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[2010] ZAGPPHC 614
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Brugsmans and Another v Moutzouris (A757/2007) [2010] ZAGPPHC 614 (24 May 2010)
IN
THE HIGH COURT OF SOUTH AFRICA
(NORTH
GAUTENG, PRETORIA)
Case No: A757/07
Date heard:
19/05/2010.
Date of judgment: 24
May 2010
In the matter
between:
Brugmans, Werner
Alfred
Johan
........................................................................................
FIRST
APPELLANT
L’ecluse,
Klass Jozoef
Romaan
.....................................................................................
SECOND
APPELLANT
and
Moutzouris, John
Pandelis
...............................................................................................
FIRST
RESPONDENT
JUDGMENT
DU PLESSIS J:
By
way of an application launched in the Witwatersrand Local Division
(as it then was) the respondent (as applicant) sought judgment
against the appellants (as respondents) for payment of the sum of
R770 511, 11 plus interest and costs. The application succeeded.
With
the leave of the Supreme Court of Appeal
1
the appellants now appeal against the judgment and order of the court
a
quo.
It
is convenient to refer to the parties as they were in the court a
quo.
For
his entitlement to payment as set out above the applicant relies on a
written agreement between him, on the one hand, and the
respondents,
on the other hand. (A further agreement is relevant. I shall refer to
the agreement between the parties as “the
agreement".) In
terms of the agreement the respondents transferred to the applicant
410 shares in a company called Praysa
Trade 1117 (Pty) Ltd (“Praysa).
The respondents also ceded to the applicant “portion of their
credit loan accounts
... to the value of R750 000” in Praysa.
The agreement further provides that “upon payment of the amount
of R750 000”
2
and interest, the applicant would “return ownership of the
shares and loan account” to the respondents. The essence
of the
applicant’s case lies in clause 4.3 of the agreement that
provides:
“
Should
the TRANSFERORS fail to make the payment... within three ... months
of signing hereof, the TRANSFEREE shall no longer be
bound by the
provisions of 4.1
3
and shall be entitled to retain or sell the shares and loan account
as he deems fit”.
It is the
applicant’s case that the respondent made certain payments in
reduction of the sum of R750 000 and interest, but
that the balance
owing, inclusive of interest until 26 January 2006, is the amount
claimed.
In order better to
understand the respondents’ defences to the claim, a brief
summary of facts that appear from the answering
and replying
affidavits is necessary.
A company called New
Adventure Investment 84 (Pty) Ltd (New Adventure) owned a business
called Hardhats. The applicant is the natural
person behind New
Adventure. In terms of a written agreement dated 26 January 2004 New
Adventure sold the business (Hardhats) to
a company called Express
Model Trading 481 (Pty) Ltd. (“Express”). (In order to
distinguish it from the agreement between
the parties, I shall refer
to this agreement as “the contract of sale".) The two
respondents were the natural persons
behind Express. The purchase
price for the business was R2,5 million. It was payable by way of “an
initial deposit”
of R1 million. The contract of sale records
that R250 000 of the deposit had been paid before the agreement was
signed. The other
R750 000 of the deposit was payable on 23 January
2004, prior to the agreement itself.
As to the balance of
the purchase price after the deposit, R1,5 million, it was to be
secured by a banker’s guarantee issued
on behalf of Business
Partners Ltd and payable on fulfilment of all the conditions
precedent contained in the contract.
The respondents
allege that Express duly paid the deposit. It could, however, only
get financing from Business Partners for R750
000. In the result, the
respondents say, an amount of R750 000 remained owing to New
Adventure under the contract of sale. To secure
the outstanding R750
000, the respondents further say, the agreement that the applicant
now relies on for his claim was entered
into. In other words, the
shares and loan account in Praysa were to serve as security for the
R750 000 that Express owed to New
Adventure.
The
first defence that the respondents raise is that “it was never
the intention that we shall otherwise (than by pledging
the shares
and loan account) become personally liable for payment” of the
R750 000. Inasmuch as clause 4.3
4
of the agreement implies that the respondents are personally liable
to pay the R750 000, it “is not in accordance with the
common
continuing intention of the parties. “Through our common error”
the respondents allege, the agreement reflects
that they must make
the payment while the intention was that only Express would be
liable. The respondents contend that they are
entitled to
rectification of the agreement by substituting in clause 4.3 the word
“TRANSFERORS” with “Express
Model Trading 481 (Pty)
Ltd. The respondents state that they were advised that the defence
must be raised by way of a counterclaim.
In view, however, of the
dispute of fact that the defence was bound to engender, the
respondents were also advised that the counterclaim
for rectification
must be pursued by way of action. On appeal before us Mr Nel for the
respondents submitted that the application
should in view of the
disputes of fact have been referred to trial.
As
the respondents foresaw, their defence of rectification created a
dispute of fact. In his replying affidavit the applicant states
that
it was indeed the common continuing intention of the parties that the
respondents would in terms of the agreement undertake
personal
liability for payment of the amount of R750 000. The applicant does
not dispute, however, that the R750 000 referred to
in the agreement
was part of the purchase price that Express had to pay to New
Adventure in terms of the contract of sale.
As
a preface to a summary of the applicant’s allegations, I point
out that the contract of sale and the agreement were entered
into on
26 January 2004. It is clear from the parties’ evidence and the
contract of sale itself that, while the latter was
singed on 26
January 2004, it had been concluded, orally I assume, before that
date. I have earlier pointed out that the deposit
was in terms of the
contract of sale payable before it had been signed. Already on 14
January 2004 Praysa wrote a letter for the
applicant’s
attention
5
wherein the respondents, who signed the letter, stated that they were
seeking to raise “a further R700 000 in order to pay
our
outstanding amount to purchase Hardhats ...”. The letter
further reads: “Our proposal is to make a contract with
you to
guarantee the cash amount still due to you in order to save the R1
500 000 made available by Business Partners which will
be available
by
{sic)
you
shortly. Since our agreement with Business Partners stipulates that
we need a written confirmation ... that the R1 000 000 is
paid by the
Purchaser in order to release the R1 500 000 to the seller. The
agreement to make between you and us is to transfer
pro rata shares
from us to you in Praysa ... to assure you of your money. The shares
will be transferred back to us once the amount
is paid in full.”
With reference to
the letter of 14 January 2004 and to further correspondence, the
applicant seeks to demonstrate that Express did
not pay the deposit
as contended for by the respondents. Based on the correspondence the
applicant further seeks to demonstrate
that Business Partners paid
the full R1,5 million. In short, the applicant avers that the
respondents are lying when they allege
that the agreement was made to
secure R750 000 that Business Partners did not pay. According to the
applicant the agreement was
made “to secure the payment of the
moneys from Business Partners Ltd". As I understand this, it
means that Business
Partners were not going to pay the R1,5 million
if the deposit had not been paid or secured.
The applicant
further alleges, with reference to documents, that the respondents
were fully aware that they were undertaking personal
liability to pay
to him R750 000.
The applicant’s
evidence as to the defence of rectification is contained only in the
replying affidavit. In the nature of
things, the respondents had no
opportunity to deal therewith. I shall nevertheless assume, but I
advisedly do not find, in the
applicant’s favour that he has by
way of the correspondence demonstrated that the agreement was entered
into to secure part
of the deposit and not part of the balance of
R1,5 million. That is not the real issue, however. The real issue is
whether the
parties intention was that the respondents would
undertake personal liability to pay part of the purchase price or
whether the
agreement was entered into as a means to give security
for Express’s liability to pay the purchase price. As to that
issue
there is a dispute of fact that the correspondence does not
resolve.
In
Plascon Evans
Paints Ltd v Van Riebeeck Paints (Pty) Ltd
[1984] ZASCA 51
;
1984 (3) SA 623
(AD)
at
p. 634H and further Corbett JA (as he then was) formulated the
general rule applicable to disputes of fact in motion proceedings
as
follows: Where “disputes of fact have arisen on the affidavits,
a final order... may be granted if those facts averred
by the
applicant’s affidavit which have been admitted by the
respondent, together with the facts alleged by the respondent,
justify such an order.” The learned judge of appeal then
pointed out that, “in certain circumstances the denial by
respondent of a fact alleged by the applicant may not be such as to
raise a real, genuine or
bona
fide
dispute
of fact.” That does not apply here as the applicant’s
averments are all contained in the replying affidavit
to which the
respondents did not have an opportunity to respond. On p. 635B
Corbett JA further stated that there may be exceptions
to the general
rule “as, for example, where the allegations or denials of the
respondent are so farfetched or clearly untenable
that the Court is
justified in rejecting them merely on the papers”.
The question now is
whether in this case the respondents' averments as to rectification
are so far fetched or clearly untenable
as to justify the court to
reject them without the benefit of oral evidence and its concomitant,
cross examination. I have already
pointed out that the correspondence
does not demonstrate the respondents’ contentions to be untrue.
In argument before us
Mr Ohannessian for the applicant submitted that
there are several contradictions in the respondents’ evidence
that, so he
argued, demonstrate untruthfulness. In my view the
contradictions, if such they are, do not support a conclusion that
this case
is exceptional to the extent that the respondents’
evidence can be rejected out of hand. In view thereof, another court
will
have to deal with the facts and it is inappropriate and
unnecessary for this court fully to deal with each contended
contradiction.
There is in my view a genuine dispute of fact as to
whether the parties intended to render the respondents liable for
part of the
purchase price.
The
learned judge a
quo
reasoned
that the respondents did not, on their own averments, make out a case
for rectification. With that I cannot, with respect,
agree. In order
to succeed with a defence of rectification, the respondents will have
to prove that the agreement does not reflect
the common intention of
the parties. They will also have to prove what the parties’
common continuing intention was and that
such a common continuing
intention is by mutual mistake not part of the agreement. Finally,
the respondents will have to prove
what the correct wording of the
agreement should be (See
Harms:
Amler’s Precedents
of
Pleadings
(6
th
ed. p.336).)
I conclude that the
defence of rectification was properly raised and that in respect
thereof there is a dispute of fact that cannot
be resolved on the
papers. The conclusion renders it unnecessary to deal with further
defences that the respondents raised on the
papers.
Mr Ohannessian
submitted that if it is held that the factual dispute cannot be
resolved on the papers, that the matter should have
been referred to
trial. With that submission, at least, Mr Nel agreed.
In the result the
following order is made:
1. The appeal is
allowed.
2.
The order of the court a
quo
is
set aside and the following order is made in its stead: “The
application is referred to trial. The notice of motion shall
stand as
a simple summons. Within 15 days of the applicant receiving notice of
this order, he must file a declaration. Thereafter
the Rules of the
Court shall apply to the exchange of pleadings and the conduct of the
trial. The costs of the application shall
be costs in the cause.”
3. The respondent is
ordered to pay the appellants’ costs of the appeal.
B.R. Du Plessis
Judge of the High
Court
I agree,
J.R. Murphy
Judge of the High
Court
I agree,
J. Hiemstra
Acting Judge of the
High Court
On behalf of the
appellants: Potgieter Attorneys
c/o De Swardt Vógel
Mahlafonya
Brooklyn Gardens
1
st
Floor, Block C
Cnr Middel & Veale
Streets
Brooklyn
Pretoria
Adv. P. Nel
On behalf of the
respondent: Stanley Brasg & Associates
c/o George Traub
Attorneys 1
sl
Floor
102 Elim Building
181 Proes Street Pretoria
Adv. T. Ohannessian
1
Leave
was specifically granted to appeal to this court.
2
The
agreement contains no earlier reference to an obligation to pay the
amount.
3
An
undertaking not to encumber or sell the shares or the loan account.
4
Quoted
above.
5
It
is unclear to whom the letter was addressed.