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[2010] ZAGPJHC 42
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HVH Gold (Pty) Limited v Friedsheft 1063 (Pty) Limitedi and Another (2009/46533) [2010] ZAGPJHC 42 (4 June 2010)
24
REPUBLIC
OF SOUTH AFRICA
SOUTH GAUTENG
HIGH COURT, JOHANNESBURG
CASE
NO: 2009/46533
REPORTABLE
In the matter
between:-
HVH
GOLD (PTY) LIMITED Applicant
and
FRIEDSHEFT
1063 (PTY) LIMITED 1
st
Respondent
ATLEHANG
ENGINEERING CC 2
nd
Respondent
JUDGMENT
MOKGOATLHENG
J
(1) This application came by way of urgency wherein the
applicant sought an order:
(a) evicting the respondents from its immovable
property; and
(b) directing the respondents to deliver its movable
assets.
(2) After hearing argument, I found that the matter was
urgent. Upon considering counsels submissions I granted the order
sought
and ruled that the reasons for such order would be furnished
on request. These then are the reasons predicating my orders.
THE FACTUAL MATRIX
(3) The
applicant is the registered owner of certain immovable property
occupied by the respondents, being Portion 32 of the Farm
Varkensfontein 169, Registration Division IR, Province of Gauteng,
situated at 2 Springs Road Nigel, and is also the owner the
movable
assets referred to in the schedule to the written sale agreement
marked “
J
”.
(4) On the 24 August 2009, the applicant and the first
respondent concluded a written sale agreement in terms whereof, the
applicant
sold to the first respondent who purchased;
(i) the above described immovable property ;
(ii) the above described movable assets; and
(iii) the “
Rights
”
to the enterprise as defined in
clause 1.1.49
of the sale agreement.
(5) The sale agreement was subject to the fulfilment of
certain precedent material terms identified in
clause
3
thereof, which are:
“
(a)
the
first respondent undertook to procure the cancellation of the
“Rehabilitation Guarantee” (i.e. as defined in clause
1.1.48 of the sale agreement with reference to Annexure “M”
thereto) not later than 30 September 2009 or within such
extended
period as the applicant may in writing agree upon;
(b) the
purchase consideration payable by the first respondent to the
applicant for the enterprise was R10 000.000.00 to be paid
as
follows:
(i) R7 936.000.00 being the aggregate of the
“Friedshelf Claims” (as defined in clause 1.1.27 of the
sale agreement)
and the assumption of liability thereof by the
applicant and the application on the “Closing Date” of a
set off as
provided in clause 10 of the sale agreement; and
(c) R2 064.000.00 as follows:
(i) R1 032.000.00 on 30 September 2009; and
(ii) R1
032.000.00 on 30 October 2009;
(6)
Should any of the aforesaid
payments not be effected on the due date thereof, in such event, the
breach of the provisions as set
forth in clause 20.2 of the sale
agreement would be and become operative.
(7)
Should the first respondent
breach any of the provisions of the sale agreement applicable to it,
and should the first respondent
fail, refuse and/or neglect to effect
payment of any amount due and owing by it to the applicant in respect
of the purchase consideration,
and fail to remedy such breach within
fourteen days after the receipt of written notice requiring it to do
so, then and in such
event, the applicant would without prejudice,
invoke clause 20.2.1 and be entitled to, inter alia, cancel the sale
agreement.
(8) Before signature of the agreement of sale on the
24 August 2009, occupation and possession of the enterprise had been
given
to and was taken by the first respondent, with effect from the
Effective Date being, 1 May 2009 from which date it was agreed that
the second respondent would occupy that portion of the immovable
property more fully identified in Annexure “X” of
the
sale agreement.
(9)
On the 30 August 2009, the
first respondent, breached the sale agreement in that it:
(a) did not procure the cancellation of the
“Rehabilitation Guarantee” as defined in the sale
agreement by 30 September
2009; and
(b) did
not make payment to the applicant of the amount of R1 032.000.00 on
30 September 2009.
(10)
As
a consequence of the first respondent’s breach of the sale
agreement, on 1 October 2009 the applicant’s attorneys
addressed a letter to the first respondent, calling upon it to remedy
its breach of the sale agreement within fourteen days of
the date of
the receipt of the letter, failing which, the applicant would be
entitled to invoke either clause 20.2.1.1 or 20.2.1.2
of the sale
agreement.
(11)
The first respondent
acknowledged not having paid the applicant the amount of R1
032.000.00 by not later than 30 September 2009
as obliged in terms of
the sale agreement, consequently, due to first respondent’s
failure to remedy its breach of the sale
agreement as requested, on
16 October 2009 the applicant’s attorneys addressed a letter to
the first respondent cancelling
the sale agreement.”
(12) Consequent
to cancellation of the sale agreement, the first respondent was
called upon to forthwith hand over to the applicant’s
representatives control of all movable assets situate on the
immovable property, failing which the applicant would institute
proceedings.
(13) The first respondent failed to comply with the said
demand and asserts that the respondents remain in unlawful occupation
of
the immovable property and are in unlawful possession of the
movable assets despite the cancellation of the sale agreement.
URGENCY
(14) Regarding
urgency, Mr Subel on applicant’s behalf argued that it is
predicated on the following grounds:
(a) in terms of
the
sale agreement, ownership in the assets
comprising the enterprise remained vested in the applicant
pending the discharge by the purchaser of its obligations
under the sale agreement, irrespective of whether, occupation
and
possession of the enterprise had been given to and was taken
by
the first respondent prior to the conclusion of the sale
agreement;
(b) all risks and benefits accruing from the
enterprise, and all costs associated therewith (save as provided to
the contrary in
clause 18.1)
were deemed to have passed from the applicant to the first respondent
with effect from the “
Effective Date,
”
the 1 May 2009;
(c) on
20 October 2009 the first and second respondents brought an urgent
ex
parte
spoliation application before the Nigel
Magistrate’s Court under case number 957/09 and obtained a
court order, as a consequence
whereof JCT Protection Services CC and
its security officers were ordered to vacate the immovable property
with the result that:
the immovable property and the movable assets have been
left unprotected at the risk of being vandalised and stolen;
waybills
have been removed and are no longer being completed with the result
that there is no proper record of the movement of items
from the
immovable property; and
(iii)there are suspicions that movable assets are being
removed from off the immovable property;
(d) the respondents are currently apparently operating
illegally on the immovable property without a refining licence,
consequently,
the applicant as the owner of the immovable property,
could possibly face criminal sanction;
(e) the respondents are not complying with the
requirements of the Certificate of Registration 184 issued to the
applicant in terms
of the
National Nuclear
Regulator Act 47 of 1999
,
and such
failure exposes the applicant to possible criminal sanction;
(f) in terms of to
clause 5.1 of
the Sub-Contracting Agreement, Annexure “Q”
to the sale agreement, the first respondent is obliged to obtain all
the necessary permits and appoint all the necessary competent
persons
in terms of the
Mine Health and Safety Act
29 of 1996
and the
Mineral and Petroleum Resources Development Act 28
of 2002
. Currently no such appointments
have been made by the first respondent, consequently, the applicant
faces the risk of prosecution
in the event of any fatality occurring;
(g)
the respondents are concluding agreements with third parties and are
incurring liabilities in the applicant’s name, purporting
to do
so on applicant’s behalf;
(h) the
respondents are using the telephones on the immovable property and
have not paid Telkom, the amount of R20 128.78 which
is due and
payable; and
(i)
the respondents have failed to pay the Ekurhuleni Municipality
accounts in respect of water, electricity, rates and taxes.
(15) Mr Subel argued that the circumstances that
currently prevail on the immovable property have engendered
reasonable fear to
the applicant that it will suffer irreparable
harm, were the respondents to continue to be in possession of the
movable assets
and be in occupation of the immovable property.
(16) Counsel submitted that the respondents conduct
demonstrates a complete disregard of the applicant’s rights to
ownership
and to the first respondent’s contractual
obligations, consequently, there is little doubt that the respondents
would have
no hesitation in spiriting away the movable assets.
(17) The applicant contends that the respondents are in
a parlous financial position as is evidenced by their inability to
service
debts. Such impercunity has rendered it impossible for them
to comply with the first respondent’s obligations under the
sale
agreement. Consequently, it unlikely that the applicant would be
able to recover damages in the normal cause. Having regard to
the
prevailing circumstances, the risk the applicant is exposed to by the
respondent’s conduct is incalculable.
(18) The applicant further contends that there is
accordingly no satisfactory alternative remedy available to it except
to seek
the relief claimed in this application, as a matter of
urgency.
(19) The applicant argues that since the respondents
allege that no mining operations are conducted on the immovable
property, having
regard to the respondents inability to lawfully
conduct operations on the immovable property there can be no
prejudice or loss
suffered by the respondents in the event of the
urgent relief being granted.
THE
RESPONDENTS SUBMISSIONS
(20) Mr Da Silva on the respondents behalf argued that
this matter is not urgent, as the application constituted an abuse of
the
court process in that the respondents have occupied the immovable
property in question and have been in possession of the moveable
assets from the 15 January 2009 with the knowledge and consent of the
applicant.
(21) Further Mr Da Silva contended that in terms of the
sale agreement entered into between the parties on 24 August 2009,
the effective
date is defined therein as 1 May 2009. This he
submitted, constituted a reaffirmation of the fact that the
respondents have occupied
the property and have been in possession of
the moveable assets for a considerable period of time, consequently,
the grounds for
the applicant’s purported or perceived
apprehension predicating the basis for urgency have existed since the
1 May 2009,
and this negatives urgency as contended for by the
applicant.
(22) In the alternative, counsel argued that the
respondents are not involved in any illegal activity on the immovable
property,
as currently no mining activities are conducted thereon by
the respondents which could amount to a contravention of any
statutory
prohibition, consequently, the perceived possibility of
harm is accordingly non-existent.
(23) The respondents deny that they have entered into
any contracts with third parties on behalf of the applicant, and
argue that
the applicants fears that the immovable property and
movable assets are at risk because JCT Protection Services CC no
longer performs
security functions on the immovable property are
unfounded and without merit, because a security company SA Security
has been employed
by the respondents to perform the very same
security functions as the former did.
(24) The respondents allege that even though the
respondents are not presently engaged in mining activities on the
immovable property,
waybills are utilised to control the arrival and
departure of goods associated with the respondents business.
(25) The respondents contend that the applicant’s
concerns that it has cause to fear that it will suffer irreparable
harm
if the they are to remain in occupation of immovable property
and be in possession of movable assets, conveniently ignores the fact
that they stand to forfeit an amount of almost R8 million already
paid in favour of the applicant as pre-determined damages should
it
be found that the agreement was lawfully cancelled.
THE APPLICABLE LEGAL PRINCIPLES
(26) The approach of the courts to vindicatory or
quasi-vindicatory claims was stated by Stegmann J in
Knox
D’Arcy Ltd and Others v Jamieson and Others 1995 (2) SA (W)
quoting Millin J in
Stern and Ruskin NO v
Appleson 1951 (3) (W), 813B-C
as
follows:
“In
the case of vindicatory or quasi-vindicatory claims, this (i.e. well-
grounded apprehension of irreparable loss) is presumed
until the
contrary is shown.”
(27) In
Fey NO v Van der
Westhuizen and Others
Meer J quoted with
approval the following from an article of J Cane:
“
In cases
in which the applicant has a vindicatory or quasi-vindicatory claim,
he would not be required to prove a well grounded
apprehension of
irreparable harm, for there is a rebuttable presumption of
irreparable injury if the interdict is not granted.”
(28) Similarly, in
Hawkins’
Trustees v Corio Saw and Planting Mills Ltd and Others Tindell
J stated:
“
The
principle seems to be that if the thing itself which forms the
subject-matter of the disposition is in the hands of the creditor,
on
a prima facie case being made out by the trustee that he is entitled
to reclaim it for the estate, the Court will attach the
thing until
the trustee’s case can be finally decided, even if mala fides
or collusion is not established and the thing itself
is money, and
even if the probability of irreparable loss has not been
established.”
THE EVALUATION OF URGENCY
(29) Our Courts recognise urgency in vindicatory or
quasi-vindicatory actions where the preservation of the merx is at
stake. The
high water mark of the respondents denial that this
application is not urgent is encapsulated the assertion that:
“
13. The
respondents are not involved in any illegal activity on the property.
There are currently no mining activities conducted
on the premises by
the respondents which could amount to a contravention of any
statutory prohibition. This apparent ‘possibility’
of
harm is accordingly non-existent.”
I
agree Mr Subel that:
“
Apart
from this negative assertion, the respondents do not disclose
precisely what lawful activities are being conducted on the
immovable
property and under what licence same are being conducted.”
(30) Having regard to the fact that the applicant was
granted a mining license by the Department of Minerals and Energy in
terms
of
section 9(1)
read with section
9(3)(e) of the Minerals Act 1991
which
had to be converted by the first respondent by lodging a “
DME
Application
” from an old order used
mining right into a new order mining right in terms of the
Mineral
and Petroleum Resources Development Act 28 of 2002
,
the
first respondents failure to prosecute such “
DME
Application
” has serious consequential
financial prejudice to the applicant.
(31) I agree with the applicant’s contention that
“
Whilst there may not be operations for
the extraction of minerals being carried on at the immovable
property, the fact remains that
the immovable property is a mining
site and as such, it is subject to legislation which, inter alia,
requires a refining licence.
The respondents do not dispute not
having such a licence. The applicant is accordingly exposed to
criminal sanction. This assertion
is not denied by the respondents
.”
(32) The fact that the first and second respondents took
occupation of the immovable property and the movable assets on or
before
the effective date of the sale agreement, does not detract
from the urgency of the applicant’s application. The urgency of
the application could not have arisen prior to the cancellation of
the sale agreement on the 1 October 2009 as correctly contended
by
the applicant.
(33) The cancellation of the sale agreement triggered
the applicants concerns about the security and safety of the assets
forming
the subject-matter of the enterprise, because such
cancellation, precipitated the applicant’s contractual
entitlement to
repossess the enterprise. The applicant accordingly
had a right to instruct JCT Protection Services CC to ensure that no
assets
were removed from the immovable property, and request the
respondents’ personnel to vacate the immovable property.
(34) The respondents do not dispute that on 19 October
2009 and 20 October 2009, Schalk Blaauw an employee of Mintails,
attended
at the immovable property in order to inspect the immovable
property and to determine which assets were still thereon, or that
during the inspection on 19 October 2009 and 20 October 2009, Blaauw
specifically observed that various assets were missing from
the
immovable property.
(35) The fact that movable assets have been removed from
the immovable property is a breach of the first respondent’s
obligations
in terms of
clause 16.1.2
of
the sale agreement
,
which decrees that pending payment of the purchase consideration, the
first respondent is not entitled to sell, alienate, encumber
or
otherwise deal with the assets without the prior written consent of
the applicant. No such consent was either sought or given
as asserted
by the applicant.
(36) The first respondent does not deny that it is:
(a) in breach,
inter alia
,
of
clauses 5.1.4 and 5.1.5
of
the sale agreement, in that it failed to prosecute (at its cost), as
it was obliged to do, the “
DME
Application
” (as defined in
clause
1.1.18
of the sale agreement) which is an
application for the conversion of an old order used mining right into
a new order mining right
in terms of the
Mineral
and Petroleum Resources Development Act 28 of 2002 (“MPRDA”)
.
The first respondent failure to take to prosecute the “
DME
Application
” is a further exacerbation
of urgency as stands to possibly lose the preference afforded to it
in terms of the
Mineral and Petroleum
Resources Development Act 28 of 2002
to
seek a conversion from old order mining rights to new order mining
rights with consequent financial prejudice and loss.
(37) The respondents are apparently in a parlous
financial position as is evidenced by their inability to service
their debts, consequently
it unlikely that the applicant would be
able to recover damages in due course, and it appears that unless
urgent relief is granted,
the applicant would not be accorded
substantial redress at a hearing in the ordinary course.
(38) Urgency is predicated upon the basis that the
applicant has to take steps to protect its ownership in the immovable
property
and movable assets. The respondents answering affidavit does
not reveal any legal basis upon which they should continue to be in
occupation of the immovable property or to refuse to make restitution
of the movable assets to the applicant in view of the lawful
cancellation of the sale agreement.
(39) The respondents have acted in complete disregard of
the sale and sub-contracting agreements concluded between the
applicant
and first respondent, consequently such conduct creates a
reasonable apprehension that the immovable property and movable
assets
are at serious risk.
(40) The
balance of convenience strongly favours the preservation of the
immovable property and movable assets, and justifies the
relief
claimed, because urgency has been occasioned by the respondents
unlawful conduct and the disregard of the applicant’s
rights to
ownership, the applicant has shown that this application is urgent.
THE
APPLICANT’S ENTITLEMENT TO EVICTION
(41) The applicant contends that on 16 October 2009 it
lawfully cancelled the sale agreement, and requested the first
respondent
to forthwith deliver to its representatives the movable
assets situate on the immovable property and to immediately vacate
same.
(42) The applicant contends further that notwithstanding
the cancellation of the sale agreement and concomitantly the
sub-contracting
agreement, the respondents have refused to vacate the
immovable property or to restore the movable assets to it,
consequently,
applicant argues that it is entitled to evict the
respondents since they are in unlawful occupation of the immovable
property.
THE RESPONDENTS DEFENCE
(43) The respondents argue that “
the
applicant’s entitlement to cancel the agreement allegedly
premised upon the first respondent’s failure to procure
the
cancellation of the so-called “Rehabilitation Guarantee”
by not later than 30 September 2009 (clause 5.1.10 of
the agreement)
and its failure to effect payment of the sum of R1 032 000.00 on 30
September 2009 (clause 9.1.2.1 of the agreement),
is unsustainable
for the following reasons:
(a) in terms of the provisions of clause 11.3 of the
agreement the applicant was obliged to furnish the first respondent
“as
soon as reasonably possible after the signature date, with
copies of the EMP (Environmental Management Programme pertaining to
the enterprise (the business enterprise of HVH comprising the
assets), the rights and permits or certificates required in terms
of
the legislation”;
(b) in
terms of the contents of the rehabilitation guarantee the amount
guaranteed in terms thereof (R210 000.00) was “Concerning
the
responsibility in terms of the Mineral Petroleum Resources
Development Act which is incumbent on (the applicant) to execute
the
environment management programme approved in terms of the provisions
of the said Act for the (said property).”
(c) the
first respondent alleges that it has tendered payment of the purchase
consideration referred to in clause 9.1.2 of the main
agreement.
Further no payment has become due and payable to the applicant, and
set off (as provided for in the agreement) has as
yet not being
effected; and
(d) the
applicant has to date not provided respondents with the requisite
copies of the EMP until which time it is not obliged to
attend to the
cancellation of the “Rehabilitation Guarantee.”
RIGHT OF RETENTION
(44) “
Further
respondents contend that they have a joint right of retention over
the property and assets as a result of expenses totalling
almost R4
million incurred in maintaining, improving and repairing the property
and assets pending reimbursement by the applicant
therefor,
consequently, it is impermissible for the applicant to seek their
eviction from the immovable property or to take possession
of the
movable assets pending the extinguishing of the respondents’
right of retention over the property.
SUB-CONTRACTING
AGREEMENT
(45)
The respondents contend that
notwithstanding the cancellation of the sale agreement, they are
entitled to remain in occupation
of the ` immovable property in terms
of the Sub-Contracting Agreement.
(46)
In
any event, the applicant is in any event not entitled to evict them
from the immovable property or claim possession of the movable
assets
pending the termination of the ‘sub-contracting agreement’
concluded between the applicant and the first respondent
on 24 August
2009, because the second respondent acquired occupation of the
immovable property and possession of the movable assets
together with
the first respondent on 15 January 2009;
(b) the sub-contract is an agreement independent from
the ‘main’ sale agreement with its own terms and
conditions notwithstanding
the fact that it was entered into as a
condition of the main agreement;
(c) the
applicant’s contentions that the sub-contracting agreement “was
dependent upon the continued existence of the
(main) sale agreement
which, has been validly cancelled” is unfounded. The
sub-contracting agreement continues to remain
in force despite the
alleged cancellation of the main agreement;
(d) in terms of the provisions of clause 6 of the
sub-contracting agreement the applicant “made available the
property and
the rights to (the first respondent)” ostensibly
from the effective date of 1 May 2009 for a determinate period of
time as
provided for in clause 4 thereof. None of the occurrences
envisaged in clause 4 have arisen in terms of which the
sub-contracting
agreement can be said to have terminated; and
(e) the
sub-contracting agreement continues to remain extant notwithstanding
the alleged termination of the main agreement, consequently,
the
respondents are entitled to occupy the immovable property and to
possess the movable assets pending the termination thereof.
Further
the respondents rights remain unaffected pending the outcome of a
dispute in regard to the interpretation and termination
of the
sub-contracting agreement.”
DISPUTE RESOLUTION BY
ARBITRATION
(47) “
The respondent
contends that in terms of the sale agreement any dispute between the
parties in regard to the parties’ respective
obligations under,
or a breach of, or the termination of, or any matter arising out of
the termination of the agreement, that dispute
shall be decided by
arbitration, in terms of clauses 12.1.1, 12.1.5 and 21 of the
sub-contracting agreement further, the provisions
of the sale
agreement also decree that disputes relating to the interpretation,
and termination of the agreement are to be resolved
or decided by
arbitration, consequently, the respondents are entitled to occupy the
property and to possess the assets pending
the arbitration of the
dispute in regard to the interpretation and termination of the
sub-contracting agreement.
(48)
The respondent allege that
in terms of the provisions of clause 11.3 of the agreement the
applicant was obliged to furnish the first
respondent
“
as soon as reasonably possible after
the signature date, with copies of the EMP (Environmental Management
Programme pertaining to
the enterprise (the business enterprise of
HVH comprising the assets), the rights and permits or certificates
required in terms
of the legislation”.
(49)
The respondents further
contention is that in terms of the contents of the “Rehabilitation
Guarantee” the amount guaranteed
in terms thereof (R210 000.00)
was “Concerning the responsibility in terms of the Mineral
Petroleum Resources Development
Act which is incumbent on (the
applicant) to execute the environment management programme approved
in terms of the provisions of
the said Act for the (said property
)”.
Consequently, no payment has become due and
payable to the applicant and set off (as provided for in the
agreement) has not yet
been effected in any event, the first
respondent has tendered payment of the purchase consideration as
referred to clause 9.1.2
of the main agreement.
(50)
The first respondent
contends that consequently, the applicant has to date not provided it
with the requisite copies of the EMP,
until such time as same is
furnished time it is not obliged to attend to the cancellation of the
rehabilitation guarantee.”
A CONSIDERATION OF THE
EVIDENCE
(51) I agree with Mr Subel’s submission that the
respondents answering affidavit fails to disclose any valid defence
to the
relief claimed and does not raise any genuine,
bona
fide
dispute of fact precluding the grant of
final relief having regard to the unsustainability of the respondents
contentions addressed
in seriatim below. Mr Da Silva conceded that
the sale agreement was lawfully cancelled. The only defence Mr Da
Silva argued, pertains
to the fact that an eviction order could not
be granted due to the continued existence of the subcontracting
agreement. Mr Da Silva
also conceded that the respondents answering
affidavit lacked detail and specificity in relation to the
applicant’s contentions.
(52) Lest I be accused of plagiarism, I have to own up
that for purposes of clarity and elucidation I have adopted the
parties eloquently
drafted affidavits and the applicant’s
counsel’s heads of argument in the adjudication of this matter
because I concur
fully with same as regards the enunciation of the
salient exposition of the contractual dispute and the legal
submissions therein
as same coincide with mine regarding the
interpretation of the contract and the application of the legal
principles to the facts.
(53) The
respondents purported dispute in regard to the lawfulness of the
cancellation of the sale agreement is without any merit,
if regard is
had to the provisions of the sale agreement as to the manner in which
the purchase price is discharged, and in particular
the assumption of
liability and set off provisions thereof, the first respondent in
fact does not actually forfeit any monies as
it alleges.
(54) The respondents contention that the applicant:
“
(a) it
would be entitled to retain the almost R8 million already paid by the
respondent, as part of the contract price pre-determined
as damages;
and
(b) the
full outstanding amount of R2 064 000.00 has already been paid into
an attorneys trust account and tendered to the applicant
in terms of
the sale agreement, which tender the applicant has declined to accept
has no merit, does not derogate from applicant’s
right to
cancel the sale agreement on breach by the first respondent.”
(55) The amount of R2 064 000.00 has been tendered by
someone other than the first respondent. In any event, the applicant
did not
accept this tender. On 29 October 2009 the applicant’s
attorneys advised attorneys Woodhead Bigby & Irving who were
acting
on behalf of Bevline Mechanical Projects (Pty) Ltd that the
sale agreement had been cancelled on 16 October 2009 consequent upon
the first respondent’s failure to discharge its obligations to
the applicant in terms thereof.
(56) The contention that the parties have not complied
with their obligation of meeting at a pre-determined time and venue
in order
to attend to the matters set out in
clause
15
of the agreement has no merit. So too is
the allegation that the circumstances surrounding the giving of
notice by the applicant
to the first respondent on 1 October 2009
concerning its alleged breach of the agreement and notice of
cancellation on 16 October
2009 were accordingly premature and
ineffective because the applicant has not provided the first
respondent with all outstanding
accounts relating to the business of
the applicant as provided for in terms of
clause
11.8
of the main agreement.
(57) C
lause 15
of
the agreement provides: “
On the closing
date (
at latest 30
September 2009
) the parties and/or
their duty authorised representatives shall meet at a pre-determined
time and venue and at which:- 15.1 the
applicant shall, subject to
the overriding provisions of the agreement, be deemed to have
delivered to the first respondent all
the moveable assets and
physical possession and de facto control of the enterprise; 15.2 the
set off referred to in clause 10 supra
shall be implemented and the
balance of the purchase consideration shall be discharged as provided
in clause 9.1.2 supra.”
(58) The fact of the matter is that, the applicant has
not accepted the payments made into the trust account of WB&I and
it
is not obliged to do so because the sale agreement has been
validly cancelled.
(59) The submission by the applicant that the fact that
someone other than the first respondent has tendered payment of the
amount
of R2 064 000.00 (i.e. the total of the amounts payable by the
first respondent in terms of
clause 9.1.2
of
the sale agreement) is evidence of the first respondent’s
parlous financial position and the fact that the first respondent
is
unable to pay its debts and cannot discharge its obligations to the
applicant in terms of the sale agreement is unassailable.
THE CANCELLATION OF THE
REHABILITATION GUARANTEE
(60) I
agree with Mr Subel’s submission that it cannot be contended,
and indeed no such contention is made in the respondents’
answering affidavit, that:
“
(a)
the
first respondent required copies of the EMP in order to procure the
cancellation of the “Rehabilitation Guarantee”.
All that
would be required to procure the cancellation of the “Rehabilitation
Guarantee” would be the establishment
of a satisfactory
substitute guarantee, i.e. on the same terms (mutatis mutandis) as
the
“
Rehabilitation
Guarantee
”;
(b) the
first respondent’s obligation, in terms of clause 5.1.10 of the
sale agreement, to procure the cancellation of the
“Rehabilitation
Guarantee” has nothing to do with and is completely independent
of the applicant’s obligation,
in terms of clause 11.3 of the
sale agreement, to furnish the first respondent with copies of the
EMP;
(c)
the contrary contention made by Pillay in paragraph 46 of the
respondents’ answering affidavit has no merit. It is clear,
upon a reading of clause 9.1, 9.2, 15.1 and 15.2 of the sale
agreement, that the first respondent’s obligation to make
payment
to the applicant of the amounts of R1 032 000.00 on 30
September 2009 and 30 October 2009 has nothing to do with and is
completely
independent of the meeting envisaged in clause 15.1 and
15.2 of the sale agreement taking place;
(d) the
contrary contention made by Pillay in paragraph 51 of the
respondents’ answering affidavit has no merit. There is
no
correspondence addressed by or on behalf of the first respondent to
the applicant. complaining that the applicant did not provide
the
first respondent with copies of the EMP or, most importantly, that in
the absence of being provided with copies of the EMP
the first
respondent could not procure the cancellation of the “Rehabilitation
Guarantee” or contending that the first
respondent’s
obligation to make payment to the applicant of the amounts of R1 032
000.00 on 30 September 2009 and 30 October
2009 arose only once the
meeting envisaged in clause 15 of the sale agreement had occurred;
and
(e) no
complaint is raised by McCrae that the applicant did not provide the
first respondent with copies of the EMP and that the
first respondent
could thus not procure the cancellation of the “Rehabilitation
Guarantee”, neither is it contended
that the first respondent’s
obligation to make payment to the applicant of the amounts of R1 032
000.00 on 30 September 2009
and 30 October 2009 arose only once the
meeting envisaged in clause 15 of the sale agreement had occurred.
(61)
There
is no merit in this contention in that:
(a) the Sub-Contracting Agreement was dependent upon
the continued existence of the sale agreement which has been validly
cancelled.
The Sub-Contracting Agreement is part of the main sale
agreement. The Sub-Contracting Agreement makes numerous references to
the
main agreement and records the transaction under the main
agreement as being:
“
2.2
subject to the Main agreement becoming unconditional and pending the
later of the grant of the DME Application or the grant
by the DME of
New Order Mining Rights in respect of the Property to Friedshelf
(i.e. a reference to the first respondent) or the
arrival of the
Transfer Date, the Parties have agreed to enter into the Agreement
upon the terms and conditions hereinafter set
forth.”
(62)
Clause 3 of the
Sub-Contracting Agreement further records that the appointment of the
first respondent to mine and exploit the Enterprise
is for and on
behalf of the applicant. Clause 4 of the Sub-Contracting Agreement
further makes it clear that the appointment under
the Sub-Contracting
Agreement is pending the transfer under the sale agreement or final
implementation or other event identified
in clause 4.
(63)
Clause 11 of the
Sub-Contracting Agreement provides for cancellation thereof in the
event inter alia of:
“
11.1.3 If
the other Party is unable or is deemed to be unable to pay its debts
in accordance with the provisions of section 345
of the Companies
Act, 1973, or otherwise defaults generally in the payment of its
liabilities.
(64)
There is no dispute
concerning the first respondent’s default in its payment of its
liabilities to the applicant nor any genuine
dispute in respect of
third parties. Accordingly, the applicant was entitled to and did
cancel the Sub-Contracting Agreement.”
DISPUTE
RESOLUTION BY ARBITRATION
(65) “
The respondents
further seek to avoid this application by raising the arbitration
provisions of the sale and sub-contracting agreements
namely Clause
21 and Clause 12 respectively. This contention is similarly without
merit:
(a) in the first instance the second respondent is
not party to the two agreements and accordingly is not party to the
arbitration
agreement;
(b) neither prior to nor in the answering affidavit
in this application the respondents have not raised any real dispute
justifying
adjudication by arbitration;
See
Withinshaw Properties (Pty) Ltd v Dura Construction Co (SA) (Pty) Ltd
1989 (4) SA 1073
, 1079; Delfante v Delta Electrical Industries Ltd
1992 (2) SA 221
(C), 227;
(c) in
casu there is no dispute raised within the meaning of clause 21, nor
is there any dispute that would qualify as “palpable
and
genuine.” Merely by contending that there is a dispute does not
trigger the arbitration provisions; and
(d) furthermore,
in terms of
section 21(1)(f) of the
Arbitration Act
the Court has the
power to grant interim interdicts or similar relief. Prayer 5 of the
notice of motion constitutes such relief.
(66)
Clause 21 of the sale
agreement subjects only “disputes” falling within one of
the categories in clause 21.1 to arbitration.
A “dispute”
must therefore arise as a pre-requisite to arbitration.
See
Delfante v Delta Electrical Industries
Ltd supra
where it was stated:
“
it
cannot be that on every occasion the ‘interpretation’ of
any one of the many provisions in the amending agreement
is in some
loose sense moot that there is to be a referral to arbitration. There
must be an issue, palpable and genuine. (See further,
in this regard
,
Russell (op cit at 171); Mustill and Boyd Commercial Arbitration 2 ed
(1089) at 12,123.)”
THE RIGHT OF RETENTION
(67)
I agree with Mr Subel’s
submission that “no basis is made out for a right of retention
because:
(a) no proof of
payment of any alleged “expenses” has been provided by
the respondents nor particular thereof;
(b) the
respondents make no allegation in regard to any increase in value of
the property or assets occasioned by such alleged expenses
having
been incurred;
(c) no
details are provided in regard to the alleged “maintaining,
improving and repairing of the property and the assets”;
(68)
I concur that as a matter of
legal principle that: “to raise a lien the respondents would be
required to establish and prove:
(a) that they are
in lawful possession of the property and assets. This is not
established;
(b) that
their expenses were necessary for the salvation or useful for the
improvement of the property and assets. This similarly
not
established;
(c) their
actual expenses and the extent of the enrichment of the applicant.
Both have to be established because the lien covers
only the lesser
of the two amounts;
(d) that
the applicant’s enrichment is iniusta (unjustified);
(e) that
there were no contractual arrangements between the parties in respect
of the expenses; and
(f) the respondents have not established any of these
requirements. In fact, it is not even apparent from the answering
affidavit
whether the improvements relate to the movable assets or
the immovable property. Mr Da Silva correctly conceded the
unassailability
of the applicant’s legal contention.
THE ENVIRONMENTAL MANAGEMENT
PROGRAMME COPIES
(69) “
The
respondents further seek to place reliance on clause 11.3 of the sale
agreement. The respondents contend that the applicant
has failed to
provide the first respondent with copies of the EMP and, therefore
that the first respondent was not obliged to procure
the cancellation
of the “Rehabilitation Guarantee”. This ground of
opposition is similarly baseless.
(70) There is no correspondence addressed by or on
behalf of the first respondent complaining that it had not been
furnished with
a copy of the Environmental Management Programme or,
most importantly that in the absence thereof the first respondent
could not
procure the cancellation of the “Rehabilitation
Guarantee.” Nor is there any correspondence contending that the
first
respondent’s obligation to make payment to the applicant
of the amount of R1 032.000.00 on 30 September and 30 October 2009
would only arise once the meeting envisaged in clause 15 of the sale
agreement had occurred.
(71)
The
obligation to procure cancellation of the “Rehabilitation
Guarantee” is not dependent upon clause 11.3. This was
required
to have been procured by not later than 30 September 2009 (clause
5.1.10 of the sale agreement). In any event, the respondents
lose
sight of the fact that the first respondent’s failure to make
payment of the amount of R1 032.000.00 on 30 September
2009 (clause
9.1.2.1) in itself justified cancellation.”
(72)
The “Sub-Contracting
Agreement” annexure “Q” to the sale agreement
entitles the applicant to cancel the
agreement in the event inter
alia of the first respondent failing to make any payment owed by it
on due date and remaining in default
ninety days after receiving
written notice to remedy such default or in the event of the first
respondent being unable or deemed
to be unable to pay its debts in
accordance with the provisions of
section
345 of the Companies Act, 1973,
or
otherwise defaulting generally in the payment of its liabilities.
THE CLAUSE 15
MEETING
(73) “
The respondents place
reliance on clause 15 of the sale agreement which provides for a
meeting on the closing date (at latest 30
September 2009). This
provision has no effect on the first respondent’s performance
and such performance was not reciprocal
on or dependent upon such
meeting.”
(74)
I
agree with applicant’s contention that: “upon a reading
of clause 9.1, 9.2, 15.1 and 15.2 of the sale agreement, the
first
respondent’s obligation to make payment to the applicant on 30
September 2009 and 30 October 2009 had nothing to do
with and is
completely independent of such meeting. The Closing Date is defined
as the date of the implementation of the provisions
of clause which
would correspond with the date of the fulfilment or waiver, as the
case may, of the last of the conditions precedent
in clause 3 or
least five business days thereafter.”
(75) “That date is independent of the due date
for performance of the obligations which the first respondent
breached i.e.
30 September 2009. Furthermore, in this instance the
first respondent was already in physical possession of the movable
assets
and the Enterprise prior to any Closing Date.”
(76) In
the premises the following order is made:
(a) the respondents are ordered to vacate Portion 32 of
the farm Varkensfontein 169 Registration Division I.R. Province of
Gauteng
by not later than ten (10) days from date of this order;
(b) the
respondents are to deliver to the applicant the movable assets
enumerated in Annexure “
J”
to the sale agreement; and
(c) the
respondents are ordered to pay the applicant’s legal costs,
including the legal costs incurred consequent upon the
employment of
two counsels.
Dated at Johannesburg on the 4
th
June 2010.
___________________
MOKGOATLHENG
J
JUDGE OF THE HIGH
COURT
DATE OF HEARING: 19
TH
OCTOBER 2009
DATE OF
JUDGMENT: 4 JUNE 2010
ON
BEHALF OF THE APPLICANT: MR SUBEL SC
WITH MR L HOLLANDER
INSTRUCTED BY: FEINSTEINS & ASS INC
TELEPHONE
NUMBER:(011) 712-0700
ON
BEHALF OF THE RESPONDENT:
MR
DA SILVA
INSTRUCTED
BY: DE BEER ATTORNEYS c/o SALEY LAHER & ASS
TELEPHONE
NUMBER:(011) 728-6666/7290