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[2010] ZAGPPHC 203
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Lithos Corporation of South Africa (Pty) Ltd v Kumba Resources Ltd (35078/06) [2010] ZAGPPHC 203 (17 November 2010)
NOT
REPORTABLE
IN
THE HIGH COURT OF SOUTH AFRICA
(NORTH
GAUTENG HIGH COURT, PRETORIA)
DATE:
17 November 2010
CASE
NO: 35078/06
In
the matter between:
LITHOS
CORPORATION OF SOUTH AFRICA (PTY) LTD
....................
PLAINTIFF
vs
KUMBA
RESOURCES
LTD
........................................................................
DEFENDANT
JUDGMENT
BOTHA
J
In
this matter the plaintiff, Lithos Corporation of South Africa (Pty)
Ltd, applies for an amendment to its particulars of claim.
The
amendment is opposed by the defendant. Kumba Resources Limited,
(Kumba).
The
summons was issued in Octobe".
The
claim is for damages for breach of contract alternatively for
delictual damages.
The
particulars of claim as they stand now, can be briefly summarized as
follows:
1.
On
24 March 1997 the party from whom the plaintiff acquired its rights,
Corporation Lithos, corcluded a written memorandum of understanding
with Miferso, a Sengalese state enterprise, regarding a mining
project called the Faleme project.
2.
In
terms of the memorandum, a joint venture was to be the vehicle of the
project. Corporation Lithos would be entitled to acquire
an 80 per
cent interest in the joint venture.
3.
The
memorandum came into force on 24 March 1997 and was to remain in
force for one year but review/able after evaluation.
4.
The
memorandum was renewed from time to time.
5.
On
7 December 2006 the plaintiff and Miferso entered into a written
memorandum in which the existence of a joint venture in which
the
plaintiff would have an 80 per cent interest was confirmed.
6.
The
plaintiff approached the defendan: for the purpose of it joining the
project. To this end a confidentiality agreement was concluded
on 4
January 2002. Pursuant to that agreement confidential information
regarding the project was imparted to the defendant.
7.
On
16 March 2002 the plaintiff and defendant entered into-written heads
of agreement in terms of which the defendant would do certain
studies
for the Faleme project. In the agreement the plaintiff warrarted that
it had an 80 per cent interest in the Faleme project.
8.
On
22 March 2002 the plaintiff and Miferso entered into a written
memorandum of agreement in terms of which the plaintiff undertook
to
find a strategic partner for the Faleme project. The plaintiff and
its partner would have an 80 per cent interest in the project.
This
agreement, POC12, was to endure for a year, expiring on 21 March
2003.
9.
On
14 August 2003 the plaintiff and defendant concluded a written
agreement. Clause 7.1 of the agreement, which states that the
plaintiff warranted that it had an 80 per cent interest in the Faleme
project, did not correctly reflect the agreement. It should
read that
the plaintiff was entitled to acquire an 80 per cent interest in the
Faleme project. In terms of clause 9.1 of the agreement
the defendant
would acquire 75 per cent of the plaintiffs 80 per cent interest in
the Faleme project for an amount of US $3.48
million. It is alleged
that clause 9.1 did not correctly reflect the agreement to the extent
that it stated that the plaintiff
already had an 80 per cent
interest in the Faleme project. Accordingly rectification of clause
9.1 was also asked. It was also
agreed in the agreement that the
parties would use their best endeavours to conclude an agreement with
Miferso within 120 days.
In terms of the agreement the defendant
undertook not to approach Miferso within that period with a view to
concluding a contract
in respect of the Faieme project to the
exclusion of the plaintiff. It was further agreed that if an
agreement with Miferso could
not be concluded within 120 days, the
agreement between the parties would lapse and that the defendant
should not for 36 months
thereafter be entitled to approach Miferso
with a view to conclude a contract relating to the Miferso oroject
without involving
the plaintiff. It is then alleged that the
defendant did so approach Miferso before the expiration of 36 months.
10.
It
is alleged that the defendant on 31 October 2003 repudiated the
agreement dated 14 August 2003, which repudiation the plaintiff
accepted.
11.
It
is alleged that but for the defendant's repudiation the plaintiff,
the defendant and Miferso would have concluded an agreement
in terms
of which the plaintiff would have acquired a 20 per cent interest in
the Faleme project.
12.
In
the alternative the plaintiff alleges that the defendant
intentionally or negligently prevented it from entering into an
agreement
in terms of which it would have acquired at least a 20 per
cent interest in the Faleme project.
13.
It
is then alleged that as a result of breach of contract, alternatively
breach of duty or unlawful competition, the plaintiff suffered
damages that are estimated to amount to US S421 million.
In
the notice of amendment the plaintiff seeks a number of amendments. I
shall only concentrate on those that remained contentious.
In
paragraphs 8, 9, 10, 11 and 12 of the notice of amendment the
plaintiff seeks to delete the aliegations that clauses 7.1 and
9.1 of
the contract on 14 August 2003 had to be rectified.
In
paragraph 4 of the notice of amendment it seeks to introduce new
paragraphs 12E, and 12F.
In
the proposed paragraph 12E it is alleged that during or about March
2003 the plaintiff's rights and obligations continued to
be of full
force and effect including:
(a)
the
obligation to find a strategic partner;
(b)
that
the construction of a railway and a port would be part of the
project;
(c)
that
a tripartite agreement would have to be concluded by the plaintiff,
defendant and Miferso. Until then the plaintiff would have
an 80%
interest in the project.
It
is alleged that the plaintiff's rights were tacitly renewed. In this
regard the plaintiff relies
inter
alia
on
the agreement of 22 March 2002 and a meeting held on 22 April 2003.
In
the proposed paragraph 12F the plaintiff refers to a meeting held on
22 April 2003 at which the plaintiff and Mefeso agreed to
conclude a
tripartite agreement and re-affirmed the plaintiff's rights. It is
alleged that the parties agreed to structure their
involvement by
creating two special purpose vehicles (SPV 1 and SPV 2). Plaintiff
would have a 100 per cent interest in SPV1 and
an 80 per cent
interest in SPV2.
In
paragraph 7 of the notice of amendment the plaintiff seeks to
substitute new paragraphs 22 to 36 for the paragraphs dealing with
the alternative delictual claim.
These
prayers give more particulars of defendant's approaches to Miferso,
which culminated in an agreement between the defendant
and Miferso to
the exclusion of the plaintiff on 7 July 2004. In paragraphs 34.20
and 34.21 it is alleged that the defendant in
so doing breached
certain articles of the Senegalese Code of Civil and Commercial
Obligations, and the Senegalese Unfair Competition
Act of 1994.
I
can now turn to the objections to the proposed amendment:
1.
There
is an objection against the lateness of the amendment and the absence
of an explanation in paragraphs 1 and 2.
2.
There
is an objection against the proposed paragraph 12E.1 on account of
the fact that the relevance of the date March 2003 is not
explained
and otherwise seems :o be in conflict with the agreement of 22 March
2002, which expired on 22 March 2003 (paragraph
3).
3.
There
is an objection against the proposed paragraph 12E.2 on the basis
that it is not clear what the source of the plaintiff's
80 per cent
interest in the Miferso project was (paragraph 4).
4.
There is an objection against paragraph 12E.3 of the proposed
amendment which seems to be based on the use of the words
"Plaintiff's
Rights) as opposed to "plaintiff's rights".
In respect of this objection, as well as in respect of some other
ones relating
to minor blemishes, the plaintif undertook to remove
the blemishes. The defendant accepted that.
5.
There is an objection against paragraph 12E.4 of the proposed
amendment on the basis that the allegations are vague or do not
justify the conclusions sought to be drawn from them. It is also
alleged that the reference to the agreement of 22 March 2002 is
confusing in view of the fact that it expired on 21 March 2003
(paragraph 6).
6.
There
is an objection against paragraph 12F of the proposed amendment on
the basis that the allegation of the conclusion of an oral
agreement
on 22 Apr I 2003 is not
bona
fide,
amongst
others because the minutes of the meeting on that day do not record
it (paragraph 7).
7.
There
is an objection against the proposed paragraphs 12F.1 -12F.3 on the
basis that no details of the proposed tripartite agreement
are given
(paragraph 8).
8.
There is an objection against the proposed paragraph 12F.4 on the
basis that the particulars o
;
how the plaintiff and Miferso would structure their involvement were
vague and embarrassing (paragraph 9).
9.
There
is an objection against the paragraphs in the proposed amendment
relying on the Senegalese Code and Unfair Competition Act.
It is
alleged that they do not comply with Rule 18(4) and that the
defendant therefore cannot plead meaningfully to them (paragraph
12).
10.
There
is an objection to paragraph 34 6 of the proposed amendment on the
basis that the allegations of the breach of a contractual
duty cannot
co-exist with the allegations of the breach of a legal duty.
In
the affidavit in support of the application for the amendment the
plaintiffs attorney. Mr Ndebele, made the following allegations:
(a)
that
the plaintiff seeks to amplify the allegation that the memorandum of
March 1997 was renewed from time to time;
(b)
that
it seeks to elaborate on the basis of the delictual claim;
(c)
that
the defendant does not take issue with the withdrawal of the claim
for rectification, but merely requires an explanation.
He
referred to the report of the expert report of Dr Thomashausen on
aspects of the Senegalese law.
He
contended that the amended particulars should be read in context and
that in certain respects the plaintiff's could obtain clarification
through a request for further particulars for trial.
In
respect of the charge, as he perceived it, that the alleged oral
agreement on 22 April 2003 was a recent fabrication, he referred
to a
letter dated 4 October 2003 addressed by Mr Gyenbie to the Senegalese
Minister of Mines and Energy (Mr Gyenbie was the person
who
represented the plaintiff on 22 March 2002 and on 22 April 2003). In
the letter he referred to an agreement in April 2003.
He also
referred to the minutes of the meeting of 22 April 2003, JN5. It
records that the agreement between the plaintiff and Miferso
"will
expire on 22 March 2003" but ends with the following statement:
"The principle chosen by Miferso still remains:
Lithos and Kumba
80 per cent Miferso 20 per cent of which 10 per cent is for "carried
interest"."
He
referred to a letter dated 8 April 2003 by Miferso to Kumba, JN7
which refers to the need to create SPV1 between Kumba and the
plaintiff.
He
referred to the fact that the plaintiff on 22 February 2010 came into
possession of a memorandum to the Senegalese Minister of
Energy and
Mines. This document led the plaintiff to believe that there was a
conspiracy between Kumba and Miferso, thus necessitating
an expansion
of the delictual claim.
In
respect of the allegation that contractual and delictual claims
cannot co-exist he contended that Senegalese law, being the /ex
loci
delicti
would
apply.
In
respeci of the witndrawal of the claim for rectification he pointed
out that new senior counsel was engaged when the plaintiff
prepared
for the trial set down for March 2010. On 22 February 2010 some 900
documents were discovered by the defendant. The consideration
of
these documents led to the amendment. New counsel was of the view
that the facts did not support a claim for rectification.
In
an answering affidavit the defendants' attorney, Mr Herholdt,
challenged trie bona fides of the plaintiff in bringing tne amendment
at such a late stage. He referred to previous amendments, one of
which was withdrawn after an objection.
He
contended that it was not proper for the plaintiff to blame the claim
for rectification on counsel. It should have explained
the situation
through its representative, Mr Gyenbie. He also made the point that
Mr Gyenbie was the person who should depose about
the alleged oral
agreement on 22 April 2003. In respect of that agreement he pointed
out that it differed from the minute of the
meeting, JN5. He referred
to the fact that in a previous amendment the plaintiff sought to rely
on a partly written, partly oral
agreement on 22 April 2003. In
respect to Dr Thomashausen, he submitted that his report is not under
oath.
The
plaintiff's replying affidavit was made by Mr Gyenbie.
He
explained that the need for an amendment became apparent during
consultation with the plaintiff's new counsel. The reason for
the
claim for rectification was that he was advised that the written
agreement did not record the agreement correctly. It was considered
to abandon the claim for rectification when it became apparent,
especially from discovered documents, that it was not necessary.
With
regard to the meeting of 22 April 2003, he said that the meeting was
convened because the defendant wanted to change the proposed
structure. He referred to certain correspondence including JN7 and a
letter from Miferso dated 20 March 2003, AG4, in which Miferso,
with
a view to the imminent expiry of the agreement of 22 March 2002,
suggested that the plaintiff approach it to negotiate a new
form of
partnership involving Kumba.
In
respect of that meeting he pointed out that the minute re-affirmed
the plaintiff's rights. He denied that the allegation of an
oral
agreement on 22 April 2003 is a recent fabrication.
Mr
Burger SC, who with Mr Turner, appeared for the defendant, argued in
respect of the withdrawal of the claim for rectification
that it
cannot be
bona
fide.
Although
counsel drafts pleadings, he must do so on facts supplied by the
client. The facts cannot change.
In
respect of the amendment he submitted in general that the plaintiff
must prove that the amendment would present the court with
a triable
issue.
He
explained that the need for an amendment became apparent during
consultation with the plaintiffs new counsel. The reason for
the
claim for rectification was that he was advised that the written
agreement did not record the agreement correctly. It was considered
to abandon the claim for rectification when it became apparent,
especially from discovered documents, that it was not necessary.
With
regard to the meeting of 22 April 2003, he said that the meeting was
convened because the defendant wanted to change the proposed
structure. He referred to certain correspondence including JN7 and a
letter from Miferso dated 20 March 2003, AG4, in which Miferso,
with
a view to the imminent expiry of the agreement of 22 March 2002,
suggested that the plaintiff approach it to negotiate a new
form of
partnership involving Kumba.
In
respect of that meeting he pointed out that the minute re-affirmed
the plaintiff's rights. He denied that the allegation of an
oral
agreement on 22 April 2003 is a recent fabrication.
Mr
Burger SC, who with Mr Turner, appeared for the defendant, argued in
respect of the withdrawal of the claim for rectification
that it
cannot be
bona
fide.
Although
counsel drafts pleadings, he must do so on facts supplied by the
client. The facts cannot change.
In
respect of the amendment he submitted in general that the plaintiff
must prove that the amendment would present the court with
a triable
issue.
He
cast doubt on the bona fides of the plaintiff and referred in
particular to its changes of stance in respect of the meeting on
22
April 2003.
He
paid particular attention to the proposed paragraph 12.E. He pointed
out that the reference to March 2003 was confusing in view
of the
expiry of the agreement of 22 March 2002 on 21 March 2003. Then the
rights that allegedly existed or continued to exist
included some
rights that clearly pre-dated the 21
st
March 2C03 whilst others seem to relate to the period after 21 March
2003.
Mnr
Naidu SC, who, with Mr Bremridge, appeared for the plaintiff, argued
that the proposed amendment introduced triable issues.
He conceded
that the reference to March 2003 in the proposed paragraph 12.E could
be confusing. He argued in general that it was
not for the court to
anticipate issues that will have to be decided in the trial.
I
have not summarized all the objections in the notice of objection.
They go into very fine detail. In general I want to say that
mostly
they display an overfastidious reading of the amendment. It many
cases clarification can properly be obtained by means of
a request
for further particulars for trial. In the case of facts on which the
plaintiff wishes to rely in support for its delictual
claim, I do not
think that they need to be stated with the particularity of
contractual terms. The same applies to the terms of
the proposed
tripartite agreement which, by definition, was not yet in existence.
The
explanation for the abandonment of the claim for rectification will
not satisfy a purist, but it is plausible. Whatever the
case may be,
I see no point in forcing the plaintiff to adhere to a claim that it
no longer espouses. After all, the defendant
cannot complain if the
plaintiff is held to the wording of clause 7.1 of the agreement of 14
August 2C03.
It
is so that having abandoned the claim for rectification the plaintiff
can only get round clause 7.1 if it can allege and prove
an agreement
in terms of which it had an 80 per cent interest in the Faleme
project. It is so that to do so it will have to be
able to allege and
prove that in spite of the expiry of the agreement of 22 March 2002
on 21 March 2001, there was a new agreement
to the effect that the 80
per cent interest in the Faleme project would endure or be renewed.
That is was it attempts to do by
its reliance on an oral agreement
concluded on 22 April 2003. It is exactly the plaintiff's agreement
that the alleged agreement
was an invention, born out of need.
I
do
not think that I can make such a finding In the end Mr Gyenbie did
make an affidavit. Then, as Mr Naidu, correctly pointed out,
there
are objective
indicia
that
Miferso intended to continue to recognize the plaintiffs right to an
80 per cent interest in the Faleme project after the demise
of the
March 2002 agreement and did indeed so after 21 March 2003. In this
regard I can refer to JH5, JN7 and AG4.
In
my view all this supplies a sufficient basis for the court to accept
that the reliance on an oral agreement concluded on 22 April
2003 has
a basis in fact and that it therefore is a triable issue.
It
may be that the alternative delictual claim is incompatible with the
contractual claim. My problem is that the alternative claim
is there
and the defendant has pleaded to it. In the circumstances it makes
little sense to disallow an elaboration of the claim
on the basis
that the claim is excipiable.
The
result is that I am of the view that the amendment should be allowed
in respect of ail the proposed paragraphs except paragraph
12.E In
respect of that paragraph the objection is upheld. I accept that that
will have the effect that references to paragraph
12.E.4 elsewhere,
such as in paragraph 12F.3, will have to be deleted.
There
are minor issues in respect of which, as I have indicated, the
plaintiff has accepted that the objections were well founded
and
where it undertook to rectify the sources of complaint. One such
instance is the reference to the applicable sections of the
Senegalese Unfair Competition Act. It is not necessary to refer to
these matters any further.
I
accept
that the replacement pages will set them right.
The
result is that the defendant has had partial success, which is enough
to entitle it to its costs. I also accept that the defendant's
opposition to the amendment was not frivolous.
The
following order is made;
1.
Plaintiff's
amendment dated March 2010 is allowed except for the proposed
paragraph 12.E thereof.
2.
Plaintiff
must pay defendants costs of opposition which costs shall include the
costs of two counsel.
C.
BOTHA
JUDGE
OF THE HIGH COURT