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[2021] ZAGPJHC 512
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Alberts v Capell and Another (25091/12) [2021] ZAGPJHC 512 (11 June 2021)
SAFLII
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Certain
personal/private details of parties or witnesses have been
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IN THE HIGH COURT OF
SOUTH AFRICA
GAUTENG LOCAL DIVISION,
JOHANNESBURG
CASE NO: 25091/12
REPORTABLE: NO
OF INTEREST TO OTHER
JUDGES: NO
REVISED: NO
Date: …11 June
2021…
In the matter between:
ALBERTS,
WENDY-ANN
Applicant
and
CAPELL,
PAULA
JOANNE
First Respondent
DAVID
NAGLE
Second Respondent
JUDGMENT
TURNER AJ:
[1]
The applicant and the first respondent were involved in a romantic
relationship up until
approximately 2011/2012. During their
relationship they had acquired movable and immovable property
together. After the breakup,
during July 2012, the applicant
instituted action proceedings to terminate their co-ownership of two
properties, namely, Erf [....]
Maroeladal Extension 23 Township (“the
Waterford property”) and Portion 5 of Erf [....] Norscot
Township (“the
Penguin property”) and for an order that a
Receiver be appointed to dispose of the properties and prepare a
final account.
[2]
Shortly before the trial in November 2013, the parties agreed to
terms which were then
made an Order of Court by the Honourable Deputy
Judge President on 25 November 2013 (the “2013 Order”). I
will return
to the terms of the 2013 Order below but note for current
purposes that: the 2013 Order does not record whether the action
proceedings
were settled or postponed by the 2013 Order; the
applicant refers to this as a “settlement agreement” and
the respondent
denies it was a “settlement agreement”;
the 2013 Order confirmed the appointment of Mr David Nagle as a
referee with
various powers to resolve the dispute between the
parties; the parties never returned to pursue the relief or disputes
in the initial
action after the 2013 Order.
[3]
Approximately 2 ½ years after the 2013 Order was granted, Mr
Nagle delivered his
“
Final
Report in connection with the Net Equity Value of and the Parties
Contributions Towards the Fixed Properties and Movable Assets
and
Resulting Settlement Amount Payable” dated 12 February 2016. In
his report, Mr Nagle confirms that he had previously
issued two draft
reports for comment by the parties and that this (12 February 2016)
report represented his “Final Report
in the matter”. Mr
Nagle was cited as the second respondent but he played no role in the
proceedings.
[4]
In his report, Mr Nagle identified the information he had received,
the calculations he
had done and made various findings, including the
following:
4.1 in
relation to the Valuation date
As the Defendant has
not received any payment to-date and the Agreement of Settlement
provides no mechanism for the payment of interest,
on a fairness
perspective I consider it reasonable that a current date valuation
should be utilised. (I emphasise again that this
is not a legal view
but based purely on what I perceive as fair.)
6.3. Utilising a
current date valuation presents practical challenges because it
presents a continuously moving target. I have therefore
set the
valuation date as being 30 September 2015 ("the Valuation
Date").
4.2 in
relation to the valuation of the Penguin property:
6.1.1 I have
commissioned Mr Brian Bolton. a certified property appraiser, to
carry out a market valuation of Penguin Drive. A copy
of Mr Bolton's
report is attached as Annexure "D". I have placed reliance
on Mr Bolton's determination.
6.1.2 Mr Bolton has
determined that the market valuation of Penguin Drive is R4 500 000
(four million five hundred thousand Rand).
6.1.3. The Defendant
has queried the accuracy of Mr Bolton's assessment of the value of
Penguin Drive as being too low. The Plaintiff
indicated to me that
she thought it was too high. While I am not an expert in property
valuations, I have discussed Mr Bolton's
report with him and I have
no reason to doubt his approach or outcome. Mr Bolton has advised
that he has valued the property based
on its zoning. which is
Residential 1 .
6.1.4 It is clear to
me that the issue of the Penguin Drive valuation is a major stumbling
block in the Parties reaching final agreement.
In an endeavor to
bring the matter to finality, I requested the Plaintiff to afford
access to Penguin Drive for an altemative valuation
by a second
valuator, which could then be benchmarked against Mr Bolton's
valuation. Despite numerous requests which delayed the
issuing of
this final report, the Plaintiff has refused to allow access to the
property for this purpose, citing her views on the
Valuation Date
together with the costs involved as the reasons therefore.
6.1.5. This report is
therefore made subject to a possible second valuation at Penguin
Drive.
In
conclusion, on the net liability of the applicant to the
respondent:
11.1 On the basis that
the Plaintiff retains as her sole and exclusive property the property
situated at Erf [....] Norscott Township
(Penguin Drive) and the
Defendant retains as her sole and exclusive property the property
situated at Erf [....] Maroeladal Township
(Waterford), the net
amount to be paid by the Plaintiff to the Defendant is R870 892
(eight hundred and seventy thousand eight
hundred and ninety two
Rand) in order to ensure that each party is allocated 50% of the net
equity market value of the properties
after taking into account of,
and making an adjustment for, the income received and the reasonable
and necessary costs paid by
the Parties towards the acquisition,
maintenance, renovation, improvement and running of the properties.
Such amount is subject
to possible adjustment for the valuation date
and the market value of Penguin Drive as more fully detailed in this
report.
11.2 If the Parties
are able to reach agreement as to who will retain the boat, the party
keeping the boat should pay R32 500 to
the other party. If the
parties are unable to reach agreement, I suggest that the boat should
be sold.
[5]
The parties did not implement the findings of Mr Nagle’s
report. It seems that
the respondent was unhappy with the valuation
of the Penguin property, sought to obtain another valuation. She
obtained an order
from this Court in November 2017 to allow her
preferred valuer to get access to conduct a valuation. In February
2018, the applicant
launched the current application in which she
seeks an order that Mr Nagle’sreport be referred back to him in
order for him
to amend it and recalculate the amounts based on a
dissolution of the partnership to be the date of the Court Order 25
November
2013.
[6]
The respondent delivered an answering affidavit resisting this
application and challenged
various aspects thereof. The primary issue
addressed by the respondent is the valuation of the Penguin property.
The respondent
contends that the valuation carried out by the valuer
appointed by Mr Nagle (Mr Bolton) had rendered an unacceptably low
price,
that she had appointed an alternate valuator and, after being
obstructed by the applicant, the replacement valuator (Mr Jacobs)
valued the Penguin property in 2018 at R5,600,000, some R1,1 million
higher than the valuation of R4,500,000 prepared by Mr Bolton
and
relied upon by Mr Nagle. The result, according to the respondent, was
that the second valuation should be used to determine
the price of
the Penguin property, increasing the payment amount due to her.
[7]
Nothing happened in the main application for almost two years after
the answering affidavit
was delivered in October 2018. Following this
delay, the first respondent launched a counter application in August
2020 in which
she sought a declarator that the partnership between
the applicant and the first respondent “is dissolved with
effect from
12 February 2016” - being the date of Mr Nagle’s
report and the date she contended for in her answering affidavit. The
respondent also seeks: declaratory relief in relation to the
valuation of the Penguin property; an order that the applicant make
payment to her in the amount of R1,453,939.00 (calculated using Mr
Jacobs’ valuation); an order to effect the transfer of
the
undivided shares held by the applicant in the Waterford property to
the respondent; and an order to effect transfer of the
undivided
share in the Penguin property by the respondent to the applicant. The
respondent also claimed payment of the costs which
she had incurred
in appointing Mr Jacobs, to carry out the second valuation on the
Penguin property.
[8]
The counter application spurred the applicant back into action. The
applicant delivered
a short replying affidavit in the main
application and a short answering affidavit in the counter
application in October 2020 denying
the respondent’s
entitlement to the relief claimed and asserting that the relief
claimed in her application should be granted.
The respondent’s
replying affidavit in the counter application was delivered in
November 2020.
[9]
I note that both parties express a desire to have the matter resolved
expeditiously. However,
each party appears to have dug-in on her own
position and been unwilling to move on the remaining disputes.
Neither party has made
use of Uniform Rule 41A in an attempt to
resolve the dispute through mediation, an issue that is relevant to
the award of costs.
[10]
In the view that I have taken of the matter, the parties have both
erred in failing to read the original
Order dated 23 November 2013
which has led to a litany of unnecessary litigation since the
delivery of Mr Nagle’s report.
For that reason, I start with
the terms of the 2013 Order.
The November 2013
Court Order
[11] I
quote extensively from the 2013 Order below:
…
The
Plaintiff and the Defendant are co-owners of two immovable properties
situated at Erf [....] Maroeladal Extension 23 Township
and Portion 5
and JO of Erf [....] Norscot Township ("the properties ")
and the items listed in annexure A attached hereto
("the
goods").
1. The parties hereby
appoint and engage Mr David Nagle, as referee in terms of Section
19bis of the Supreme Court Act, in order
to:
1.1 Establish the market
value of the properties.
1.2 Establish the net
equity market value of the properties after deduction of any amounts
owing in respect of mortgage bonds registered
over the aforesaid
immovable properties.
1. 3 Established a marked
(sic) value of the goods.
1.4 Established the
whereabouts and current status of the goodr.
1. 5 Calculate and
establish the full and precise extent of income generated, in any
manner whatsoever, by and/or in connection
with, the properties,
including, but not limited to, rentals.
1.6 Calculate and
establish the full and precise reasonable and necessary costs
expended by either of the parties in connection
with the acquisition,
maintenance, repair, improvement and renovation of the properties.
1.7 Determine what costs
expended by either of the parties as aforesaid are reasonable and/or
necessary . .
1.8 Calculate and
establish, on the basis that the Plaintiff retains as her sole and
exclusive property the property situated at
Erf [....] Norscot
Township and the Defendant retains, as her sole and exclusive
property, the property situated at Erf [....]
Maroeladal Extension 23
Township, Portions 5 and JO, what amount is to be paid by the
Plaintiff to the Defendant to ensure that
each party is allocated 50%
of the net equity market value of the properties after taking into
account of, and making an adjustment
for, the reasonable and
necessary costs paid by the parties towards the acquisition,
maintenance, renovation, improvement and running
of the properties.
1.9 Determine an
equitable split of the movable goods either on the basis of the
division of the actual goods alternatively by way
of an allocation of
certain of the goods to one party and the remaining goods to the
other party with a pecuniary adjustment being
made in terms whereof
one party would be required to make payment to the other party of an
amount so as to ensure that each party
is allocated and receives 50%
of the value of the goods.
1.10 Prepare such
accounts as may be necessary reflecting the above.
2. The referee is to
report to the above Honourable Court as soon as reasonably possible.
3. The referee has the
powers as envisaged in section 19(3), (4) and (6) of the Supreme
Court Act 59 of 1959 as well as the powers
set out hereunder.
4. The parties are
entitled to submit to the referee any such evidence, both oral and in
the form of documents or written statements,
as are relevant in order
to facilitate the referee completing his mandate as set out herein.
5. The referee's findings
will be final and binding on the parties.
6. In addition to the
powers in terms of Section 19bis of the Supreme Court Act 59 of 1959
the referee shall have the following
powers: ….
6.1 The right to make all
investigations necessary and in particular to obtain from the parties
all information with regard to the
properties and the goods. ….”
[12]
Neither party engaged properly the terms of this Order in presenting
its affidavits and making its claims
in the current applications. In
my view, it is essential to interpret and apply the 2013 Order before
diving into the factual disputes
and arguments in the current
application papers.
[13]
Clause 1 sets out clearly the ambit of the work to be done by
Mr Nagle. Included in clause 1.8 is
the requirement that he calculate
and establish, on the basis that the plaintiff retains the Penguin
property and the defendant
retains the Waterford property: what
amount is to be paid by the plaintiff to the defendant to ensure that
each party is allocated
50% of the net equity market value of the
properties after taking into account and making an adjustment for,
the reasonable and
necessary costs paid by the parties towards the
acquisition, maintenance, renovation, improvement and running of the
properties.
This necessarily requires the referee’s
determination to be done after a review of all of the information he
gathers.
[14]
Clause 2 of the Order requires the referee to report to the Court and
clauses 3 and 6 set out the powers
given to the referee. Critically,
for purposes of the current application, clause 5 provided that Mr
Nagle’s“findings
will be final and binding on the
parties”.
[15]
Section 19bis of the Supreme Court Act provided:
“
1.
In any civil proceedings any court of a provincial or local division
may, with the consent of the parties, refer (a) new matter
which
requires extensive examination of documents … (b) any matter
which relates wholly or in part to accounts; or (c) any
other matter
arising in such proceedings,
for enquiry and report to
a referee, and the court may adopt the report of any such referee,
either wholly or in part, and either
with or without modifications or
may remit such report for further enquiry or report or consideration
by such referee, or make
such other order in regard thereto as may be
necessary or desirable.
Any such report or any
part thereof which is adopted by the court, whether with or without
modifications, shall have effect as if
it were a finding by the court
in the civil proceedings in question.”
[I note that the parties
refer to section 19bis of the Supreme Court Act, 1959 in the Order,
but by November 2013, the 1959 Act
had been repealed and
section 38
of the
Superior Courts Act 2013
applied.]
[16]
Subsections (2) - (5) deal with the powers of the referee to summon
witnesses and procure evidence.
[17]
If the provisions of
Section 19bis
had been adopted, without more,
there may have been an argument that the Court’s adoption of
the report was required before
it was effective. However, in this
case, the parties and the Court modified the ordinary position in
clause 5, recording that the
referee’s findings would be final
and binding on the parties.
[18]
The Supreme Court of Appeal has confirmed the role played by a
referee’s report (in the ordinary course)
and the test to be
applied if any party wishes to modify it (
Wright v Wright &
Another
2015 (1) SA 262
(SCA)). With reference to section 19bis
of the Supreme Court Act, 1959 and
section 38
of the
Superior Courts
Act, the
SCA confirmed (at para 8) that “
a court is bound by
the findings of a referee contemplated in
s 19
bis, unless it can be
found that the conclusions arrived at by the referee were
unreasonable, irregular or wrong.
” The SCA found that the
position was similar to that of an expert valuator and highlighted
the importance of recognising
and upholding the finding of an
appointed referee or expert valuator, in the absence of a gross
irregularity or mistake. The role
of an expert valuator tasked with
producing a final and binding report has been discussed previously by
the SCA (
SA Breweries Ltd v Shoprite Holdings Ltd
2008 (1) SA
203
(SCA)). It seems to me that the approach adopted by the parties
(and the Court) in the 2013 Order, was to appoint Mr Nagle with
the
evidence gathering powers of a referee and to confirm the status of
his report and findings as being “final and binding”,
akin to those of an expert called on to make a determination.
[19]
As such, it is clear that the 2013 Order did record the terms on
which the parties settled the 2012 action
proceedings and bound the
parties to a set of rules for the resolution of their disputes over
the value to be paid by one to the
other on the termination of their
co-ownership of the property covered by the 2013 Order.
[20]
An assessment of Mr Nagle’s report dated 12 February 2016
indicates that heunderstood his mandate
and complied with each of his
obligations in terms of clause 1 of the November 2013 Order. He
undertook a detailed analysis of
all of the available records and
exercised his judgment, as referee, in relation to those aspects
where there was a dispute between
the parties. These disputes appear
to have included matters relating to the validity of supporting
documentation, the validity
of representations made by the applicant
or the respondent, and he applied a consistent approach to different
topics across the
different properties.
[21]
Having regard to the nature of the expert determination which the
parties agreed would be “final and
binding”, it seems to
me that Mr Nagle performed precisely the mandate that the parties
required him to perform and he arrived
at a result which was
considered and equitable. The fact that both parties are unhappy with
the result may well be the proof of
Mr Nagle’s objectivity.
[22]
In my view, when the parties received Mr Nagle’s report in
February 2016, they ought to have accepted
and implemented his
findings. Having done so, the dispute between them would have been
finally resolved. The current proceedings
reveal that the parties did
not recognise the “final and binding” status of Mr
Nagel’s report. I now deal with
each of the aspects raised and
assess whether any of them meet the threshold necessary to justify a
modification of Mr Nagle’s
report.
The relevant valuation
date
[23]
The applicant contends that Mr Nagle’s use of 30 September 2015
was arbitrary and that he ought to
have used a valuation date of 23
November 2013, being indicative of the date on which the partnership
dissolved. The applicant
relies on common law rules regarding the
dissolution of partnerships for these submissions. However, even if
the partnership dissolution
date were relevant, which it is not for
the reasons below, the applicant’s preferred date is equally
arbitrary as it is clear
the romantic partnership dissolved prior to
the trial action being instituted in July 2012. By contrast, the
respondent asserts
that the date of Mr Nagle’s final report (12
February 2016) should be used as the date of the dissolution. No
extrinsic evidence
is provided to support this assertion and, to the
extent that the date has been chosen to coincide with Mr Nagle’s
report,
I am not sure how the respondent thinks Mr Nagle could have
assimilated all of the information up to 12 February and produced his
report on the same day. As he stated in his report, it would have
been a constantly moving target.
[24]
It seems to me that the parties have embarked on the wrong
inquiry and invoked the wrong principles
in attempting to change the
valuation date. Once they agreed and the Court issued the 2013 Order,
it was the provisions of that
Order which bound the termination and
valuation of their co-ownership in the properties, not the common law
of partnership or the
parties’ preferences. The parties gave Mr
Nagle the power to determine the amount payable by the one to the
other having
regard to the valuationswhich he placed on the goods and
properties. Given that the parties would continue to co-own both the
Penguin
and Waterford properties throughout the period, it was
unnecessary for Mr Nagle to back-date (or future date) his
valuations. What
he needed to ensure was that the approach adopted
was in accordance with the agreed Order. In my view, he complied with
his mandate
and his choice of 30 September 2015 as a valuation date
cannot be criticised.
[25]
As an aside, I agree with the submissions of the first respondent
that, if the parties had sold either or
both of the properties
following the 2013 Order, the value realised by each from the sale of
the properties would be half of the
value realised in the sale. It
would have been artificial and inconsistent with the terms of the
Order for the parties to have
determined a market value at a prior
date when the true market value of the properties was realised
through a sale transaction
during the valuation process. Similar
reasoning can be adopted to justify Mr Nagle’s use of a date
after November 2013.
The 2018 Jacobs
valuation
[26]
The respondent insists that the court should replace the valuation
undertaken by Mr Bolton during 2015 (on
the instructions of Mr Nagle)
with the valuation undertaken by Mr Jacobs in 2018. In doing so, she
asserts that Mr Nagle’s
report anticipates the delivery of a
new valuation, that the new valuation would have influenced his
findings and that the sole
reason for the delay in obtaining the
Jacobs report was the obstructive conduct of the applicant.
[27]
Even if this were so, the respondent does not provide any
justification for disregarding the valuation undertaken
by Mr Bolton
or for disregarding the views expressed by Mr Nagle in respect of Mr
Bolton’s report at paragraph 6.1.3 of Mr
Nagle’s report.
[28]
In regard to the valuation report by Mr Jacobs, that report cannot be
taken by the Court and merely substituted
for the report of Mr
Bolton, leaving the remainder of Mr Nagle’s report unchanged,
for at least the following reasons:
28.1 The founding
affidavit in the counter application does not disclose Mr
Jacobs’expertise that qualifies him as an expert.
The applicant
has rightly objected to the introduction of those credentials in the
replying affidavit, as a party cannot make its
case in reply. (
Esau
And Others v Minister Of Co-Operative Governance And Traditional
Affairs And Others
2021 (3) SA 593
(SCA) para 60)
28.2 Mr Jacobs’
valuation was conducted in 2018 and no attempt was made toreconcile
that 2018 valuation to Mr Nagle’s
valuation date of 30
September 2015.
28.3 No evidence is
available to indicate whether renovations, changes etc were made to
the property between 2015 and 2018 and no
account has been taken of
additional capital or maintenance costs that may have been incurred
on the Penguin property between 2015
and 2018.
28.4 No attempt has been
made to assess how the use of Mr Jacobs’ valuation would
necessitate the adjustment of any other
amounts taken into account in
Mr Nagle’s report.
[29]
In the circumstances, even if the Mr Jacobs’ valuation were
correct as at 2018, it is not useful evidence
for determining the
value of the property or an equitable split between the parties at
the valuation date of 30 September 2015.
Further, and in any event,
there is no warrant for substituting a 2018 report for the 2015
report of Mr Bolton where there has
been no attack on the
independence, expertise or credibility of Mr Bolton and there is no
evidence that Mr Bolton’s report
or Mr Nagle’s reliance
thereon was irregular, unreasonable or wrong.
[30]
Given my decision in relation to the usefulness of Mr Jacobs’
valuation in these proceedings, the
applicant should not be obliged
to contribute to the costs of procuring that report.
The transfer of the
properties
[31]
There is no opposition from the applicant to the relief claimed by
the respondent in relation to the transfer
of the properties. It
seems that both parties believe it is time for the properties to be
transferred and to be registered in their
own names. It seems
appropriate that the transfers should be effected at the same time. I
agree with Mr Nagle ( Report paragraph
9) that, as the costs are
incurred for purposes of splitting the estate, the costs of both
transfers should be shared equally between
the parties.
[32]
During argument, I urged the parties to agree on a single conveyancer
to conduct both transfers so that
the transfers could take place at
the same time and the split of the costs associated therewith can be
managed centrally. After
conclusion of the hearing, the parties
reverted to me and confirmed that Ms. Louw-Mari Nell of Ayoob Kaka
Attorneys has been agreed
as the conveyancer to be appointed. To that
end, the parties are requested to provide a copy of this judgment to
the conveyancer
so that the conveyancer is aware of the requirements
in relation to transfer, the timing of transfer and the costs of
transfer.
[33]
The quantum of the amount payable by the applicant to the respondent
is determined with reference to Mr
Nagle’s report and the
counter-application. The amount payable is R903, 392.00 calculated as
follows: R870,892.00 after the
reconciliation in respect of the
immovable properties; plus R32,500 in respect of the boat. (I note
that, in her answering affidavit
to the counter-application, the
applicant does not challenge the claim in respect of the boat.)
[34]
In relation to interest, counsel for both parties confirmed that the
date on which interest begins to run
is 12 February 2016 and the
prescribed rate to be applied, on a straight-line basis, is 8,75%.
[35]
In relation to costs, neither party has been successful in obtaining
the main relief they sought and, in
my view, both parties ought to
have given more weight to the findings in Mr Nagle’s report.
Further, there is no evidence
that either party invoked Uniform Rule
41A to refer the matter to mediation and so I consider that each
party should bear her own
costs.
[36]
In the circumstances, I make the following Order:
(1) The applicant’s
application is dismissed.
(2) The findings in Mr
Nagle’s report, dated 12 February 2016, including his
determination of the valuation date, are final
and binding.
(3) The applicant is
liable to make payment to the first respondent in the amount of R903
392.00 within 60 days of this order.
(4) The applicant is to
pay interest on the above amount at the rate of 8,75% calculated from
12 February 2016 to date of payment.
(5) The parties shall
arrange for the simultaneous transfer of their undivided shares in
the immovable properties as follows -
a. The applicant shall
transfer her undivided share of the immovable property known as the
Waterford property - Erf [....], Maroeladal
Extension 23 Township,
Registration IQ Province of Gauteng, measuring 764 (seven hundred and
sixty four) square metres held by
Deed of Transfer T052539/06 - to
the first respondent;
b. The first respondent
shall transfer her undivided share of the immovable property known as
the Penguin property - Portion 5 of
Erf [....] Norscot Township
Registration Division IQ Province of Gauteng measuring 2111 (two
thousand one hundred and eleven) square
metres held by Deed of
Transfer T65221/2009 - to the applicant.
(6) The applicant is to
pay 50% of the total costs of both transfers to the conveyancer.
(7) The first respondent
is to pay 50% of the total costs of both transfers to the
conveyancer.
(8) The applicant and
first respondent are ordered to do all things necessary and to sign
all documentation necessary, within 60
days of this Order, to effect
the transfer and registration of the aforesaid properties. In the
event of either party failing and/or
refusing to sign and execute
such documentation within 10 days of being provided with same and
requested by the conveyancer to
do so, the Sheriff of this Honourable
Court is authorised to sign all such documentation necessary to
effect the transfer and registration
of the properties aforesaid.
(9) Each party is to pay
her own costs in respect of the application and the counter-
application.
DA Turner AJ
Date of hearing: 8 June
2021
Date of judgment: 11 June
2021
Appearances:
On behalf of the
applicant :
Adv R Stevenson
Instructed
by:
Clark Attorneys
On behalf of the first
respondent :
Adv L Grobler
Instructed
by:
Harris Inc