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[2011] ZAGPPHC 23
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Dalbock and Another v Holleran and Others (72560/2009) [2011] ZAGPPHC 23 (4 February 2011)
NOT
REPORTABLE
IN
THE HIGH COURT OF SOUTH AFRICA
/ES
(
NORTH
GAUTENG HIGH COURT. PRETORIA
)
CASE
NO: 72560/2009
DATE:
04/02/2011
IN
THE MATTER BETWEEN
RICHARD
DALBOCK
…...........................................................................
1
ST
APPLICANT
…
..................................................................
(Second
respondent in the main application)
CLIVE
WILLIAM HOLLERAN
…...............................................................
2
nd
APPLICANT
…
......................................................................
(Third
respondent in the main application)
AND
MAHLOMOLA
JAMES
NAZO
...............................................................
1
st
RESPONDENT
…
...........................................................................
(First
applicant in the main application)
MALIBA-MATSO
INVESTMENT HOLDINGS (PTY) LTD
…...............
.2
nd
RESPONDENT
…
.....................................................................
(Second
applicant in the main application)
THE
SHERIFF OF KLERKSDORP
….................................................
3
rd
RESPONDENT
JUDGMENT
OMAR.
A.T
This
is an application for an interlocutory interdict suspending the
further execution of a writ of execution ("the writ")
pending the finalisation of legal proceedings to be instituted by the
applicants for an order setting aside the writ.
The
applicants initially applied on an urgent basis for the interlocutory
interdict and on 29 June 2010 TOLMAY J postponed the application
to
the opposed motion roll of 16 August 2010 and interdicted the third
respondent from selling the applicants' shareholding in
Safe-T Pack
(Pty) Ltd ("Safe-T Pack") by way of public auction pending
the finalisation of this application and reserved
the issue of the
wasted costs occasioned by the postponement.
The
applicants contend that the writ ought to be set aside due to the
fact that no amount of money is due by them to the second
respondent
in terms of the sale agreement which was made an order of court. The
sale agreement is marked as annexure "C"
to the applicants'
founding affidavit. The applicants contend that the condition
precedent contained in clause 6.1.1 of the sale
agreement (the first
condition precedent) was not fulfilled or waived within the time for
fulfilment. As clause 6.1.1 of the sale
agreement does not contain a
time for fulfilment of the first condition precedent, it was
submitted by counsel for the applicants
that the time for the
fulfilment of the first condition precedent can be established on one
of the following basis:
a)
an interpretation of the sale agreement;
b)
the rectification of the sale agreement.
Counsel
for the applicants further submitted that clauses 3.3.1 and 6.3 of
the sale agreement supports the contention that it was
the intention
of the parties that the first condition precedent had to be fulfilled
before 1 March 2010. Clause 6.3 provides for
the effective
resignation of the first respondent on 28 February 2010 as a further
condition precedent.
It
was submitted in the alternative that the clauses stated above
support the applicants' contention that clause 6.1 falls to be
rectified.
Further
it was submitted that the applicants do not seek the rectification of
the sale agreement
in
this application
and as such the trustees of the Safe-T Pack Share Trust and Safe-T
Pack do not have a direct and substantial interest in the relief
that
is claimed in this application and it is not necessary to join such
persons, as contended by the first and second respondent.
Further,
the non-variation clause contained in the sale agreement does not
prevent rectification.
The
first and second respondent contends that the time for the fulfilment
of the first condition precedent was before payment of
the last
instalment on 1 April 2011 and that the second respondent waived the
fulfilment of the first condition precedent in terms
of clause 6.2 of
the sale agreement on 23 April 2010.
The
applicants contend that the sale agreement falls to be rectified by
including a further condition precedent ("the second
condition
precedent") to the effect that the Industrial Development
Corporation of South Africa ("the IDC") had
to consent in
writing before 1 March 2010 to the sale of the second respondent's
shares and loan account in Safe-T Pack to the
applicants, which
condition was not fulfilled. The applicants further contend that the
evidence in support of the applicants' contention
that the sale
agreement falls to be rectified to include the second condition
precedent, are not disputed by the first and second
respondent.
The
first and second respondent contends that clause 11 of the loan
agreement between the IDC and Safe-T Pack does not preclude
the sale
or disposal of shares between the shareholders of Safe-T Pack and
that the IDC indicated that it would not oppose the
transfer of the
second respondent's shares in Safe-T Pack to the applicants.
Clause
11 of the loan agreement reads as follows:
"The
borrower undertakes that until repayment of the loan in full, the
borrower will not issue any further shares other than
to the
shareholders and shall ensure that
the
shareholders will not sell or in anv other way dispose of any of
their shares in the borrower without the prior written consent
of the
lender
which consent shall not be unreasonably withheld."
Further,
annexure "Jl" which is an e-mail dated 26 March 2010 from
the IDC to the first respondent, reads as follows:
"2.
... Any change in shareholding is subject to prior IDC consent."
It
is very clear from the above that the IDC requires that its written
consent must be given to any disposal of the shareholders
shares, and
it is not limited to third parties. It is also clear from the papers
that no prior written consent was given by the
IDC to transfer the
shares in Safe-T Pack. As such the submission or interpretation of
clause 11 of the loan agreement by the first
and second respondent
is, in my view, untenable.
The
applicants further contend that the second respondent failed to
comply or tender to comply with its obligations, in terms of
the sale
agreement, to cede its loan account to the applicants which implied
that the second respondent was not entitled to claim
payment of the
purchase consideration from the applicants. Although the sale
agreement does not expressly indicate when performance
by the second
respondent to transfer the shares and loan account in Safe-T Pack to
the applicants has to occur, clause 18.1 of
the sale agreement makes
provision for the pledge and cession of the second respondent's
shares as security for the repayment of
the purchase price, implying
that performance by the second respondent had to occur at the
effective date in terms of clause 7
of the sale agreement ie the
latest date of the signature of the sale agreement and the fulfilment
of the conditions precedent.
I
fully agree with the contentions of the applicants as it accords with
the general legal principle in respect of credit sales which
was
enunciated in the matter of
Mulder
v Van Eyk
1984
4 SA 204
(SE) at 208D-E as follows:
"In
a cash sale, payment and delivery are reciprocal and concurrent
obligations, and delivery can be delayed until payment
has been made
or at least tendered ... The position differs, however, in the case
of credit sale. The fact that the obligation
to pay is postponed to
some agreed future date, or may be fulfilled over a period of time,
does not relieve the seller of the duty
to make delivery either
immediately or within a reasonable time unless there is an agreement
to the contrary."
The
contention by the first and second respondent that the issue of the
share certificates reflecting the sale of the shares by
the second
respondent would be finalised by the secretary of the company and the
reversal of the loan account is merely an accounting
entry is, in my
view, untenable as it is clear from the papers that the IDC refused
to re-cede the second respondent's loan account
to it and as such it
was and remains impossible for the second respondent to transfer the
loan account to the applicants in terms
of the sale agreement.
Further clause 2.2 of the sale agreement provides that the second
respondent's shares and loan account in
Safe-T Pack were sold in one
undivided transaction. It is also clear from the papers that the
second respondent neither delivered
nor tendered to deliver its
shares and loan account in Safe-T Pack to the applicants.
I
have perused the sale agreement between the parties and must comment
that this was not the best drafted agreement. It is clear
that the
sale agreement contains certain conditions precedent (or suspensive
conditions as it is referred to in clause 1.17.14
of the sale
agreement). It is trite law that conditions precedent suspends the
operation of the obligations flowing from the contract
until the
occurrence of the future uncertain events which may also include the
obligation regarding the payment of the purchase
price.
It
is also clear from annexure "P" which is a letter from the
applicants' attorneys to the first and second respondents'
attorneys
dated 8 April 2010 that it was at all times the contention of the
applicants that the conditions precedent were not complied
with and
they regarded the agreement as null and void. Further no proof of
compliance was provided to the applicants' attorneys.
The
applicants further contend that the respondents failed to comply with
rules 45(7)(a) and 45(8)(c)(i)(a) of the Rules of Court
and
notwithstanding the alleged non-compliance with the Rules of Court,
the first and second respondent failed to cancel the sale
in
execution and refused to provide an undertaking that the sale in
execution would not take place pending the fmalisation of this
application which necessitated argument before TOLMAY J.
Counsel
for the first and second respondent submitted that it is common cause
that there has not been compliance with the provisions
of the Rules
of Court and until there has been compliance, the sale cannot
proceed. I am of the view, however, that compliance
with rule
45(8)(c)(i)(a) is not a pre-requisite for the relief claimed in this
application.
After
considering the papers as a whole, I am of the view that the
applicants have made sufficient averments in the founding papers
in
respect of rectification and consequently for the averment that the
contract is invalid. It is clear that the applicants do
not seek
rectification in this application and it is not necessary to join the
other contracting parties to the sale agreement
in this application
or to state and prove the requirements for rectification.
It
was further contended by the applicants that the issuing of the writ
was irregular in that no sum of money is due by the applicants
to the
second respondent and that the reference to the first respondent as a
judgment creditor is clearly incorrect and further
that the
applicants are not liable for the first and second respondents' legal
costs in the main application.
It
was stated by the first respondent (in paragraph 44.3 of the opposing
affidavit)
that-
"On
a
proper
interpretation
of the order of court, the sale agreement was incorporated therein.
This means that on 1 March 2010 the sum of Rl 222 000,00 became
due
and payable by the applicants to the second respondent."
This
in my view pre-supposes that the Registrar of the Court had to
properly
interpret
the court order
and
sale agreement
when the writ was issued.
I
have serious reservations and concerns as to whether the Registrar of
the Court (most probably his assistant) had properly applied
his mind
and
properly
interpreted
the court order and sale agreement incorporated therein, when issuing
the writ.
In
am of the view that the applicants have made out a case for the
relief that is sought in prayers 2 to 4 of the notice of motion
and
that the first and second respondents should pay the costs of this
application. The balance of convenience is in favour of
the granting
of the interim relief to the applicants. I am of the view that the
applicants will be severely prejudiced if the sale
in execution
proceeds and the applicants' shares are sold to a purchaser in good
faith and without notice of defect. Further the
applicants were
prepared to agree that the shares remain under attachment thereby
preventing any possible prejudice to the first
and second respondent.
The
applicants have shown that they have a clear alternatively
prima
facie
right
that the writ be set aside and that the applicants' shares in Safe-T
Pack not be sold in execution pursuant to the attachment
of the
shares in terms of the writ. I am of the view that the applicants
have a well grounded apprehension or irreparable harm
if the interim
relief is not granted and the ultimate relief is eventually granted
and do not have any other satisfactory remedy.
As
far as the issue of the wasted costs of 29 June 2010 is concerned, it
is clear from the papers that the first and second respondent
failed
to cancel the sale in execution or provide an undertaking that the
sale in execution will not take place pending the
finalisation
of this application, which prompted the applicants to proceed by way
of an urgent application and as such I am of the
view that the first
and second respondent should pay the wasted costs because of their
conduct. However, I am not convinced that
they acted totally
unreasonably so as to award attorney and client costs.
In
the result, I make the following order:
1.
The further execution of the writ of execution (annexure "B"
to the applicants' affidavit) is suspended pending the
finalisation
of the legal proceedings to be instituted by the applicants for an
order setting aside the writ of execution.
2.
The third respondent is interdicted from selling the applicants'
shareholding in Safe-T Pack (Pty) Ltd by way of public auction
pending the finalisation of legal proceedings referred to in prayer 1
above.
3.
In the event that the applicants fail to institute the legal
proceedings referred to in prayer 1 above within one month from
date
of this order, the orders set out in prayers 1 and 2 above will
automatically lapse.
4.
The first and second respondents are ordered to pay the wasted costs
of this application as well as the wasted costs occasioned
on 29 June
2010.
SS
OMAR
ACTING
JUDGE OF THE NORTH GAUTENG HIGH COURT
72560-2009
HEARD
ON:
FOR
THE APPELLANT:
INSTRUCTED
BY:
FOR
THE RESPONDENT:
INSTRUCTED
BY: