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[2018] ZAGPJHC 44
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Mdwaba v Nonxuba (A5051/2015) [2018] ZAGPJHC 44 (9 March 2018)
REPUBLIC
OF SOUTH AFRICA
IN
THE HIGH COURT OF SOUTH AFRICA
GAUTENG
LOCAL DIVISION, JOHANNESBURG
CASE:
A5051/2015
DATE:
09/03/2018
REPORTABLE:
YES
/ NO
OF INTEREST TO OTHER
JUDGES:
YES
/NO
In
the matter between:
MDWABA:
MTHUNZI
APPELLANT
AND
NONXUBA:
ZUKO
RESPONDENT
JUDGMENT
THE COURT
[1]
The “
audi
alteram partem
”
rule is a fundamental principle of our law which is enshrined under
the bill of rights in the Constitution of the Republic
of South
Africa, Act 108 of 1996. Every litigant is therefore entitled to be
afforded a fair public hearing before a Court if such
a litigant has
a dispute which can be resolved by the application of the law.
[2]
Central to this appeal, is the issue whether the Court a quo
infringed the right of the appellant to a fair hearing by not giving
him an opportunity to address the Court in argument on the merits of
the case after a point in limine was argued and decided upon.
[3]
It is apposite at this stage to mention that, before the hearing of
this appeal, the Court issued a directive to the appellant
to file
heads of argument with regard to the merits of the case since the
respondent had addressed the issue of the merits in his
heads of
argument but the appellant had not.
[4]
At the commencement of the hearing, the Court had to deal with an
application to declare the appeal to have lapsed and an application
for its re-instatement. The Court considered it to be in the
interests of justice to entertain the appeal and proceeded on such
basis.
[5]
The Court engaged both counsel for the litigants that they should
argue both the issue raised in the appeal (whether the appellant
was
afforded an opportunity to be heard on the merits) and the merits of
the case. Counsel for the appellant agreed with the Court
that it is
empowered in terms of section 19(d) of the Superior Courts Act, Act
10 of 2013 to hear the appeal on the merits as well
rather than to
remit the matter back to the Court a quo for rehearing.
[6]
It is common cause that the respondent issued summons against the
appellant and applied for summary judgment after the appellant
filed
its notice of intention to defend the action. The appellant then
filed his affidavit resisting summary judgment raising a
point in
limine and a number of defences as to why summary judgment should not
be granted. Further, it is not in dispute that,
in the Court a quo,
the parties argued the point in limine and thereafter the Court
delivered a judgment dismissing the point in
limine. After dismissing
the point in limine, the Court gave an order on the merits in favour
of the respondent without affording
the appellant an opportunity to
submit his heads of argument and argue the merits of the case.
[7]
Counsel for the appellant contended that he only argued the point in
limine at the hearing of the case and was expecting, as
is usually
the procedure, that after a decision is made on the point in limine,
the Court would invite the parties to argue on
the merits. This did
not happen. Instead the Court a quo dismissed the point in limine and
gave judgment in favour of the respondent
without giving the
appellant an opportunity to hand up his heads of argument and to
argue the merits of the case. The rights
of the appellant to a
fair hearing, so the argument goes, have therefore been trampled upon
and he has been prejudiced in the conduct
of his case.
[8]
The point in limine argued by the appellant was that the respondent
is relying on two causes of action for his claim yet he
has verified
only one cause of action in his affidavit in support of the summary
judgment. In respect of the merits the appellant
contended that the
respondent is
ex
lege
a shareholder of 30% in the business since he has paid the full
amount agreed upon. Transfer of rights has taken place since payment
has been made even if the share certificate has not been issued and
delivered. It was argued that it is trite that a plaintiff
who claims
restitution is obliged to tender return of whatever he received and
this did not happen in this case. He further relied
on a breach of
the principles of good faith and ubuntu by the respondent.
[9]
The respondent’s first cause of action, it is contended, is
based on fraud but the respondent did not substantiate his
claim in
this regard. The respondent did not make the necessary averments in
his particulars to sustain his claim of fraud. The
second ground of
the respondent’s claim is based on breach of contract. The
respondent cancelled the contract by a letter
in December 2014
whereas the final payment of the purchase price was made on the 1
st
of September 2014 and the share certificates and transfer forms were
signed on the 1
st
October 2014.
[10]
We find ourselves in disagreement with counsel for the appellant that
the respondent’s claim is based upon two causes
of action and
only one was verified in the affidavit in support of the summary
judgment application. The respondent’s cause
of action is
breach of the agreement based on failure to deliver the share
certificate and transfer form. It is not in dispute
that the
appellant was in terms of the agreement to deliver documents within 5
business days from the date of final payment. He
did not do so –
hence the respondent cancelled the agreement. We therefore hold the
view that the Court a quo was correct
in its dismissal of the point
in limine.
[11]
The parties agreed that, so it is contended by counsel for the
appellant, they will conduct themselves in a fair and reasonable
manner, act in good faith towards each other and uphold the values of
‘
Ubuntu
’
in all their dealings in this case. It is further contended that the
respondent did not act in good faith when he cancelled
the contract
without giving the appellant more time to furnish him with the share
certificate. In terms of the agreement between
the parties, so the
argument goes, a party who is in breach will be called upon to
rectify the breach within 10 days but the respondent
only gave the
appellant 7 days. The respondent’s summons, so contended by the
appellant, is therefore premature.
[12]
It is contended by counsel for the respondent that the letter dated
the 3
rd
of December 2014 demanded payment of the purchase price to be made
within 7 days. This was though not a letter demanding the appellant
to rectify the breach. The letter demanding rectification of the
breach in terms of the agreement was issued by the respondent
on the
17
th
of September 2014 and gave the appellant until the 1
st
of October 2014 to rectify same. The cause of action the respondent
is basing his claim upon is breach of contract – hence
the
letter of cancellation of the contract which was issued on the 3
rd
of December 2014.
[13]
The final payment of the purchase price and interest was made on the
1
st
of September 2014 and the 5 days within which the
appellant was to deliver the share certificate and the transfer form
expired
on the 8
th
September 2014. In terms of the
agreement between the parties, so it is argued, the appellant was to
deliver the share certificate
and the transfer form within 5 days
from the date of final payment of the purchase price. Those are the
only documents which make
delivery in terms of the agreement and the
appellant failed to deliver these documents. The appellant was thus
in breach of the
contract and failed to rectify the breach when
called upon to do so.
[14]
On the 17
th
September 2014 a letter was sent to the appellant calling upon him to
deliver the documents on or before the 1
st
of October 2014 and he failed to do so. The respondent acted in good
faith and gave the appellant ample time to rectify the breach.
[15]
Section 34 of the Republic of South Africa provides as follows:
34. Access to
Courts
“
Everyone
has the right to have any dispute that can be resolved by the
application of law decided in a fair public hearing
before a court or, where appropriate, another independent and
impartial tribunal or forum.”
[16]
It is well established that the point in limine is argued first for
it may be dispositive of the whole matter. However, in
summary
judgment the point in limine does not dispose of the whole matter but
simply prevents the granting of summary judgment.
Should the point in
limine be dismissed, the matter is referred to trial. Put
differently, if the point in limine is upheld,
leave to defend is
granted to the defendant. In casu, the point in limine was not
dispositive of the matter but was intended to
refer the matter to
trial. We are unable to disagree with counsel for the appellant that,
by not giving the appellant an opportunity
to present its argument on
the merits of the case, the Court a quo erred and has thereby
prejudiced the right of the appellant
to a fair trial. On this basis
the appeal should succeed.
[17]
As mentioned hereinbefore, this Court has the power to remit the
matter back to the Court of first instance or to hear the
matter on
the merits. Having called for heads of argument from the appellant on
the merits of the summary judgment and having heard
extensive
argument thereon, this Court decided to consider and adjudicate this
feature of the case.
[18]
We propose to refer to the following relevant clauses of the sale of
shares agreement entered into by the parties:
A.
Clause
1.1.2
“
Business
Day” means any calendar day which is not a Saturday, a Sunday
or an official public holiday in South Africa.
B.
Clause
1.1.4
“
Delivery
Documents” means the share certificate reflecting the
Purchaser’s holding of the Sale Shares, together with
a duly
signed and currently dated share transfer form complying with the
memorandum of incorporation of the Company, reflecting
the Purchaser
as transferee.
C.
Clause
3.
3.1 The
Seller hereby sells to the Purchaser, who purchases, the Sale Share
on the terms and conditions of this Agreement.
3.2
Ownership of and all risk in and benefit of the Sale Shares shall
pass to the Purchaser on the transfer of the Sale Shares
as
contemplated in clause 5
D.
Clause
5
CLOSING
Within 5 (five)
Business Days of the final payment being made by the Purchaser
(including the payment of all interest which will
have accrued on the
Purchase price up to the date of final payment to the extent
applicable), the Seller shall deliver the Delivery
Documents to the
Purchaser as well as furnish the Purchaser with written confirmation
that the share register of the Company has
been updated to reflect
the Purchaser as the owner of the Sale Shares.
E.
Clause
7
BREACH
Should either
party commit a breach of any of the provisions of this Agreement
(“Defaulting Party”), then the other
Party (“Aggrieved
Party”) shall be obliged to give the Defaulting Party 10 (ten)
Business Days’ written notice,
or such longer period as may be
reasonable required in the circumstances, to remedy the breach. If
the Defaulting Party fails to
comply with such notice, the Aggrieved
Party shall be entitled to cancel this Agreement or to claim
immediate payment and/or specific
performance by the Defaulting Party
of all the Defaulting Party’s obligations whether or not the
due date for payment and/or
performance shall have arrived, in either
event without prejudice to the Aggrieved Party’s rights to
claim damages.
F.
Clause
9.4
Implementation
and Good Faith: 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 be conducive to
the giving of effect to the
terms, conditions and import of this Agreement. 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
the obligations in accordance
with the terms of this Agreement. This
implies that they shall (i) at all times during the term of this
Agreement act reasonably,
honestly and in good faith; (ii) perform
their obligatios arising from this Agreement diligently and with
reasonable care; and
(iii) make full disclosure to each other of any
matter that may affect the execution of this Agreement.
G
Clause 9.5
Payment and
interest: All payments in accordance with the terms of or arising out
of this Agreement shall be made fee of bank exchange.
commission and
all other deductions to the Party entitled thereto. No Party shall
have the right to defer, adjust or withhold any
payment due to the
other in accordance with the terms of or arising out of this
Agreement or to obtain deferment of judgment for
such amount or any
execution of the judgment by reason of any set-off or counterclaim.
All amounts due by one Party to another,
including damages, in
accordance with the terms of or arising out of this Agreement shall,
unless paid on due date, bear interest
from the due date to date of
payment. Interest shall be:- (i) calculated at 2% (two per cent) per
month; (ii) capitalised monthly
in arrears on the balance due.
H.
Clause 9.18
Costs: The
Purchaser shall be liable for the legal costs associated with the
preparation of this Agreement, including those costs
necessary and
incidental to drafting, negotiating and settling this Agreement. Any
costs, including legal costs on a full indemnification
basis (failing
which, the highest permissible legal tariff), incurred by a Party
arising out of a breach by any other Party of
any of the provisions
of this Agreement, shall be borne by the Party in breach.
[19]
Counsel for the appellant referred this Court to the case of
Botha
v Fick
[1994] ZASCA 184
;
1995 (2) SA 750
(A)
wherein the Court held that delivery of the documents transferring
rights is not essential to transfer a right as long as consensus
has
been reached between the parties to transfer the right. Counsel’s
submission in this regard was that the respondent became
the owner of
30% of the shares in the company by making the final payment although
no delivery of the share certificate and transfer
form took place.
[20]
Although we agree with the principle enunciated in such case, it is
distinguishable from the present case. Clause 3 of the
Sale of Shares
agreement states clearly that ownership of and all risk in and
benefit of the sale of shares shall pass to the purchaser
on the
transfer of the shares as contemplated in clause 5. Clause 5 required
the appellant to deliver the share certificate and
transfer form
within 5 business days of final payment being made to the respondent.
He failed to do so. The transfer of the right
in this case is
regulated by the agreement entered into between the parties.
[21]
We agree with counsel for the respondent that the letter of the 17
th
September 2014 complied with clause 7 of the agreement between the
parties and gave the appellant 10 days within which to rectify
the
breach of clause 5. It is the letter of cancellation which gave the
appellant 7 days within which to make payment of the purchase
price.
We are therefore satisfied that the Court a quo correctly found that
there is no merit in the argument that the summons
was premature.
[22]
We are not persuaded by the appellant’s contention that the
respondent did not deal with him fairly, reasonably and in
good
faith. We hold the view that, if anyone of the parties acted
unreasonably and not in good-faith, it is the appellant.
The
respondent started addressing correspondence demanding performance in
terms of clause 5 of the agreement as early as the 17
th
of September 2014 until the contract was cancelled on the 3
rd
of December 2014 without success. The appellant never delivered the
delivery documents in compliance with clause 5 of the agreement.
[23]
We are mindful of the decision of the Constitutional Court in the
case of
Everfresh Market Virginia (Pty) Ltd v Shoprite
Checkers (Pty) Ltd
2012 (1) SA 256
(CC)
wherein the Court held
that the principles of good-faith and ubuntu be imported into our law
of contract and to develop it by the
infusion of these principles.
Counsel for the appellant submitted that the Court should apply these
principles in the present case.
However, the Constitutional Court
stated clearly that a case for applying these principles has to be
properly pleaded. This
principle was not squarely relied upon
in the affidavit resisting summary judgment. But assuming the court
is entitled to look
at the spirit of the agreement and the other
facts set out in the affidavit, the contrary inference is to be
drawn. The limited
facts at our disposal suggests that the appellant
himself did not conduct himself in accordance with the principles of
good-faith
and ubuntu which facts of course also have a bearing on
the bona fides of the defence.
[24]
The appellant attached the share certificate and transfer form to his
affidavit resisting summary judgment which share certificate
is
purported to have been signed by the appellant on the 1
st
of October 2014. The respondent’s letter of the 17
th
September 2014 gave the appellant 10 days within which to deliver the
documents. The 10 days were to expire on the 1
st
of October 2014. Now, there is no plausible explanation why he could
not deliver these documents until the contract was cancelled
in
December 2014. The only explanation given by the appellant is that he
relied on service providers to produce these documents.
[25]
Clause 7 of the agreement provides for ‘
the
defaulting party to be given 10 day notice or such longer period as
may be required in the circumstances.’
There
is nothing before this Court to suggest that the appellant ever
requested an extension of time to attempt compliance
with clause 5 of
the agreement or explained the difficulties he was encountering.
[26]
It is trite that, for a defendant against whom summary judgment has
been sought, to succeed in resisting same, he must
satisfy the
Court that he has a bona fide defence by disclosing fully the nature
of the grounds of the defence and the material
facts relied upon for
such defence.
[27]
In the case of
Joob Joob Investments (Pty) Ltd v Stocks Mavundla
Zek Joint Venture
2009 (5) SA 1
(SCA)
, the Court stated the
following:
“
The
rationale for summary judgment proceedings is impeccable. The
procedure is not intended to deprive a defendant with a triable
issue
or a sustainable defence of her/his day in court. After almost a
century of successful application in our courts, summary
judgment
proceedings can hardly continue to be described as extraordinary. Our
courts, both of first instance and at appellate
level, have during
that time rightly been trusted to ensure that a defendant with a
triable issue is not shut out. In the Maharaj
case at 425 G-426E,
Corbett JA, was keen to ensure first, an examination of whether here
has been sufficient disclosure by the
defendant of the nature and
grounds of his defence and the facts upon which it is founded. The
second consideration is that the
defence so disclosed must be both
bona fide and good in law. A court which is satisfied that this
threshold has been crossed is
then bound to refuse summary judgment.
Corbett JA also warned against requiring of the defendant the
precision apposite to pleadings.
However, the learned judge was
equally astute to ensure that recalcitrant debtors pay what is due to
a creditor.”
[28]
We are satisfied that the appellant has failed to satisfy the Court
that he has a bona fide defence to the claim of the respondent
which
is good in law. We therefore conclude that the appellant has failed
to disclose a bona fide defence to respondent’s
claim. The
appeal therefore falls to be dismissed.
[29]
Clause 9.18 of the agreement between the parties provides for
the legal costs incurred by a party arising out of the
agreement to
be paid by the defaulting party at the highest permissible legal
tariff. The appellant is the defaulting party in
this case and
therefore is liable to pay the costs of the respondent on the scale
as between attorney and client.
[30]
In the circumstances, the following order is made:
I.
The
appeal is dismissed.
II.
The
appellant is ordered to pay the costs of the respondent including the
costs of the 27
th
of February 2017 and 7
th
of February 2018 on the scale as between attorney and client.
________________
TWALA
J
JUDGE
OF THE HIGH COURT OF SOUTH AFRICA
GAUTENG
LOCAL DIVISION
I
agree,
________________
TSOKA
J
JUDGE
OF THE HIGH COURT OF SOUTH AFRICA
GAUTENG
LOCAL DIVISION
I
agree,
_______________
OPPERMAN
J
JUDGE
OF THE HIGH COURT OF SOUTH AFRICA
GAUTENG
LOCAL DIVISION
Date
of hearing:
07 AND 9 FEBRUAY 2018
Date
of Judgment:
6 March
2018
For
the Appellant:
Advocate: GH MEYER
Instructed
by:
KEKANE HLATSHWAYO RADEBE INC
Tel No: 011 484
4114
For
the Respondent:
Advocate: FG BARRIE SC
Instructed
by:
NONXUBA INC
Tel: 011 234
119