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 60
|
|
Six Bar Trading 667 (Pty) Limited v Latsky (29088/2008) [2016] ZAGPJHC 60 (18 March 2016)
REPUBLIC
OF SOUTH AFRICA
IN
THE HIGH COURT OF SOUTH AFRICA
GAUTENG
LOCAL DIVISION, JOHANNESBURG
CASE
NO: 29088/2008
DATE:
18 MARCH 2016
In the matter
between:
SIX BAR TRADING
667 (PTY)
LIMITED
...........................................................................
Applicant
And
LATSKY, ISABELLA
JOHANNA
.......................................................................................
Respondent
JUDGMENT
OPPERMAN AJ
INTRODUCTION
[1] On 1 September
2008 the applicant instituted legal proceedings against the
respondent for the payment of certain amounts. This
action was
defended but ultimately settled. On 23 June 2015 the settlement
agreement was made an order of court by Mngadi AJ (‘the
order’).
THE SETTLEMENT
AGREEMENT
[2] The settlement
agreement provides as follows:
“1. The
Defendant undertakes to pay to the Plaintiff in full and final
settlement of any claim for capital, interest and costs
which the
Plaintiff has against the Defendant, the sum of R 3 000 000.00 (Three
Million Rand).
2. The said sum of
R 3 000 000. 00 (Three Million Rand) will be paid by the Defendant to
the Plaintiff on date of registration
of transfer of the Remaining
Extent of Portion 9 of the Farm Vlakfontein No. 30, Registration
Division IR, Province Gauteng (“the
property”) to a third
party once the Defendant has sold the property to such a third party.
3. In the event of
the Defendant not selling the property within a period of 5 (five)
years reckoned from date of signing hereof,
the Plaintiff will in
lieu of such payment, be entitled to the transfer of one third
undivided share in the property free of encumbrances.
The Plaintiff
will be liable for the payment of all costs of transfer.
4. If the Plaintiff
elects to do so, it shall be entitled to register a security bond
over the property in the sum of R 3 000 000.00
(Three Million Rand).
The Plaintiff will be liable for the payment of all costs for the
registration of the bond.
5.Each party will
pay its own costs of this action.
6. Neither of the
parties will have any claims against each other arising out of any
other cause of action.”
(‘the
settlement agreement’)
[3] The settlement
agreement was signed at the beginning of June 2010. The applicant
exercised its rights under clause 4 of the
settlement agreement by
registering a security bond over the property in the sum of R 3 000
000 (three million rand).
THE PROBLEM
[4] The property as
defined in the settlement agreement was not sold within a period of 5
(five) years reckoned from the date of
signature of the settlement
agreement. The applicant was thus, and after expiry of the five year
period, entitled to the transfer
of a one-third undivided share in
the property, free of encumbrances. When attempting to take transfer
of the undivided one-third
share, the applicant discovered that, in
addition to the bond that it had registered over the property, there
were two further
mortgage bonds registered over the property in
favour of the Standard Bank of South Africa Limited (‘the
Standard Bank’).
[5] A one-third
unencumbered share in the property could thus not be registered in
favour of the applicant as these bonds constituted
encumbrances. The
director of the applicant who deposed to the affidavit, Mr Charles
Rich (‘Mr Rich’) stated that it
was only after the
settlement agreement had been made an order of court, that the fact
that two further bonds had been registered
over the property, had
come to his attention. Mr Rich said that the respondent must have
known about these bonds at the time of
the conclusion of the
settlement agreement, as such bonds had already been registered by
the time the settlement agreement was
concluded. The one bond had
been registered on the 1st February 2002 and the other, on the 19th
October 2007.
THE INITIAL
PROPOSAL
[6] On the 3rd July
2015 Mr Reon Marais (‘Mr Marais’) addressed a letter on
behalf of the applicant to the respondent
proposing that the
settlement agreement be amended to provide that payment of the agreed
sum of R 3 000 000 (three million rand)
be made no later than 2
September 2015 failing which, the applicant would be entitled to
attach and sell the said property in execution.
No response to this
letter was received. That put paid to the sensible approach to
resolving the matter and the litigation ensued.
THE INITIAL
NOTICE OF MOTION
[7] The initial
notice of motion contained two parts. In Part A the applicant sought
that the order of court granted by Mngadi AJ
on 23 June 2015 be
rescinded and that the settlement agreement entered into between the
parties on the 2nd June 2010 be rectified
to provide that:
“2.1 Clause
three (3) thereof be deleted for impossibility of performance.
2.2 Clause three
(3) be substituted with the following clause:
‘In the event
that the Defendant has not sold and re-registered the property to a
third party within a period of five (5)
years from date of signature
of the agreement, the Defendant shall within a further three calendar
months after the expiry of such
five year period pay the said sum of
R 3 000 000-00 to the Applicant, failing which the Applicant shall be
entitled to attach and
sell the said property in execution.’”
In Part B of the
notice of motion, the applicant sought that the rectified settlement
agreement be made an order of court.
AMENDMENT TO THE
NOTICE OF MOTION
[8] The applicant
amended its notice of motion, without objection, by the inclusion of
the following prayer after prayer 2.2:
“3.
Alternatively to the above, and in the event that the court finds
that clause 3 of the settlement agreement is not impossible
(sic) to
perform, then:
3.1 The Respondent
be ordered to make payment to the Applicant in the amount of
R 3 000 000. 00; or
3.2 The Respondent
be ordered to settle any and all outstanding bonds and encumbrances
over the property, including but not limited
to Bond Number
B17142/2007 and Bond Number B9616/2002, held by Standard Bank of
South Africa, within three months from the date
of the order;
3.3 The Respondent
be ordered to sign all necessary documentation, within ten (10)
business days of the expiration of the three
month period referred to
above, to give effect to Clause 3 of the settlement agreement; and
3.4 In the event of
the Respondent failing to sign all necessary documentation within the
prescribed time frame, the Sheriff of
the Court be authorised and
directed to sign all necessary documentation on the Respondents
behalf to give effect to clause 3 of
the settlement agreement.”
IMPOSSIBILITY OF
PERMORMANCE AND RECTIFICATION
[9] Mr Rich
contended that he did not know of the existence of the two other
bonds at the time of the conclusion of the settlement
agreement
whereas the respondent said that an attorney, Mr Charles Gishen who
facilitated the settlement, knew about it and had
communicated this
information to Mr Rich (or is presumed to have done so). Mr Rich
denies that a Mr Charles Gishen represented
him. He alleged that it
was a Mr Martin Gishen of Gishen Gilcrest Attorneys. Mr Martin Gishen
is presently a solicitor practicing
as such in Australia who
summarised the situation as follows:
“As far as I
can recall at the meeting we (myself and Charles) were made aware of
the existence of a bond registered over
the property and it is for
this reason that I included the words … “free of
encumbrances” in clause 3 of the
Settlement Agreement, the
agreement being that if Latsky did not pay the R3M within 5 years
Rich would be entitled to payment of
the sum of R3M or, at his
option, one third of the property bond free ie Latsky would have to
pay the bond and the current rates
and taxes… “ (my
emphasis)
[10] The settlement
agreement provided for two payment options:
10.1 Payment of R 3
000 000 after the property had been transferred to a third party
(‘the first option’); or
10.2 Registration of
a one third undivided share in the property, free of encumbrances
after 5 (five) years from the date of signature
(‘the second
option’).
[11] The applicant
initially approached the matter by contending that the second option
was, by reason of the prior bonds, impossible
to perform,
unenforceable and void ab initio. It contended that it was irrelevant
that the applicant was well aware of Standard
Bank’s single
encumbrance over the property at the time of signature of the
settlement agreement. It argued that the facts
showed that at the
time when both the applicant and the respondent signed the settlement
agreement, it was impossible for the applicant
to register a
one-third undivided share in the property, free of encumbrances, in
the name of the applicant.
[12] This assertion
of impossibility was hotly contested and respondent contended that
nothing contained in the settlement agreement
was incapable of being
performed at the time of entering into the settlement agreement. The
R3 000 000 could objectively have been
paid within the first five
year period if the property had been sold and the one-third undivided
share in the property could and
(can still) be transferred and
registered, if and when the other two bonds in favour of Standard
Bank are cancelled. Thus both
options 1 and 2 were capable of
performance at the time of the conclusion of the settlement
agreement.
[13] The applicant,
at the hearing of this matter, did not persist with the rectification
and impossibility of performance argument
as it had, prior to the
hearing served the amendment to the notice of motion which amendment
was not opposed. The fact that the
amendment was not opposed has some
bearing on whether the respondent was prejudiced in the preparation
and presentation of its
case, a matter to which I shall return.
CONSENSUAL
RESCISSION
[14] The applicant
firstly prays for an order rescinding the order of 23 June 2015. This
prayer per se is not opposed by the respondent.
However, it does not
follow that this order should be granted. The reason underpinning the
rescission application was the need
to rectify the settlement
agreement by virtue of the alleged impossibility of performance
argument, all of which has now been abandoned.
The alternative relief
is based upon it being found that clause 3 is possible to perform.
Applicant conceded that clause 3 is indeed
possible to perform.
Clearly, payment of the debts secured by the prior bonds, would
result in the cancellation of the bonds and
there is nothing
impossible about that.
[15] The practice of
applying for rescission of orders by consent has been criticised by
the Courts in a line of cases. The inherent
jurisdiction of the Court
does not include the right to interfere with the principle of
finality of judgments, other than in circumstances
specifically
provided for in the rules or at common law (see Lazarus and Another v
Nedcor Bank Limited; Lazarus and another v ABSA
Bank Limited,
1999
(2) SA 782
(W); Swart v ABSA Bank,
2009 (5) SA 219
(CPD) at 223B;
Saphula v Nedcor Bank Limited,
1999 (2) SA 76
(WLD))
SPECIFIC
PERFORMANCE
[16] Having amended
the notice of motion and it being common cause between the parties,
apparently without regard to the line of
cases relating to rescission
that I have referred to above, that this Court should rescind the
order, the parties then argued the
matter from the premise that what
was in issue was whether or not specific performance ought to be
granted.
[17] That being so
the issues for determination became firstly, what the nature of the
factors were a court should (and could) take
into consideration in
determining whether specific performance should be granted and
secondly, whether the court had the power
to regulate the procedure
of the manner in which specific performance was to be carried out.
[18] As indicated,
this argument is premised on the erroneous assumption that parties to
an order of Court are able to obtain rescission
for the asking, i.e.
that they can ask the Court simply to rubber stamp the consensual
rescission of the order granted on 23 June
2015. The applicant
expressly and during argument abandoned reliance upon the argument
that the settlement agreement ought to be
rectified and that the
order sought and granted was based on incorrect facts. That being so,
there are no facts before me which
would entitle this Court, being
bound as it is by the authorities cited, to rescind the order. Now
the question arises whether,
despite not rescinding the order, this
Court can or should issue any further order on what has already been
pronounced upon by
a Court of competent jurisdiction? Should the
applicant not be confined in its efforts to enforce the order to the
usual remedies
of (i) having a writ of execution issued by the
Registrar, or (ii) launching contempt of Court proceedings? It
appears not.
CONTEMPT OR
EXECUTION ONLY?
[19] In Eke v
Parsons
[2015] ZACC 30
, Madlanga J (speaking on behalf of the
majority of the justices), having rejected the formalistic approach
which takes a narrow
view of the efficacy and value of court orders
granted as a result of settlement agreements, held as follows, at
para 24:
“Whilst
ordinarily the purpose served by a settlement order is that, in the
event of non-compliance, the party in whose favour
it operates should
be in a position to enforce it through execution or contempt
proceedings, the efficacy of settlement orders
cannot be limited to
that. A court may choose to be innovative in ensuring adherence to
the order. Depending on the nature of the
court order, it may –
for example – first issue a mandamus for compliance. Failing
compliance, it may then consider
committal for contempt.”
(quoted without footnotes)
[20] Of considerable
significance too is that which is stated in paragraph 31 of Eke v
Parsons (supra):
“The effect of
a settlement order is to change the status of the rights and
obligations between the parties. Save for litigation
that may be
consequent upon the nature of the particular order, the order brings
finality to the lis between the parties; the lis
becomes res judicata
(literally, “a matter judged”). It changes the terms of a
settlement agreement to an enforceable
court order. The type of
enforcement may be execution or contempt proceedings. Or it may take
any other form permitted by the nature
of the order. That form may
possibly be some litigation the nature of which will be one step
removed from seeking committal for
contempt; an example being a
mandamus.” (quoted without footnotes)
ANALYSIS OF THE
RIGHTS EMBODIED IN THE COURT ORDER
[21] The court order
envisages two scenarios. One being the scenario existing within a
period of five years reckoned from date of
signature of the
settlement agreement and the second the period after the expiry of
such five year period. Prior to the expiry
of the five year period,
the applicant was entitled to the payment of R 3 000 000 should the
property have been sold to a third
party. After the expiry of the
five year period, the applicant is no longer entitled to payment of
the sum of R 3 000 000 but is,
in lieu of such payment, entitled to
the transfer of a one-third undivided share in the property, free of
encumbrances.
[22] The difficulty
the applicant faces in this matter is that because there are two
mortgage bonds registered over the property
in favour of the Standard
Bank, the applicant is unable to register a one-third unencumbered
portion of the property into its name.
[23] The question
which arises is why a writ of execution was not issued, a Court order
being in existence. The answer to this lies
in the form of the
settlement agreement and its wording. It does not, as it should have,
provide in peremptory terms what the respondent
was supposed to do
after the expiry of the five year period. Instead, it simply
pronounces what the applicant’s rights would
be in that event.
This does not assist the Sheriff in being asked to execute such an
order. For the Sheriff to be properly informed
of how to execute the
order in a suitably worded writ he or she needs to know precisely
what it is that is to be done. It is the
failure to apply this simple
and practical principle in the framing of settlement agreements
intended to be made orders of Court
that gives rise to this problem,
and the incurring of unnecessary costs. Whilst the Court is not
unmindful of the challenges facing
practitioners seeking to get their
clients and their opponents to agree to the terms of a settlement
agreement, often drawn at
the doors of Court, it is always advisable
to consider the task of the Sheriff confronted with the settlement
that has now become
an order of Court and ask how would the Sheriff
execute this order. If the answer is not clear then greater attention
needs to
be paid to the terms of the draft settlement.
[24] The second
scenario i.e the position after the expiry of five years reckoned
from date of signature of the settlement agreement
which was made an
order of court, does not provide for the payment of the R 3 000 000.
It simply provides for the registration
of an undivided one-third
share of the property into the name of the applicant.
[25] This court is
now seized with ensuring that there is adherence to this order. In
this regard it is not confined to just the
writ of execution or the
contempt of Court route. That is a false dichotomy. Its options are
wider and more practical. For example
it may, as contemplated in Eke
v Parsons (supra), first issue a mandamus for compliance wherein it
spells out with greater precision
and considerations of practicality
dealing with circumstances on the ground, and failing compliance it
may then order committal
for contempt.
[26] The applicant,
though flailing about for a remedy when faced with the inability to
register an undivided one-third share of
the property into its name,
took the appropriately reasonable step of addressing correspondence
to the respondent, proposing that
the settlement agreement be amended
to provide that payment of the sum of R 3 000 000 be made by no later
than 2 September 2015
failing which, the applicant would be entitled
to attach and sell the property in execution. As pointed out above,
no response
to this proposal was received and this must weigh with
the Court when considering the question of liability for costs.
[27] What applicant
ought to have done was to call upon the respondent to pay the
outstanding bonds held by Standard Bank. It was,
after all, these
facts or the failure to pay these amounts which prevented the
registration of the one-third undivided share into
the name of the
applicant. Still, it had opened the door to a negotiated resolution
to the impasse and it must receive credit for
this.
NATURE OF THE
APPLICATION BEFORE THIS COURT
[28] The alternative
amended relief the applicant is claiming in terms of the amendment,
is for specific performance compelling
the respondent to ensure that
all encumbrances over the property are settled, alternatively,
damages for breach of the aforesaid
obligations. The respondent
argues that the problem that the applicant faces is that the relief
it now seeks was not even mentioned
in its founding affidavit or the
replying affidavit. Respondent’s counsel argues that the cause
of action as set out in applicants
founding affidavit and as
persisted with in the replying affidavit, was that the specific
performance that it now seeks was impossible
to perform.
[29] In MEC for
Health, Gauteng vs 3P Consulting, 2012(2) SA 542 (SCA) at 551D, Van
Heerden JA held as follows:
“While it is
so that a party in motion proceedings may advance legal arguments in
support of the relief or defence claimed
by it even where such
arguments are not specifically raised in the papers, provided that
all relevant facts are before the court,
this will not be allowed if
it causes prejudice to the other party”. See too Minister Van
Wet en Order v Matshoba, 1990(1)
SA 280 (A) at 285E – I.
[30] The respondent
contends further that the relief sought in the amended notice of
motion by the applicant runs directly opposite
to the factual
contentions put forward in its affidavits filed. I disagree. The
facts in this matter are effectively common cause.
It is the legal
construction of these facts which has changed.
[31] The respondent
further contends that the applicants’ case as formulated in its
founding affidavit, did not call for evidence
relating to whether or
not the respondent was able to give effect to an order for specific
performance. I am unable to agree with
the respondent. The applicant
applied to amend its notice of motion. The respondent did not object
to this amendment and raised
no contentions that it would be
prejudiced by the amendment. The respondent did also not request the
leave of this court to file
further affidavits pursuant to such
amendment. The matter now falls to be adjudicated upon the evidence
before this court.
ENFORCEMENT OF
THE ORDER
[32] The settlement
agreement was made an order of court on 23 June 2015 on an unopposed
basis and by definition with the respondent’s
consent. The
settlement agreement was thus, according to the respondent, as at
June 2010 and still currently, capable of being
enforced (indeed,
this was the very basis for her opposition). In the respondent’s
affidavit, she contends that the settlement
agreement is both valid
and enforceable. She further stated under oath that what the
applicant would have received, had no bonds
been registered over the
property, was one third thereof.
[33] The respondent
contended that the settlement agreement/order is capable of
enforcement if Standard Bank consents to the registration
of the
one-third undivided share. What is clear, is that the settlement
agreement is enforceable if she, the respondent, settles
the bonds
held by Standard Bank. According to the annexures annexed to the
founding papers, Standard Bank are owed R875 000 in
respect of Bond
Number B171342/2007 and R125 000 in respect of Bond Number
B9616/2002. These allegations were contained in paragraph
15 of the
applicant’s founding affidavit and were not denied by the
respondent. They stand undisputed.
[34] The only thing
which stands between the applicant and it being the owner of a
one-third undivided share in the property, free
of encumbrances, is
the payment by the respondent of the amounts owing in respect of the
two bonds to Standard Bank.
[35] The respondent
had five years within which to sell the property and to pay the
applicant the sum of R 3 000 000. She did not
do so. She had five
years within which to anticipate and prepare for the transfer of the
one-third undivided share in the property
“free of
encumbrances”. The respondent knew, since date of signature of
the settlement agreement that, in the event
of her not selling the
property within the five year period, she would be obliged to
transfer an unencumbered undivided one-third
share. In this
regard, the comments of Madlanga J in Eke v Parsons (supra) at
paragraph 41 are apt:
“Justice
between the two litigants demands that their settlement agreement,
which was made an order of Court, must be given
effect. After all, a
court’s duty is to do justice between the litigants. In this
instance, justice demands that Mr Eke be
held to his bargain.”
(quoted without footnotes).
[36] In my view, the
respondent must be held to her bargain. At the time of the conclusion
of the settlement agreement being June
2010, she agreed that she
would be able to give transfer of a one-third undivided share free of
encumbrances. In opposing the present
application she deposed to an
affidavit averring that the settlement agreement (her bargain) was
enforceable and valid. When the
notice of motion was amended and
specific performance of the settlement agreement was sought, she did
not oppose the amendment
of the notice of motion. She further did not
request this courts leave to file evidence in support of her
inability to settle the
outstanding bonds with Standard Bank or any
other fact which in her view, would have been relevant to this court
performing its
functions. Under these circumstances I can see no
reason why this court should not order the respondent to do what she
undertook,
five years ago, to do.
COSTS
[37] The basis for
the relief which is granted, being the enforcement of a court order,
is not the same case the applicant in its
initial notice of motion
brought the respondent to court to meet. The applicant, via
correspondence and amendment attempted to
meet the legal obstacles
put up by the respondent and at every turn, was met with more
hurdles. There could be no doubt in the
mind of the respondent that
what the applicant wanted, was either the R 3000 000 or the one-third
undivided share in the property,
unencumbered. The respondent offered
neither.
[38] The applicant
has been successful, admittedly not on the basis argued. In
exercising my discretion in favour of the applicant
in respect of the
issue of costs, I am mindful of this. In my view, the respondent used
the machinery of the law to avoid performing
her obligations in terms
of the settlement agreement (now order), as she was entitled to.
However, she has now come to the end
of this legal road and must bear
the costs of such privilege.
ORDER
[39] I accordingly
grant the following order:
39.1. The respondent
is ordered to settle any and all outstanding bonds and encumbrances
over the Remaining Extent of Portion 9
of the Farm Vlakfontein No.
30, Registration Division IR, Province Gauteng (‘the
property’), including but not limited
to Bond Number
B171342/2007 and Bond Number B9616/2002, held by Standard Bank of
South Africa Limited, within three months from
the date of this
order;
39.2. The
obligations contained in prayer 39.1 hereof, do not include the
obligation to settle the applicant’s bond in the
sum of R 3 000
000, it registered over the property;
39.3. The respondent
is ordered to sign all necessary documentation, within ten (10)
business days of the expiry of the three month
period referred to in
paragraph 39.1 hereof, to transfer a one-third undivided share in the
property to the applicant;
39.4. In the event
of the respondent failing to sign all necessary documentation within
the prescribed time frame, the Sheriff of
this Court is authorised
and directed to sign all necessary documentation on the respondent’s
behalf;
39.5. The respondent
is to pay the costs of this application.
I OPPERMAN
Acting Judge of
the High Court
Gauteng Local
Division, Johannesburg
Heard: 9 February
2016
Further heads
submitted: 17 February 2016
Judgment
delivered: 18 March 2016
Appearances:
For Applicant:
Adv SJ Mushet
Instructed by:
Reon Marais
For Respondent:
Adv F du Toit SC
Instructed by:
Christo Smith