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[2010] ZAWCHC 169
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Van Niekerk v Clarke and Another (14791/07) [2010] ZAWCHC 169 (31 August 2010)
IN
THE HIGH COURT OF SOUTH AFRICA
(WESTERN
CAPE HIGH COURT, CAPE TOWN)
REPORTABLE
CASE
NO: 14791/07
In
the matter between:
GERRIT
JACOBUS VAN NIEKERK
Plaintiff
and
EDWARD
JOHN CLARKE
First
Defendant
JOHANNA
KATRINA CLARKE
Second
Defendant
CORAM D
H ZONDI J
JUDGMENT
BY D H ZONDI J
FOR
THE PLAINTIFF ADV. E J J SPAMER
INSTRUCTED
BY MALAN LOURENS INC.
(STRAND)
C/o
MILLERS
ATTORNEYS INC
(CAPE
TOWN)
FOR
THE DEFENDANT ADV. H C SCHREUDER
INSTRUCTED
BY
DU
PLESSIS & HOFMEYER INC.
(SOMERSET
WEST)
C/o
VAN
DER SPUY & PARTNERS (CAPE TOWN)
DATE
OF HEARING 24, 25 FEBRUARY 2010 & 30 APRIL 2010
DATE
OF JUDGMENT 31 AUGUST 2010
REPUBLIC
OF SOUTH AFRICA
IN
THE HIGH COURT OF SOUTH AFRICA
(WESTERN
CAPE HIGH COURT, CAPE TOWN)
REPORTABLE
CASE
NO: 14791/07
In
the matter between:-
GERRIT
JACOBUS VAN NIEKERK
Plaintiff
and
EDWARD
JOHN CLARKE
First
Defendant
JOHANNA
KATRINA CLARKE
Second
Defendant
JUDGMENT
DELIVERED ON 31 AUGUST 2010
ZONDI,
J
Introduction
[1]
The plaintiff in his capacity as cessionary of the Newflo Trust ("the
Trust") instituted an action against the first
and second
defendants claiming payment of a sum of R180 000-00 which at the
trial was amended and reduced to R130 000-00.
Pleadings
and Evidence
[2]
In the particulars of claim the plaintiff alleges that on or about 22
December 2005, the Trust concluded a sale agreement with
the
defendants in terms of which the defendants sold to the Trust an
immovable property namely the Remainder of Erf 1500 Bakkershoogte
("the property"), situate at Stellenbosch in the Western
Cape for the sum of R3 600 000-00.
[3]
In terms of the sale agreement a deposit in the amount of R180 000-00
was payable by the Trust on or before 31 January 2006.
[4]
Pursuant to the sale agreement the plaintiff paid the sum of R180
000-00, on behalf of the Trust to the defendants' attorneys.
This
amount was to be held in trust by the defendants' attorneys pending
transfer of the property.
[5]
The sale was further subject to the Trust obtaining a loan for the
balance of the purchase price from a financial institution
on or
before 31 January 2006 or within such extended period as the
defendants might in their sole and absolute discretion allow.
The
defendants undertook to apply for a loan on behalf of the Trust.
[6]
Clause 9 of the sale agreement makes provision for what would happen
in the event of its breach by the Trust. It provides as
follows:
"9.1
Should the Purchaser fail to pay the purchase price, or any portion
thereof, or to deliver the guarantee for payment of
the purchase
price or any portion thereof within the time stipulated, or should
the Purchaser fail to rectify any other breach
of this agreement
within 7 (seven) days after written demand is made by or on behalf of
the Seller to do so, then in such event
the Seller will be entitled
to:
9.1.1.
Claim specific performance and payment of the full balance of the
purchase price outstanding on date of such breach, together
with
interest thereon and/or any other consideration as stipulated herein,
from date of such breach of contract; or;
9.1.2.
To cancel the agreement in which event the Purchaser will be obliged,
if he had already been given occupation of the property,
to vacate
the property immediately allowing the Seller to repossession thereof;
and subject to any statutory limitations thereto;
(i)
The
Purchaser will forfeit the amount(s) plus interest which has already
been paid by him to or on behalf of the Seller; and
(ii)
The
Purchaser shall be obliged to pay any arrear amounts immediately to
the Seller;
PROVIDED
THAT the Seller may waive the benefit contained in subparagraph
9.1.2(i) and 9.1.2(H) above and shall be entitled to claim
only
damages in which event the Seller will be entitled to retain any
amounts plus interest already paid to him or on his behalf
to be
taken into account as a set off against his damages..."
[7]
It is common cause that the Trust waived in writing the benefit of a
suspensive condition regarding the obtaining of a loan
for the
balance of the purchase price and that in breach of clause 9.1 of the
agreement failed to deliver the guarantees for the
payment of the
balance of the purchase price within seven days after it was demanded
to do so by the defendants' transferring attorneys.
[8]
In consequence of the Trust's failure to deliver the necessary
guarantees pursuant to the sale agreement, the defendants cancelled
the agreement and sought to withhold the deposit in terms of Clause
9.1.2 of the agreement.
[9]
On or about 3 May 2007 the Trust ceded its rights, title and interest
in all claims it might have against the defendants for
the refund of
the deposit. The deed of cession provided as follows:
"DIE
NEWFLO TRUST
verklaar
hiermee dat dit verskuldig is aan
GERRIT
JACOBUS VAN NIEKERK
in
'n bedrag van ten minste van R180 000-00 ten opsigte van die deposito
wat deur Mnr Van Niekerk namens Newflo Trust betaal is
in die
transaksie
met
EDWARD JOHN
CLARKE
en
JOHANNA
KATRINA CLARKE
vir
die aankoop van onroerende eiendom gelee te Irenelaan 220,
Somerset-Wes.
Ten
einde terugbetaling van die vermelde bedrag aan Mnr Van Niekerk te
bewerkstellig, en in mil waarvoor Mnr Van Niekerk herimee
afstand
doen van sy reg om aksie in te stel teen die Newflo Trust vir
verhaling van die bedrag, sedeer die Newflo Trust an Mnr
Van Niekerk
alle reg, title en belang in enige en alle eise wat dit het of mag
verkry teen Edward John Clarke en Johanna Katrina
Clarke
voortspruitend uit die laasgenoemde se retensie van die vermelde
deposito.
Dit
word op rekord geplaas dat die sessie wat hierin vervat is, vir
waarde ontvang is en dat Mnr Van Niekerk hierna geregtig sal
wees om
die vermelde eise van die Newflo Trust in sy eie naam in te stel."
[10]
The plaintiff contends that the defendants are not entitled to keep
the entire deposit or any portion thereof as penalty in
terms of the
provision of Clause 9.1.2 of the sale agreement on the ground that on
or about 7 August 2006, Plusko 111 (Edms) Bpk
("Plusko"),
the company owned by the plaintiff, offered to purchase the property
from the defendants for the sum of R3
780 000-00.
[11]
The plaintiff alleges that the defendants rejected Plusko's offer and
did not give reasons for doing so.
[12]
The plaintiff avers further that on or about 8 September 2008 the
defendants sold the property to Dekon Trust for R3 600 000-00
which
is for an amount less than the offer made by Plusko.
[13]
In their plea the defendants challenged the plaintiffs authority to
bring the action and pleaded that they have suffered damages
as a
result of breach of the sale agreement by the Trust.
[14]
The defendants pleaded as follows to the plaintiffs particulars of
claim:
"6.2
Although the Defendants sold the property to Dekon Trust, as alleged
in paragraphs 15.2.1, 15.2.2 and 15.2.3 of the particulars
of claim,
the Defendants suffered damages as a result of the breach of contract
of The Newflo Trust, which damages exceeded the
amount of the deposit
ofR180 000-00 paid by The Newflo Trust, in that:
6.2.1.
the Defendants were unable to take bookings for and conduct the
business of a guesthouse on the property during the period
January
2006 until October 2006;
6.2.2.
the Defendants were unable to conduct the businesses of a nursery and
garden services on the property to the full and usual
capacity of
these businesses during the period January 2006 to October 2006;
6.2.3.
the Defendants were compelled to pay an additional amount of R50
000-00 in respect of a residential property bought by the
Defendants
in respect of which the Defendants were not in a position to perform
timeously as a result of the delay caused by The
Newflo Trust's
breach of contract;
6.2.4.
the Defendants suffered loss of income in the form of interest which
they would have earned on the amount of R3 600 000-00,
alternatively
the amount of R2 400 000-00 (being the difference between the sale
price of the property of R3 600 000-00 and the
purchase price of the
residential property bought by the Defendants, of R1 200 000-00), as
a result of a delay caused by the Newflo
Trust's breach of contract."
[15]
In support of the allegations contained in the particulars of claim
the plaintiff gave his own testimony and also relied on
the evidence
of Mrs M M Voges.
[16]
The plaintiff, who is a building contractor and property developer,
testified on how he got involved in the transaction which
forms the
subject of these proceedings.
[17]
He was invited by a certain Mr Van Zyl, his business acquaintance to
invest capital in the proposed property development project
in
Somerset West. The Trust intended to acquire land for development. It
identified the defendants' property as a land suitable
for its plans.
The project involved the construction of a Medical Centre.
[18]
The Trust then concluded a sale agreement with the defendants in
terms of which it would buy the property from the defendants
at the
purchase price of R3 600 000-00. Funding for this transaction would
have come from prospective investors and Imperial Bank.
It was the
plaintiffs understanding that Imperial Bank was to provide 80% of the
funding by way of a loan and he was to raise 20%.
[19]
In order to raise the purchase price Mr Van Zyl, who at the time was
a quantity surveyor for the development project, approached
the
plaintiff and asked him to invest 20% of the capital necessary for
the purchase of the property. In return the plaintiff was
promised
that he would be employed to build the Medical Centre at a cost of
R5500-00 per square metre.
[20]
The proposal appeared attractive to the plaintiff in that not only
did it offer him an investment opportunity but also provided
a work
opportunity for him. It was the plaintiffs understanding that he
together with Mr Van Zyl and Timo Voges would constitute
the
consortium. Van Zyl and Timo Voges would be responsible for raising
80% of the capital for the purchase of the property. At
that stage he
did not know Timo Voges. The latter was introduced to him by Mr Van
Zyl at a later stage.
[21]
As part of his contribution to the capital the plaintiff paid R180
000-00 deposit on behalf of the purchaser, the Trust. He
made payment
out of the cheque account belonging to Peak Star 133 (Pty) Ltd, one
of his construction companies. He made payment
to the defendants'
attorneys. It was also the plaintiffs understanding that Timo Voges
was
"the
owner"
of
the Trust.
[22]
It is common cause that the defendants subsequently cancelled the
deed of sale as the Trust could not raise the funds to finance
the
transaction. After the cancellation of the agreement the defendants
refused to release R180 000-00 deposit which the plaintiff
had paid
on behalf of the Trust. The Trust elected not to sue the defendants
for the refund of the deposit but instead ceded to
the plaintiff its
right in a claim for a refund of a deposit.
[23]
The plaintiffs attorneys of record prepared a deed of cession which
the plaintiff signed on or about 25 April 2007. After signing
the
deed of cession the plaintiff delivered it to Timo Voges' house for
signature by him. Timo Voges signed the deed of cession
on 3 May 2007
outside his house in Strand. Armed with a deed of cession the
plaintiff sued the defendants for the refund.
[24]
Mrs Voges, who is the chairperson of the Trust and is one of the
three trustees, testified on behalf of the plaintiff. Timo
Voges is
her husband. He is not one of the trustees but he manages the Trust
affairs on behalf of the trustees.
[25]
Mrs Voges signed on behalf of the Trust a deed of sale for the
purchase of the property which the Trust earmarked for development.
Timo Voges was driving the project for the development of the
property and the trustees were not directly involved though Mr Voges
informed them of the developments on an-ongoing basis.
[26]
Mrs Voges never had any dealing with the plaintiff regarding the
proposed development of the property. Her husband, Timo Voges
dealt
with the plaintiff at all the times.
[27]
She is, however, aware that the plaintiff paid a deposit and that the
defendants subsequently cancelled the contract because
of the Trust's
inability to raise the required purchase price.
[28]
Timo Voges subsequently informed her that he had signed a deed of
cession ceding to the plaintiff the Trust's right to sue
the
defendants for the refund of the deposit. Neither Mrs Voges nor the
other two trustees were present when the deed of cession
was signed
by Timo Voges on 3 May 2007. They were, however, later informed of
the cession and did not have an objection to it.
All the three
trustees signed a resolution on 12 February 2010 purporting to ratify
the conclusion of the cession by Timo Voges.
Absolution
Application
[29]
At the close of the plaintiff's case Mr Schreuder, who appeared on
behalf of the defendants, applied for absolution from the
instance on
the ground that the plaintiff had failed to make out a
prima
facie
case
against the defendants.
[30]
Mr Schreuder argued firstly, that the plaintiff does not have
locus
standi
to
sue the defendant and secondly, that there was no evidence regarding
the extent of prejudice suffered by the defendants.
[31]
He advanced two grounds upon which he submitted that the plaintiff
lacked the
locus
standi.
Firstly,
he argued that the deed of cession upon which the plaintiff sues is
void and invalid as it was not signed by the trustees
of the Newflo
Trust. He submitted that because of it being void the deed of cession
was incapable of ratification.
[32]
Secondly, he argued that in any event the plaintiff did not pay the
deposit. Peakstar 133 (Pty) Ltd paid the deposit and being
so it
should have brought the action not the plaintiff. The question is
whether absolution should be granted at this stage.
[33]
I now turn to consider the first contention raised by the
defendants.
[34]
Mr Schreuder submitted on behalf of the defendant that the cession
upon which the plaintiff sues is invalid in that the person,
who
signed the deed of cession on behalf of the Trust whereby the
latter's rights, title and interest in its claim against the
defendants for the refund of a deposit were ceded to the plaintiff,
did not have authority to do so.
[35]
In developing this argument he pointed out that all the trustees of
the Newflo Trust should have signed the deed of cession
for it to be
capable to confer any rights on the plaintiff. He argued that the
deed of cession was void and as such was incapable
of ratification.
[36]
In reply, Mr Spamer submitted on behalf of the plaintiff that the
fact that the trustees have to act jointly in conducting
the Trust
affairs does not mean that the ordinary principles of the law of
agency do not apply. He pointed out the trustees may
expressly or
implicitly authorise someone to act on their behalf as long as they
did not abdicate their responsibilities in delegating
their powers.
In support of this contention he placed reliance on
Nieuwoudt
and Another NNO v Vrystaat Mielies (Edms) (Bpk)
2004
(3) SA 486
(SCA) at 494D and
Coetzee
v Peet Smith Trust en Andere
2003
(5) SA 674
(T) 680 I).
[37]
Mr Spamer argued further that in the present case the deed of trust
does not contain any provisions prohibiting Timo Voges
from
exercising the broad powers employed by him in setting up and
managing the property development project on behalf of the trustees
.
He argued that clauses 7 (k) and (s) and 17 of the deed of trust are
a source of Voges' powers as they confer authority on the
trustees to
delegate.
Applicable
Law
[38]
It is correct that the test for absolution from the instance is not
whether the evidence led by the plaintiff establishes what
would
finally be required to be established, but whether there is evidence
upon which a Court applying its mind reasonably to such
evidence,
could or might (not should or ought to) find for the plaintiff
(Claude
Neon Lights (SA) Ltd v Daniel
1976
(4) SA 403
(A) and
Gascoyne
v Paul and Hunter
1917
TPD 170).
What this means is that the plaintiff must make out a
prima
facie
case
in the sense that there is evidence relating to all the elements of
the claim to survive absolution which in the present matter
would
include
locus
standi.
[39]
The test is, however, somehow different where the issue turns on the
interpretation of a document. If the plaintiffs evidence
consists of
the production of a document on which it sues and the sole question
between the parties is the proper interpretation
of the document, the
distinction between the interpretation that a reasonable man might
give to the document and the interpretation
that he ought to give it,
tends to disappear. In those circumstances absolution should be
refused unless the proper interpretation
appears to be beyond
question
(Gafoor
v Unie Versekeringsadviseurs (Edms) Bpk
1961
(1) SA 335
(A) at 340 B-C
[40]
It is trite law that in the absence of a contrary provision in the
trust deed the trustees must act jointly if the Trust estate
is to be
bound by their acts.
(Land
and Agricultural Bank of South Africa v Parker and Others
2005
(2) SA 77
(SCA) at paragraph 15). In the absence of a contrary
provision in the deed they may, however, authorise someone to act on
their
behalf and that person may be one of the trustees.
(Thorpe
and Others v Trittenwein and Another
2007
(2) SA 172
(SCA) at paragraph 9). See also
Nieuwoudt
and Another NNO v Vrystaat Mielies (Edms) Bpk,
supra
at para 23 and Honore's South African Law of Trusts, 5
,h
ed.
at 324-325).
Findings
[41]
The question whether or not the trustees have powers to delegate will
turn on the interpretation of the deed of trust which
is the source
of their powers.
[42]
The deed of trust in the present case makes provision for three
trustees and the persons, who in terms of the Master's Letters
of
Authority dated 5 December 2005 are authorised to act as trustees,
are Wilmien Lederle, Martha Maria Voges and Erik Wilhelm
Voges. It
allows the trustees to delegate their powers.
[43]
Clause 17 of the Trust Deed provides for delegation of power. It
states:
"The
Trustees shall at times be empowered to employ an attorney or other
agent to transact all or any business of whatsoever
nature required
or permitted to be done in pursuance of this Trust Deed and they
shall be entitled to be allowed and paid all charges
so incurred and
shall not be responsible for the default or negligence of any such
Attorney or Agent for any other loss occasioned
by reason of his/her
employment."
[44]
Clause 7 (k) and (r) provides as follows:-
"(k)
In dealing with the affairs of the Trust, the trustees shall, without
derogating from the other powers and authorities
given to them in
terms of this Trust Deed, have all such powers and authorities as are
normally vested in the Board of Directors
of a Company.
(r)
Without in any way derogating from the powers and authorities herein
before vested in the Trustees, they shall have such ancillary
and/or
additional powers as shall be necessary or requisite to enable them
from time to time, to deal with all matters opportunity
to the trust
is such manner as they deem advisable in the interest of the Trust".
[45]
It is common cause in the present case that Timo Voges, who signed
the deed of cession, is not one of the persons authorised
to act as
the trustees in terms of the Letters of Authority. He is the husband
of Mrs Voges (the chairperson and donor) and the
father of the other
trustees. Timo Voges manages the Trust estate on behalf of the
trustees.
[46]
I disagree with Mr Spamer's submission that the authority to
delegate, which the trustees have under clause 17 of the deed
of
trust, includes the authority to employ a third party such as Timo
Voges to conclude the deed of cession on their behalf. Clause
17 on
its proper construction relates to the authority of the trustees to
employ third parties to perform certain functions on
behalf of the
trustees because of their specialised skills and knowledge in a
relevant task to be performed. Conclusion of the
deed of cession is
not a type of task which is delegable.
[47]
It is clear from the provisions of Clause 17 that the trustees are
not responsible for the default or negligence of the person
they
employ under Clause 17. The exclusion of the trustees' liability for
the default or negligence of any such person is inconsistent
with the
concept of representation under the law of agency in terms of which
the rights and obligations arising out of a contract
concluded by an
agent enure to the principal.
[48]
The trustees cannot therefore in the exercise of their powers under
clause 17 confer on a third party powers to cede trust
rights, title
and interest in the claim against trust debtors. The right to sue for
the refund of the deposit is an asset of the
Trust. It vests in the
trustees and they must act jointly in disposing of such asset.
Moreover the conclusion of the deed of cession
is the function which
involves the exercise by the trustees of their discretion. The
trustees must act jointly in concluding the
cession or authorise one
of them to do so on their behalf. It is the function which the
trustees cannot delegate.
[49]
It follows from the aforegoing that the trustees cannot rely on
Clause 17 as providing authority for them to delegate to Timo
Voges
the power to cede the Trust claim. The deed of trust does not
authorise them to do so. The deed of cession is void and invalid
as
the person who concluded it did not have authority to do so and it is
an act which cannot be ratified.
[50]
In the circumstances I hold that the plaintiff does not have a
locus
standi
to
bring this action as the document upon which he sues and on which he
purports to derive authority is void and invalid. There
is no doubt
that the trust deed does not empower the trustees to authorise Timo
Voges to conclude a deed of cession.
[51]
In light of the conclusion that I have reached it becomes unnecessary
for me to consider the other contentions of the defendants.
The
Order
[52]
In the result absolution from the instance is granted with costs.
ZONDI
D H