu-Natal
Joint Liaison Committee
(above) para 128.
[12]
Endumeni
(above) para 18. See also
National
Credit Regulator
(above) paras 93, 100 & 104: “elementary meaning demands
that we stop short of the extreme expedient of interpreting
a
provision against its own language”.
[13]
Endumeni
(above) para 26.
[14]
Hubbard
(above) para 14.
[15]
Mansingh
(above) para 9.
[16]
See
Article by Michael Bishop and Jason Brickhill, “‘In the
beginning was the word’: the role of text in the

interpretation of statutes” SALJ (2012) 129 at pages 681 –
716. The authors endorse a contextual, purposive approach
to
statutory interpretation but all forms of interpretation in their
view owe some degree of fealty to the words of the law with
an
interpretation required to be ‘reasonably capable’. The
Courts, in their opinion, often exceed their interpretive
mandate by
allowing interpretations at odds and incompatible with the text
itself.  The authors propose to modify Schreiner
JA’s two
approaches expressed in
Jaga
v Donges NO
,
1950 (4) SA 653
(A) at 662-664 and their suggestion is something of
a combination of the two options.  They suggest a two-stage
process.
First, judges should set out the possible meanings of
a provision with full regard for both text and context.  The
second
stage requires the judge to rely on the contextual factors.
It would appear that the use of the word “possible”
twice
by Wallis JA in
Endumeni
(paras 18 and 26) is indicative that the “new” approach
to interpretation is consistent with this in substance, if
not in
form.
[17]
KPMG
(above)
para 39.
[18]
Endumeni
(above)
para 18.
[19]
Johnston
v Leal
1980 (3) SA 927
(A) at 943A.
[20]
Johnston
v Leal
(above) at 943A.
[21]
KPMG
(above)
at
para 39. It appears that Harms JA’s use of the word “meaning”
in this paragraph was erroneous: it is clear
from the relevant
passage in
Johnston
v Leal
(which is the basis of the dictum) that the sentence should more
correctly read “[i]f a document was intended to provide
a
complete memorial of a jural act, extrinsic evidence may not
contradict, add to or modify its
terms
”.
See also
ABSA
Technology Finance Solutions (Pty) Ltd v Michael’s Bid A House
CC and Another
2013 (3) SA 426
(SCA) at paras 18 – 23;
Kingswood
Golf Estate (Pty) Ltd v Witts-Hewinson
2013 JDR 2722 (SCA) paras 20 – 22.
[22]
Bothma-Batho
(above) at para 11.
[23]
Affirmative
Portfolios CC v Transnet Ltd t/a Metrorail
,
2009(1) SA 196 (SCA) at paras 14 and 15