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[2016] ZAGPJHC 195
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Montic Dairy (Pty) Ltd and Others v Moraitis Investments (Pty) Ltd and Others (A5084/2014) [2016] ZAGPJHC 195 (12 May 2016)
REPUBLIC
OF SOUTH AFRICA
IN THE HIGH COURT
OF SOUTH AFRICA
GAUTENG DIVISION,
JOHANNESBURG
CASE
NO:
A5084/2014
DATE:
12 MAY 2016
In
the matter between:
MONTIC
DAIRY (PTY)
LTD
.........................................................................................
First
Appellant
(1
st
Respondent in Court a quo)
MONTIC
TRANSPORT (PTY)
LTD
........................................................
Second
appellant Appellant
2
nd
Respondent
in court a quo)
MONTIC
INVESTMENTS (PTY)
LTD
.......................................................................
Third
Appellant
(3
rd
Respondent in Court a quo)
MONTIC
ASSETS (PTY)
LTD
...................................................................................
Fourth
Appellant
(4
th
Respondent in court a quo)
HUNTERS
PROPERTIES (PTY)
LTD
.........................................................................
Fifth
Appellant
(5
th
Respondent in court a quo)
TROPICA
FOODS (PTY)
LTD
......................................................................................
Sixth
Appellant
(6
th
Respondent in Court a quo)
TROPICA
INVESTMENTS (PTY)
LTD
..................................................................
Seventh
Appellant
(7
th
Respondent in Court a quo)
KARL
KERBERT
N.O
.......................................................................................................
8
th
Appellant
(as
trustee of the Karl Kerbert
Trust)
...............................................
(8th
Respondent in Court a quo)
MICHAEL
SEGAL
N.O
......................................................................................................
9
th
Appellant
(as
trustee of the Karl Kerbet
Trust)
...........................................
(9
th
Respondent in the Court a quo)
SOLLY
GROSS
N.O
..........................................................................................................
10
th
Appellant(as trustee of the Karl Kerbet
Trust)
.......................
(10
th
Respondent in the Court a quo)
APOSTOLOS
MORAITIS
N.O
.......................................................................................
11
th
Appellant
(as
trustee of the Karl Kerbet Trust) (11
th
Respondent in the Court a quo)
KARL
KERBERT
N.O
.....................................................................................................
12
th
Appellant
(as
executor of the late Julia Lamer) (12
th
Respondent in the Court a quo
KARL
KERBERT
..............................................................................................................
13
th
Appellant
(13
th
Respondent in the Court a quo)
THE
SHERIFF, JOHANNESBURG
................
14
th
Appellant(14
th
Respondent in the Court a quo)
Versus
MORAITIS
INVESTMENTS (PTY)
LTD
.....................................................................
1
st
Respondent
(1
st
Applicant in the Court a quo)
APOSTOLOS
MORAITIS
N.O
.....................................................................................
2
nd
Respondent
(2
nd
Applicant in the Court a quo)
ATHANASIOS
MORAITIS
N.O
..................................................................................
3
rd
Respondent
(as
trustee of Moraitis Trust)(3
rd
Applicant in the Court a quo)
CHRISTOS
MORAITIS
N.O
........................................................................................
4
th
Respondent
(as
trustee of Moraitis Trust) (4
th
Applicant in the Court a quo)
APOSTOLOS
MARAITIS
..............................................................................................
5
th
Respondent
(5
th
Applicant in the court a quo)
SUMMARY
Trust
and Trustees- Trustee of Family Trust and also Director of Companies
(Moraitis) singly enters into settlement negotiations
and settlement
agreement in respect of trust and companies’ affairs- court a
quo having set aside the settlement agreement
as void and
unenforceable on basis that the trustee had no actual authority to
conclude the settlement agreement on behalf of the
family trust in
spite of his warranty that he had been so authorised and in regard to
company, that the transfer of all the company’s
shares
constituted a disposal of all or the greater part of the assets of
the company which required a special resolution of members
as
contemplated in section 112(2) read with section 115 of the Companies
Act 71 0f 2008 for order to be enforceable however, on
appeal,
majority judgement (per Matojane J and Hawyes AJ), upholding appeal
on grounds, inter alia, that the settlement agreement
constituted a
compromise of the pending litigation and coming from trustee’s
company group however, in terms of minority
judgement (per Moshidi J)
the settlement agreement remains void abnition and un-enforceable
largely based on the trite legal principle
that requires that
trustees must act jointly, unless the Trust Deed provides otherwise.
JUDGMENT
MATOJANE
J, HAWYES AJ, CONCURRING (MOSHIDI J DISSENTING
)
Introduction
[1]
This is an appeal against the Order of the Court
a quo
granting
an application declaring the Settlement Agreement “void and
unenforceable” and setting aside the ensuing consent
order
which incorporated the settlement agreement.
[2]
In the court below, Windell J found that the settlement agreement was
void and unenforceable for the following reasons:
1.
Moraitis had no actual or implied authority to conclude the
settlement agreement on behalf of the Moraitis Family Trust.
2.
Moraitis was not properly authorised to sign the settlement agreement
on behalf of Moraitis Investments (Pty) Ltd.
3.
In signing the settlement agreement Moraitis purported to dispose of
the greater part of the assets of the company and that in
terms of
section 112
of the
Companies Act 71 of 2008
this requires a special
resolution that had not been passed.
The
parties
[3]
The adversaries in this matter are two people, namely, Mr Karel
Kebert (“Kebert”) and Mr Apostolos Moraitis (“Moraitis”).
They conduct their business through special purpose vehicles in the
form of limited liability Companies, duly incorporated and
that the
shareholding in the said Companies are held by either other Companies
or Trusts with each of such Trusts having multiple
trustees and
beneficiaries.
[4]
Both Kebert and Moraitis are directors of Moraitis Investments (Pty)
Ltd. Moraitis Investments (Pty) Ltd is a 20% shareholder
in the
first, second, fourth, fifth and sixth applicants. The only
shareholder and member of Moraitis Investment (Pty) Ltd is the
Moraitis Family Trust. Moraitis Family Trust is a 20% shareholder of
the third applicant
[5]
Kebert is a trustee of the 8
th
applicant. He is the
twelfth appellant in his capacity as executor of his late mother’s
estate, he is the thirteenth appellant
in his personal capacity. He
is also a director of the first to seventh appellants.
[6]
Moraitis is the fifth applicant. He is the director of the first
respondent, he is also a joint trustee of the Moraitis family
trust
and the fifth respondent. He also acts on behalf of the first, third
and fourth respondent.
[7]
There is a complete breakdown in the business relationship between
Kebert and Moraitis and they want to sever their relationship
in a
multiplicity of companies and businesses they are associated in with
each other.
Litigation
history
[8]
On the 8
th
December 2006 the first to fourth respondents
(“MORAITIS GROUP”) launched an urgent application for the
winding-up
of the first to sixth appellants on the ground that it
would be just and equitable to do so. There was an alternative prayer
for
a forced buyout of the respondents’ 20% shareholding in the
Montic Group. The shareholding in these companies were held by
entities and trusts in which Kebert and Moraitis had interests.
[9]
The matter came before Sapire AJ on 25 October 2007 who granted an
order by consent. He ordered a buyout at a price to be determined
by
a third party. He stated in his judgment delivered on the 19 October
2007 that: -
“
It
has emerged that the parties are agreed that there is to be a
complete and permanent severance of their hitherto existing
relationship
as shareholders in the several companies in which they
are interested, and that that is to be achieved by the Kebert Group
purchasing
the entire interest of the Moraitis Group comprising its
shares and loan accounts in the companies.
What
is not yet agreed is the price to be paid, when it is to be paid, and
the choice of an independent referee who is mandated
to place value
on the interest purchased and so fix the purchase price.
A
draft order suggested by the applicants and comments thereon by the
respondents, have ben placed before me. It has been left to
the court
to make an appropriate order to give effect to and regulate the
agreement governing the termination and severance of
the
relationship.”
[10]
The relevant portion of the court order reads as follows: -
“
1.
“The KEBERT GROUP shall purchase the complete 20% interest of
the MORAITIS GROUP in the 1
st
to 6
th
respondents comprising shares held by the seller in such companies
and the relative claims on loan accounts owing to the seller.
Karl
Kebert shall, if he so desires, be entitled to take transfer of the
shares and loan accounts into his own name.
2.
Notwithstanding that the sale relates to the interest in several
different companies, the sale is one of all the assets and
indivisible.”
3.
THAT the purchase price shall be conclusively determined and finally
determined by an independent third party who shall act as
valuer and
not as arbitrator.
[11]
Paragraphs 8 and 9 of the Order envisage that the sale should be
finally concluded on appointment by agreement between the
Kebert
Group and the Moraitis Group of the independent valuator whose
valuation would be conclusive and final of the value of the
20%
interest. The sections read: -
8.
Should any problems or difficulties become manifest pending the
valuation the valuer may on notice to the parties approach the
court
for directions in this regard.
9.
The purchase price as determined by the valuer shall be payable
within 90 days after the same has been determined and intimated
to
the parties, against delivery by the purchaser to the seller of all
share certificates, share transfer forms and cessions of
claims on
loan account, completed signed and executed in due form, so as to
convey to the purchaser the shares and loan accounts
bought and sold
in accordance with the provisions hereof.
[12]
The parties agreed to the appointment of Ernest and Young Advisory
Services Ltd to act as the “independent third party”
to
value the respondents’ 20% interest in the Montic Group . Their
report was received on 5 March 2009 and the respondents
were unhappy
with the report and considered it to be wrong.
[13]
Kebert on behalf of the Kebert Group instituted an action against
Moraitis Group and the Valuator in the North Gauteng High
Court under
Case Number 41065/2006 seeking an order setting aside the valuation
alternatively, setting aside the valuation and
referring such
valuation back to Ernst & Young for reconsideration.
[14]
On 14 December 2009 Kebert in his capacity as executor and sole heir
of his late mother’s estate instituted action against
Moraitis
in the South Gauteng High Court claiming a purchase price of certain
shares under Case NO.52206/09. The settlement agreement
was later
made an order of Court.
[15]
On 28 August 2013 the attorneys representing Moraitis contacted
Kebert’s attorneys asking if Kebert would be prepared
to settle
all matters between Kebert and Moraitis. After protracted
negotiations, Kebert agreed to pay Moraitis R600 000.00 in
full and
final settlement of all three pending cases between the parties.
[16]
On 5
September 2013 the action became settled between the
parties and the impugned settlement agreement was made an order of
court. That
should have been the end of the acrimonious litigation
between the Kebert and Moraitis but this was never to be.
[17]
On 30 September 2013 the application, which forms the subject matter
of the order under appeal was issued in the High Court
of South
Africa, Gauteng Division, Johannesburg for an order declaring the
Settlement Agreement void and unenforceable, setting
aside of the
consent order and costs.
[18]
I first wish to start by analysing the nature of the business
relationship between Kebert and Moraitis. It would appear that
in
substance Kebert and Moraitis were business partners even though they
were carrying on business by means of the machinery of
corporations
and trusts. At all relevant times Moraitis decided all matters
relating to the Moraitis Family Trust on his own and
the consent
order made by Sapire AJ was clearly intended to bring about the
dissolution of a partnership. This is borne by the
following conduct
of Moraitis:-
[19]
While Kebert and Moraitis comprised the full board of the first
respondent, Moraitis to the exclusion of Kebert passes a resolution
to bring an application for the liquidation of first to sixth
appellants.
[20]
He decided all matters on behalf of the Moraitis family Trust without
reference to his co-trustees. For example, he passed
a resolution to
bring the aforementioned winding-up resolution without the consent of
his two co-trustees.
[21]
In his founding affidavit filed in the Winding-up application before
Sapire AJ Moraitis describes the relationship between
himself and
Moraitis as one of business partners and that there was a partnership
relationship outside the business. He states
in paragraph 60 of the
affidavit that over the years and by virtue of their agreed
association, which was both tacit and implied,
they equally
participated in the the partnership business. He states that it was
accepted that he will market and manage the affairs
of the
partnership and Kebert will attend the production side of the
business.
[22]
In paragraph 51 he states: -
“
51.
The partnership had its origins in 1980 and has continued to underlie
the entire corporate structure of Montic Diary and the
associated
entities.
52.
Moreover, the aforesaid inter-relationship will attest to the
following,
inter alia:-
52.1
the partnership business was conducted as a group:
52.2
the management structure was self-same:
52.3
the business links are indistinguishable;
52.4
there are corresponding directors;
52.5
there is a complete identity of interests.”
[23]
In paragraph 54 Moraitis states:
“
54.
Over the passage of time since our first introduction, not only were
Kebert and I business partners, but a close-knit friendship
ensued
between us. We recognised that if we combined our respective skills
and experience in a joint business venture, we would
stand to reap
huge commercial rewards. We entertained the prospect of setting up
our own business in the liquid consumer industry.”
[24]
To fortify the evidence of Moraitis that his relationship with Kebert
was in substance and in fact a partnership which carried
on business
by means of special purpose vehicles, Moraitis duly assisted by his
attorney and Senior Counsel without reference to
his two co-trustees
negotiated and concluded an agreement in full and final settlement.
[25]
The settlement agreement was a compromise of all pending litigation
between Kebert and Moraitis as shown firstly, by the fact
that
Kebert in his personal capacity as opposed to the seventh to
eleventh respondents in the Sapire order, is ordered to
pay to
Moraitis in his personal capacity the amount of R600 000.00.
[26]
Secondly, Kebert, both in his personal capacity and in his capacity
as executor in the estate of his late mother, abandoned
any claims he
or the estate had against Moraitis in respect of shares held in an
offshore company. It is significant that this
claim did not form part
of the Sapire judgment but was included as a compromise to terminate
the three pending litigation between
the parties.
[27]
Thirdly, the shares and/or loan accounts disposed of are to be
transferred to Kebert in his personal capacity as opposed to
the
seventh to eleventh respondents in terms of the Sapire order.
[28]
Moraitis and/or the Moraitis Family Trust and/or Moraitis Investments
(Pty) Ltd cede all and any loans and/ or claims they
may have had in
the Companies or associated entities to Kebert in his personal
capacity.
[29]
The settlement agreement was concluded not only by the parties cited
in the heading thereof but also as well as parties incorporated
into
the agreement by reference via the warranties recorded in clauses 8
and 9 of the settlement agreement. The preamble to the
agreement
states:
“
WHEREAS
the aforementioned parties are involved in the litigation and wish to
resolve the litigation and all and any dispute between
them;
AND
WHEREAS, the above parties have reached an agreement with regards to
the disputes between them and wish such agreement to be
reduced to
writing, and with leave of the above Honourable Court, be made an
order of Court.”
[30]
Moraitis signed the settlement agreement on behalf of Moraitis
Investments (Pty) Ltd and in his capacity as a director and
also
signed the agreement on behalf of the Moraitis Trust in his capacity
as a trustee of Moraitis trust. Kebert, on the other
hand, signed the
agreement in his capacity as trustee of the Karl Kebert Family Trust
and in his capacity as executor of the estate
of his late mother.
[31]
In terms of paragraph 8 of the settlement agreement: -
“
Kebert
warrants that he is authorised to enter into the settlement agreement
on behalf of the companies and as executor of the estate
late Julia
Lamer and on behalf of his Trust (as trustee) and that the companies
and his trust have authorised Kebert to enter into
the settlement on
their behalf”
[32]
Paragraph 9 of the settlement agreement reads: -
“
Moraitis
warrants that he is authorised to enter into this settlement
agreement on behalf of his trust (as trustee) and Moraitis
Investments (Pty) and that Moraitis Investments (Pty) Ltd and his
trust have authorised Moraitis to enter into this settlement
agreement on their behalf”
[33]
Paragraph 11 states:
“
This
agreement constitutes the full and final settlement of the Litigation
“
Paragraph
12 states:
“
The
parties agree that this settlement agreement will remain confidential
as between the parties”
[34]
Moraitis argued in the court below that the settlement agreement was
void against the trust because at the time he signed the
settlement
agreement, neither third nor fourth respondents in their capacities
as the trustees of the Moraitis trust, had authorised
him to conclude
the settlement agreement on their behalf, in their capacities as
trustees of the Moraitis Trust. Nor had they had
a meeting of
trustees to discuss the settlement agreement of all the pending
litigation by any one trustee on behalf of the trust.
[35]
The two trustees of the Moraitis Family Trust were cited as
co-applicants in the application which resulted in the Sapire AJ
judgment. The two trustees delegated to Moraitis in terms of clause
6.5 of the Moraitis Family Trust Deed the power to bring the
application. The trustees were represented by the same attorney
who
had ostensible authority to compromise the action or any matter in it
unless he had received instructions to the contrary. See
Hlobo
v M.M.V Accident Fund.
[1]
This
authority carried over into the negotiations “to compromise …
or settle upon such terms and conditions as deemed
advisable, all
claims made by or against the trust” as provided for in clause
9.25 of the Trust Deed.
[36]
In my respectful view, the trial judge erred in finding that Moraitis
had no actual or implied authority to conclude the settlement
agreement on behalf the Trust.
[37]
Moraitis further submitted that the transfer of all of first
respondent’s shares and loan accounts in the first to Sixth
Respondents:
37.1
would, by all accounts, be a “disposal” thereof: and
37.2
would constitute a disposal of “all, or the greater part”,
of the assets of the company and would therefore require
a special
resolution of members as contemplated in
Section 112(2)
read with
Section 115
of the
Companies Act 71 of 2008
in order to be
enforceable.
[38]
As per the judgment of Sapire AJ delivered on the 19
th
October 2007 all parties agreed to the buyout by the Kebert Group of
the interests of the Moraitis Group. This effected the disposal
of
the 20% interest by the Moraitis Group to the Kebert Group. What
is not yet agreed upon is the price to be paid, when
it is to be
paid, and the choice of an independent referee who is mandated to
place value on the interest purchased and so fix
the purchase price.
[39]
It follows therefore, in my view, that the trial court erred in
finding that in signing the settlement agreement Moraitis purported
to dispose of the greater part of the assets of the company which
required the compliance with
Section 112
of the
Companies Act. The
settlement agreed as stated earlier was a compromise of the three
pending litigation and such offer of compromise came from the
attorneys for Moratis Group.
[40]
Order
1.
The appeal is upheld
2.
The Order of the Court
a quo
on the merits is set aside and
substituted by an order that the application is dismissed.
3.
Respondent are ordered to pay appellants’ costs of the appeal
which includes the costs for the application for leave to
appeal and
to include the costs incurred consequent upon the employment of
Senior Counsel.
MOSHIDI
J (DISSENTING
)
[41]
I have read the majority judgment prepared by my brother, Matojane J
and in which Hawyes AJ concurred. I do not, however, respectfully,
agree with the reasoning and conclusion reached.
The
Factual Matrix
[42]
The factual matrix, the history of the matter, as well as the issues
in dispute, have been sufficiently sketched in the judgment
of the
court
a quo
and in the main judgment. It is therefore
truly unnecessary to repeat these here, save to record that the
present appeal
is with the leave of Windell J (“
the court
a quo
”). The appeal is directed at the whole of the
judgment on the merits of the court
a quo
, excluding the order
awarding the costs to be paid by the fifth applicant (Apostolos
Moraitis) to the respondents.
The
Crucial Issue
[43]
The crucial issue in this appeal is the question whether the court
a
quo
was correct in declaring the settlement agreement entered
into between Mr Karl Hans Kebert NO (“
Kebert
”) and
Mr Apostolos Moraitis (“
Moraitis
”) on 4 September
2013, to be “
void and unenforceable
and the consent
order which incorporated the settlement agreement is set aside
”.
The court
a quo
also made an order that the costs of the
application be paid to the respondents, and to be paid by the fifth
applicant (Moraitis).
There are other related issues, such as
the effect which the settlement agreement had in disposing of the
entire 20% shareholding
and loan accounts of Moraitis Investments
(Pty) Ltd in the first, second, fourth, fifth and sixth appellants;
whether there
was compliance with the provisions of secs 112(2) and
75(1) of the Companies Act 71 of 2008 (“
the 2008
Companies
Act
&rdquo
;); whether the relationship between Moraitis and Kebert
was properly and in substance a partnership; and finally, whether the
respondents
were entitled to a rescission of the court order, making
the settlement agreement an order of court, either in terms of
Uniform
Rule 42
or in terms of the common law. All these issues were
fiercely contested in the court
a quo
.
Certain
Common Cause Facts
[44]
It is not in dispute that the Moraitis Family Trust (“
the
Moraitis Trust
”),
established during 1977, consists of three trustees, namely Apostolos
Moraitis (“
Moraitis
”),
Athanasios Moraitis, and Christos Moraitis. The Letters of
Authority issued in terms of sec 6(1) of the Trust Property
Control
Act,
[2]
authorised these three
trustees to act on behalf of the Moraitis Trust.
[3]
It is further not in dispute that only one of the trustees, namely
Moraitis, signed the settlement agreement in question
[4]
More specifically, the settlement agreement was entered into by
Kebert NO and Moraitis. It was signed by Moraitis,
firstly, on
behalf of Moraitis Investments (Pty) Ltd, the first respondent in
this appeal. Moraitis also signed the agreement
“
as
trustee of the Moraitis Trust
”.
There are no signatures of the other remaining trustees, namely
Athanasios Moraitis NO, and Christos Moraitis NO,
the third and the
fourth respondents, respectively. This was so, in spite of the
provisions of clause 6 of the Trust Deed,
which requires the trustees
to, either all of them sign the agreement, or alternatively, to have
authorised properly, one of them
to sign the settlement agreement.
[5]
[45]
Indeed, in the founding papers in the court
a
quo
,
Moraitis confirmed that, at the time he signed the settlement
agreement, the other two trustees, had not authorised him to do
so
nor was a meeting of the trustees of the Moraitis Trust convened “
to
discuss settlement of all the pending litigation by any one trustee
on behalf of the Trust …
In
order for the settlement agreement to be valid and enforceable as
against the Moraitis Trust, it was necessary for all three
trustees
to sign the settlement agreement jointly, in their capacity as
trustees … The Trust Deed, annexure 4.1 hereto,
does not
provide for any trustee acting singly on behalf of the Trust, in the
absence of which, so I am advised, as a matter of
law, the trustees
must act jointly if the trust estate is to be bound by their
acts
”.
[6]
[46]
It is also so that the majority of the parties to the settlement
agreement, are not all the parties involved in the other pending
litigation. For example, in the winding-up application, brought by
the present respondents, as well as its
sequelae
,
the review action, the majority of the parties were not cited in the
action between Kebert NO and Moraitis, and in the course
of which the
settlement agreement was concluded and made an order of court.
[7]
The above exposition of the facts, save for the respective arguments
in regard thereto, are common cause. These are
also,
coincidentally, mirrored largely, in the main judgment.
Some
Applicable Legal Principles
[47]
I deal with some applicable legal principles. The settled law,
over the past 96 years, is quite clear:
“
The
general rule is that joint trustees must act jointly. Generally
speaking a joint trustee may delegate his duties to a co-trustee
or
to any agent but the power to do so depends on the provisions of the
trust deed – in this case the deed of donation.
If it is
prohibited it cannot be done.
[8]
See
Goolama
Ally Family Trust v Textile, Curtaining and Trimming
.
[9]
See also
Mariola
and Others v Kay-Eddie NO and Others
,
[10]
for the proposition that all trustees have to be joined when a trust
sues or is sued.
[48]
In
Van
der Westhuizen v Sandwyk,
[11]
which referred with approval to
Mariola
and Others
(
supra
),
it was held,
inter
alia
,
that, since a trust was not a juristic person and its assets vested
in the trustees in their capacities as trustees, all trustees
had to
be joined in an action to enforce a right pertaining to the
trust.
[12]
[49]
The matter of
1
Thorpe NNO and Another v Trittennenin and Another,
[13]
seems to me to be directly in point here. In that case, the
appellant had signed an offer to purchase certain immovable property
from the first respondent. In so doing, the appellant purported
to act on behalf of a trust and a third party who was acting
on
behalf of a company yet to be formed. The agreement of sale
made provision for two purchasers. The trustee’s
name was
inserted as the first purchaser while, the space for the second
purchaser’s name was left blank. The sale
was made
conditional upon the first respondent being able to establish a
township on the property. In ultimately dismissing
the appeal
with costs, it was held that:
“
The
trust deed in the present matter provided for three trustees.
No provision was made for a trustee to act on behalf of
the other
trustees without their authority. Neither of the other two trustees
in the trust signed the sale agreement, or gave the
first appellant
written authority to act on their behalf. This rendered the
agreement void ab initio and of no force and
effect.
”
[14]
[50]
The court
a
quo
also referred, quite correctly so in my view, to
Land
and Agricultural Bank of South Africa v Portter and Others,
[15]
and the warning cautioned against by Harms JA, in
Nieuwoudt
and Another NNO v Vrystaat Mielies (Edms) Bpk
,
[16]
in concluding ultimately that the settlement agreement is void and
unenforceable.
[17]
See
also
Liebenberg
NO v MGK Bedryfsmaatskappy (Pty) Ltd
,
[18]
and
Grainco
(Pty) Ltd v Broodryk NO En Andere.
[19]
[51]
The appellants contend that the settlement agreement was validly
concluded even though signed by Moraitis only on behalf of
the
Moraitis Trust. The contentions include that the launching of
the application in the court
a
quo
was an abuse of court process, and that Moraitis sought a reason to
avoid the settlement agreement; that in entering into the settlement
agreement, Moraitis provided a written warrantee that he was indeed
authorised to represent the Moriatis Trust, and that the founding
papers simply contain insufficient allegations to support
Moraitis-assertion;
[20]
that
it was not necessary for all three trustees to have signed the
settlement agreement; that the Moraitis Trust was merely a
vehicle
created by Moraitis who held the shares in Moraitis Investments (Pty)
Ltd (the first respondent); that at all times, Moraitis
was the
governing mind behind the Moraitis Trust and he decided all matters
on behalf of it; that in the discussions leading to
the drafting of
the settlement agreement and having it made an order of court, and at
court, Moraitis was represented by an attorney
and senior counsel,
and the latter withdrew from the matter when Moraitis developed cold
feet or a change of heart in proceeding
with the settlement
agreement; the deponent to the answering papers (Kebert) conceded
that the parties to the settlement
agreement were not all the
parties to the various litigation matters;
[21]
that in all their business relationships, spanning for some time,
(from 1984), Moraitis at no stage required the permission of
the
remaining trustees in regard to any business decision; that the mere
fact that there are three trustees of the Moraitis Trust
does not
mean that it is
per
se
administered by three trustees; the business interests held by
the Moraitis Trust were interests held by Moraitis and not
by the
remaining trustees; Moraitis was the only trustee of the
Moraitis Trust who is a capital beneficiary thereof; that
clause 6.5
of the Trust Deed permits the trustees to delegate their powers to
committees consisting of one or more trustees; the
purpose of the
settlement agreement was an all embracing settlement of all disputes
between Moraitis and Kebert; and that Moraitis
should be estopped
from denying that he was mandated by the other trustees pursuant to
the warranty he gave in the settlement agreement
to the contrary.
Based on all of the above, and other contentions, the appellants in
the court
a
quo
contended that the application launched by Moraitis and other
trustees, was ill-conceived, not
bona
fide
,
and a waste of the court’s time.
[52]
I have deliberately set out in full the various assertions of the
appellants in the court
a
quo
.
The reason is patent, that is to show just how misplaced, factually
incorrect, and legally unsound these assertions are.
A readily
available example of such incorrectness can be discerned from the
replying papers filed to Kebert’s supplementary
affidavit in
this Court under case number 36463/2013.
[22]
In that action it is plain that the majority of the parties cited
there, were not all before this Court when the settlement
agreement
was made an order of court. As stated before, the settlement
agreement was entered into between Kebert and Moraitis
only.
This was under case number 2009/52206, as is apparent from the
settlement agreement proper. There are other similar
examples.
[53]
The fundamental flaw in the applicant’s submissions on this
aspect lies in the blatant ignorance of the general rule,
described
in the legal principles above, that joint trustees must always act
together in relation to the affairs of the trust.
There is even
some law, possible authority for the proposition that, even if one
trustee has been authorised by the remaining trustees
to institute
action on behalf of the trust, this alone does not necessarily confer
locus standi
on that trustee (see
Van der Westhuizen and
Van Sandwyk (supra)
).
The
Warranty by Moraitis
[54]
The fact that Moraitis, in writing, warranted that he was authorised
by the other two trustees to enter into the settlement
agreement, can
truly be of no assistance, legally speaking, to the appellants in
their cause. Neither can it be justification
for legitimising
what is purely an unlawful settlement agreement. The courts
ought not to be tempted to countenance such
conduct in the absence of
exceptional circumstances, in my view. It is unfortunate that
the majority judgment,
[23]
placed undue reliance on the fact that Moraitis gave a written
warranty that he was authorised by the remaining trustees to enter
into the settlement agreement, when it is factually and objectively,
not the case. The same applies to the finding in the
majority
judgment that because the remaining two trustees of the Moraitis
Trust, who were cited as co-applicants in the application
which
resulted in the Sapire AJ judgment, and therefore entitling Moraitis
subsequently to enter into the settlement agreement
under
discussion. It is attempted to buttress the finding on the fact
that the trustees were represented by the same legal
representative
who had ostensible authority to compromise the action or any matter
in it unless he had received instructions to
the contrary, and with
reference to
Hlobo
v MMV Accident Fund
.
[24]
I respectfully disagree that this finding based on an assumption, as
it does, can be a true reflection of the facts and applicable
legal
principles. The end result on this finding, is that in spite of
the mere citation of all the trustees of the Moraitis
Trust, the
settlement agreement was not lawfully consented to by all such
trustees, as is required by both the law and the Trust
Deed. In
addition, the Moraitis Trust was not a party to the litigation in
which the settlement agreement was subsequently
made an order of
court. The latter fact is undisputable.
[55]
From the above, it follows, in my view, that the finding of the court
a
quo
that Moraitis, whatever his motives were, lacked the requisite
authority from the remaining trustees, and that therefore, the
settlement agreement called to be declared void and unenforceable,
was correct. It properly cannot be faulted. The same applies
to
the finding that Moraitis cannot be estopped from now denying that he
did not have the requisite authority to act on behalf
of the Moraitis
Trust, at the time. The finding was correctly made with reference to
case law, such as,
Stand
242 Hendrik Potgieter Road, Ruimsig (Pty) Ltd v Gobel.
[25]
[56]
In my view, the true motive for Moraitis to have acted, as he did, in
entering into the settlement agreement without authority
from his
co-trustees, cannot be properly established on the papers. However,
it remains highly suspect based on the patent and
vast experience in
business deals involving diversed entities. This is why he was made
to pay the costs of the application, even
though successful, in the
court
a quo
. At best, his conduct was unethical and
improper if he knowingly warranted that he was clothed with the
requisite authority
at the time. Based on this, the additional
finding of the court
a quo
that the applicants
a quo
were perfectly entitled to apply to her for the setting aside of the
consent order in terms of Uniform Rule 42(1)(c), can equally
not be
faulted. I have to add the following, prior to concluding, on
this aspect of lack of authority on the part of Moraitis
to act on
behalf of the Moraitis Trust. This is that, although clause 6.5
of the Trust Deed provides that the trustee shall
have the power to
delegate any of their powers to committees consisting of one or more
trustees, such delegation of powers by the
trustees of the Moraitis
Trust had not taken place at the time of the conclusion of the
settlement agreement. It was admittedly
signed by Moraitis only, and
as correctly argued by the respondents, in my view, whilst his
co-trustees, the third and the fourth
respondents, were totally
oblivious thereof, and while it could never have been to the
advantage of the beneficiaries of the trust.
All the
contentions of the appellants in this regard are not borne out by the
objective facts. It is for this reason too
that the view
advanced in the majority judgment to the effect that Moraitis had
actual or implied authority to conclude the settlement
agreement on
behalf of the trust, can with respect, not be sustained.
[57]
In my view, the fact only that Moraitis entered into settlement
negotiations solo, and proceeded to sign the settlement agreement
in
similar fashion, warrants the dismissal of the appeal. However, if I
am incorrect in my above determination, I still believe
that the
appellants should also not succeed on the other two remaining
defences. I deal with these briefly below.
The
Partnership Defence
[58]
First, the alleged partnership defence. Remarkably, this defence was
only advanced for the first time in the supplementary
affidavit of
the appellants, when it was alleged as follows:
“
It
is evident from the founding affidavit of Mr Apostolos Moraitis in
support of the application under case number 41065/2006, and
in
particular paragraphs 50 to 52 thereof, that: the relationship
between him and myself was in reality a partnership business,
conducted as a group by various entities which were established over
many years and when circumstances demanded their establishment
…
”
[26]
[59]
Once more, this approach by the appellants is clearly contrary to the
rules of court and the law, as set out earlier in this
judgment.
For repetition, this is that, in motion proceedings, an applicant is
required to set out all its case in the founding
papers. In any
event, as argued by the respondents, the undisputed facts are that,
by the election of the parties concerned, all
business was conducted
through special purpose vehicles in the form of limited liability
Companies, duly incorporated, and that
the shareholding in the
mentioned Companies was held by either other Companies or Trusts,
with each of such Trusts having multiple
trustees and beneficiaries,
and which constitute a bar to a finding that the parties were ever
true partners. This would undoubtedly
violate the principles of both
the Company Laws and the Law regarding Trusts. For the same reason,
it would be contrary to the
Law of Partnership which allows for
partners to, by all accounts of their whim terminate partnerships.
Interestingly, whilst
dealing with this issue of partnership, the
majority judgment observes that:
“
,,,
At
all relevant times Moraitis decided all matters relating to the
Moraitis Family Trust on his own and the consent order made by
Sapire
AJ was clearly intended to bring about the dissolution of the
partnership …
”
[27]
This,
in the context of the proceedings leading up to the winding-up
application.
[60]
From the above, it is plain that the defence of the existence of an
alleged partnership, or even akin to a partnership, has
no merit at
all. In any event, as mentioned, the objective facts do not
show that the trustees of the Moraitis Trust consented
to such a
partnership.
The
Final Defence
[61]
I deal with the appellants’ final defence. The appellants
challenge the finding of the court
a quo
to the effect that in
signing the settlement agreement, Moraitis purported to dispose of
the greater part of the assets of the
Company, and that it is clear
from
sec 112
of the
Companies Act 71 of 2008
that this required a
special resolution which had been passed. The appellants
contended in both the notice of appeal and
heads of argument that,
the court
a quo
erred in not finding that the disposal of the
entire interests of the Moraitis Group to the Kebert Group was
consequently effected
and regulated in terms of the order of court as
recorded in the Sapire AJ judgment of 19 October 2007.
[62]
In my view, the court
a quo
has indeed dealt comprehensively
with the issue under discussion with due reference and regard to the
objective facts and the applicable
law. This finding can also
not be faulted at all. It is truly unnecessary to repeat all
here.
[63]
In any event, it is plain that the appellants are driven to rely on
the assertions they make simply in order to avoid the requirements
of
the applicable law, stated above. It is undoubted that the
disposal of the relevant shareholding as well as loan accounts
involved, were effected, not in terms of the Sapire AJ judgment, but
the purported settlement agreement. This disposal of
the shares
and loans, clearly constituted all or the greater part of the assets
of the Company. In addition, Kebert and Moraitis,
as the only
directors of the first respondent Company (Moraitis Investments (Pty)
Ltd), plainly had an interest in the transaction
(the settlement
agreement), as envisaged in sec 75 of the 2008
Companies Act.
It
is clear that the purported settlement constitutes the
causa
for the transfer of the shareholding and the loan accounts which
Kebert was hoping to become owner of in terms of the order granted
by
Mojapelo DJP on 5 September 2013.
[28]
The shares and/or loan accounts disposed of are to be transferred to
Kebert in his personal capacity or his nominee (as opposed
to the
seventh to eleventh respondents in terms of the Sapire AJ order). The
final observation to be made in comparing the terms
of the settlement
agreement, and the Sapire AJ order is the following: Kebert,
both in his personal capacity and in his capacity
as executor in the
estate of his late mother (Julia Lamer), abandoned any claims he or
the estate had against, who could only be,
Moraitis in respect of
shares in an off-shore Company, which issue had nothing to do and did
not feature in the Sapire AJ judgment
or order at all.
[29]
From this, it is also plain that the appellants’ attack on the
finding of the court
a
quo
on this aspect as well has no merit at all.
Conclusion
[64]
In all of the above circumstances, the appeal falls to be dismissed.
The costs, which is a discretionary matter, should follow
the result.
The costs should also include the costs of senior counsel.
Order
[65]
In the result, I would make the following order:
1.
The appeal is dismissed with costs.
2.
The costs shall include the costs of senior counsel.
D
S S MOSHIDI
JUDGE
OF THE HIGH COURT OF SOUTH AFRICA
GAUTENG
LOCAL DIVISION, JOHANNESBURG
COUNSEL
FOR THE APPELLANTS D P J ROSSOUW SC
INSTRUCTED
BY RAMSAY WEBBER INC
COUNSEL
FOR THE RESPONDENTS L N DE KONING SC
INSTRUCTED
BY MILLS AND GROENEWALD INC
DATE
OF HEARING 20 OCTOBER 2015
DATE
OF JUDGMENT 12 MAY 2016
[1]
2001
(2) SA 59
SCA at para [10] and [11]
[2]
Act
57 of 1988.
[3]
See
p 50 vol 1 of appeal record.
[4]
See
annexure “AM2” - settlement agreement in High Court of
South Africa, Gauteng Local Division, Johannesburg –
under
case no 52206/2009 – p 44 to 49 – vol 1, appeal record.
[5]
See
“
the
proceedings of trustees
”,
p 57 to 58, Deed of Trust, vol 1, appeal record.
[6]
See
paras 56 to 57 of F/A p 31 to 32, vol 1, appeal record.
[7]
See
court order, pp 124 to 125, vol 2, appeal record.
[8]
Shahmahomed
v Hendricks and Others
1920
(A) 151.
[9]
1989
(4) SA 985
(C) at 988D-E.
[10]
1995
(2) SA 728 (W).
[11]
1996
(2) SA 490
(W).
[12]
At
495C-E of the judgment.
[13]
[2006]
4 All SA 129
(SCA).
[14]
At
paras 9 to 13 of the judgment.
[15]
2005
(2) SA 77
(SCA) at para [10].
[16]
2004
(3) SA 486 (SCA).
[17]
See
para [30] of judgment – court
a
quo
–
p 285 – vol 3, appeal record.
[18]
2003
(2) SA 224
(SCA).
[19]
2012
(4) SA 517 (FB).
[20]
See
paras 9.1 and 9.2 of answering affidavit p 131, vol 2, appeal
record.
[21]
See
para 3.1 p 141 – AA – vol 2, appeal record.
[22]
See
para 14 pp 250 to 258 vol 3, appeal record.
[23]
See
paras [14] to [19] pp 10 to 12 of majority judgment.
[24]
2001
(2) SA 59
(SCA) paras [10] and [11].
[25]
2011
(5) SA 1
(SCA).
[26]
See
para 4.1, p 188, vol 2, appeal record.
[27]
See
para [16] of majority judgment.
[28]
See
annexure “AM5”, vol 1, pp 87 to 92 and
cf
annexure “KHK1”, vol 2, pp 152 to 157.
[29]
See
vol 2, p 154, appeal record.