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[2020] ZAGPJHC 422
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Forum Exporters International (Pty) Ltd v Park Village Auctioners (Pty) Ltd and Another (43236/17) [2020] ZAGPJHC 422 (11 June 2020)

REPUBLIC
OF SOUTH AFRICA
IN
THE HIGH COURT OF SOUTH AFRICA
GAUTENG
LOCAL DIVISION, JOHANNESBURG
CASE
NO: 43236/17
REPORTABLE:
YES/NO
OF
INTEREST TO OTHER JUDGES: YES/ NO
REVISED.
19/11/2020
In
the matter between:
FORUM
EXPORTERS INTERNATIONAL (PTY) LTD
Plaintiff
And
PARK
VILLAGE AUCTIONERS (PTY)
LTD
First Defendant
CLIVE
LAZARUS
Second Defendant
J
U D G M E N T
KEIGHTLEY,
J
:
INTRODUCTION
1.
This case involves a dispute arising out of
the importation of a large consignment of household furniture and
similar effects and
the subsequent sale of these items in South
Africa. The plaintiff, Forum Exporters International (Pty) Ltd
(Forum), sourced the
goods through a contact in the United Kingdom,
procured them and imported them into South Africa. In all, over 100
containers of
goods were involved. However, Forum was not in the
business of selling bulk consignments of household goods, and it
needed a partner
that could do so. It initially entered into an
arrangement with Goodrich Auctioneers (Goodrich) for this purpose.
Goodrich, in
turn, brought Park Village Auctioneers (Pty) Ltd (PVA)
into the relationship.
2.
Sadly, as the facts demonstrate, the
relationship between the three parties involved in this commercial
enterprise soured. In fact,
it is safe to say from the evidence I
heard at trial, that none of the parties came out of the deal feeling
as though it had been
a good experience. Be that as it may, the
breakdown in the commercial relationship led to Forum instituting a
claim against PVA,
as well as a separate claim against one of the
Directors of PVA, Mr Clive Lazarus.
3.
Goodrich is not a party to the litigation,
although its role in the commercial relationship between the parties
looms large in the
case. A central issue of the dispute is what the
respective roles and functions of PVA and Goodrich were in relation
to Forum.
Forum’s case is that it was PVA’s obligation
under the agreement to pay the amounts due to Forum once the goods
were
sold. Hence, it sues PVA for the amounts it says are due to it.
PVA, on the other hand, disputes its liability, claiming that
Goodrich
was the party bearing the relevant obligations to Forum.
PLAINTIFF’S CLAIMS
4.
As to the nature of Forum's claims, it is
simplest to start with the particulars of claim as they stood at the
time of trial. As
against PVA (claim A) Forum avers that:
“
5.
During March 2016, the Plaintiff concluded an agreement with Valitus
LLC in the United Kingdom for the purchase of household
furniture and
accessories witch (sic) Valitus had sourced from Maisons du Monde in
France.
6. The Plaintiff
anticipated importing 185 containers of household furniture and goods
from France pursuant to this agreement (the
goods).
7. On or about 15 May
2016 at Johannesburg, the Plaintiff, represented by Dave Buda acting
personally and the First Defendant represented
by its director, the
Second Defendant and one RAYMOND TERBLANCHE t/a GOODRICH AUTIONEERS,
acting personally, entered into an oral
joint venture agreement.
8
.
The Material express, alternatively tacit, alternatively implied
terms of the joint venture agreement were as follows:
8.1 The Plaintiff
would import the goods into South Africa through Durban harbour and
remain the owner thereof until they were sold
in accordance with the
agreement;
8.2 The Plaintiff
would clear the goods and transport it to warehousing in Gauteng
belonging to or under the control of the First
Defendant;
8.3 Goodrich
Auctioneers would unpack the goods at the warehouses and prepare
inventories;
8.4 The First
Defendant would enter the goods onto their systems and attend to all
aspects of the sale of the goods including advertising
and marketing,
sales, delivery, invoicing and collections;
8.5 The Plaintiff
would be paid a sum of money (in South African Rand) by the First
Defendant equal to the Maisons du Monde retail
price ('the MDM
price') of the goods nominated in pounds sterling multiplied by a
factor of 6;
8
.6
Whatever was received by the First Defendant in excess of that sum
would be divided between the First Defendant and Goodrich
Auctioneers
in shares agreed between them, after expenses were settled. The
parties envisioned that the goods would be sold with
a 30% markup and
that the said 30% would therefore constitute the excess. The parties
envisioned further that a third of the 30%
would go towards expenses,
a third to the First Defendant and a third to Goodrich Auctioneers.
9. Between May and
June 2016, 128 containers of goods were delivered to the said
warehouses, all of which were processed and 98
of which were sold by
the First Defendant and the Plaintiff complied with all of its
obligations under the agreement.
9A. On or about 4 July
2016, and at OR Tambo Airport, Johannesburg, at the request of
Raymond Terreblanche t/a Goodrich Auctioneers,
whose request the
Plaintiff was informed was supported by the First Defendant,
represented by the Second Defendant and the Second
Defendant
personally, the Plaintiff, represented by Dave Buda acting
personally, orally agreed to reduce the factor of 6 referred
to in
paragraph 8.5. above to a factor of 4.9.”
5.
In essence, Forum contends that there was
what may be described as a joint venture agreement between all three
parties. Under this
agreement, the parties each had certain roles and
obligations. Forum says that PVA had the obligation ultimately to pay
over to
Forum the amount due to it (Forum) flowing from the sale of
the goods in South Africa. This amount was based on what is referred

to in paragraph 8.5 of the particulars of claim as the retail price
of the goods set by Maisons du Monde (the MDM price), multiplied
by
6. I will refer to this as “the factor” or “the
factor equation”. Forum contends that the factor was
initially
agreed to be 6, but was later reduced to 4.9 by further agreement
between the parties.
6.
According to Forum, under the agreement,
the factor acted as the baseline for the calculation of the selling
price of the goods.
To this baseline, the parties agreed that a 30%
mark-up would be applied. Forum would be entitled to payment based on
the factor
equation, regardless of the ultimate selling price. PVA
and Goodrich Auctioneers (Goodrich) would each get 10% of the
mark-up,
with the remaining 10% being allocated for the expenses
involved in warehousing, marketing and selling the goods.
7.
Forum’s complaint against PVA under
Claim A in a nutshell is that PVA has failed to comply with its
obligation to pay over
to Forum the amount due to it under the
agreement. Forum’s case is as follows:
7.1.
The MDM price for the goods in the
containers that were imported was £4 300 800.00. This amount
was subsequently revised downwards
at trial, as I will explain later.
7.2.
Based on the lowest common denominator of
factor 4.9 on the MDM price, Forum was entitled to payment from PVA
of R 21 073 920. 00,
which amount was also revised downwards at
trial.
7.3.
Despite this, Forum says that it received
payment from PVA of only R2 324 051. 68 between August and December
2016.
7.4.
Forum has elected to forgo the amounts due
to it from the final “fire sale” of goods that took place
on 8 December 2016,
which it estimates to be an amount of R151 900.
00. In effect, once the factor is taken into account, Forum has
elected to forgo
approximately R800 000. 00 of its total claim on
account of the fire sale.
7.5.
Further, Forum says that it received an
amount of some R7,3 million directly from a third party, Unicorn, as
a result of a sale
Forum arranged with Unicorn. Forum accepts that
this amount must be subtracted from the total amount it claims from
PVA.
7.6.
The final (as amended) value of Forum’s
claim against PVA under claim A is R6,5 million.
8.
Forum’s claim against Mr Lazarus
(claim B) is stated as follows in the particulars of claim:
“
11.1
During June to September 2016 the Second Defendant, operating on the
wrong premise that the First Defendant's expenses stood
to be
deducted from the income received from the sales of the goods rather
than from the excess referred to in paragraph 8.6. above:
11.1.1 Inflated
certain expenses and administrative costs and invented others;
11.1.2 Under-declared
sales and manipulated sales invoices in order to reflect lesser
amounts;
11.1,3 Failed to
declare certain sales of goods;
11.1.4
Presented the Plaintiff with false reconciliations reflecting the
under-
declarations;
11.1.5 Sold some of
the goods privately, for his own account;
11.1.6 Allowed the
Second Defendant to deal with and sell various of the goods for his
own account;
11.2 In so acting the
Second Defendant:
11.2.1 intended to
defraud the Plaintiff;
11.2.2 Used the
position of director of the First Defendant to gain an advantage for
himself;
11.2.3
Failed, in his capacity of director, to act in good faith, for a
proper purpose and in the best interests of the First Defendant.
”
9.
Forum relies on the common law and on
s76(3), read with
s218(2)
of the
Companies Act, 2008
in seeking to
hold Mr Lazarus personally liable for the damages allegedly suffered
by Forum in being induced by Mr Lazarus’
alleged unlawful
conduct into agreeing to drop Forum’s factor from 6 to 4.9.
Section 76(3)
obliges a director of a company to perform her
functions in good faith and for a proper purpose, and
s218(2)
renders
liable a person who causes loss to another as a result of any
contravention of the Act.
DEFENDANTS’ PLEA
10.
The defendants initially filed three
special pleas. The first two were abandoned before the trial
commenced. The third special plea
was raised by Mr Lazarus in respect
of claim B. It was abandoned by him in the heads of argument filed on
his behalf. I deal no
further with it.
11.
In paragraph 6.4 of their plea, the
defendants admit that on or about 15 May 2016 at Johannesburg:
“
Terreblanche,
trading as Goodrich Auctioneers, entered into an oral agreement in
terms whereof the parties agreed that goods delivered
to the
warehouse of the First Defendant would be sold and that all three
parties would contribute towards the venture.
”
12.
It should be noted that although the
defendants also admit that PVA was represented by Mr Lazarus at the
meeting, they do not admit
that he entered into the oral agreement on
behalf of PVA. However, there is an admission that all three parties
would contribute
towards the venture.
13.
The defendants admit paragraphs 8.2 and 8.3
of the particulars of claim. It is therefore common cause that Forum
would clear the
goods through customs and transport them to
warehousing in in Gauteng belonging to or under the control of PVA;
and that Goodrich
would unpack the goods and prepare inventories.
14.
As to the averments contained in paragraph
8.4 of the particulars of claim, the defendants plead that PVA would
enter the goods
onto its system based on the inventories to be
supplied by Goodrich. It says it complied with this obligation. The
defendants dispute
that it was to attend to all aspects of the sale
of the goods, including advertising and marketing, sales, delivery
invoicing and
collections. They plead that it was Goodrich’s
obligation to do so, save for the advertising, which was a joint
obligation
with Goodrich. The defendants say that they complied with
this obligation. They plead further that PVA would prepare invoices
based
on the sales figures supplied to PVA by Goodrich, and that PVA
complied with this information.
15.
Insofar as the averments concerning PVA’s
alleged obligation to pay to Forum as contained in paragraphs 8.5 and
8.6 of the
particulars are concerned, the defendants plead as
follows:
“
11.1The
Defendants deny the contents of these sub-paragraphs.
11.2 Although the
Defendants admit the initial agreement was that the Plaintiff would
receive an amount equal to six times the British
pound sterling value
of the goods, the Defendants specifically plead that due to the
Plaintiff misrepresenting the quality and
value of the goods, it was
no longer entitled to receive the original agreed amount.
11.3 The Defendants
further specifically plead that upon inspection of the goods and
after the first unsuccessful attempt to sell
these goods, that the
intended entitlement for the Plaintiff to receive a sum of six times
worth the British pound of the depicted
price of the item in South
African Rands from the sale of goods was cancelled as it was clear
that the goods will not realize a
price if the factor was to be 6.
11.4 The Defendants
specifically plead that as a result that (sic) Goodrich Auctioneers
determined the sales price, it was agreed
that the Plaintiff would
receive a net amount from the sale of goods, that is the sale price
of goods, from which the following
would be deducted;
11.4.1
Commission of 20% on the sale price, which
would equally be divided between the First Defendant and Goodrich
Auctioneers;
11.4.2 An amount equal
to 30% of the expenses related to the sale of the goods, except for
advertising and marketing costs, which
would in totality be deducted
from the sale price.”
16.
The defendants plead further that:
16.1.
Only 104 containers were delivered;
16.2.
Not all containers were processed;
16.3.
They deny that 98 containers were sold by
PVA;
16.4.
They deny that Goodrich supplied inventory
lists for all the containers.
16.5.
The sales were undertaken by Goodrich.
16.6.
PVA received lists of sales and figures of
sales from Goodrich and complied with its obligations under the
amended agreement.
17.
As to the alleged agreement at OR Tambo in
terms of which the parties agreed that Forum would reduce its factor
to 4.9, the defendants
plead that: “
Raymond
Terreblanche (representative of Goodrich) unilaterally negotiated
with (Forum) in this respect.
”
18.
The defendants admit that PVA made payment
to Forum in the amount of R2 324 051. 68. However, the defendants
deny that PVA is liable
to pay Forum the sum claimed.
19.
As to claim B, the averments in support of
the claim are simply denied.
THE REDUCED QUANTUM OF
THE CLAIMS
20.
As I indicated earlier, at trial Forum
presented its case on the basis of a reduced quantum: it no longer
claimed payment from PVA
in the amount of some R23 million under
claim A, but only an amount of R6,5 million. This meant that the
particulars of claim were
not in sync with the case presented and
evidence led by Forum. After considering the parties heads of
argument, I requested further
submissions on the question of whether
a formal amendment was necessary so as to align the particulars with
the case presented.
21.
Forum submitted that a formal amendment was
not necessary, as the real issues, and basis for the reduced claim,
were fully canvassed
in the evidence led at trial. However, out of
caution, Forum formally requested the court for leave to amend its
particulars to
bring them in line with the case it had argued. It
filed an amendment to its particulars of claim together with its
submissions
on the issue.
22.
In their responding submissions, the
defendants took issue with Forum. They discussed various calculations
based on a comparison
of the original particulars of claim with the
proposed amended particulars of claim and submitted that this
comparison showed that
the proposed amendment left more questions
than answers. They submitted further that the basis for the reduced
claim, i.e. the
master spreadsheet (which I will discuss in more
detail below) had not been confirmed by Forum’s witnesses. The
nub of the
defendant’s submissions was that Forum’s
calculation of its claim is based on mere conjecture and not
evidence.
23.
It will be clear from my discussion and
analysis of the evidence and the issues in dispute that follows that
I do not share the
defendants’ complaints about the proposed
amendments. I am satisfied that the issues raised by the amendments
were canvassed
in the evidence led at trial. Accordingly, leave is
granted to Forum to amend its particulars of claim.
THE
ISSUES IN DISPUTE: CLAIM A
24.
The following disputed issues appear from
the pleadings and the evidence led:
24.1.
What goods were delivered and dealt with
under the agreement?
24.2.
What were the terms of the agreement
between the parties? In particular, what were the respective roles
and obligations of PVA and
Goodrich to Forum? In this regard, the
gist of the defendants’ case is that PVA was a side-player in
the enterprise, and
that Goodrich was Forum’s primary partner.
Accordingly, PVA’s case is that Forum should be looking to
Goodrich, and
not to PVA for fulfilment of any obligations owed to
it.
24.3.
A related issue is the status of the
alleged agreement struck at OTR Tambo on 4 July 2016, when Forum says
it agreed to drop its
factor to 4.9. Allied to this, is PVA’s
claim that due to the quantity of damaged goods the financial
structure of the deal
changed fundamentally, such that the factor no
longer played a role and Forum was only entitled to a net amount, as
set out in
the defendants’ paragraph 11.4 of their plea.
24.4.
Whether PVA complied with its obligations
to Forum under the agreement.
24.5.
The quantification of the claim (in the
event that Forum establishes that PVC is liable to it).
THE GOODS DELIVERED
25.
It is common cause that the goods that
formed the basis of the commercial relationship between the parties
were sourced and imported
into South Africa by Forum. It is also
common cause that the goods were packed into containers which had to
be unpacked. Mr David
Buda represented Forum at all relevant times.
He testified that he engaged the services of African Compass
International Cargo
(Pty) Ltd (Compass) as Forum’s clearing
agents. Compass was also responsible for delivering the containers to
the PVA warehouses
where the goods were to be stored.
26.
Forum pleaded that 128 containers were
delivered and unpacked. PVA disputes this in its plea, contending
that there were only 104
containers. It is obviously important for
this issue to be resolved. Forum must satisfy the court that its
claim for payment from
PVA is based on a proper calculation of the
quantity of goods sold. The starting point of the inquiry is thus
what quantity of
goods was delivered.
27.
Ms Rosekilly is a director of Compass, and
she oversaw the delivery and unpacking of the containers at PVA’s
premises. She
testified about the procedure that was followed. The
containers were sealed on delivery. After checking the seal on each
container,
Compass prepared an unpacking sheet for that container. It
would be opened and unpacked, with each item marked off and checked
against the unpacking sheets.
28.
The information as to what was in each
container was supplied by Valitus, the UK supplier of the goods. This
was used as a basis
for the unpacking sheets. The unpacking sheets
were entered into evidence, and Ms Rosekilly was taken through a
sample of them
in her evidence in chief. The unpacking sheets showed
handwritten annotations. Ms Rosekilly explained that the ticks
against each
item on the unpacking sheet corresponded with the number
of those items actually unpacked from the container. So, if the
unpacking
sheet indicated that there should be 10 bar stools, and
only 5 ticks appeared alongside that item, it meant that only 5 were
actually
unpacked from the relevant container. If a listed item was
not found, this too would be marked on the sheet.
29.
According to Ms Rosekilly, there were some
variables as to why an item was not ticked off. In some cases,
although the item was
in the container, its identifying sticker had
fallen off. In this case, the item would nonetheless not be marked
off. In other
cases, the item would be in a different container. In
all cases, it seems plain from Ms Rosekilly’s evidence that the
annotations
on the unpacking sheets provided an accurate, albeit
conservative, record as to the items that were delivered. If
anything, the
unpacking sheets underestimated the number of items
that were delivered and unpacked.
30.
Ms Rosekilly’s evidence was not
materially challenged under cross-examination. She admitted that she
had not overseen the
unpacking of each container, but this is of no
matter. She gave good and clear evidence about the process involved
and the scheme
used to accurately capture the items that were
unpacked. I have no reason to reject any aspect of her evidence.
31.
Mr Buda testified that on the basis of the
inventory supplied by Valitus, cross-checked against the information
contained in the
unpacking sheets, Forum compiled what was referred
to at the trial as the master spreadsheet. This was prepared for
purposes of
the trial. It was shared with the defendants in the
pre-trial proceedings, and they made some adjustments to it. While
the defendants
did not oppose Forum’s use of the master
spreadsheet at the trial, this was with the proviso that it be
understood that it
was Forum’s document, and not that of the
defendants.
32.
The master spreadsheet is a lengthy Excel
document, comprising approximately 9000 lines of information. Counsel
for Forum did not
take Mr Buda through all 9000 lines. This would
have taken up a considerable amount of court time. Instead, he led Mr
Buda in evidence
as to the convention used to compile the master
spreadsheet, with reference to some sample lines.
33.
The headings of the columns in the
spreadsheet captured the stock code of each item; the quantity of
each item meant to be delivered;
a description of the item in words;
the container number in which the item was contained; the seal number
for the container; the
shipment date of the container; the date the
container was received; the warehouse it was delivered to; the MDM
price of each item;
the number of items actually unpacked, and the
price; and then the factor 4.9 value.
34.
The pricing columns were included in the
master spreadsheet, as Forum presented the spreadsheet not only to
establish the actual
items that were delivered, but in addition to
sustain the quantification of its claim against PVA. I will deal with
the latter
aspect later. For purposes of establishing the stock that
was delivered, Mr Buda confirmed that the master spreadsheet
recognised
only the actual number of items that had been marked off
on the unpacking sheets. He testified further that in cases of
uncertainty,
for example, uncertainty as to whether one tick
represented the full 25 items under one stock code, or only 1 of
those items, Forum
relied on and counted only the latter, rather than
the former. This is consistent with the conservative approach adopted
in the
unpacking sheets. In my view, it establishes that
at
least
the number of items on the master
spreadsheet were delivered, although in all probability the stock
pool that was ultimately dealt
with was larger than that reflected in
the master spreadsheet.
35.
I am satisfied that based on the evidence
of Mr Buda and Ms Rosekilly, the master spreadsheet may be accepted
as establishing the
items, and the numbers of those items, that were
delivered, and thus which formed the basis of the inventory of stock
that was
to be dealt with by the parties.
THE TERMS OF THE
AGREEMENT
36.
As I have indicated, from the pleadings
filed, certain aspects of the agreement between the three parties are
common cause. In the
first place, PVA admits that it entered into an
agreement with Forum and Goodrich. It also admits that in terms of
this agreement,
the goods would be transported to and unpacked at
premises belonging to, or under PVA’s control. It admits that
the goods
would be entered onto its inventory, although it says it
relied on Goodrich to supply the relevant information. It also admits
that it issued invoices, although it says that these were based, once
again, on information supplied by Goodrich.
37.
Significantly, PVA admits that under the
agreement Forum initially was entitled to receive payment on the
factor 6 basis, i.e. Forum
was entitled to receive out of the deal
six times the MDM price for the items sold. PVA contends however,
that this term of the
agreement was later changed such that Forum
would only be entitled to the balance remaining from sales after the
deduction of a
20% commission of the sale price (to be split between
Goodrich and PVA), and 30% of the expenses relating to the sale
(excluding
advertising costs). If this is correct, it would
drastically reduce what Forum was entitled to under the agreement.
Instead of
receiving a guaranteed factor 6 on the goods sold, Forum
would only be entitled to a much smaller sum, dependent on the actual
price received for goods, and significant upfront deductions.
38.
Despite this being the case on the
pleadings, when Mr Lazarus testified on behalf of PVA, he appeared to
take the position that
there never was an agreement between PVA and
Forum. He also dismissed as “
pie
in the sky
” Forum’s case
that under the agreement, Forum was entitled to receive the MDM price
multiplied by six. I will return
to Mr Lazarus’ evidence later.
But it is worth noting at this stage that the basis of the defence as
pleaded, and as supported
by Mr Lazarus’ evidence were not
always in sync.
39.
From the pleadings and the evidence two
issues relating to the terms of the agreement can be identified:
first, what was the nature
of the agreement and, in particular, what
were PVA’s obligations under the agreement; and second, what
were Forum’s
payment terms and more specifically were these
subsequently amended as PVA claims in its plea. I refer to these
issues as the “nature
of the agreement issue” and the
“factor issue” respectively.
The evidence on the
nature of the agreement issue
40.
Three witnesses were called to testify on
behalf of Forum in respect of the terms of the agreement: Mr Buda; Mr
Terreblanche (who
was a director of Goodrich at the time); and Ms
Heather Upsdell (who was also a director of Goodrich).
41.
Mr Buda is a trader and the guiding mind of
Forum. He gave the background as to how the deal came about. He was
initially approached
at the end of 2015 by Valitus, a UK based
company, to sell goods that Valitus had sourced from Maison du Monde
in France. The goods
had to be sold outside the European Union. After
he had done some research, Mr Buda decided in about February or March
that he
would do the deal with Valitus. At this stage, some of the
goods were already in a warehouse in South Africa.
42.
Mr Buda, on behalf of Forum, first entered
into an agreement concerning the goods with Goodrich, represented by
Mr Terreblanche
and Ms Upsdell. This was at the end of April 2016.
Shortly after this, Mr Terreblanche and Mr Lazarus held discussions
in Johannesburg.
From Ms Upsdell’s evidence it appears that
this was because the first warehouse that Mr Terreblanche had in mind
proved to
be too small to house the stock. Bigger premises had to be
found. Mr Terreblanche thus approached Mr Lazarus. What transpired
was
an agreement between Goodrich and PVA. The terms of this
agreement were transmitted to Mr Buda by Ms Upsdell in an email dated
6 May 2016.
43.
The salient terms of this email were as
follows:
43.1.
“
It was agreed (in discussions
held between Mr Terreblanche and Mr Lazarus) that Park Village
Auctioneers and Goodrich will work
together to sell your furniture.
”
43.2.
“
We all the same end goal -
maximum sales in the shortest space of time; Timelines are very tight
and you would like to see approx
30% sold by end of June
”.
43.3.
“
PVA have a huge data base of
clients and have enormous exposure in the market place
”.
43.4.
“
We will run major advertising
together as PVA/Goodrich
”.
43.5.
“
Space and cost per (square metre)
is no longer a variable factor. We (Goodrich only) will share profit
with PVA
”.
44.
The email went on to say that Mr Lazarus
had met with them later that day “
to
get to grips with how things will work so we could all get on the
same page and understand who was doing what and how we could
best
represent you and work as a strong team
”.
To this end, Ms Upsdell recorded that Mr Lazarus’ input, which
was “
very straight and to the
point
,” as to PVA’s role,
was that:
44.1.
PVA would: “
(g)ive
us the space required
”.
44.2.
PVA would “
(e)nsure
lighting and security
”.
44.3.
“
PVA/Goodrich/Eugene etc will be
selling the goods
”.
44.4.
“
We will jointly work with stock
lists/codes/descriptions from Ollie to capture our data base for
invoicing
”.
44.5.
“
Pricing on the system will be
cost (your reserve) plus 30%. We can give 5% discount. For bulk ie
UFO we can discuss better prices
STC
”.
[words in brackets in this extract appear in the original]
44.6.
“
They (PVA) brought in two team
members - Grant who will create the invoicing system and be based on
site from Tuesday and Elaine.
Elaine and I will do the invoicing of
goods together.
”
44.7.
“
One central data base, complete
visibility and transparency, no one may move / sell any stock without
an invoice
”.
44.8.
“
Overhead costs ie rent,
advertising, staffing etc are for Goodrich a/c only. This will in no
way affect yourself or Eugene’s
pocket
”.
44.9.
“
Every Thursday a report and
reconciliation will be done and copied to everyone. This will be
sales for the week and stock sold,
balances
”.
44.10.
“
Every Friday payment will be made
to the relevant accounts
”.
44.11.
“
He (Mr Lazarus) assured us of his
commitment to the project and was happy to answer all and all
questions.
”
45.
It is common cause that Grant is Grant
Cameron, who was a PVA employee. His role was to administer the
invoicing and accounting
aspects of the arrangement. Elaine was also
a PVA employee. By all accounts, she played a less central role in
events. Eugene was
Eugene Swanepoel. He was one of Mr Buda’s
acquaintances. It was he who put Mr Buda in touch with Mr
Terreblanche. He does
not loom large in the critical cast of
characters.
46.
It is common cause that at the time that
the email from Ms Upsdell was sent to Mr Buda, Forum was not yet a
party to the terms agreed
on between Goodrich and PVA. On 13 May
2016, Mr Cameron emailed Mr Buda asking him to supply certain
details, including costings,
so that he could upload the stock onto
PVA’s system. These were provided to Mr Cameron on an excel
spreadsheet with the information
originating from the Valitus
documents accompanying the containers.
47.
Forum’s case is that the joint
venture agreement between all three parties was struck when Mr Buda
visited Johannesburg on
15 May 2016 and met with Mr Lazarus, Mr
Terreblanche and Ms Upsdell. In his testimony, Mr Buda was asked to
comment on PVA’s
plea, to the effect that PVA’s only
responsibility was to do advertising (jointly with Goodrich) and
invoicing. Mr Buda responded
that:
“
I
did not see it like that at all. One of the things that was
attractive to me about the introduction of Park Village in the early

part of May by Mr Terreblanche, or Goodrich, was the fact that he was
coming along with a heavy hitter Auctioneer who had a database
who
was participating in the selling process. He was offering the storage
and the administrative strength to be able to support
an undertaking
of this size.
”
48.
Mr Buda was also asked whether, when they
met on 15 May, Mr Lazarus was as firm on what the role of PVA would
be as was recorded
in Ms Upsdell’s email of 6 May. He replied:
“
Very much so
”.
He said that Mr Lazarus:
“…
was
very clear that he wanted to make sure that all the money, all the
administration was done by PVA, his team. The role of Raymond,
and
Goodrich, and Heather, and all of that would be on an administrative
level but nonetheless still through his team. That is
where Elaine
and Grant came in. It was very much a PVA operation as it were.”
In answer to a question
under cross-examination, he said that Mr Lazarus’ position was
that: “
there only could be one company running the
administration… There was only one way to be doing the stock
control and I think
that the role of Goodrich was to be able to
support that with the information that they needed to share with them
and what that
was I was not clear.”
49.
Under cross-examination, when asked to
explain what he understood the respective roles of PVA and Goodrich
to be under the agreement,
he reiterated that while Goodrich had a
role to play, based on whatever terms were agreed between Goodrich
and PVA: “
What was represented to
me was Clive (Mr Lazarus) was running with this it was his business
this is how they do it that is how it
is
”.
He said that Mr Lazarus had indicated that PVA was “
in
the driving seat
”. He pointed to
the 6 May 2016 email from Ms Upsdell as capturing what the role of
PVA would be, following the meeting between
all three parties on 15
May 2016.
50.
He was also asked under cross-examination
whether PVA was his agent under the agreement. His response in this
regard was: “
I... I suppose you
could say that yes, I did not see it like that...
[intervene].”
Later under cross-examination he was shown an email that he had sent
to Mr Terreblanche on 22 November 2016.
This was shortly before the
whole project came to an end. Mr Buda expressed his displeasure to Mr
Terreblanche about how things
had worked out. In the email, he wrote:
“
As you are aware PVA is not my
agent. Goodrich or you are.
”
51.
It was pointed out to Mr Buda that this
contradicted his earlier statement to the effect that it could be
said that PVA was Forum’s
agent. Mr Buda’s response was
that he could not remember why he had made this statement. However,
he said that he was very
upset at the time as things had gone
horribly wrong. “
I was looking for
an avenue through to Clive and … Clive was unapproachable at
the time. He was being bizarre so I went that
route okay. It does not
necessarily make it true that that is what I said to Raymond.
”
52.
The defendants rely on this email and this
exchange to undermine Forum’s case that PVA was liable to it
under the agreement.
I will deal with this issue later, when
assessing the evidence.
53.
Ms Upsdell testified on behalf of Forum. As
the author of the 5 May email she confirmed its contents. She was
taken through what
it said. Ms Upsdell was asked what she had meant
in saying that: “
(p)ricing on the
system will be cost (your reserve) plus 30%
.”
She confirmed that this was a reference to the factor that Mr Buda
worked on and what he wanted in his pocket. She said:
“
We
agreed to put on the 30% that were then split between Goodridge, Park
Village and their expenses.
”
54.
Ms Upsdell was part of the meeting between
the parties on 15 May in Johannesburg. She was asked what had been
agreed between the
parties as to who would take charge of the
operation and how it would work in terms of the unpacking, invoicing
and selling. Ms
Upsdell confirmed that she was largely responsible
for the unpacking of the containers. She said the agreement was that
all of
them would do the selling. She relocated to the PVA premises
for this reasons, and Mr Lazarus appointed a few of his staff to
assist
with the selling.
55.
As to the role of PVA as outlined by Mr
Lazarus in the meeting, Ms Upsdell said:
“
Clive
was very specific that we were not to handle money. We were not to
invoice. That he had brought Grant in who was their bookkeeper.
They
had the system in place 10 because they had the accounts package.
They would do all the invoicing. And they would control
security,
because they had, obviously they had security guys at the exits. They
would sign people in and out. Nothing was to leave
the premises
without Clive's knowledge. And if it did leave the premises, it had
to be on a Park Village Auctioneer's invoice.
And everything had to
be checked when it left.
”
And:
“
Clive
was very, very clear on the point. He had brought Grant across from
their Randburg offices to run this on their side, on the
bookkeeping
side. He was going to do all the invoicing. We did mention Elaine and
I were going to do it, but we never did. It stayed
purely with Grant.
He worked on the (bookkeeping) package, only he had access to it.
”
And:
“
And
they would also, Park Village also insisted they had full control
over the stock. All stock leaving had to be on an invoice.
Had to be
signed in and out … When they sold any stock, it had to be on
an invoice, a Park Village Auctioneers invoice.
That was done by
Grant. And it had to be signed out at their security
.”
56.
Under cross-examination, Ms Up
sdell
was asked about the 15 May meeting and why
it was held. She said:
“
I
am trying to remember, but I believe that was when Dave Buda flew up
from Cape Town to see his stock and check what was happening.
And
that was when we sat around the boardroom table and went through the
various different, who would be doing what and how.
”
57.
She was asked whether any arrangement was
made that differed from what was recorded in her email of 6 May. She
responded: “
No
”.
She confirmed that the email was a handy summary of what had been
agreed. She was asked whether Mr Lazarus had said at
the meeting
that: “…
he is from now on
fully responsible for everything in that warehouse no matter what
happens to it?
” Ms Upsdell
replied: “
I do not remember him
using that term, ‘whatever happens to it’. But he was
very specific that he would handle the security,
the safety of the
stock, the security, the selling, invoicing, and the money.
”
58.
She was asked who Mr Buda looked to in
order to ensure that things ran smoothly. She answered that he looked
to both Mr Lazarus
and Mr Terreblanche for feedback. Ms Upsdell was
also asked to comment on what Mr Buda may have meant in his email to
Mr Terreblanche
on 22 November. She responded, that she did not know,
other than that Mr Buda had initially done the deal with Mr
Terreblanche.
Ms Upsdell was also questioned about a later email from
Mr Buda to Mr Terreblanche dated 6 December 2016, in which Mr Buda
said
that he was awaiting a full worksheet from Ms Upsdell for all
the inventories sold from or by PVA. She was asked why Mr Buda had

requested this information from her if PVA was in charge. She
responded that neither she nor Mr Terreblanche had the information

and she had told Mr Terreblanche that she could not do it: “
I
did not have the full sales figures from Park Village, how could I do
an inventory?
” In his evidence,
Mr Buda had indicated that he had asked Ms Upsdell to do this task as
he thought he might get more joy
out of her than Mr Lazarus.
59.
Ms Upsdell was also cross-examined on how
the sales process worked, and to what extent PVA employees were
actually involved in the
sales. For reasons that appear later it is
not necessary for me to go into this aspect of her evidence in any
detail.
60.
Mr Terreblanche also testified on behalf of
Forum. He said he did not know Mr Buda and became involved through Mr
Swanepoel, who
knew Mr Buda. He confirmed that when he started
negotiating with Mr Buda, PVA was not yet involved. However, when he
saw the number
of containers involved, he realised that Goodrich
needed more space. It was then that he approached Mr Lazarus.
61.
Mr Terreblanche testified that Goodrich did
most of the sales. However, PVA staff also did a certain amount. He
said that all the
stock was in PVA warehousing and the security was
supplied by PVA. All sales had to be processed through Mr Cameron.
PVA controlled
all the invoicing and payment was made into PVA’s
bank account. This evidence accords with Ms Upsdell’s evidence
on
the sales, invoicing and payment process, save for the fact that
Ms Upsdell said that PVA did most of the sales.
62.
Mr Terreblanche said that PVA took
responsibility for the stock and security. This was at the insistence
of Mr Lazarus. Asked to
describe Mr Lazarus’ approach to the
venture, Mr Terreblanche responded:
“
It
was his premises, his warehouses, etcetera. So, obviously he had you
know, previous to our deal, he obviously has security in
place. It is
his premises, so everybody listen to what Clive Lazarus says. There
was not a third party, a mutual beneficial security
company employed
you know, it was all under the roof and under the instruction of Mr
Lazarus
.”
63.
Under cross-examination, Mr Terreblanche
confirmed that a three-party agreement had been entered into at the
meeting on 15 May 2016.
According to Mr Terreblanche, when he
realised he needed more space to house the goods in the containers,
and after the Wynberg
warehouse he had in mind had fallen through, he
approached Mr Lazarus. When he originally approached Mr Lazarus, he
had wanted
to pay him rental. But Mr Lazarus came back to him with
the proposal that he (Mr Lazarus) get involved in the venture instead
of
simply renting Goodrich space. He said they agreed to split the
commission on a 10% each basis, with a further 10% for expenses.
He
then approached Mr Buda and told him he was going to go into a joint
venture with PVA. Mr Buda was happy with that, and so was
Mr Lazarus.
Mr Terreblanche confirmed that at the stage of the 6 May email, the
agreement was still between Goodrich and PVA.
64.
He was taken to an email written by Ms
Upsdell to Mr Buda dated 2 May 2016. The email set out what
Goodrich’s responsibilities
would be, and how the proceeds
would be split. The terms set out in this email are different from
those contained in the later
email of 6 May 2016. Mr Terreblanche
said that this email was written at the start of negotiations with Mr
Buda. It is clear from
the email that at that stage it was envisaged
that Mr Swanepoel would be involved and would take a share in the
deal. Mr Terreblanche
explained in this regard that: “
The
initial concept when we started the negotiations for this contract up
until where we ended it changed dramatically, okay. At
the time of
this letter Mr Lazarus from Park Village was not yet involved.
”
65.
It was put to Mr Terreblanche in
cross-examination that under the envisaged terms in the 2 May email,
Goodrich was “
basically
responsible for everything
”. Mr
Terreblanche responded: “ …
yes
if we are going according to this letter because before anybody else
was involved in the contract. If everything went according
to this
letter on 2 May, correct.
”
66.
Mr Terreblanche was asked about the meeting
on 15 May. He responded:
“
All
right, so the end result you know from that meeting was that you know
Mr Cameron, Clive would do the, or Park Village would
do the
invoicing. They would collect the purse basically the whole structure
of the deal. So we would sell, and they would raise
the invoice, they
would collect the money. That was basically you know...the
advertising was going to be decided with all of us.
It was just
basically the outline of how the things were going to go forward.”
67.
Mr Terreblanche was requested to explain
why Mr Buda had asked him and Ms Upsdell, and not Mr Lazarus, for an
inventory of all goods
sold at or by PVA, if PVA was indeed in
control of the inventory. He said:
“
At
no time, at no time in the entirety of the contract were we ever
given access into that inventory to see what the invoice amounts

were, who was being invoiced, what was sold on auction to the true
figures. All of us only Clive (Mr Lazarus) had control over
that”.
68.
He was asked whether, when they left the
table to adjourn for lunch after the meeting on 15 May, had anything
changed from the terms
set out in the 6 May email. He said:
“
You
know it was more clarity on the way forward, and reconfirming the
joint venture and the way that we were going to work. I cannot
tell
you honestly it is so long ago I cannot tell you exactly what was
discussed at that lunch, because then I would be lying.
But it was a
general lunch with everybody going forward. Clive Lazarus invited
Dave and myself to lunch at the Butcher Shop, and
it was more on a
friendly footing
.”
69.
Mr Lazarus’ version was put to Mr
Terreblanche:
“
Mr
Lazarus will say no new deal was struck on 15. Mr Buda merely came up
to meet him, and to see where the warehouses are and just
to confirm
what was informed to him on 6 May.
”
70.
Mr Terreblanche responded: “
Correct,
Mr du Plooy
”.
71.
So much for the plaintiff’s evidence
on the terms of the agreement. What of that of the defendants? Mr
Lazarus was the only
witness called on their behalf.
72.
In his evidence in chief, he was asked
about the roles of PVA and Goodrich he responded that Goodrich would
compile the inventory
and send these to Mr Campbell. Goodrich was
responsible for the sales of the items and PVA would invoice and
account to Forum on
the financial aspects. He said that PVA would pay
Forum via electronic transfer.
73.
Mr Lazarus was asked whether the extent of
PVA’s involvement was discussed during the meeting with Mr Buda
on 15 May. He was
also asked whether he had concluded an agreement of
some sort with Forum at the meeting. His respective responses to
these questions
was:
“
Not
really I think that particular first meeting was really for Mr Buda
to look at the facilities, and he briefly went through what
was going
to take place in terms of responsibilities.”
And:
“
Not
at all.”
74.
He testified that at some point he wanted
to exercise a landlord’s tacit hypothetic and lock the doors of
the warehouses,
but he did not do so as Mr Terreblanche promised him
that there was the prospect of a bulk sale to UFO. Mr Lazarus was
very critical
of the project. He said he had been “
led
up the garden path
”, that most of
the goods were Chinese and Indian items, suitable for small people,
not for the South African market. He said
that there were a lot of
Chinese umbrellas. He said the prospective customers he approached
all just shook their heads. There were
damaged legs, and stained
furniture. He said there were lots of cases of refunds: “
I
would say 90 percent of the time the money was refunded
”.
75.
It should be noted that these details were
never put to any of the plaintiff’s witnesses. While all agreed
that there was
some damage to the goods, and that this might have
been more than was to be expected, they were never told that the
defendants’
case was that 90% of the sales required refunds.
Nor where they asked about whether the furniture was suitable for the
South African
market. On the contrary, Ms Upsdell testified that the
furniture was A grade quality. Furthermore, Mr Lazarus stated in his
evidence
in chief that he did not spend much time at the sale
premises.
76.
Mr Lazarus said that he did a final
reconciliation to close the books and to “
move
on from a bad chapter
”. This was
after the fire sale on 8 December 2016. He was asked by his counsel
whether he owed Forum money after the final
reconciliation. He said
that he had, but that he had paid it over to Forum.
77.
Under cross-examination, Mr Lazarus
confirmed that his version was that he was never part of any
agreement with Forum. Counsel for
the plaintiff took Mr Lazarus
through the defendants’ plea. He was directed to the plea in
response to the terms of the three-way
joint venture alleged by the
plaintiff in paragraphs 7 and 8 of the particulars of claim. In the
plea, PVA admitted that it had
certain obligations consequential on
the alleged agreement, and that it had complied with those
obligations. He was asked why the
defendants had pleaded that they
acquired obligations and complied with them when Mr Lazarus’
case at trial was that PVA
was never part of the three-party
agreement. He had difficulty answering the question, responding:
“
M'lady
I am not an attorney there was a... agreements of different companies
functions but I am not qualified enough to discuss
the legal point on
a [indistinct]. My knowledge of being an attorney is not... is not
sufficient.
”
78.
When pressed as to what the functions of
the different parties were he again said:
“
There
was... I... I am not denying that there was an agreement of people to
do different functions in dispersing the office furniture
but in
terms of a legal agreement I am not an attorney M'lady and I cannot
quantify on the terms of the legality of clause 10.5.
I am not
qualified enough to... answer your question.”
79.
And finally, when asked whether he accepted
that the three parties came together and agreed to undertake various
obligations between
each other, he responded:
“
There
was... yes there was an agreement to do certain functions for
disposing of the furniture.
”
80.
Mr Lazarus confirmed that the defendants’
case was that PVA’s only function under the agreement was to do
advertising
and marketing in conjunction with Goodrich, and to issue
invoices based on information provided by Goodrich. He said that the
plaintiff’s
evidence, which placed PVA at the centre of
operations was wrong. He was taken to Ms Upsdell’s email of 6
May. When asked
to comment on the accuracy of what she had recorded
in it, Mr Lazarus said that this could have been Ms Upsdell’s
perception.
But he could not comment on the content of the email
putting PVA at the centre of things. He could not recall having said
that
he wanted complete control of the stock.
81.
Mr Lazarus was asked about the defendants’
version that Goodrich was solely responsible for sales. He was told
about the sales
process testified to by Ms Upsdell and Mr
Terreblanche. When told that Ms Upsdell had testified that the PVA
logo was on the slips
that customers took to Mr Cameron to generate
invoices and to make payments, he said he did not know about that.
Eventually, he
told the court that he did not contend that PVA had
not done any sales.
Analysis
of the evidence and submissions on the nature of the agreement issue
82.
On the plaintiff’s case, the outcome
of the meeting between the parties on 15 May 2016 was an agreement
between the three
parties as to how the goods would be sold and on
what basis there would be accountability to Forum. Its case is that
PVA ultimately
was responsible to account to Forum for the stock
disposed of and to pay to Forum its agreed cut. PVA’s case was
presented
on the basis that there was no agreement with Forum, and
that PVA only had limited obligations, which it performed.
83.
As far as the witnesses for the plaintiff
are concerned, they were generally consistent in their versions of
the agreement and its
terms insofar as the role of PVA is concerned.
Mr Buda was a good witness. He answered questions directly, and did
not prevaricate.
He was clear in what he understood PVA’s role
to be. Although he accepted that PVA and Goodrich may have made
arrangements
between themselves, Mr Lazarus’ stance was that Mr
Terreblanche and Ms Upsdell would operate through the PVA team. I
have
no reason to reject Mr Buda’s evidence in this regard.
84.
Ms Upsdell was an excellent witness. She
was able to give clear and detailed responses to answers put to her.
She was at the two
critical meetings when Mr Lazarus outlined what he
understood PVA’s role to be. Her recollection was recorded in
the contemporaneous
email of 6 May 2016. She was also on the ground
at PVA’s premises throughout the period and had hands-on
knowledge of how
things worked. I have no reason to reject her
evidence to the effect that PVA was an integral part of the
three-party agreement,
and, indeed, that PVA had overall control of
the money, the invoicing, and the security of the stock.
85.
Overall, Mr Terreblanche was not an ideal
witness. He had to be reminded to answer questions. My sense is that
he is more of a talker
than a listener. He gave long answers, often
not on point and had to be told to return to the question and to
answer it. However,
I have no reason to find that he was not a
credible witness on this aspect of the case. His evidence was
consistent with that of
Ms Upsdell to the effect that PVA, through Mr
Lazarus, was in the driving seat of the operations in Johannesburg.
86.
What of the sole witness for PVA, Mr
Lazarus? If a defendant is to have only one witness in its corner, it
should not be a witness
like Mr Lazarus. Mr Terreblanche’s
meanderings in his evidence paled into insignificance when Mr Lazarus
took the stand,
particularly when he was under cross-examination. His
default position was to avoid answering questions, or to give wholly
irrelevant
answers. He hid behind not understanding the law. He was
difficult to pin down on facts. Indeed, it was difficult to
understand
what his case was from the evidence he gave.
87.
Mr Lazarus ultimately accepted under
cross-examination that there was an agreement between the three
parties. Indeed, it would have
been difficult for him to avoid this
given the plea that was filed. His initial stance when he took the
stand, viz. that PVA and
Goodrich were parties to an agreement that
excluded Forum, could not be sustained. This is so on Mr Lazarus’
own admission.
88.
There is ample other evidence to confirm
that there was an agreement between the three parties. The evidence
also points to the
controlling hand of PVA over the operation. Much
evidence was led on who sold items on the showroom floor and whether
PVA had a
role to play here at all. I have not gone through this
evidence in any detail, as I do not consider it to be a determinative
factor
on the issue of PVA’s accountability to Forum under the
agreement. It is quite clear on the evidence that there was joint

working relationship between Goodrich and PVA in terms of sales. Even
if Goodrich did most of the sales (as Mr Terreblanche said),
PVA also
did sales (on Mr Lazarus’ own admission), and Mr Lazarus was
responsible for the final auction on 8 December 2016.
89.
More importantly, in my view, is the common
cause fact that all sales were processed by PVA. Invoices were issued
on a PVA letterhead.
Mr Cameron of PVA was located at the premises to
process and capture the sales. He kept the books, so to speak. Both
Ms Upsdell
and Mr Terreblanche were consistent in their evidence that
Mr Cameron reported to PVA and not to Goodrich on the status of sales

and the income received. In fact, evidence was led in relation to
claim B, which I deal with later, to the effect that Mr Cameron

prepared the accounts for PVA for purposes of reporting back to Mr
Buda as to the amounts due to Forum under the agreement. Goodrich
had
no hand in this. On Mr Lazarus’ own admission, he did a
reconciliation and paid over to Forum what he considered to be
due to
them. Ms Upsdell and Mr Terreblanche confirmed that they had not
control over the inventory once it had been uploaded. It
lay within
PVA’s control.
90.
All of this evidence supports the
plaintiff’s averments that there was an agreement concluded
between Forum, Goodrich and
PVA on 15 May 2016. In terms of this
agreement, it was PVA, and not Goodrich that was responsible to
account to Forum for the sales,
and to pay to Forum the amount due to
it under the agreement.
91.
The defendants submitted that the 15 May
agreement was a fabrication by Forum. The evidence does not support
this submission. It
is so, as the defendants pointed out, that Mr
Buda said in his testimony that PVA and Goodrich had reached terms of
agreement between
themselves. However, this does not contradict his
evidence that there was a three-party agreement as suggested by the
defendants.
I understood Mr Buda’s evidence to be that however
the other two parties arranged things between themselves, as between
the
three parties, PVA would take the lead and would be accountable
to Forum for whatever was due to it from the sale of the goods.
92.
Criticism was also levelled at Ms Upsdell’s
and Mr Terreblanche’s evidence, and the answers they gave under
cross-examination.
They were both asked whether anything further was
agreed at the 15 May meeting other that what was set out in the email
of 6 May.
The latter email was sent at a time when, it is common
cause, PVA and Forum had not yet made an agreement. The defendants
submitted
that as Mr Terreblanche had answered that nothing further
was agreed, this meant that there was in fact no agreement between
Forum,
PVA and Goodrich at the 15 May meeting. The answer given by Mr
Terreblanche should be considered within the context of his entire

evidence, and of the other evidence led. It cannot be seen in
isolation. If one has regard to whole conspectus of evidence, Mr

Terreblance simply cannot be understood to have confirmed, as the
defendants would have it, that there was no agreement between
the
parties.
93.
In any event, as I have pointed out, even
Mr Lazarus eventually said that there was an agreement regarding the
roles of the parties.
It was Mr Lazarus who offered in his testimony
that he had paid all the money due to Forum. Not only is this
consistent with the
evidence led on behalf of the plaintiff, but it
is confirmation by the defendants that it was PVA who had to account
to Forum,
and not Goodrich.
94.
For all the above reasons, I find that
Forum has established that the three parties entered into an
agreement as averred in the
particulars of claim. I find that in
terms of that agreement, PVA was obliged to pay to Forum what was due
to it from the sale
of the goods. The next question is what was Forum
entitled to receive under the agreement? This brings me to the next
leg of the
case, viz. the factor issue.
The factor issue
95.
It is the plaintiff’s case that under
the agreement reached on 15 May, Forum was entitled to be paid on the
basis of the factor
6 equation. This was the case until 4 July 2016,
when Mr Buda, on behalf of Forum, agreed to reduce its factor to 4.9.
96.
The defendants admitted in the plea that
the original agreement was that Forum would receive payment on the
factor 6 basis. However,
they pleaded that because of a
misrepresentation about the quality of the goods, it was no longer
entitled to receive this. Instead,
it was agreed that Forum would
receive the net amount left over after a deduction of 20% commission
and 30% expenses.
97.
In his evidence Mr Buda confirmed the
factor 6 arrangement. He denied that there was ever an agreement to
alter this is the terms
pleaded by the defendants, save for the final
fire sale which, it is common cause, proceeded on a non-factor basis.
In fact, he
said that this was never even discussed. The first he
heard of it, he said, was when it was raised by the defendants in the
case.
98.
Mr Buda was referred to two emails in his
evidence in chief. The first was one from Mr Lazarus to Mr Buda,
dated 9 June 2016. It
read:
“
Hi
Dave
Thanks for mail. From
the outset I have always planned in being transparent, and have
worked on a open book policy with regard to
the figures relating to
sales and expenses. I have not gone through the actual figures as is
being worked on at present and cannot
determine If there is room to
reduce commissions as have not received all of the expenses invoices
such as advertising set up overtime
staff printing packing etc .A
detailed list will be available for you once completed . I also may
suggest some of these expenses
are discussed and maybe even shared as
the suggested 10% costs are being exceeded and the costs are eating
deeply into the expected
profits and as stated yesterday the exercise
is proving uneconomical to administer .I do not yet know the actual
profit from the
last sale if any but once finished the collection of
money refunds etc we provide a full list of income & expenses and
determine
the net profit if any and discuss if there is any leeway to
negotiate, and recommended a meeting is held and matter discussed
Regards
CLIVE”
(
sic
)
99.
He was referred to another email, dated 2
July 2016. This one was from Mr Buda to Mr Lazarus. It said:
“
Hi
Clive
I suggest we reduce
the prices so significantly that the goods should fly out.
To that end I suggest
the following.
1. The goods at PVA
(shipments 1-7) have a retail value of UKP 5,7m
2
.
I suggest each item is sold by PVA at a ratio of 7.3 including VAT
this means that Forum will get a ratio of 5. 615 including
VAT,
that's a discount of 20% on current levels.
3
.
The above returns you 30% as agree
d
.
4
.
All sales will be calculated by dividing by 130 multiplied by 100 to
arrive at the fair
distribution of funds
5
.
Hopefully this will inspire you to aggressively market the goods.
6. Let’s work
closely together to achieve the desired result.
Call me with your
comments
Dave
”
(sic)
100.
Mr Buda explained that the ratio 5.615
referred to in paragraph 2, if VAT was excluded, would come to 4.9.
In other words, his evidence
in this regard is that he was suggesting
a reduction by Forum of the factor 6 equation to factor 4.9. He could
not recall whether
Mr Lazarus ever called him to discuss the matter
as suggested in the email.
101.
However, on the previous day, being 1 July,
Mr Terreblanche messaged Mr Lazarus by WhatsApp (this was confirmed
by Mr Terreblanche
in his evidence). It said: “
Seeing
Dave (o)n Sunday, at airport. Will tell him the bad and ugly. There
no good (sic) until he drops the price as discussed
.”
102.
Mr Buda confirmed that he met Mr
Terreblanche at OR Tambo International Airport on Sunday, 4 July. He
said that PVA and Goodrich
were moaning about the fact that they were
not able to make the sort of returns they were looking for. Mr
Lazarus had previously
said that his overheads were high and that
they needed a better return. He confirmed that at the meeting with Mr
Terreblanche he
agreed to reduce his price to factor 4.9.
103.
His evidence is consistent with a message
from Mr Terreblanche to Mr Lazarus at 12.21 on 4 July, saying: “
Dave
new amount we pay him is 4.9 excl vat (sic)
”.
And at 12.22 Mr Lazarus responded: “
K
”.
I understand that “K” is short for “OK” on
messaging platforms.
104.
Ms Upsdell confirmed Mr Buda’s
version as to his having agreed to reduce his share to factor 4.9.
She said this happened when
they saw things were not going so
smoothly, and they were not making money they thought they would
make. She said that this was
due to stock damage and “
various
reasons
”. She was asked by
counsel for the plaintiff whether the defendants’ case was
correct, i.e. that a new deal was struck,
in terms of which Forum
would only receive the net amount after the deduction of 20%
commission and a further 30% for expenses
from the sales price. She
said:
"That never
happened. The factor for Dave Buda remained unchanged and the only
concession Dave ever made to that, when we were
struggling with the
sales and both Park Village and Goodrich said we are not making money
and the expense are not being covered,
he offered to contribute
towards ... Sorry. Okay. Dave Buda offered to contribute towards a
major radio campaign that we had suggested
we do. He never changed
his factor. Nothing was ever agreed on to the contrary.
And, asked for clarity on
what she meant by saying Mr Buda’s factor had never changed,
she said:
"Sorry, my
apologies. Never changed the structure of the deal. His factor
reduced, but he still got his factor in his pocket.”
105.
Mr Terreblanche confirmed Mr Buda’s
version as well. He confirmed his messages to Mr Lazarus, referred to
earlier. As to the
defendants’ version, he said:
“
That
is not true. There was always that, the factor, because originally we
had started at nine, then it came down to seven, and
then it came to
six and then basically 4.9. So there was always a factor. And the
agreement never changed. The only thing that
ever changed in the
agreement, was in terms of the amount paid to Mr Buda, okay, in terms
of the factors.”
106.
Mr Terreblanche was questioned under
cross-examination about him having said that the factor was
originally 9, then 7, then 6 and
then 4.9. He was asked when the
figure 9 was on the table. To this he responded: “
Right
in the beginning of the contract when we started negotiating you know
when I asked about values. What is the value of this
contract?
”
He said that this was what Mr Buda envisaged. However, it went down
to 7 later, when the parties had agreed on the joint
venture.
107.
The defendants rely on this evidence from
Mr Terreblanche to advance their submission that, as stated in their
heads of argument
Mr Buda’s price “
was
always a pie in the sky and never based on any realistic foundation
.”
108.
The difficulty, of course, for the
defendants is that in paragraph 11.2 of their plea they admit that
the original agreement was
that Forum would receive payment based on
the factor 6 equation. He was not asked to explain this in his
evidence in chief. However,
he was cross-examined on it. Mr Lazarus
said that the factor was an “
aim
”;
a “
goal which was not achievable
”;
and not a “
fixed price
”.
He was unable to give a proper explanation for the messages exchanged
between him and Mr Terreblanche on 1 and 4 July 2016.
He avoided
answering questions, or gave irrelevant answers. He was not a
satisfactory witness on this score.
109.
I have no reason to doubt the credibility
of the plaintiff’s witnesses on the factor issue. It is so that
Mr Terreblanche
rambled on to some extent on the factor shifting from
9 down to 4.9. However, I do not regard this to be a material issue
for the
plaintiff’s case. Mr Buda testified that he thought
that a price of factor 9 might be achievable, but at the end of the
day
the parties settled on a factor of 6. It is clear from his
evidence that the parties did discuss the possibilities of various
factors,
including a possibly achievable factor 9. However, on the
whole the evidence supports the plaintiff’s case that what was
originally agreed upon by the parties was that Forum would be paid on
the basis of the factor 6 equation.
110.
As I have noted, this is confirmed in the
plea itself. Mr Lazarus’ attempt to avoid the case pleaded by
the defendants by
saying that the factor was nothing more than a
non-binding goal is wholly unsupported by the pleadings and the
evidence. The evidence
clearly establishes that the original factor
was 6, and that this was reduced to 4.9 by agreement between the
parties on 4 July
2016.
111.
As to the defendants’ case that Forum
would be paid a net amount after the deduction of 20% commission and
30% for expenses,
there is nothing to support a finding that this
formulation was agreed between the parties as a general basis for
payment to Forum.
It was only for purposes of the final fire sale in
December 2016 that a non-factor based payment basis was agreed. This
was pleaded
by the plaintiff in its particulars of claim and was
admitted by the defendants.
112.
For these reasons, I find that the
plaintiff has established that under the agreement between the
parties, Forum was entitled to
payment based on the factor 6
equation. I find further that on 4 July 2016, and by agreement
between the parties, the factor was
reduced to 4.9.
DID PVA COMPLY WITH ITS
OBLIGATIONS?
113.
I have found that it was PVA’s
obligation under the agreement to account to, and to pay Forum the
amounts due to it. It is
common cause that PVA paid Forum an amount
of R2 324 051. 68. Forum’s case is that there was a shortfall
in what it was entitled
to be paid under the agreement. Accordingly,
PVA did not comply with its payment obligation.
114.
Based on the master spread sheet, which I
have accepted as being an accurate basis on which to determine the
goods delivered, the
value of the goods was £3 495 310,35. On a
factor equation of 4.9, Forum says that it was entitled to be paid at
least R17
127 020,71, plus VAT by PVA. This is on the basis that all
the goods were sold.
115.
As I indicated earlier, this is less than
the original amount claimed. In the original particulars of claim
Forum based its claim
on the value of the 98 containers of goods sold
by PVA, and pleaded that this value was an £4 300 800.
00. In its
amended particulars of claim, Forum uses as its starting
basis the value of the goods delivered, and pleads that this was £3

495 310. 35. The reduction in value is based on the calculations
done based on the master spread sheet. On the evidence presented,
the
spreadsheet only captured goods
actually
unpacked and accounted for. This accounts for the reduction in value,
despite the claim being based on a larger pool of goods,
i.e. goods
delivered as opposed to goods sold. On the calculation in the amended
particulars of claim, the basic value of the claim,
calculated on the
factor 4.9 equation, is reduced from R23 073 920. 00 to
R17 127 020. 71.
116.
The amount paid by PVA falls far short of
this. The defendants did not present evidence to establish how it
calculated the amount
it actually paid to Forum. Nor did the
defendants present evidence to contradict the value of the goods
entered on the master spread
sheet. The evidence thus establishes,
based on the value of the identified goods, and applying a factor of
4.9, that there was
an underpayment by PVA, meaning that PVA did not
comply with its obligations to Forum.
117.
The defendants raised certain issues to
dispute Forum’s case in this regard. In the first place, they
say that it is common
cause that there was damage to the goods,
meaning that the full price could never have been achieved. The
defendants point out
that in the letter of demand sent by Forum’s
attorneys they said that Forum would be willing to write off the
value of 50%
based on damage. For whatever reason, the plaintiff did
not proceed with that suggestion, as borne out by the particulars of
claim.
The defendants did not lead evidence to show the value of the
damage they claim was material. There is certainly no evidence that

the damages were so extensive that it absolved PVA from its
obligation to pay and more to Forum than the R2,3 million that it did

pay. The damages issue is not a basis for finding that PVA met its
payment obligations under the agreement.
118.
The second issue the defendants raise is
the common cause fact that in about September 2016 Goodrich issued
invoices in its own
name, and received for its own account, payment
of over R300 000. 00 for goods sold without PVA’s
knowledge. I will
refer to this issue again when I deal with the
quantum. However, for reasons similar to those advanced regarding the
damages issue,
this would not absolve PVA of its obligation to make
full payment to Forum. The amount of some R300 000. 00 even if
taken
into account, falls far short of the total amount due.
119.
What the evidence does establish is that
the R2.3 million paid by PVA to Forum was substantially less than
what Forum was entitled
to be paid under the agreement. I accordingly
find that PVA failed to comply with its payment obligation to Forum.
THE QUANTUM OF THE CLAIM
120.
Where
damages are difficult to estimate, the fact that they cannot be
assessed with precision will not relieve a wrongdoer of the
necessity
of paying.
[1]
It
has been held that:
“
Monetary
damage having been suffered, it is necessary for the Court to assess
the amount and make the best use it can of the evidence
before it.
There are cases where the assessment by the court is very little more
than an estimate; but even so, if it is certain
that pecuniary damage
has been suffered, the Court is bound to award damages. It is not so
bound in the case where evidence is
available to the plaintiff which
he has not produced; in those circumstances the Court is justified in
giving, and does give, absolution
from the instance. But where the
best evidence has been produced, though it is not entirely of a
conclusive character and does
not permit of a mathematical
calculation of the damages suffered, still, if it is the best
evidence available, the Court must use
it and arrive at a conclusion
based upon it.
”
[2]
121.
In this case it is so that I cannot
determine with mathematical accuracy how much more PVA ought to have
paid Forum over and above
the R2.3 million that was paid. However,
Forum has pleaded its case on quantum on a basis that permits me to
arrive at a conclusion
on the evidence available.
122.
It is common cause that PVA produced only
some 134 invoices by way of discovery. PVA does not say that these
were the only invoices
that were ever issued. In view of the quantity
of goods involved, quite clearly far more invoices were issued than
those discovered.
Consequently, Forum cannot rely on PVA’s
discovered records for purposes of quantifying its claim.
123.
Forum’s case is that according to the
master spreadsheet, the total value of the goods delivered was £3
495 310. 35.
Its case further is that all of these goods were sold.
In its particulars of claim, Forum avers that the sale held on 8
December
2016 was a final sale aimed at clearing the goods then
remaining in the warehouse. The defendants admit this averment. It
was not
suggested to any of the plaintiff’s witnesses that
goods remained unsold after the final sale.
124.
As I have indicated already, I accept that
the master spreadsheet is a conservatively accurate record of the
goods that were delivered.
PVA has not led evidence to dispute the
values attached to the items of goods in the master spreadsheet. I
accordingly accept that
the value attached to the goods as contended
for by Forum in the master spreadsheet.
125.
It follows that on the evidence I have
before me, a calculation may be made of the amount Forum ought to
have been paid based on
the factor equation. In its pleadings, Forum
relies only on a factor 4.9 calculation. This is because, as Forum
explained, without
a proper accounting from PVA it is impossible to
calculate what goods were sold on a factor 6 basis prior to 4 July
2016, and what
goods were sold on a factor 4.9 basis post the 4 July,
when the factor was reduced. There can be no prejudice to PVA on this
score,
as it is the lower of the two factors I have found to have
been agreed on under the agreement. On this basis, Forum says it was

entitled to R17 127 020. 17 plus VAT (the spreadsheet MDM total).
This is calculated on the basis of the MDM price of £3
495 310.
35 multiplied by the factor 4.9.
126.
However, Forum does not claim the full
amount of the spreadsheet MDM total. It concedes that what must be
subtracted from this amount
is what it was entitled to be paid based
on the factor equation in respect of goods that were sold by Forum
separately to Unicorn
in November 2016 (the Unicorn deal). In
addition, it says that the value of the estimated percentage of goods
sold at the final
sale must be subtracted from the spreadsheet MDM
total. Finally, it accepts that the amount already paid by PVA to it
must also
be subtracted.
127.
As regards the Unicorn deal, Mr Buda
testified that as the months were going by and sales had slowed he
told Mr Terreblanche and
Mr Lazarus in a meeting that he was going to
try to sell some of the remaining inventory himself. He said he made
a deal with Unicorn,
an auctioneering company in Rustenburg. He
produced a spreadsheet showing the codes for all the items that were
collected by Unicorn
under the deal. The Rand value equivalent of all
of these goods was some R32 million. What remained after Unicorn had
removed the
items was sold at the final sale.
128.
Mr Buda estimated that Unicorn had taken
delivery of 30 containers. He was questioned about the accuracy of
this under cross-examination.
Mr Buda pointed out that the estimate
of containers was not relevant, as there was an accurate list of the
actual items that were
sold and uplifted by Unicorn. Mr Terreblanche
testified that Unicorn worked on an inventory when they loaded the
stock, and that
someone else whom Mr Buda had arranged was present.
129.
In their heads of argument, the defendants
made submissions to the effect that there was no evidence as to who
had compiled the
Unicorn inventory and whether it was accurate. They
submitted that it was possible that Unicorn had taken more stock than
was on
the inventory list, or that Unicorn had actually taken higher
value stock than that reflected and relied on by Forum. The inventory

list was the best evidence available as to the goods sold and
uplifted by Unicorn. It was not put to Mr Buda that Unicorn had taken

more stock that reflected on the Unicorn inventory, or that it had
taken higher value items than was reflected there. In the
circumstances,
I accept the plaintiff’s calculation in terms of
how much should be deducted from the spreadsheet MDM total as
representing
the factor 4.9 value of the goods taken by Unicorn. On
Forum’s calculation, the amount to be deducted from the
spreadsheet
MDM total on this score is R7 398 031. 76.
130.
As to the issue of the deduction in respect
of the fire sale, Forum bases its calculation on Mr Terreblanche’s
evidence that
the items that were sold on 8 December 2016 represented
no more than 5% of the total goods inventory. Forum accepts it must
deduct
the MDM value of these goods, as the final sale was not based
on the factor equation. In the absence of invoices for these goods,

or other evidence, it is appropriate in this case for the court to
work off this estimate. The least prejudicial percentage to
work off
is 5%, as this will provide a higher deduction in favor of PVA. On
this basis, Forum has calculated that an amount of
R856 351. 03
should be deducted from the spreadsheet MDM total.
131.
It is common cause that the amount paid to
Forum by PVA was R2 324 051. 68, and this amount must also be
deducted.
132.
Finally, as regards quantum, I need to deal
with what the parties referred to as the “Goodrich issue”.
It is common
cause that Goodrich removed certain items from the
inventory and sold them for its own account under its own invoices.
Mr Terreblanche
testified that he had done so early on in the project
as Mr Lazarus had not paid Goodrich for its out of pocket expenses.
133.
Mr Terreblanche did not fare too well on
this under cross-examination. The invoices in question were dated
September, not May or
June, as he had first indicated. However, it
seems to be common cause that Mr Lazarus did come to know about
Goodrich’s actions,
and that some sort of reconciliation was
done. The defendants submit that there was a “Goodrich pillage”
and that Goodrich
was stealing stock left, right and centre. However,
there is no evidence to support this submission. Indeed, Mr
Terreblanche also
gave evidence that Mr Lazarus set aside goods for
his own account. As far as free-for-alls are concerned, it seems to
me that if
it was going on at all, both Goodrich and PVA were engaged
in that activity.
134.
What the evidence does show is that
Goodrich issued invoices in its own name to the value of R336 729.
00. Forum submitted that
as PVA had overall control of the goods and
their security, it should not be excused of its accountability to
Forum in this regard.
In other words, this amount should not be
deducted from the value of the goods on the master spreadsheet. Forum
submitted further
that this was really an issue between Goodrich and
PVA.
135.
The evidence on the Goodrich invoices was
murky. While there is some merit in the submission by Forum that this
is really an issue
between the other two parties, the fact is that at
least R336 729. 00 of goods included in the master spreadsheet were
not sold
by PVA. In my view, this amount ought properly to be
deducted from the value of the goods on the master spreadsheet for
purposes
of the calculation of damages.
136.
In conclusion, on the question of quantum
under claim A, I find that Forum is entitled to damages calculated on
the basis of the
spreadsheet MDM total, less the amount already paid
to Forum by PVA, less the MDM value of the goods sold to Unicorn,
less the
MDM value of the final sale, less the amount of R R336 729.
00. In figures, the calculation is as follows:
Spreadsheet MDM total due
to Forum:
R17 127
020,71
Less MDM value on Unicorn
deal:

R7 398 031. 76
_____________
Sub-total:

R9 728 988. 94
Less MDM value of fire
sale:

R856 351. 03
_____________
New
subtotal:

R8 872 637
Less payment made by
PVA:

R2 324 051. 68
_____________
New
subtotal:

R6548 586. 27
Less goods sold by
Goodrich:

R336 729. 00
_____________
TOTAL
DUE:
R6 212 157. 23
CLAIM B
137.
As indicated earlier, claim B is against Mr
Lazarus in his personal capacity. At trial, Forum sought damages
against Mr Lazarus
on the basis that he induced Forum to lower its
factor from 6 to 4.9, and that he did so fraudulently and against the
provisions
of the
Companies Act. Forum
relies on the common law, and
on
s76(3)
, read with
s218(2)
of the
Companies Act to
establish its
claim. It says that by his conduct, Mr Lazarus used his position as
director of PVA to benefit himself and that he
failed to act in good
faith and for a proper purpose. In so doing he breached his statutory
duties. He also committed fraud under
the common law.
138.
Forum’s case is that Mr Lazarus
inflated expenses and invented other expenses, he presented Forum
with false reconciliations,
based on under declarations of sales, and
he sold some goods for his own account. Through this conduct Forum
was led to believe
that the projected margins upon which the parties
originally agreed that Forum would be entitled to a factor of 6, were
not being
achieved. Consequently, when faced with this alleged false
picture, Mr Buda, on behalf of Forum, agreed to reduce Forum’s

margin to 4.9.
139.
These allegations are denied by Mr Lazarus.
140.
Mr Terreblanche was the main witness in
support of Forum’s case against Mr Lazarus. He testified that
on Mr Lazarus’
instructions, he, Mr Terreblanche obtained two
invoices from a company involved in securing radio advertisements for
the project.
The first invoice was in the amount of R160 183. 68. The
second, for exactly the same services, was inflated to R388 000. 00.
Forum
had agreed to contribute to the cost of the advertising
campaign. The two invoices were entered into evidence. Clearly, some
explanation
was required from Mr Lazarus. He sought to avoid pointed
questions directed at him under cross-examination. He said he did
receive
the invoices, and that he did not deal with invoices or
quotes. His responses did not instill any confidence in the court
that
there was indeed a benign explanation for two invoices for the
same services but for vastly different amounts. In all probability,

the inflated invoice was produced, as Mr Terreblanche said, to ensure
that Forum paid more than it ought to have paid for the advertising.

As the person at the helm of PVA, and in control of the Johannesburg
operations of the commercial venture between the parties,
it is
probable that Mr Lazarus was behind the scheme to present Forum with
an inflated invoice.
141.
The second issue explored was Mr
Terreblanche’s evidence that Mr Lazarus ensured that PVA kept
two sets of books, and that
he fabricated expenses. Mr Terreblanche
was not a model witness in this regard. He tended to make general
statements, such as:
“
Let
me, let me try and put this just as a layman and you professionals
will know exactly how to interpret it. But from the start
of the
contract, right up until the end of the contract, no matter, so Clive
would say to me, you need to bring the equation down,
the rate okay.
Because we need to sell the goods faster or whatever the case is. So
he would tell me that. I would then negotiate
with Mr Buda and get
the price, the equation down. That is why it started at nine, and we
finished at 4.9. Okay.
So
I would do that. And no matter what, what, no matter even though the
rate came down every time and Mr Buda came down on his equation,
no
matter what, Clive was never happy and every time we would come to
the weekly sales meetings, or figures, there would be a whole
another
story that Clive has done, you know. Like the figure, the
manipulating of the figures and manipulating of cost that did
not
exist.”
142.
When asked to pinpoint what expenses Mr
Lazarus manipulated, Mr Terreblanche identified cleaning costs. He
said that Mr Lazarus
charged for cleaning the warehouses when in fact
it was Goodrich that did so. It is also common cause that at one
stage Mr Lazarus
unilaterally decided to charge his fellow partners
rental, when this had never been part of the agreement. He also
threatened to
exercise a landlord’s tacit hypothetic and, in
his words: “
lock the doors
”.
On the advice of his lawyer, he credited Forum with the amount he had
deducted for rental and he did not lock the doors.
143.
Mr Terreblanche also testified that Mr
Lazarus had taken goods off the floor to sell for his own account.
His evidence in this regard
was the following:
“
Mr
L
azarus
,
uhm, came and spoke to me and he said to me listen, we are not going
to make any money out of this contract whatsoever. And I
am going to
take you know, a whole lot of goods for myself so I can at least make
a, you know, I can sell it off and make you know,
make some money.
…
I know where we were.
We were walking around the warehouses, looking at stock and talking.
And I speak under correction, I really,
it is so long ago but I think
it must have been, it must have been around September maybe.
…
So he just said to me,
we are not going to make any money out of this and you know, I am
taking a whole lot of stock for myself,
so I can sell it off and you
know, make some money and I suggest that you do the same. You know,
take some of the stock for yourself.
Because you know, the costs are
running so high, etcetera, etcetera. And that was, that was his
suggestion and instruction. And
then I, obviously I heard what he
said. And then a few days later, it could have been the next day, it
might have been two days
later, you know, I walked in, came into, I
went into the warehouse and these, his staff were removing a whole,
was removing stock
off the, off the warehouse floor and taking it
into containers, into wooden containers and sealing them. And I asked
the staff
you know, what are you doing? And he said no, Mister, Boss
Clive said they must take this stuff and put it in the containers and

seal the containers.”
144.
Ms Upsdell confirmed Mr Terreblanche’s
version that Mr Lazarus put goods aside to sell for his own account,
although she dated
this as being before the fire sale in December.
She said:
“
Clive
had made a big stash of stock behind containers to ensure he made
some extra money after the fire sale, after the auction
in case there
was a shortfall
.”
She said she had seen
this first hand.
145.
As against this alleged conduct of Mr
Lazarus, there is the common cause fact that Goodrich, too, made
sales for its own account.
Mr Terreblanche also testified that he
took up Mr Lazarus’ invitation to set aside some goods for his
own account. Mr Lazarus
denied that he had ever hidden goods to sell
later for himself, although he seemed to say in his evidence in chief
that there was
some agreement between him and Goodrich that they
would jointly sell some goods.
146.
There is no doubt that Mr Lazarus was not
happy with the way in which the project had turned out. He realised
he had made a bad
bargain. He tried to claw back what he could, for
example, by charging rental unilaterally. It would make sense, in
this atmosphere,
that both Mr Lazarus and Goodrich decided to set
aside goods to sell for themselves.
147.
However, the contrary versions of Mr
Terreblanche and Mr Lazarus are complicated by the fact that neither
of them were good witnesses
on this issue. It would be difficult to
make a credibility finding between the two witnesses. Happily, I do
not have to make a
specific finding in this regard.
148.
This is because on the allegation about PVA
keeping two sets of books there is concrete evidence to Mr
Terreblanche’s testimony.
Mr Terreblanche testified that
“
Well,
uhm, there were always two figures when we used to get together for
our weekly meeting, sales figures, etcetera. Where Grant
Cameron, the
Park Village accountant who did the invoices and handled the money,
would always …
So
he would make up two sets of numbers. One would be the actual
figures, so real figures. And a second set would be fake figures

which Clive from Park Village would then disclose those fake figures
to Mr Buda.
”
149.
Mr Lazarus was taken to two customer
invoice reports. Each covered the same transactions for the same
period of time. In the first,
the total was recorded as being R141
000 less than in the second report. The second report, showed extra
columns, being “
actual
”
and “
GP
”.
The “actual” column reflected an added R141 000. Mr
Lazarus said he did not draw up the reports and could not
explain the
difference between the two. He did not know whether “GP”
meant gross profit.
150.
Then Mr Lazarus was taken to an email, sent
by Mr Cameron to a number of people, including Mr Lazarus. There was
a spreadsheet attached
to the email. Mr Cameron wrote:
“
Hi
all.
These are the ACTUAL
FIGURES (
Dave does not see
) of where we are plus I have
included yesterday’s invoicing. …
Please
note I have written the Actual Sales back by 67%, giving you the Cost
due to Dave, then added a 30% markup and that is the
Figure I show to
Dave as Total Sales. … This then gives you an overall 40% GP.”
(Words in brackets appear in the
original, but underlining is added)
151.
When asked to explain what strongly appears
to be evidence that PVA indeed kept two sets of books, and
under-declared sales to Forum,
Mr Lazarus once again deflected. He
said that he: “
.. did not
understand the email
”. When it
was put to him that he received an overall 40% gross profit, he said:
“
I disagree. I never raised the
invoice
.” He said that Mr
Cameron’s figures are “
completely
wrong
”, and “
I
did not even read the percentage. I did not understand the
situation.
” Mr Lazarus said that
he had handed everything over to Claudia Carreira to do a complete
audit. However, she was not called
as a witness, despite a pre-trial
minute indicating that she was expected to be called to testify on
behalf of the defendants.
Mr Cameron was also not called as a witness
to explain his alleged “errors”, despite him also being
listed as a witness.
152.
This evidence, and Mr Lazarus’ wholly
unsatisfactory answers, clearly establishes that PVA indeed kept two
sets of books with
a view to misleading Forum as to the actual sales.
Consequently, the amounts due to Forum were reduced accordingly. It
is not plausible
that Mr Lazarus, who by all accounts was in control
at PVA, did not know of this scheme. Mr Cameron reported to him and
the other
directors. It beggars belief that Mr Lazarus did not know
exactly what was going on and, indeed, that he had not given
instructions
to Mr Cameron to draw up the accounts on the basis that
he did.
153.
Such conduct would certainly be unlawful
and may well constitute a basis for action against him either under
the common law or under
the
Companies Act. However
, what I need to
determine for purposes of claim B, is whether this unlawful conduct
on the part of Mr Lazarus induced Mr Buda,
on behalf of Forum, to
reduce his factor to 4.9.
154.
In this regard, I am not satisfied that the
evidence establishes the link. It is common cause that there was a
higher rate of damage
to the goods than any of the parties expected.
This hampered sales. It is also clear on the evidence that sales were
not as abundant
and fast-paced as the parties had expected. Whether
this was because of poor advertising and stock management, as Mr Buda
suggested
in his evidence, or because of damages, as Mr Lazarus said,
the evidence shows that a number of factors probably led to the
compromise
on the part of Mr Buda to reduce his factor to 4.9.
155.
Ms Upsdell explained in her evidence in
chief that Mr Buda agreed to reduce Forum’s factor: “
When
we realised this was not going to be achieved due to the damage and
various reasons
.”
156.
Mr Terreblanche testified that Mr Lazarus
told him to put pressure on Mr Buda to reduce his factor because Mr
Lazarus said the expenses
were higher than the 10% set aside for them
in the agreement. However, later in his testimony I asked him to
clarify whether his
version was that when he went to Mr Buda to
renegotiate the factor, this was because the expenses were exceeding
10%. Mr Terreblanche
answered that this is not what he told Mr Buda.
He said that: “
Bringing down the
factor negotiating the factor, or bringing prices down on the goods
is normal course of business.
” He
also said that he told Mr Buda that he needed to bring his factor
down in order: “
.. to make the
goods cheaper in order to sell the stock quicker
.”
157.
Even if it could be found that Mr Lazarus’
conduct amounted to fraud and a breach of his obligation under
s76(3)
of the
Companies Act to
exercise his powers in good faith and a
proper purpose, I find that Forum has failed to establish, on the
evidence, that this conduct
caused Mr Buda to reduce his factor. The
evidence shows that all three parties went into the agreement with
certain expectations.
They envisaged that with a factor of 6 the
project would meet their expectations. However, their expectations
were not met. Mr
Buda may have been misled as to the exact sales
figures, but the evidence establishes that there were many other
reasons why he
agreed to reduce his factor relatively early on in the
project. The agreement to reduce was not solely or primarily because
he
was misled by Mr Lazarus.
158.
For these reasons, Forum’s claim B
falls to be dismissed.
CONCLUSION AND ORDER
159.
I find that Forum has made out a case under
claim A, but not under claim B. There is no reason why costs should
not follow the result.
160.
I make the following order:
Claim A
1.
Plaintiff is granted leave to amend its particulars of claim.
2.
The First Defendant is directed to pay to the Plaintiff:
2.1
The sum of R6 212 157. 23 (Plus VAT);
2.2
Interest on this amount at the rate of 10.5% per annum from date of
summons to date of final
payment;
2.3
Costs of suit.
Claim B
1.
The claim is dismissed with costs.
KEIGHTLEY
J
JUDGE OF THE
HIGH COURT
GAUTENG LOCAL DIVISION
Electronically
submitted therefore unsigned
This
judgement was prepared and authored by the Judge whose name is
reflected and is handed down electronically by circulation to
the
Parties/their legal representatives by email and by uploading it to
the electronic file of this matter on CaseLines. The date
for
hand-down is deemed to be 19 November 2020.
Date
Heard (by videolink):

9
th,
10
th
& 11
th
JUNE 2020
Date
of Judgment:

19 NOVEMBER 2020
On
behalf of the Plaintiff:

Mr DW BAGULEY
Instructed
by:

OOSTHUIZEN & CO
On
behalf of the First & Second Defendant:

Mr. AJJ DU PLOY
Instructed
by:

A LE ROUX ATTORNEYS
[1]
Esso
Standard SA (Pty) Ltd v Katz
1981
(1) SA 964(A)
at 969H-970A
[2]
Herman
v Shapiro & Co
1926
TPD 367
at 379, cited with approval in
Esso
Standard,
above at 970E-G