Milkwood Construction (Pty) Ltd v ERF 1109 Marina Martinique CC and Others (849/2009) [2009] ZAECPEHC 25 (26 May 2009)

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[2009] ZAECPEHC 25
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Milkwood Construction (Pty) Ltd v ERF 1109 Marina Martinique CC and Others (849/2009) [2009] ZAECPEHC 25 (26 May 2009)

FORM A
FILING SHEET FOR SOUTH EASTERN
CAPE LOCAL DIVISION JUDGMENT
PARTIES
:
Case
Number:
849/2009
High
Court:
Port
Elizabeth
DATE
HEARD:
30
April 2009
DATE
DELIVERED:
26
May 2009
JUDGE(S):
D.
Chetty
LEGAL
REPRESENTATIVES –
Appearances:
for
the Applicant(s):
Adv
Eksteen/Adv Dyke
for
the Respondent(s):
Adv
Buchanan / Adv P Scott
Instructing
attorneys:
Applicant(s):
Mr
G Parker (Greyvensteins)
Respondent(s):
Mr
Spilkin (Spilkins Inc)
CASE
INFORMATION -
Nature
of proceedings
:
Urgent
Application
Topic:
Key
Words:
Contract
– Formation of – Dispute of fact – Whether such real or genuine
– All evidence establishing conclusion of binding
contract –
Whether such contract one for sale of land in terms of Alienation of
Land Act or joint venture agreement – Power
of authority member of
close corporation – Court ordering majority member and trustees to
sign resolution to enable registration
of transfer
REPORTABLE
IN THE HIGH COURT OF SOUTH AFRICA
(EASTERN CAPE – PORT ELIZABETH)
Case No:
849/
2009
In the matter between:
MILKWOOD
CONSTUCTION (PTY) LTD
First
Applicant
MILKWOOD
BUSINESS PROJECTS (PTY) LTD
Second
Applicant
and
ERF 1109 MARINA
MARTINIQUE CC
First
Respondent
CHRISTO ALBERT
SWART
Second
Respondent
JOHAN BAREND
LOTTERING
Third Respondent
SUSANA
PETRONELLA LOTTERING
Fourth
Respondent
DAPHNE BOTHA
Fifth Respondent
Coram:
Chetty,
J
Date Heard:
30
April 2009
Date Delivered:
26
May 2009
Summary:
Contract
– Formation of – Dispute of fact – Whether such real or genuine
– All evidence establishing conclusion of binding
contract –
Whether such contract one for sale of land in terms of Alienation of
Land Act or joint venture agreement – Power
of authority member of
close corporation – Court ordering majority member and trustees to
sign resolution to enable registration
of transfer
______________________________________________________________
JUDGMENT
______________________________________________________________
CHETTY, J
[1] Erf 1109,
Island Palm Drive, Marina Martinique
,
boasts a luxurious thirty two (32) unit condominium of which thirty
(30) have been sold, the purchase price for each varying between
R1.7
to R4.1 million rand. It constituted the first phase of a
development, styled Milkwood. During February 2009, attorneys Smith

Tabata Buchanan Boyes (STBB) addressed a letter to the third
respondent informing the latter that they were attending to the
registration
of transfer of the sold units to the purchasers thereof.
Annexed thereto was a draft resolution for signature by the second
and
third respondents in their capacity as members of a close
corporation, Erf 1109 Marina Martinique CC (the CC) which owned erf
1109.
The draft resolution, envisaged to be passed at a meeting of
the members of the CC viz. the second and third respondents, recorded

that: -
“RESOLVED
1. THAT ERF 1109 MARINA MARTINIQUE CC, apply
for the approval of the Sectional Title Plan relating to Milkwood
situated on
ERF 1109 ASTON BAY.
2. THAT
CHRISTO ALBERT SWART is hereby authorised to sign:-
2.1 all the documentation required for
registration purposes at the Deeds Office with regard to the
Sectional Title Scheme to be
registered as MILKWOOD which is situated
on ERF 1109 ASTON BAY.
2.2 all Deeds of Sale and related documents for the transfer of
the units in the Sectional Title Scheme.”
[2] The penultimate
paragraph of the letter referred to a development agreement
,
referred to later in this judgment as “J2”, which formed part of
the Milkwood Prospectus in terms of which STBB were obliged
to pay
the CC R250 000, 00 in respect of each of the thirty (30) units sold.
The letter furthermore requested the third respondent
to furnish them
with his banking details in order that 70% of the money received
(R250 000, 00 x 30) be deposited therein. The
letter elicited no
response. On 9 March 2009 STBB addressed a further letter to the
third respondent bemoaning the delay in the
passing of the proposed
resolution and implored the latter to attend thereto expeditiously.
The letter concluded by retracting
the earlier offer and advised the
third respondent that –
“Ten
slotte geliewe kennis te neem dat ons onderneming vir betaling van
70% aan jou soos uiteengesit in ons skrywe van 19 Februarie
word
hiermee herroep. Die ontwikkelaars se instruksies is dat die volle
bedrag aan die Beslote Korporasie betaal sal word soos
per die
bestaande ooreenkoms. Enige dividende sal deur die lede intern
hanteer word.”
[3] Spilkins
attorneys
,
ostensibly acting on behalf of the CC and the third respondent,
responded to STBB’s letter in the following terms –
“We
act in this matter on behalf of Erf 1109 Martinique CC and Mr J B
Lottering.
Our client has referred to us your letter dated 9 March 2009
addressed to our client but sent by email to Mr Johan Muller.
Both the Close Corporation and our client have
been in dispute with Milkwood Construction (Pty) Ltd for a
considerable period of
time relating to the development by Milkwood
Construction (Pty) Ltd on land owned by the Close Corporation.
Despite numerous requests, Milkwood Construction (Pty) Ltd have
refused or neglected to address our client’s concerns and demands.
Under the circumstances and until all our client’s concerns and
demands are adequately addressed we are instructed to point out
that
our client:
1.
Will not
sign the resolution apparently sought by Milkwood Construction (Pty)
Ltd.
Will not
sign the financial statements of the Close Corporation, more
particularly inasmuch as there are outstanding issues
relating to
such financial statements.
To the extent that it is contended on behalf of Milkwood
Construction (Pty) Ltd that a final and binding agreement has been
concluded
with the Close Corporation we are instructed to point out
that this is incorrect.
Kindly note accordingly. We would also request that any further
correspondence or communications to the Close Corporation or our

client be addressed to these offices.”
[4]
It
will be gleaned from the aforegoing that the anticipated cooperation
foreshadowed in STBB’s letter would not be forthcoming.

Consequently, by notice of motion filed on 30 March 2009 the
applicants sought relief, on an urgent basis, framed as follows (only

relevant portions have been reproduced)–
“
2. Directing the Second and Third
Respondents to sign all documentation and to do all things necessary
to give effect to the agreement
concluded between the Applicants and
the First, Second and Third Respondents at the Supertubes Guest
House, Jeffrey’s Bay, on
1 October 2004 which is referred to in
paragraphs 34 to 37 of the Founding Affidavit of Harold Henry Larsen
and, more particularly,
to sign the draft Resolution for First
Respondent to apply for the approval of the Sectional Title Plan
relating to “Milkwood”
situated on Erf 1109 Aston Bay, which is
annexed to annexure “U1” to the Founding Affidavit.
3. Directing the Third, Fourth and Fifth
Respondents to sign all documents and to do all things necessary to
give effect to the
agreement concluded between the Applicants and the
First, Second and Third Respondents at the Supertubes Guest House,
Jeffrey’s
Bay, on 1 October 2004 which is referred to in paragraphs
34 to 37 of the Founding Affidavit of Harold Henry Larsen, and more
particularly,
to sign the draft Resolution of the Johan Barend
Lottering Trust authorising the First Respondent to apply for the
Approval of
the Sectional Title Plan relating to “Milkwood”
situated on Erf 1109 Aston Bay, which is annexed to annexure “U1”
to the
Founding Affidavit.
4. Directing that the Sheriff for the District of Humansdorp is
authorised to sign the Resolutions referred to in paragraphs 2 and
3
above on behalf of the Third, Fourth and Fifth Respondents in the
event of the Third, Fourth and Fifth Respondents failing to
sign such
documentation within 10 days of the date of this order.
5. Directing the Third Respondent,
alternatively, the Third Respondent jointly
and
severally with such other Respondents who may elect to oppose this
application to pay the costs of the application, including
the costs
of two counsel.”
[5] The application
is opposed by the third to the fifth respondents and purportedly also
by
the first respondent, the CC. For the sake of clarity, it is to be
observed that the fourth respondent is the wife of the third

respondent whilst the fifth respondent, the second respondent’s
accountant. The third to fifth respondents are moreover trustees
of
the JBL Lottering Trust (the Trust), the Trust having acquired the
third respondent’s interest in the CC during 2005.
[6] It
is
apparent from the aforegoing notice of motion that in essence the
applicants seek specific performance of a contract which they
contend
was concluded during October 2004 between them and the first
respondent. The respondents, save for the second respondent,
on the
other hand, strenuously resist the relief sought averring that no
agreement, as contended for by the applicants, was concluded
between
the parties. Whilst acknowledging that there were various meetings
held they maintain that the preliminary discussions
yielded no
binding agreement and that in any event the agreement purportedly
concluded in 2004 is fundamentally different to the
agreement which
the applicants now seeks to enforce. The respondents thus resist the
relief sought on four broad bases viz. (i)
the lack of urgency; (ii)
the inappropriateness of the applicants proceeding by way of motion
where they were aware of a genuine
dispute of fact between the
parties; (iii) the second respondent’s lack of authority to bind
the CC and (iv) they contend that
the agreement in any event does not
comply with the provisions of s 2 (1) of the
Alienation
of Land Act
1
.
Urgency
[7] It is not in
issue that thirty (30) of the
thirty
two (32) units have been sold and await transfer into the names of
the purchasers; that guarantees put up will not remain
indefinitely;
the very real possibility exists that the purchasers may resile from
the agreements and that the financial prejudice
to the applicants in
the case of such eventuality would be considerable. The respondents
contend however that whatever urgency
there may be, was self created
in as much as the applicants have for the preceding two (2) years
been aware of the dispute between
the parties and cannot now approach
the court for relief as a matter of urgency.
[8] The correct
approach to
a
matter as in
casu
is authoritatively set out in
20
th
Century Fox Film Corporation v Black Films
2
and
Bandle Investments (Pty) Ltd v Registrar of Deeds and Others
3
where it was held that in deciding whether a matter be heard as one
of urgency, a court must assume that the applicants’ case
is a good
one and that it is entitled to the relief sought. In my view the
matter was inherently sufficiently urgent to warrant
a departure from
the established rules. In any event, the respondents were afforded
more than sufficient time, the issues have
been fully canvassed and
to dismiss the application on the basis of lack of urgency would be
wholly inappropriate.
Real of Genuine Dispute of Fact
[9] The principle,
developed over many decades
,
is that a court will be loathe to entertain proceedings brought by
way of motion when there
is
a
genuine, real or
bona
fide
dispute of fact. The applicants contend there is none, motion
proceedings being the appropriate machinery for the relief they seek.

Counsel for the respondents however, took a different view. Mr
Buchanan
,
who, together with Mr
Scott
appeared for the respondents, submitted that by electing to proceed
by way of motion, the applicants did so at their peril and
in the
process attempted to conceal the real dispute by the deliberate
omission to disclose material information which they have
had in
their possession for approximately two (2) years. In the course of
counsels address I was referred to a plethora of documentation
and
information appearing in correspondence emanating from the
respondents’ attorneys from which, counsel contended, the factual

dispute was readily apparent.
[10] Included
amongst the annexures to the opposing papers are a number of letters
between attorneys
Muller
and
Spilkins
,
an agreement of sale of land, erf 1109 Marina Martinique, by the
first respondent (represented by the second and third respondent)
to
the first and second applicants, an agreement titled
“Erf
1109 Marina Martinique CC, sale of members interest; loan account and
shares”
between the first and second applicants relating to the purchase of
the third respondent’s interest in the first respondent;
a
memorandum of agreement between the JBL Trust and the second
respondent on the one hand and the applicants on the other for the

purchase by the latter of the Trust’s interest in the first
respondent; financial statements of the first applicant; notices
of
meetings of first respondent scheduled for 6 March 2008 and 18 March
2008;
and minutes of the meeting of 18 March 2008 attended by the sole
attendant, the third respondent. The aforesaid documents
and the
flurry of correspondence all relate to the affairs of the respondents
inter
se
,
all of which, in my view, have nothing to do with the real issue in
this matter, viz. the enforceability of an agreement concluded

between the applicants and the first respondent. These documents
attest to a dispute between the respondents and the first applicant

but that dispute has no bearing whatsoever on the real issue in this
matter.
[11] The
applicants’ case is a fairly simple one – viz. the existence of a
valid and binding contract concluded between themselves
as the one
contracting party and the CC as the other. That contract, the
applicants say is embodied in annexures “J1”, “J2”
and “J3”
to the founding papers. The aforesaid
annexures,
signed by the second respondent, are extracts from a prospectus
numbering fifty seven (57) pages (annexure “G” to
the founding
affidavit), the preface of which, proclaims that
“
The purpose of this Prospectus
(referred to as the Investment Memorandum) is to provide the
prospective shareholders information
regarding the two (2) part share
issue pertaining to Milkwood Construction (Pty) Ltd and Milkwood
Sales and Promotion (Pty) Ltd”
.
[12] In order to
place this prospectus in proper perspective it is apposite to
commence at the very beginning with reference to
the factual
averments. The traditional, widely accepted ap
proach
is that where a dispute of fact does exist, a final interdict should
only be granted in motion proceedings if the facts stated
by the
respondent together with the admitted facts in the applicant’s
affidavit justify such an order.
Where
however, it is clear that facts, though not formally admitted, could
not be denied, they would be regarded as admitted (
Stellenbosch
Farmers Winery Limited v Stellenvale Winery (Pty) Ltd
4
).
In
Plascon
Evans Paints v Van Riebeeck’s Paints
5
Corbett JA modified the rule somewhat. At p 634G-635C, the learned
judge of appeal stated as follows:-
“
It seems to me,
however, that this formulation of the general rule, and particularly
the second sentence thereof, requires some
clarification and,
perhaps, qualification. It is correct that, where in proceedings on
notice of motion disputes of fact have arisen
on the affidavits, a
final order, whether it be an interdict or some other form of relief,
may be granted if those facts averred
in the applicant's affidavits
which have been admitted by the respondent, together with the facts
I
alleged
by the respondent, justify such an order. The power of the Court to
give such final relief on the papers before it is, however,
not
confined to such a situation. In certain instances 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 (see in this regard
Room
Hire Co (Pty) Ltd v Jeppe Street Mansions (Pty) Ltd
1949
(3) SA 1155 (T)
at
1163 - 5;
Da
Mata v Otto NO
1972
(3) SA 858
(A) at 882D -
H). If in such a case the respondent has not availed himself of his
right to apply for the deponents concerned to
be called for
cross-examination under Rule 6 (5)
(g)
of
the Uniform Rules of Court (
cf
Petersen v Cuthbert & Co Ltd
1945
AD 420
at 428;
Room
Hire
case
supra
at
1164) and the Court is satisfied as to the inherent credibility of
the applicant's factual averment, it may proceed on the basis
of the
correctness thereof and include this fact among those upon
B
which
it determines whether the applicant is entitled to the final relief
which he seeks (see eg
Rikhoto
v East Rand Administration Board and Another
1983
(4) SA 278
(W)
at
283E - H). Moreover, there may be exceptions to this general rule,
as, for example, where the allegations or denials of the respondent
C
are
so far-fetched or clearly untenable that the Court is justified in
rejecting them merely on the papers (see the remarks of BOTHA
AJA in
the
Associated
South African Bakeries
case,
supra
at
924A).”
[13]
There
is in my view no real or genuine dispute of fact concerning the
crucial issue which requires adjudication, viz., the conclusion
of
the contract referred to in paragraph [11] hereinbefore. Prior to
annexures “J1”, “J2” and “J3”, relied upon by
the
applicants as constituting the agreement concluded between themselves
and the first respondent being signed by the second respondent,

various exploratory meetings were held between the deponent to the
founding affidavit, Harold Henry Larsen (Larsen) and the second
and
third respondents. The applicants contend that not only the content
but the import of various documents generated thereafter
attest to
the conclusion of a binding agreement between themselves and the
first respondent. I propose to consider them chronologically,
viz.
annexures “E” to “O3” to the founding affidavit.
[14] It is apparent
from annexure “E” titled
“agreement”
and signed by Larsen and the second and third respondents that the
signatories thereto agreed upon a joint venture to develop a
one
hundred and twenty (120) unit condominium complex on erf 1109. It
envisaged the formation of a development company and stipulated
that
the agreement would only be binding upon the project materialising.
[15] On 25 July the
aforementioned persons met once more, the envisaged project, now
named the
Milkwood Development
Project
.
It explicitly identified the owners of erf 1109 as being the CC
represented by the second and third respondents and envisaged
the
formation of a company to develop the
project.
The minutes of the meeting reflect that the signatories thereto
approved the following resolutions –
“
1. Harald
Henry Larsen is, to approved terms, hired to work out a plan and be
in charge of the Project on Erf 1109.
2. The lawyers involved shall be Hennie
Mouton and Johann Muller.
3. The Erf is today owned by a closed
corporation of Johann Lottering and Christo Swart.
4. The landowners are willing to, to defined
terms, to allow the banks and other lending institutions to use the
Erf as security.
5. The project shall be organized in the most
efficient way, both financially and legal. If companies are needed
these shall be
bought as shelf companies.
6. Board of Directors shall consist of the
landowners and key supportive people.
7. Time schedule says to have the Investment
Memorandum ready for distribution in beginning of September.
8. The landowners shall be paid R30,-mill for
the Erf 1109, when the project is fulfilled.
9. The landowners admit a sellers credit of
land, due payable on pro rata part when each flat is sold.
10. The landowners shall as a term gain 50% of
the net profit of the project.
11. It is intended to raise equity by selling
14 shares for R500 000,- in Milkwood Construction Pty and another 70
shares in Milkwood
Sales and Promotions Pty Ltd. It is further
resolved to try to borrow another R7,-mill to finance Phase 1.
12. Harald Henry Larsen presented preliminary
figures for the project.”
It
will be gleaned from the aforegoing resolutions that all signatories
thereto viz. the second and third respondents and Larsen
agreed that
erf 1109 would serve as security for loans sought and that the
development would be driven by two companies.
[16]
Pursuant
to the agreement two shelf companies, Quickleap Investments 235 (Pty)
Ltd, and Sunset Bay Trading 170 (Pty) Ltd, were
acquired, a change of
name of the aforementioned companies duly being effected, the former
to the first applicant and the latter
to Milkwood Sales and Promotion
(Pty) Ltd. It is not in issue that the registrar of companies
declined to approve the name change
of the latter shelf company,
hence its current appellation, Milkwood Business Projects (Pty) Ltd.
Any reference to Milkwood Sales
and Promotion (Pty) Ltd in the
documentation is in fact a reference to the second applicant.
[17] The investment
memorandum, referred to in the introductory paragraph of the meeting
aforesaid, and which Larsen was to compile,
soon emerged as the
Prospectus, its stated purpose
“to
provide the prospective shareholders information regarding the two
part share issues pertaining to Milkwood Construction (Pty)
Ltd and
Milkwood Sales and Promotion (Pty) Ltd”
.
It is a comprehensive document encompassing fifty seven (57) pages.
It fleshes out previous agreements referred to hereinbefore
but it is
unnecessary to refer to it in any detail save for three sections
headed
“Declaration by Landowners”
,
“Agreement between Landowners”
and
“Milkwood Sales and
Promotion (Pty) Limited”
and
“Agreement between
Landowners and Milkwood Construction (Pty) Limited
”
identified
as exhibits “J1”, “J2” and “J3” in paragraph [13] above,
to which I will in due course revert. A site layout
plan envisaged a
four phase development, the first being the thirty two (32) unit
condominium.
[18] On 1 October
2004, the board of directors of the applicants met. Minutes of the
meeting held on 25 July 2004
,
referred to in paragraph [15] hereinbefore, were approved, signed and
adopted by the signatories. The three sections of the prospectus

identified in the preceding paragraph were
“formally
adopted and legally adopted and approved”
and it was specifically recorded that
“Two sets of original documents
shall be signed by those, whom are authorised to sign and kept on
file at lawyer, Johann Muller’s
office, in Jeffrey’s Bay
”
.
The three sections of the prospectus read as follows-
[18.1] Firstly,
Declaration
of Land Owners
“Declaration
of Landowners of Erf 1109 Island Palm Drive, Marina Martinique, Owned
by a Close Corporation with members Johan Lottering
and Christo Swart
This declaration is part of the total plans of the Milkwood
Project and shall act, as a written confirmation of the owners said

will.
We, Johan Lottering an
d
Christo Swart, hereby confirm giving the Milkwood Construction (Pty)
Limited and Milkwood Sales and Promotion (Pty) Limited the
exclusive
rights to utilize, build, construct and sell condominium units
according to plans approved by the founders of the Milkwood
Project.
The Erf 1109, Island Palm D
rive
at Marina Martinique is completely free of any obligations or
liabilities.
If the project for any reason is not started according to the
plans, the Land Owners will compensate the initial payment of ZAR

50,000 paid by each investor that is to be used for project
preparations, if the land for any reason is partly sold or wholly
sold or used for any other purpose.
It is an assumption that this declaration is adopted of the Board
of Directors of both Milkwood Construction (Pty) Limited and Milkwood

Sales and Promotion (Pty) Limited.”
[18.2]
Secondly,
Agreement
between Land Owners and Milkwood Sales and Promotion (Pty) Limited
“
This agreement is made to secure the financial relationship
between Milkwood Sales and Promotion (Pty) Limited and the Land
Owners
Johan Lottering and Christo Swart. This agreement is part of
the total plans of the Milkwood Project.
Effective from July 25
th
and according to the Declaration of
Land Owners dated July 25
th
2004, the parties have agreed upon the following:
1. Milkwood Sales and Promotion (Pty) Limited
shall have full responsibility for Sales and Marketing of the
condominium units;
2. By Sales of condominium units, Milkwood
Sales
and Promotion (Pty) Limited,
shall, after paying Estate Agent commissions and compensations to
Land Owners, first compensate Milkwood
Construction (Pty) Limited
all their actual total cost, before Milkwood Sales & Promotion
(Pty) Limited, keeps any profit
on their accounts;
3.
The Land
Owners; Johan Lottering and Christo Swart shall be compensated with
ZAR 250.000,- for each condominium unit sold as each
condominium
unit’s proportional part of the Erf 1109, Island Palm Drive, Marina
Martinique;
4. The compensation under item 3 is due payable
when Milkwood Sales and promotion (Pty) Limited has received the
Sales Amount for
each condominium
unit
into its Bank account on registration of transfer.
It is an assumption that this agreement is adopted by the Boards
of Directors of both Milkwood Construction (Pty) Limited and Milkwood

Sales and Promotion (Pty) Limited.”
[18.3] and
thirdly,
Agreement
between Land Owners and
Milkwood
Construction (Pty) Limited
“This
agreement is made to secure the financial relationship between
Milkwood Construction (Pty) Limited and the landowners Johan

Lottering and Christo Swart, and is part of the total plans of the
Milkwood Project.
Effective from 25
th
July 2004 and according to the Declaration of Landowners dated 25
th
July 2004, the parties have agreed upon the following:
1. The landowners accept that Milkwood
Construction (Pty) Limited is only a cost centre and that their
compensation for sales of
land parcels will occur when each flat is
paid and registered with its own title.
2. Milkwood Sales
&
Promotion (Pty) Limited will pay the compensation.
3. The Landowners hereby confirm, without any
objections, that Milkwood Construction (Pty) Limited has the right to
register a bond
of the Erf 1109, Island Palm Drive, Marina
Martinique, to secure for investments done on the Erf. It is assumed
that this Bond
will act as a dynamic mortgage within its nominal
value of ZAR 20.000.000, - twenty
million-.
4. As part of the total financial plan, the landowners accept
without any objections that the Financial Institution giving the loan

of ZAR 7,000,000 (Seven Million Rand) has the right to register a
bond on Erf 1109, Island Palm Dive, Marina Martinique to secure
their
interest.
It is the assumption that The Bond mentioned under item 4 is
fully paid and terminated after fulfilment of Phase 1 of the project

or by decisions made by the Board of Directors of Milkwood
Construction (Pty) Limited.
It is an assumption that this agreement is
adopted by the Board of Directors of both Milkwood Construction (Pty)
Limited and Milkwood
Sales
&
Promotion (Pty) Limited.”
[19]
The
reproduction of these entire sections of the prospectus was rendered
unavoidable by reason of the stance adopted by the third
respondent
and the argument advanced on his behalf that no binding and valid
contract was concluded between the applicants and
the first
respondent. What is abundantly clear herefrom is that any reference
to the landowners equates to the first respondent.
The third
respondent’s case that no agreement was concluded is, as evidenced
by the aforegoing documentation, patently false.
In amplification of
his denial he initially alleged that the document at page 47 of
annexure “G”, the agreement reproduced
in paragraph [18.2] of the
prospectus, was unsigned. Annexure “J2”, however,
signed
by the second respondent, is the very same document. At the meeting
held on 7 December 2004, the minutes of the meeting held
on 30
October 2004 was approved and signed by the entire board including
the third respondent. As adverted to earlier the board
resolved that
those authorised to sign should sign. It is self evident that the
second respondent signed exhibits “J1”, “J2’
and “J3”
with the express approval of the third respondent.
[20]
His
authority to do so has however been impugned and I shall deal with
that aspect hereinafter. Suffice it to say that there are,
in
addition to the aforegoing, objectively established facts which
demonstrate quite unequivocally that the third respondent’s
denial
that a valid contract had not been concluded between the applicants
and the first respondent is false. During the course
of litigation
initiated by a Swedish developer who alleged a prior agreement with
the first respondent to develop erf 1109, the
second respondent
deposed to an affidavit, (annexure “L” to the founding
affidavit). The import of the affidavit corroborates
the applicants’
version that a valid contract had been concluded.
[21] Thereafter,
financial assistance was sought from First National Bank
(FNB) to fund the development. The second respondent, together with
the third respondent signed certain limited suretyships. The

disagreement which thereafter arose between the first respondent and
the bank in consequence of which the bank was jettisoned as
the
financier in favour of Absa bank clearly did not result in the
dissolution of the contract between the applicants and the first

respondent. Although the loan from Absa was far in excess of that
sought from FNB, it is obvious that the increased funding related
to
the further development of the other phases of the project.
[22] The high water
mark of the second respondent’s case that the increased loan and
the handwritten addendum penned by attorney
Muller to the resolution
adopted by the members of the first respondent on 10 May 2007 proves
that the 2004 agreement had all but
lapsed, fails to distinguish that
the resolution was internal to the affairs of the first respondent
and in no way impacted upon
the contractual relationship between the
applicants and the first respondent. The further submission that
exhibit “H” to the
founding affidavit likewise proves that an
entirely new structure had come into operation likewise fails to
recognise that the
amount obtained from Absa was sought not only in
respect of the first phase of the development viz. the thirty two
(32) condominium
units but for further development envisaged in the
prospectus.
[23] Mr
Buchanan
further submitted that in any event no valid contract was concluded
between the applicants and the first respondent by reason of
the fact
that the second respondent not only lacked the requisite authority to
sign annexure “J2” but that the purported agreement
was
unenforceable for want of compliance with the provisions of the
Alienation
of Land Act
(the Act)
6
.
In the course of this judgment I found that on a proper construction
of the plethora of documentation annexed to the founding
affidavit
and the evidence adduced that a joint venture agreement to develop
erf 1109 had come into being. In my view “no alienation”
of land
as envisaged in the Act occurred to render the agreement
unenforceable. Reliance on the
Alienation
of Land Act
merely serves to obfuscate the issues.
Did the second respondent have
the requisite authority to sign “J2” on behalf of the first
respondent
[24]
It
is clear that the second respondent was entitled to sign the
agreements. In paragraph [19] hereinbefore I adverted to the minutes

of the meeting held on 7 December 2004 where the third respondent was
party to a resolution authorising
“those
who are authorised to sign”
to
sign. The second respondent, who holds a 30% members interest in the
first respondent, is now alleged to lack the requisite authority
to
sign on its behalf. S 46 (1) of the
Close
Corporations Act
7
provides that each member of a close corporation stands in a
fiduciary relationship to the close corporation. The legal position

is clear. Unless a member is precluded by an association agreement
from signing on behalf of the close corporation he is entitled
to do
so. This special relationship between a member and the close
corporation entitling a member to fully participate in the affairs
of
the close corporation was affirmed by F.H Grosskopf, JA in
Amalgamated
Banks of South Africa BPK v De Goede en Andere
8
where the learned judge of appeal stated as follows at
9
-
“
Artikel 42 van die
BK Wet bepaal dat elke lid van 'n beslote korporasie in 'n
vertrouensverhouding tot die korporasie staan. Kragtens
art 46
(a)
van
die BK Wet is elke lid geregtig om deel te neem aan die dryf van die
besigheid van die korporasie vir sover die Wet self of
'n
samewerkingsooreenkoms nie anders bepaal nie. In die onderhawige
geval was daar geen samewerkingsooreenkoms nie en was die respondente

nie as gevolg van ander bepalings van die BK Wet beperk in hulle reg
tot deelname nie. Behoudens die bepalings van art 47 van die
BK Wet
(wat nie in die onderhawige geval van toepassing is nie) het lede
kragtens art 46
(b)
van
die BK Wet gelyke regte met betrekking tot die bestuur van die
besigheid van die korporasie en met betrekking tot die bevoegdheid
om
die korporasie te verteenwoordig by die dryf van sy besigheid. Die
uitsonderings gemeld in art 46
(b)
is
nie hier ter sake nie. Wat die onderlinge of interne verhoudings
betref blyk dit dus dat alle lede, ongeag hulle ledebelang,
in
beginsel gesamentlik beheer oor die korporasie mag uitoefen. Dit
staan lede egter vry om 'n meer passiewe rol te speel.
Wat die eksterne
verhoudings betref bepaal art 54(1) van die BK Wet dat elke lid in
beginsel die bevoegdheid het om die korporasie
teenoor derdes te bind
indien die handeling verband hou met die gewone loop van die
korporasie se besigheid, of indien die handeling
uitdruklik of
stilswyend deur die korporasie gemagtig is of later bekragtig word.
'n Lid van 'n
beslote korporasie staan dus in 'n besondere verhouding tot die
korporasie. Hy is regtens 'n mede-bestuurder van die
korporasie en
geregtig om deel te neem aan die dryf van die korporasie se
besigheid. Daar moet egter onderskei word tussen die
beslote
korporasie se besigheid (bv om passasiersdienste te verskaf) en die
lid se besigheid (om die beslote korporasie se besigheid
te dryf en
te bestuur). Wanneer hy as lid 'n regshandeling verrig wat verband
hou met die gewone besigheid van die beslote korporasie,
tree hy op
in sy hoedanigheid as medebestuurder van die beslote korporasie, en
dus ook in die loop van sy besigheid as sodanig.”
[25] This then
brings me to the form of the relief sought by the applicants. Relief
is sought against the second and third respondents
personally and
against the third, fourth and fifth respondents in their capacity as
the trustees of the JBL Trust. The applicants
contend that it was an
implied, alternatively tacit term of the agreement concluded between
the first respondent and the applicants
that the second and third
respondents would do all things necessary and sign all documents
necessary in order to give effect to
the aforesaid agreement. That
the agreement exists is
,
as adumbrated hereinbefore, beyond question. The applicants are
perforce entitled to the relief sought. Although the second
respondent
was cited as such he has indicated his willingness to sign
all resolutions.
[26] In the result
the following order
s
will issue:-
The second and third respondents
are ordered to-
1.1 sign all
documentation and to do all things necessary to give effect to the
agreement concluded between the applicants and the
first, second and
third respondents at the Supertubes Guest House, Jeffrey’s Bay on 1
October 2004;
1.2 to sign the
draft resolution reproduced at the foot of paragraph 1 of the
judgment for the first respondent to apply for the
approval of the
sectional title plan relating to Milkwood;
2. The third,
fourth and fifth respondents are ordered to-
2.1 sign all
documentation and to do all things necessary to give effect to the
agreement concluded between the applicants and the
first, second and
third respondents at the Supertubes Guest House, Jeffrey’s Bay on 1
October 2004;
2.2 to sign the
draft resolution reproduced at the foot of paragraph 1 of the
judgment for the first respondent to apply for the
approval of the
sectional title plan relating to Milkwood;
3. The Sheriff of the district of
Humansdorp is authorised to sign the resolutions referred to in
orders 1.2 and 2.2 on behalf of
the third, fourth and fifth
respondents in respect of the latter persons failing to do so within
ten (10) days from the date of
handing down of this judgment.
4. The third, fourth and fifth
respondents are ordered to pay the costs of this application jointly
and severally, the one paying
the others to be absolved, such costs
to include the costs of two (2) counsel.
_______________________
D. CHETTY
JUDGE OF THE HIGH COURT
Obo the
Applicants: Adv J.W Eksteen SC / Adv B.C Dyke
Instructed by Greyvensteins
St George’s House
104 Park Drive
Port Elizabeth
Ref.:- G Parker
Obo the First,
Third, Fourth and Fifth Respondents: Adv R.G Buchanan SC / Adv P.W.A
Scott
Instructed by
Spilkins Inc
2-5
th
Floor
Rink Street
Central
Port Elizabeth
1
Act 68 of 1981
2
1982 (3) SA 582
(W) at 586G
3
2001 (2) SAV 203
(SECLD) at 213E-F
4
1957 (4) SA 234
(C) at 235E-G
5
[1984] ZASCA 51
;
1984 (3) SA 623
(AD)
6
Act No 68 of 1981
7
Act No 69 of 1984
8
1997 (4) SA 67
(AD )
9
74J-75F