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[2012] ZASCA 6
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Joubert Scholtz Inc and Others v Elandsfontein Beverage Marketing (Pty) Ltd (307/11, 765/11) [2012] ZASCA 6; [2012] 3 All SA 24 (SCA) (9 March 2012)
THE
SUPREME COURT OF APPEAL OF SOUTH AFRICA
JUDGMENT
Case No: 307/11
765/11
In the matter between:
JOUBERT SCHOLTZ INC
….................................................................
1
ST
APPELLANT
POLLACK, R K, N.O.
AND MATLALA, N A, N.O.
(in their capacities
as joint trustees of
GOOSEN, PIETER
ANDRIES)
…..........................................................
2
ND
APPELLANT
ELANDSFONTEIN 95 CC
….................................................................
3
RD
APPELLANT
ELANDSFONTEIN BOTTLING
CC
…...................................................
4
TH
APPELLANT
and
ELANDSFONTEIN BEVERAGE
MARKETING (PTY) LTD
…..................
RESPONDENT
Neutral citation
:
Joubert Scholtz Inc v Elandsfontein Beverage Marketing
(307/11
& 765/11)
[2012] ZASCA 6
(9 March 2012)
Coram:
BRAND,
HEHER, MHLANTLA, MALAN AND MAJIEDT JJA
Heard:
21 February
2012
Delivered:
9 March
2012
Updated:
Summary:
Principal
and agent – attorney receiving funds into trust account –
terms and scope of mandate – probabilities.
Enrichment –
condictio sine causa
– attorney authorised to distribute
funds in trust account in accordance with directions of G –
payments made with lawful
cause – misuse by G – no
condictio
available.
Enrichment -
impoverishment – defendant holding credit loan account in
plaintiff – account reduced by amount of misappropriated
funds
– no impoverishment.
____________________________________________________________________________________
ORDER
On appeal from:
South Gauteng High Court
(Johannesburg) (Lamont, Coppin and Mayat JJ sitting as court of
appeal):
1. The appeals of the
first, second, third and fourth appellants are upheld with costs.
2. The order of the court
a quo is set aside and substituted by the following order:
‘
The appeal and
cross-appeal are dismissed with costs.’
3. All orders for costs
are to include the costs of two counsel where employed.
__________
_______________________________________________________________________
JUDGMENT
_____________________________________________________________________
HEHER JA (BRAND,
MHLANTLA, MALAN AND MAJIEDT JJA concurring):
[1] The respondent in the
appeal was the plaintiff in the court of first instance, the South
Gauteng High Court (Tshiqi J). It claimed
from the first appellant, a
firm of attorneys (‘Joubert Scholtz’), specific
performance of an alleged oral mandate
calling for the repayment of
surplus funds held in trust after payment to First National Bank
(‘FNB’) and Standard
Bank (‘Standard’) of
moneys paid by the plaintiff into trust for the purpose of
discharging debts of and secured by
assets of the plaintiff.
[2] The
plaintiff also claimed, in the same action, against Pieter Andries
Goosen
1
and the third and fourth appellants (respectively
Elandsfontein 95 CC and Elandsfontein Bottling CC) for payment of
amounts paid
by Joubert Scholtz to those appellants or their
creditors from moneys paid by the plaintiff into the trust account in
pursuance
of the aforesaid mandate that, so the plaintiff alleged,
were paid by Joubert Scholtz in breach of its mandate and without
legal
obligation and resulted in the unjust enrichment of those
appellants at the expense of the plaintiff.
[3] The trial court
dismissed the plaintiff’s claims, but upheld a claim in
reconvention by
Goosen for a statement
and debatement of his capital loan account in the plaintiff.
[4] On appeal to the Full
Court (Lamont, Coppin and Mayat JJ) the plaintiff was more
successful: the order made by Tshiqi J in respect
of the plaintiff’s
claims was set aside and replaced with money judgments against each
of the appellants. The appeal against
the order on the claim in
reconvention was dismissed.
[5] This
Court granted special leave to appeal to all the appellants. There
was no cross-appeal by the respondent.
The dispute as it
appeared in the pleadings
[6] On 3 December 1999 at
Durban the plaintiff, then known as Melton Trading (Pty) Ltd, entered
into a written agreement with Goosen,
the third and fourth
appellants, and Platinum Food and Beverages CC (the holder of the
intellectual property rights for the ‘Goosen
Group’) in
terms of which the four parties would sell to the plaintiff their
business as a going concern together with the
moveable assets and
immovable property from which the businesses were conducted in
Elandsfontein. The plaintiff in turn accepted
responsibility in
respect of the liabilities of the businesses and the immovable
property including any liabilities of Goosen for
any obligations
secured by any mortgage bonds over the property for the sum of up to
R12 million only. The liabilities for which
the plaintiff undertook
responsibility included, so the plaintiff alleged:
(1) payment of the
settlement amount owed by Goosen to FNB in respect of the mortgage
bond over the property; and
(2) payment of the
settlement amount owed by the fourth appellant to Standard in respect
of a notarial bond passed over the plant
and equipment of the
corporation which formed part of the assets of the businesses sold to
the plaintiff.
[7] The plaintiff’s
case was that it mandated Joubert Scholtz (represented by Mr Jan
Joubert, a partner in the firm) to investigate,
negotiate, settle and
pay the debts of Goosen and the fourth defendant that were the
subject-matter of its undertaking. To this
end it paid certain moneys
into the trust account of Joubert Scholtz for that limited purpose.
However, the attorneys refused either
to account for the moneys
received or to repay such moneys as had not been applied to the
execution of its mandate. The plaintiff
accordingly claimed payment
of the amounts of R800 000,00 (the alleged FNB surplus) and R1 574
024,65 (the alleged Standard surplus)
or such amounts as might be
found due after debatement of the account.
[8] Joubert Scholtz
admitted that it received money into its trust account from the
plaintiff and alleged that it had paid out all
moneys so received as
it had been instructed by Goosen so to do. It denied the terms of the
mandate as set up by the plaintiff.
It pleaded that it had been
instructed by Goosen and / or Mr Abdoola on behalf of the plaintiff
to use and apply money received
from the plaintiff ‘to make
payment of (to) such entities and in such amounts as it may be
instructed by [Goosen]’
and had agreed to account to Goosen in
respect of all moneys received and paid.
[9] In its replication to
the plea of Joubert Scholtz the plaintiff:
(1) denied that Goosen
possessed authority to furnish instructions on its behalf with regard
to the use and application of the money
paid into the trust account;
(2) alleged that Joubert
Scholtz was aware of the terms of the agreement relating to its
undertaking to discharge the liabilities
of Goosen and the fourth
appellant;
(3) alleged in
consequence that Joubert Scholtz was estopped from relying on such
authority as Goosen might be found to possess,
‘for the purpose
of establishing a lawful excuse or justification for payment of the
moneys entrusted to it’.
[10] The plaintiff’s
claim for unjust enrichment was framed against the four defendants
jointly and severally. It set up once
again the mandate allegedly
conferred on Joubert Scholtz to investigate, settle, receive funds
and pay FNB and Standard ‘as
contemplated in clause 6.1.2 of
the written agreement’. It alleged that it entrusted R4,6
million to Joubert Scholtz in January
and February 2000 for the
purpose of discharging Goosen’s indebtedness to FNB and R2 724
024,65 during June to August 2000
for the purpose of discharging the
fourth appellant’s indebtedness to Standard. It further alleged
that, having paid the
banks, Joubert Scholtz, instead of retaining
the surplus funds in its trust account paid such funds to Goosen or
his creditors
or nominees and to the third and fourth appellants. To
the knowledge of Goosen and the third and fourth appellants, the
plaintiff
averred, there was no legal obligation that bound the
plaintiff to make such payments. As a result of the payments, Goosen
and
the third and fourth appellants had been unjustly enriched at the
plaintiff’s expense.
The issues on appeal
[11] The plaintiff’s
case against Joubert Scholtz turns on the terms of the mandate: Was
the instruction to Joubert such as
to limit the use of the funds
deposited by the plaintiff to strict adherence to the payment of the
FNB and Standard debts for which
the plaintiff had assumed liability
or did it confer a broader authority to take and give effect to
instructions from Goosen as
to the disposal of the money? In this
regard the plaintiff bore the onus of proof throughout the trial.
[12] Only four witnesses
were called at the trial. Mr Abdoola, a director of the respondent at
certain of the relevant times, was
the single witness for the
plaintiff. Mr Joubert testified for Joubert Scholtz. Mr Goosen and
his wife (whose evidence was of minor
consequence) were the witnesses
for the second, third and fourth appellants.
[13] The trial commenced
in November 2005, more than five years after the material events in
the case. Much of the evidence consisted
of the uncorroborated
recollections of the witnesses. The plaintiff’s case was
weakened by the absence of contemporaneous
letters confirming the
fact and content of meetings and conversations in circumstances where
such confirmation might reasonably
have been expected from a canny
businessman, as Abdoola certainly was. In relation to all the
evidence one must necessarily be
slow to accept such uncorroborated
testimony at face value and as reflecting with accuracy the actual
words uttered or the sequence
of statements and events.
[14] The trial judge made
no findings concerning the demeanour of the witnesses. She did
however reject the evidence of Abdoola
as false in material respects
on the strength of her assessment of the probabilities. The Full
Court, by contrast, overturned her
order because it concluded, also
on the probabilities, that Joubert and Goosen had dishonestly
conspired to defeat the claim, a
conspiracy that included the
manufacturing of correspondence.
[15] I too
propose to determine the probabilities applying the principles set
out in
SFW Group Ltd and another v Martell et
Cie and others
2003 (1) SA 11
(SCA) paras 5,
6, 7 and 34. In doing so it will be helpful to establish the
subjective understanding of the various witnesses as
to the rights
and duties imposed on the plaintiff and Goosen by the written
agreements. For this purpose it does not matter whether
that
understanding correctly reflects the intent and purpose of the
agreements. This is so because the likelihood that a witness
would
have behaved in one way or another depends not on the correctness of
his grasp of the terms of the agreement but rather on
how his
perception, right or wrong, would have influenced his conduct.
[16] In considering the
evidence there are, apart from the principal issue that I have
identified above, certain other subsidiary
disputes that may need to
be decided. These are:
(1) the meaning of the
terms of the payment liability clause in the Sale of Business
agreement;
(2) whether Joubert was
aware of the terms of the agreement at any material time;
(3) Goosen’s
authority, if any, to act on behalf of the plaintiff in relation to
the payment of the debts for the payment
of which the plaintiff had
taken responsibility;
(4) Joubert’s
understanding of Goosen’s authority;
(5) whether Joubert and /
or Goosen deceived the plaintiff as to the proposed or actual use of
the funds deposited by the plaintiff
in the trust account;
(6) whether the moneys
were held in trust for the plaintiff or Goosen;
(7) what, if any,
inference or weight is to be attached to the failure of the plaintiff
to call Moosa to testify;
(8) whether a face to
face meeting between Abdoola, Goosen, Groenewald and Joubert took
place in January to discuss payment of the
FNB debt.
[17] The evidence was
inordinately drawn out. Abdoola’s testimony covers nearly 400
pages, Joubert’s about 350 and Goosen’s
more than 200. In
what follows I have necessarily limited my synopsis as far as
possible without ignoring the whole picture.
Abdoola’s
evidence
[18] By 1999
Goosen and his Elandsfontein group of corporate entities were in
serious financial difficulty. Goosen was introduced
to Abdoola who
resided in Durban and ran a company called Sunnyfield Packing Co
(Pty) Ltd. He expressed an interest in acquiring
Goosen’s
business interests.
[19] In October of that
year Goosen, in his personal capacity, and as representative of the
third appellant (the property arm) and
the fourth appellant (the
bottling arm) entered into a Memorandum of Interest (‘MOI’)
with Abdoola who acted ‘as
nominee for the Moosa / Abdoola
Group’ as well as nominee for a company to be formed. The MOI
contemplated the sale of the
business interests as a going concern to
the new company in which Goosen and the Moosa / Abdoola interest
would hold 49.9% and
50.1% respectively. For the purpose of
formalising the sale a formal agreement was to be concluded between
the parties.
[20] Prior to the
conclusion of the sale agreement the business interests were de facto
taken over by a shell company, Melton Trading
(Pty) Ltd (the
plaintiff). Goosen was its sole shareholder and director. The
transfer of the immovable property on which the business
was
conducted would only be effected some months later.
[21] The MOI expressly
stated that
‘
3.1
The Third Party will inject capital by way of funding into the
Company as and when such funds may be required, but limited to
SIX
MILLION (R6M). Such funding by the Third Party will be treated as a
loan to the Company and their loan accounts to be credited
accordingly.
3.2
Both the First and Third parties will be responsible for the complete
management and control of the Company.’
[22] On 3 December 1999,
Goosen signed a Sale of Business and Property Agreement with the
plaintiff for a price of R30 million.
The sellers (Goosen, third
appellant, fourth appellant and Platinum) assigned the liabilities of
the combined business at the effective
date, 17 October 1999, to the
extent of R12 million only to the purchaser (the plaintiff).
[23] Clause 5.5 of the
agreement provided as follows:
’
The
purchaser shall accept responsibility, in respect of the liabilities
of the business and the Property (including any liabilities
of Goosen
for any obligations secured by mortgage bonds over the Property) for
the sum of R12,000,000 (Twelve Million Rand) only,
and the sellers
hereby indemnify and hold harmless the purchaser against any
liabilities of the business and any such secured liabilities
of
Goosen incurred or arising prior to the effective date, including any
contingent liabilities, in excess of the said sum of R12,000,000
(Twelve Million Rand). The amount payable by the purchaser to the
sellers in respect of the purchase price (R30 000 000) (Thirty
Million Rand) shall be reduced by the said sum of R12,000,000 (Twelve
Million Rand), which latter sum shall be paid in accordance
with
6.1.2 below.’
[24] The payment terms
were contained in clause 6:
‘
6.1
The purchase price shall be paid as follows:
6.1.1
by the issue to Goosen, as part payment of the purchase price of the
Property of R10,000,000 (Ten Million Rand) ordinary par
value shares
of R1 (One Rand) each in the share capital of the purchaser, which
shares shall be issued against transfer of the
Property into the name
of the purchaser;
6.1.2
by the payment by the purchaser to such of the creditors of Goosen
(in respect of any obligations secured by mortgage bond
or bonds over
the Property) or the creditors of the other sellers in respect of the
business as the purchaser shall in its election
determine of the sum
of up to R12,000,000 (Twelve Million Rand);
As
to the balance thereof by the creation of loan accounts in favour of
Goosen in the books of the purchaser.’
[25] According to Abdoola
the ceiling of R12 million on assigned liabilities was derived from
information furnished by Goosen to
him during pre-contractual
discussions. Abdoola was aware of his financial problems. Although a
schedule of liabilities was provided
by Goosen later in December
subsequent events proved it to be both incomplete and inaccurate. The
result was that Abdoola, who
ran the administrative affairs of the
plaintiff from Durban, never obtained a reliable identification or
quantification of the
liabilities covered by the provisions in
clauses 5 and 6, and was often taken by surprise when Goosen told him
of demands by creditors
of whom he was unaware.
[26] Simultaneously with
the conclusion of the Sale of Business and Property Agreement,
Goosen, the plaintiff, Groenewald (a minor
shareholder and the
auditor of the fourth appellant) and the family trusts of Abdoola and
Moosa concluded a Sale and Shareholders’
Agreement. In return
for 51.1% of the business as a going concern, including immovable
property valued in terms of the sale agreement
at R13.4 million and
all the plant, equipment and stock, the Moosa / Abdoola interests
undertook only one financial obligation:
to provide or procure R12
million in loan funding to the plaintiff which would attract interest
at prime bank rate. The purpose
of the funding was to liquidate the
debts of the sellers up to the amount of R12 million. Any debts in
excess of that figure would
be the liability of the sellers.
[27] From the outset,
according to Abdoola, he and Goosen were the de facto directors of
the plaintiff. The appointments were only
formalised by a resolution
on 24 February 2000 at which time Moosa was added as a further
(non-executive) director. No company
documents or resolutions were
adduced that reflected an earlier appointment of Abdoola or any
division or allocation of duties
and responsibilities to the
respective directors or any delineation of or limitation upon their
authority. In so far as the board
of the plaintiff, at least from 24
February 2000, consisted of at least three directors, no evidence
whatsoever was adduced of
its approval or disapproval of the
subsequent acts of Abdoola, Moosa or Goosen whether before or after
the event. One only has
Abdoola’s say-so (prima facie in
conflict with the unvaried terms of the MOI) that Goosen’s only
duty (and use) was
to oversee production at the factory in
Elandsfontein; beside that he had no decision-making capacity. Goosen
disputed this, although
he conceded that he had no authority to sign
cheques. This was, from the point of view of the onus borne by the
plaintiff, manifestly
unsatisfactory. Abdoola’s evidence of the
spheres of authority was not the best evidence, and certainly not
definitive, of
such authority. Given the silence of the board on this
crucial aspect one is bound to assume that the terms of the MOI
continued
to reflect the formal understanding between the
shareholders and was recognised in the interaction of the directors
appointed to
represent their interests. Upon this premise Goosen
retained throughout an equal level of authority with Abdoola in the
direction
of its affairs including the payment of debtors pre- and
post the effective date of the agreements.
[28] Abdoola testified
that Goosen had authority to settle certain debts of his own . . .
‘we allowed him to settle it because
he knew exactly what was
going on’. Although this may have been closer to a statement of
opinion than a definition of legal
authority, it was certainly a
recognition of the practical reality that Goosen was in the best
position to know which historical
business debts required to be paid.
Abdoola also emphasised that Goosen was obliged to inform the
plaintiff of who such debtors
were and produce some sort of proof of
the debt; the company would then pay in its discretion, often not
even notifying Goosen
of who had been paid. That may indeed have been
the practice but it needs to be borne in mind that the facts of the
present case
are different since in both instances large sums of
money were paid by the company, clearly in the first instance to
settle FNB
and Standard. The question is whether any limitation was
expressly or impliedly put on the utilisation of whatever may have
been
unnecessary for those purposes.
[29] According to
Abdoola, Goosen phoned him in late December or early January to tell
him that FNB was foreclosing on its bond
over the property of the
plaintiff. Abdoola knew that the debt was some R5.4 million but had
not been aware of litigation. Goosen
suggested that it might be
possible to negotiate a discount. He told Abdoola that Joubert
Scholtz in the person of Joubert, was
handling the matter for him.
Because that firm was also engaged in the transfer of the property it
seemed a good idea to involve
Joubert in the proposed negotiations.
[30] Abdoola testified
that he travelled by air to Johannesburg and met Goosen and
Groenewald at the factory. All three went to
Joubert’s office
in Kempton Park. There he met Joubert for the first time.
[31] Joubert told him
they (he and Goosen) were under pressure and that the plaintiff was,
in terms of the agreement, obliged to
pay the claim against Goosen
under the FNB bond. Abdoola, led to believe there was a prospect of
settlement, told Joubert that
the plaintiff would transfer the money
into his trust account. There was no urgency but the bond had to be
paid. Abdoola also said
that the plaintiff was applying for a bond
over the property in order to raise the money to pay. Joubert
suggested they should
try to negotiate a lower figure with FNB, but
said cash was necessary to achieve this. Abdoola thereupon instructed
Joubert that
since he was handling the transfer he should also deal
with the cancellation of the bond and control the money from the
plaintiff
to settle FNB’s claim from his trust account and,
having done so, report back to the plaintiff so that transfer of the
property
could be speeded up.
[32] I interpose to note
that Joubert and Goosen denied the meeting about which Abdoola
testified in its entirety and put forward
a completely different
version to explain why the plaintiff deposited money to meet the FNB
debt.
[33] Later, as Abdoola
testified, Goosen reported to him that FNB was prepared to settle for
R4.6 million. Abdoola asked him to
obtain terms for payment, but was
told that the figure was immutable because the agreement was for an
immediate cash settlement.
He regarded R4.6 million as representing
an attractive saving on the original debt and accordingly went about
raising the funds
from associate companies. According to his evidence
‘we managed to raise R3.8 million and we undertook to get
another R800
000.00 within a month’. He contacted Goosen and
told him to instruct Joubert to that effect.
[34] When the money was
available he telephoned Joubert and obtained his trust account
details and told him R3.8 million would be
paid into the account. He
could not remember exactly what was said ‘but I would say that
he was aware that R3.8 million was
coming initially and a further
R800 000.00 would be coming to his trust account to make up the
balance of R4.6 million,
which he also affirmed, is the settlement
figure of First National Bank
’ (my emphasis). He instructed
Joubert to cancel the bond and speed up the transfer.
[35] On 17 January 2000
the plaintiff’s cheque for R3.8 million signed by Abdoola was
deposited to the credit of Joubert Scholtz
at the Prospecton branch
of Standard Bank. On 16 February 2000 a further cheque for R800 000
was similarly deposited. Both cheques
bore endorsement relating to
their use but it is common cause that neither came to the attention
of Joubert.
[36] Also on 17 January
2000 Joubert addressed a letter to the plaintiff which he sent to its
fax number in Elandsfontein in the
following terms:
‘
Geagte
menere
EERSTE
NASIONALE BANK
Die
konsultasie tussen skrywer en u mnr Goosen vroeër vandag verwys.
Ons
wens u instruksies te bevestig dat ons ‘n bedrag van R3.8
miljoen en R800 000-00 in ons trustrekening moet ontvang ten
einde
Eerste Nasionale Bank te betaal.
Ons
bevestig dat u onderneem het om met Eerste Nasionale Bank te
onderhandel en te kyk wat die minimum bedrag is wat hulle bereid
sou
wees om in volle en finale vereffening te ontvang.’
Although Abdoola
professed to have been unaware of the letter until the first
appellant made discovery, he confirmed that it precisely
reflected
his instructions.
[37] Abdoola was also
shown a letter written in manuscript by Goosen and purportedly dated
18 January 2000 and addressed to ‘Jan’
(Joubert) as
follows:
‘
Na
die vele telefoon oproepe na Abdoola en Moosa gedurende Desember en
begin Januarie gaan ons nou R3,8 miljoen rand by jou inbetaal,
vandag
of more, wat jy asb. In trust moet neem en mnr. Uys van FNB laat weet
(dringend). Dit is deel van die koopprys van die fabriek
(deel van
die krediteure lys).
Dié
R3,8m moet dringend aan Uys & Kie oorbetaal word en kan nie
langer wag nie.
‘
n
Verdere bedrag van R800,000 sal aan jou oorbetaal word in die nabye
toekoms welke bedrag jy moet oorhou totdat ek jou instruksies
gee
(aangesien ek nog met FNB probeer onderhandel vir afslag) hoe
uitbetaling moet geskied.
Is
dit moontlik dat rente verdien kan word op gelde nog nie uitbetaal
nie?’
Abdoola denied ever
having seen this letter.
[38] Abdoola was referred
to a letter dated 18 February 2000 from Joubert Scholtz to Goosen and
once again faxed to the plaintiff’s
Elandsfontein number:
‘
EERSTE
NASIONALE BANK
Ons
bevestig dat ons die bedrag van R800 000-00 vandag ontvang het en dat
ons op u instruksies voormelde oorgeplaas het na u rekening
by NBS
Bank.
Ons
bevestig dat u onderneem het om self toe te sien dat enige restant
van Eerste Nasionale Bank daaruit afgelos sal word.’
Of this letter Abdoola
testified:
‘
It
is totally against my instructions to Mr Joubert. He was supposed to
pay FNB and not Goosen . . . Mr Goosen was not entitled
to any money
. . . He had no authority to give any instructions [that the money be
paid into his bank account]. He took instructions
from me . . . I was
not told the moneys were given to anyone . . . including Goosen.’
[39] According to Abdoola
he ‘believed the fire had been put out’ (ie in relation
to FNB). He waited for an accounting
from Joubert Scholtz with the
transfer of the property, something that only occurred much later.
When he eventually received the
title deed in 2001 he requested an
accounting from Joubert and was told he was not entitled to it as the
money was Goosen’s.
[40] After FNB the next
step in the saga was a phone call to him from Goosen in early March
to tell him that Standard was now putting
pressure on the plaintiff
and taking legal action. He was informed, for the first time, he
said, that that bank held a notarial
bond over the plant and
equipment at Elandsfontein which it was now threatening to perfect.
Goosen told Abdoola that Joubert Scholtz
was handling the bank and he
would get Joubert to call him. Joubert phoned and told him that
Standard had fixed a deadline of 22
March for payment.
[41] On 16 March 2000
Joubert sent a copy of a letter addressed by the bank to the members
of the fourth appellant and dated 1 March
2000 to the plaintiff’s
address in Durban. It read as follows:
‘
Offer
of R2 600 000 in full and final settlement for the overdrafts on:
PA
Goosen – account numbers 01 282 082 2 and 01 282 339 2 and
Elandsfontein Bottling CC – account number 41 030 035
7.
The
offer of R2 600 000 contained in your letter dated 3 February 2000,
in full and final settlement of the debts in the name of
Mr. Goosen
and Elandsfontein Bottling CC, has been accepted.
Our
agreement is subject to the full amount being paid to ourselves
within 21 days of this letter i.e. 22 March 2000 failing which
we
will have no option but to proceed with legal action.
Once
payment has been received all suretyships will be released together
with our Notarial General Bond.’
Abdoola testified that he
had overlooked the clear reference to the settlement of Goosen’s
personal debt.
[42] Towards the
beginning of April, Abdoola, Goosen, Groenewald and Joubert met at
the first appellant’s premises in Kempton
Park. Abdoola wanted
to negotiate a longer time to pay Standard. Joubert told him he could
not persuade the bank to take a lower
amount or extend the time.
Abdoola undertook to deal directly with Mr Claassen, the bank
manager. He told Joubert that it was obvious
that the plaintiff must
pay or lose both the equipment and its business. As before, he
instructed him to use the money that the
plaintiff would deposit into
the trust account to pay the bank and cancel the notarial bond.
[43] Abdoola negotiated
with Claassen, stressing, he said, the value of the plant and
machinery. On 12 April he submitted a written
proposal for an
extension of terms. Two days later the bank agreed to accept payment
by 12 May. But the plaintiff did not comply
and on 17 May the bank
demanded settlement by the following day. Further negotiations
between Abdoola and Claassen resulted in
a deferment until the end of
June.
[44] On 30 June the
plaintiff deposited a cheque for R1 million at the Prospecton branch
of Standard into the trust account of Joubert
Scholtz. Abdoola said
he discussed the matter with Joubert and informed him that the
plaintiff had not been able to raise more
but would do so if given
time. The payment apparently had the desired effect of staying the
axe until 27 July.
[45] Later in July
Abdoola told Joubert that a further R1.6 million was available and
would be paid into his trust account to settle
the bank’s claim
and procure cancellation of the notarial bond. On 31 July the deposit
was made.
[46] When Abdoola spoke
to Joubert in August 2000 the latter drew to his attention that the
plaintiff had agreed to pay interest
at prime rate from 22 March on
the Standard debt and that that undertaking was still unfulfilled.
Joubert later phoned and gave
Abdoola a figure of R124 024,65. A
cheque dated 14 August 2000 was made out by the plaintiff and handed
to Goosen for delivery
to Joubert Scholtz. Goosen phoned Joubert in
Abdoola’s presence and told him it should be used to finally
settle the debt
to Standard.
[47] The plaintiff made
discovery of a letter dated 11 August 2000 from Joubert to it at its
Durban fax number in which he voiced
a number of grievances held by
Goosen in relation to the management of the company, the keeping of
financial records and payment
of a monthly management fee due to
Goosen under the agreement. This letter also contains the following
statements:
‘
Our
previous conversations refers.
We
have now received confirmation from Standard Bank that their claim
has been paid in full. We wish to confirm that we have paid
out in
accordance with your instructions as follows:
04/07/2000
– R900 000; 31/07/2000 – R1,3 million; 01/08/2000 –
R200 000;
01/08/2000
– R324 024.65 directly to Elandsfontein 95 CC.
Mr
Goosen has requested us to discuss certain matters with you which
causes him great concern.
.
. .
7.
During the inspections of the books Messrs Goosen and Groenewald were
unable to establish exactly what amount was paid out to
creditors. To
this end we are informed that the transaction for the sale
essentially had the following in mind:
7.1
The contract made provision for creditors of R12 million. In the
event of the creditors not being R12 million the difference
between
that actually paid out and the amount of R12 million has to be
accounted for in Mr Goosen’s loan account by way of
a credit.
Mr Goosen would then be immediately be entitled to payment of that
portion of the loan account.
7.2
Please can you give us a full breakdown as to the amounts paid to
creditors to date and which creditors had not been paid. Mr
Goosen’s
concern in this regard stems from the fact that in most of those
instances he is liable as surety and co-principal
debtor.’
Abdoola denied ever
receiving the letter. He asserted that the disposition of the moneys
received was in conflict with his instructions
to Joubert and that
the reference to the terms of the agreement showed that Joubert had
had insight into its content at least in
regard to the plaintiff’s
obligation to pay creditors of the business. He was unable to suggest
why Joubert, intent as he
maintained on deceiving the plaintiff,
should have recorded that the amount of R324 024.65 (clearly an
incorrect reference to the
money earmarked for the interest) had been
paid to the third appellant.
[48] During 2001 the
plaintiff’s auditors required a reconciliation of the
liabilities paid in respect of FNB, Standard and
the Industrial
Development Corporation. They asked why a total of about R2.724
million had been paid to Standard when only R2.011
million had been
owed. Abdoola phoned Joubert and asked for an accounting. Joubert’s
response was that he did not need to
account to the plaintiff as the
money sent to him had been for Goosen. That prompted Abdoola to take
legal advice. Despite extensive
correspondence between his attorneys
and Joubert Scholtz he was unable to obtain an explanation that
satisfied him. He eventually
became aware that the moneys paid into
the trust account to meet the debt of FNB had been applied not only
to that end but also
to settle other creditors of Goosen and the
third and fourth appellants outside the scope of clauses 5 and 6 of
the agreement.
Nobody, he testified, had ever informed him that the
bank’s claims had been settled at amounts less than the
payments made
for the purpose by the plaintiff. Nor had the plaintiff
authorized Joubert Scholtz to utilize the funds for any other
purpose.
The trust account
[49] A copy of the trust
account of Joubert Scholtz, in so far as it related to the receipt
and disposal of the plaintiff’s
payment was accepted in
evidence. It clearly illustrates the reason for the plaintiff’s
grievance, given that the evidence
of Abdoola was truthful and
reliable. The breakdown of the account was as follows:
‘
ONTVANG
BETAAL
2/6/2000
Ontvang 1 000 000,00
2/6/2000
Betaal Elandsfontein Bottling
rekening
by Standard Bank 900 000,00
1/7/2000
Ontvang 1 600 000,00
1/7/2000
Betaal Elandsfontein Bottling
Rekening
by Standard Bank 1 300 000,00
1/8/2000
STANDARD BANK KREDIET
A.
P A GOOSEN 150 000,00
B.
ENB krediet P A Goosen 50 000,00
C.
Elandsfontein 95 30 000,00
D.
NBS (Krediet Servcon) 150 000,00
E.
Elandsfontein 95 20 000,00
2/8/2000
Melton Trading 124 024,56
A.
Elandsfontein 95 CC 60 000,00
B.
NBS Krediet Goosen 64 024,65
18/1/2000
Deposito Melton Trading 3 800 000,00
18/1/2000
Uys & Kie 3 800 000,00
16/2/2000
Deposito Melton Trading 800 000,00
17/2/2000
P A Goosen NBS 800 000,00
_____________________________
7
324 024,56 7 324 024,65
______________________________
The corporate saver
account
[50] Joubert opened a
corporate saver trust account for Goosen. It too was proved in
evidence. It reflects the details of when and
how the main trust
account was depleted (on the instructions of Goosen) and the moneys
transferred from it were used to pay entities
other than the FNB and
Standard debts which were covered by the terms of the Sale of
Business agreement.
[51] Noteworthy is the
fact that the amount of R124 024.65 paid by the plaintiff expressly
to discharge its liability for the interest
on the Standard debt was
not applied to that purpose at all.
The countervailing
testimony of Joubert and Goosen
[52] Mr Joubert is an
attorney with more than 20 years experience. By the end of 1999 Mr
Goosen had been his client for several
years. The relationship was
purely professional. They were not friends. In so far as the court a
quo built its finding of a conspiracy
on a close friendship the
conclusion finds no support in the evidence. Joubert advised Goosen
in relation to the business that
he carried on at Elandsfontein under
the umbrella of what Joubert thought of as ‘the Goosen group’.
[53] The business fell on
hard times. In October 1998 Standard obtained summary judgment
against Goosen and the third appellant
and commenced proceedings to
perfect its notarial bond over the assets. To Joubert’s
knowledge Goosen had been trying to
dispose of the business for about
two years by the end of 1999.
[54] In October or
November 1999 Goosen showed Joubert a memorandum of understanding
that he had signed with Mr Abdoola.
[55] In November 1999
Goosen settled an action brought by FNB at court, Joubert being
present and keeping a file note. The defendants
were required to pay
R3.8 million by 17 January 2000.
[56] In December Goosen
called on Joubert at his office seeking help in relation to a
contract. He required Joubert to travel immediately
to KwaZulu-Natal.
Joubert, however, was not available. At Goosen’s request he
made contact with an attorney in Pietermaritzburg
and arranged for
Goosen to consult with him that afternoon. Joubert faxed the contract
brought by Goosen to him but did not himself
look at the document
and, in evidence, professed himself unable to identify it. Nor did he
retain a copy, returning the original
to Goosen. There his initial
involvement ended.
[57] At the beginning of
January Goosen contacted him again. They discussed the latter’s
problems with debt. Goosen told him
the problems were over. He said
he had signed an agreement that required him, Abdoola and Moosa to
set up a new company to purchase
the Elandsfontein property and the
business. The company was to raise a loan of R12 million that would
be paid to him to liquidate
his debts. Goosen described the
arrangement as ‘more a matter of taking in partners than
selling the business’, as
he was to remain one of the directors
(with Abdoola). They were, he said, to have equal control, Abdoola
handling the affairs in
Durban while the business continued as before
at Elandsfontein.
[58] Also in early
January 2000, Mr Uys, the attorney representing FNB, phoned Joubert
and informed him that he had received instructions
that R3.8 million
had been paid into the first appellant’s trust account. Joubert
could find no record of such a payment.
He contacted Goosen who said
that R4.6 million would be deposited in a few days. Joubert spoke to
Goosen daily after that but nothing
was forthcoming. Meanwhile Uys
was pressing for payment and uttering threats.
[59] On 17 January Goosen
came to Joubert’s office. He asked him to check the trust
account again. Goosen had discussed the
matter with his partners.
Joubert ascertained that no payment had been made. Using his
cellphone Goosen spoke to Mr Moosa. After
a while he handed the phone
to Joubert. Joubert told Moosa that Goosen alleged that an amount of
R4.6 million would be paid by
Moosa into his trust account. Moosa
confirmed that the money would be paid. Joubert remarked that there
were various creditors
pressing, that his firm would be handling a
lot of cases for Goosen, and that R4.6 million would not be
sufficient. Moosa asked
him what the creditors amounted to. Joubert,
after a quick calculation named the principal creditors and the
amounts owed to them
and said they could reach R14 million or R15
million. Moosa’s response was that ‘their’
obligation to Goosen
was limited to R12 million. He added, ‘Anyhow
it is Mr Goosen’s debts and his problem and he must decide who
to pay
and who not to pay’.
[60] Moosa asked how long
Joubert could hold back the creditors. Joubert answered that R3.8
million had to be paid that day and
that there were various other
creditors who could not be resisted much longer. Moosa then undertook
to pay R3.8 million into the
firm’s trust account immediately
and ‘some other money later’ that could be used to pay
other creditors, including
a further bond of R500 000,00 in favour of
FNB. The reference to R800 000, Joubert said, came from Goosen after
Moosa rang off,
he telling Joubert that R4.6 million would be paid
in.
[61] Goosen instructed
Joubert to pay the FNB settlement figure forthwith but to hold back
other payments as he intended to negotiate
further to obtain better
terms. He also instructed Joubert that whatever came in should be
placed in an interest-bearing account
for him and that he would
notify Joubert as to who should be paid.
[62] On the same day,
Joubert testified, he wrote to the plaintiff at Elandsfontein
confirming his instructions. (This is the letter
quoted in para 36
above.) Because of the difficulties he was experiencing with his
colleague, Uys, he asked Goosen to write a letter
that would stress
the imminence of the payment to FNB. In due course he received from
Goosen the letter dated 18 January 2000 (quoted
in para 37).
[63] On 26 January
Joubert wrote again to the plaintiff at Elandsfontein:
‘
EERSTE
NASIONALE BANK
Ons
bevestig dat ons vandag ‘n bedrag van R3.8 miljoen aan die
Prokureurs van Eerste Nasionale bank oorbetaal het ter gedeeltelike
vereffening van die eis van Eerste Nasionale Bank teen uself.
Ons
is in afwagting van u spesifieke instruksies oor wat die bedag is
waarop u met Eerste Nasionale Bank ooreengekom het en wil
ons ook aan
u bevestig dat ons tot op datum slegs die bedrag van R3.8 miljoen
vanaf u ontvang het. Indien u enige verdere deposito’s
in ons
trustrekening gemaak het, wil ons u versoek om asseblief aan ons ‘n
aanduiding te gee van die bedrag en die datum
waarop, aangesien ons
geen verdere aanduiding kan kry van bedrae geld deur u gedeponeer
nie.
Volgens
ons berekenings skuld u Eerste Nasionale Bank aansienlik meer as die
bedrag van R3.8 miljoen reeds betaal en sal ons dit
waardeer indien u
hierdie aangeleentheid as een van dringendheid sal hanteer.’
[64] On 18 February an
amount of R800 000.00 was deposited into the first appellant’s
trust account. Joubert at once ensured
that it was transferred into a
corporate saver account in Goosen’s name which carried interest
and enabled creditors to be
paid directly from it. He received
instructions from Goosen from time to time to pay various persons. As
appears from his account
such instructions were carried out. In reply
to a question as to why he had not opened an account in the
plaintiff’s name
Joubert replied that Goosen had told him that,
according to the arrangements with his new partners, the money was
his, and, in
any event, he (Joubert) was in possession of none of the
company documents necessary for the opening of such an account.
[65] Throughout the
period January to April 2000, Joubert testified, they were battling
to keep Goosen’s creditors at bay.
Standard, which held a
notarial bond over the plant and equipment of the business, was
particularly urgent and embarrassing for
Joubert who was on that
bank’s conveyancing panel. Although he held some discussions
with Claassen, the manager, he left
the negotiating to Goosen and
Groenewald.
[66] Joubert was informed
that a settlement had been reached with Standard at a figure of R2.6
million. During the course of a telephone
conversation between them,
Abdoola asked him how much was outstanding to Standard. Joubert
replied that he had a letter given to
him by Goosen stating that the
debt was R2.6 million. On 16 March 2000, he faxed to him the letter
quoted earlier (in para 41).
[67] In April 2000
Abdoola, Goosen and Groenewald came to Joubert’s office. This,
said Joubert, was the first and only occasion
that he met Abdoola in
person. They discussed various creditors. Standard was threatening to
exercise its rights under the notarial
bond. Joubert had a conflict
of interest and did not want to get involved, so Abdoola and Goosen
agreed to ‘sort it out’
with the bank. Abdoola said
Goosen and Groenewald should see how long they could keep the bank at
a distance and the plaintiff
would shortly pay some money in; they
should come back to Joubert with what and who should be paid (not
just Standard). He said
‘Goosen will sort it out; they are his
debtors and he will tell you who and what you must pay’.
Abdoola also made it
clear that Goosen would run the company as
before and described the relationship between them as ‘family’.
[68] On 12 April 2000
Abdoola, on behalf of the plaintiff, wrote as follows to Standard:
‘
RE:
ELANDSFONTEIN BOTTLING CC
We
refer to our telecom with regard to the debt of the above named
company, and our purchase of the business, it’s assets,
and
immovable property at Elandsfontein from Mr P.A. Goosen.
At
present we are sorting out the best financing structure to fund the
equipment and immovable property. No financing has yet been
concluded
by our company. However negotiations are at an advanced stage.
According
to our records the total outstanding to your company by Elandsfontein
Bottling CC is 2,6 million, secured by a notarial
bond over the
equipment. The value of which exceeds R12 million installed.
We
would like to request your company to extend us a further 30 days to
finalize our funding and settle the debt. Interest at prime
rate can
be levied from March 22 2000 until payment date, which would not
exceed May 12 2000.
Your
co-operation is respectfully required. We hope the above will be
acceptable. Your response is awaited.’
Joubert first saw this
letter on discovery.
[69] On 30 June the
plaintiff deposited R1 million to the firm’s trust account.
Joubert transferred the money to Goosen’s
corporate saver
account and Goosen again instructed him on various occasions to deal
with the moneys as the account reflects. Joubert
was unaware and,
apparently, unconcerned as to whether the persons he was told to pay
were ‘group’ creditors or not.
[70] At the end of July a
further amount of R1.6 million was deposited by the plaintiff and
likewise disposed of.
[71] In August Goosen
brought a cheque from the plaintiff for about R124 000.00. Joubert
denied that he was responsible for providing
the interest amount on
the Standard debt to Abdoola as, he testified, he was no longer
involved in negotiations. Goosen, he said,
would have picked up a
cheque from Joubert Scholtz and delivered it to Claassen in Pretoria.
He subsequently became aware that
Goosen had in fact persuaded
Claassen to forgo the interest obligation.
[72] Joubert was
cross-examined about his response to a letter dated 14 June 2001
written by the plaintiff’s then attorney,
Mr Adams of Bowman
Gilfillan Inc, in the following terms:
‘
As
you know we act on behalf of Elandsfontein Beverage Marketing (Pty)
Limited, formerly known as Melton Trading (Pty) Limited.
Our
client instructs us that on or about the 30 of June 2000 and the 31
of July 2000 you received payments from our client in the
amounts of
one million rand and one million six hundred rand respectively,
coming to a total of R2.6 million.
We
are instructed that the above amounts were paid to you with
instructions to pay same to Standard Bank in order to settle the
amount owing to Standard Bank by Elandsfontein Bottling CC, which
amount was secured by a Notarial Bond over the equipment sold
to our
client. We are further instructed that Standard Bank required payment
of interest on the above amount, which was also paid
to yourselves
for this purpose in an amount of R124 024,6 on or about the 14 of
August 2000.
In
this regard our client requires written confirmation of the full
details of the amounts paid to Standard Bank and confirmation
that
such monies were allocated in order to liquidate the amount owing by
Elandsfontein Bottling CC to Standard Bank. In the event
of you being
in possession of any of the bond documents we also request same to
the extent that there are any surplus funds our
client would require
repayment of same.’
The reply signed by
Joubert was in the following terms:
‘
Our
failure to deal with all matters raised in your letter under reply
shall not be construed as an admission of the correctness
thereof.
Writer
is to say the least amazed at the stance now adopted by your client
in your letter under reply.
Allow
us to place the following on record:
1.
The writer represented Elandsfontein Bottling CC as attorney as well
as Melton Trading (Pty) Ltd now known as Elandsfontein Beverage
Marketing (Pty) Ltd.
2.
The writer also assisted Mr Goosen as attorney in the purchase and
sale agreement that was entered into between various parties
in terms
whereof
inter alia
assets of
Elandsfontein Bottling CC were sold to Melton Trading now
Elandsfontein Beverage Marketing (Pty) Ltd.
3.
As part of the purchase price Elandsfontein Beverage Marketing (Pty)
Ltd was to settle certain debts including that of Standard
Bank. By
the 22nd March 2001 Standard Bank had obtained a judgement against
Elandsfontein Bottling CC as well as Mr Goosen in personal
capacity.
As a result of the failure of Elandsfontein Beverage Marketing (Pty)
Ltd to settle the debt, Standard Bank instructed
its lawyers to
proceed with execution steps and the property of Elandsfontein
Beverage Marketing was subsequently attached.
4.
During April 2000 writer consulted with two of the directors of
Melton Trading now Elandsfontein Beverage Marketing (Pty) Ltd,
to wit
Mr G Abdoola and Mr P Goosen when the abovementioned attachment was
discussed. The amount Standard Bank was prepared to
settle on were
R2,6 million plus interest at 14,5%. Mr Abdoola asked Mr P Goosen to
try and negotiate with Standard bank regarding
the repayment as he
was not in a position to pay the judgment debt in full. He requested
Mr P Goosen to do everything in his power
to stop removal of the
goods attached which would obviously have caused seriously damage for
Elandsfontein Beverage Marketing.
5.
He also informed Mr P Goosen that he could make an amount of R1
million immediately available and asked Mr P Goosen to try and
arrange for the balance to be paid off over the next months.
6.
Mr P Goosen informed Mr G Abdoola that he had been paying certain
amounts directly out of own funds to keep Standard Bank happy.
Mr G
Abdoola intimated that he was aware of this and thanked Mr P Goosen
for his assistance in overcoming the problem with
inter
alia
Standard Bank.
7.
Writer obviously viewed this meeting as one between partners
co-operating in order to protect their business.
8.
The amounts referred to by you were subsequently paid into our Trust
account.
9.
The writer received instructions from Mr Goosen to effect payments of
the following amounts:
9.1
04/07/2000 R900 000
9.2
31/07/2000 R1.3 million
9.3
01/08/2000 R200 000
9.4
01/08/2000 R324 024.65
Lastmentioned
amount was paid directly to Elandsfontein 95 CC. The other amounts
were paid to Standard Bank.
On
the 11th of August 2000 we received confirmation from Standard Bank
that their full outstanding debt had been paid and that their
file
will be closed.’
It will be observed that
the last-mentioned letter does not refer to any authorisation
conferred by Moosa or Abdoola on Goosen or
Joubert in relation to the
payment of debts. Joubert explained this omission as an oversight. As
far as para 2 of the letter referred
to him assisting Goosen as the
latter’s attorney in the sale agreement Joubert maintained that
his intention was merely directed
to the emergency assistance in
finding a substitute attorney for Goosen in early December 1999.
[73] That in substance
completes the evidence of Joubert. Goosen’s version of events
does not require minute analysis. He
essentially confirmed the
factual aspects of Joubert’s testimony although there were
areas of difference. He repeatedly stated
that according to his
understanding of the sale agreement the R12 million allocated to the
payment of creditors was part of the
purchase price that he was
entitled to dispose of at his discretion with due regard to the need
to pay historical creditors of
the group business. That is why he was
at all times so eager to try to settle at lesser figures, believing
that if he did so, the
difference saved would come to him. His
evidence concerning his right to use the moneys paid by plaintiff to
the trust account
of Joubert Scholtz was by no means consistent. He
vacillated between claims to an out and out entitlement to the
disposition of
the full amount in his discretion and an acceptance of
an obligation to settle creditors and a right to receive the balance
of
the R12 million cash after such settlement. His view of which
creditors were the subject of the agreement also appeared to be
flexible,
generally extending to all his personal creditors and
creditors of the business as well as those of the third and fourth
appellants.
It is also apparent that he was influenced by an unspoken
grievance that his fellow shareholders had not been more forthcoming
in their compliance with the obligation to provide the capital to pay
the debts. It is also clear from his evidence that he was
prepared to
mislead Abdoola, and probably also Joubert, to lay his hands on money
made available by the plaintiff. The disposition
of the R124 024.65
deposited by the plaintiff under the impression that it would be used
to pay the Standard interest debt provides
a clear example of such
conduct. Having persuaded the bank to waive the claim, instead of
notifying Abdoola, Goosen instructed
Joubert to make payments to the
third appellant and NBS that are reflected in the trust account.
[74] It is clear from the
evidence that Goosen was devious to the point of dishonesty with both
Abdoola and Joubert. Such behaviour
was motivated and probably
accentuated by a fuzzy but wrong appreciation of the payment
responsibilities of the plaintiff and the
Moosa / Abdoola group under
the agreement. I think his state of mind is best explained by the
following concession made towards
the end of his evidence. Asked
whether he had studied the agreement of sale he replied:
‘
Unfortunately
at the time I did not and I must say whatever I read, I read in the
context how I saw this business. It has been shown
here in the court
to me in quite a different context.’
Whether his conduct and
his evidence was rooted in confusion and grievance (as I am inclined
to think was the case) or in dishonesty,
what is certain is that,
save for those instances where his evidence is reliably corroborated,
no reliance should be placed on
it. In his case, the unreliability of
his evidence is exacerbated not only by the disadvantage of delay in
bringing the matter
to trial, but also by the frailties of advancing
age.
[75] Where then, on a
conspectus of all the evidence, is the truth to be found? Certain
areas of disputes can easily be resolved
and I propose to deal with
these first.
The interpretation of
clause 6 of the Sale of Business and Property Agreement
[76] As counsel for
Goosen has pointed out there are subtle differences between the
formulation of the liabilities assumed by the
plaintiff as purchaser
of ‘the business’ (as defined in clause 1.1.10 read with
clauses 1.1.11, 1.1.12 and 1.1.13 of
the agreement) to be found in
clauses 3.1.2 and 5.5 on the one hand and clause 6.1.2 on the other.
I agree with counsel’s
submission that, because clause 6 deals
with the
mechanism
of payment and not the obligation to pay,
the inconsistency should be resolved on the basis that the, perhaps,
more extensive obligation
in clauses 3.1.2 and 5.5 (which do regulate
the
obligation
to pay) should prevail.
[77] I also agree with
Goosen’s counsel that the effect of the payment obligation and
method of division of the payment of
the price is that the plaintiff
as purchaser as at the date of purchase parted with no cash at all
for the acquisition of the business
and property. Goosen obtained 10
000 shares and a loan account. The sellers would notionally be rid of
up to R12 million of debt
if and when the plaintiff, a dormant
company at the time of sale, paid their creditors. Even treating the
undertaking to pay the
sellers’ creditors and the Goosen loan
account for the balance of the purchase price as constituting value
in the hands of
Goosen, one third of the purchase price is made up of
his shares in the self-same plaintiff which was, in turn, obliged to
honour
the obligation to pay creditors to the tune of R12 million,
and, in due course, Goosen’s loan account.
[78] Furthermore, on a
proper interpretation of the agreement, provided the plaintiff was
able to procure loan funding of up to
R12 million from a financial
institution, the Moosa / Abdoola family trusts were able to avoid any
obligation at all in return
for their controlling interest in the
plaintiff which now owned the business and assets built up by Goosen.
Even if they had to
provide the funding from their own resources,
they were entitled to repayment plus interest at prime. Despite the
substantial sounding
purchase consideration of R30 million for their
50.1% share of the business, the trusts were in fact not obliged to
pay one cent
for their shares in the plaintiff beyond the nominal
R200 provided for in the Sale and Shareholders’ Agreement.
Goosen, for
his part, retained 49.9% of an entity that still had to
pay off its creditors, without receiving a cent other than a book
entry
loan account which was only repayable, without interest, when
the majority shareholder consented.
[79] Neither the
interpretation of the agreement nor its pernicious effects (on
Goosen) was such as (of itself) to justify payment
to any creditor
falling outside the scope of the payment obligation. Those creditors
included creditors of the businesses conducted
by the third and
fourth appellants and Platinum, the creditors of Goosen in respect of
Portion 86 (of which he was the owner),
and the creditors in respect
of obligations secured by mortgage bonds over Portion 86, to a limit
of R12 million.
Joubert’s
knowledge of the terms of the Sale of Business and Property Agreement
[80] Joubert gave a clear
and forthright account of the circumstances under which Goosen sought
his assistance at the last moment
in relation to the conclusion of
the agreement and his inability to do so. His evidence was confirmed
in all material respects
by Goosen. No rebutting evidence was led.
There was no inconsistency or inherent improbability in his relation
of events. The attempt
to discredit him was founded entirely in
inferences sought to be drawn from letters written many months
afterwards that might suggest
some acquaintance with its terms at the
later stage. By then however Goosen had consulted Joubert about his
own grievances concerning
the implementation of the agreement and may
have furnished him with a copy in whole or in part. Nothing in the
later correspondence
offsets the direct testimony of Joubert that he
did not become acquainted with the terms of the agreement and was not
involved
in its negotiation.
[81] If Joubert had known
the terms of the agreement he would have been in no doubt that Goosen
was deluding himself. It is inconceivable
in such circumstances that
he would have played along with the delusion instead of spelling out
the reality to him. It is also
inconceivable that Joubert as Goosen’s
adviser (and not a friend) would have co-operated in opening the
corporate saver account
and effectively allowed Goosen carte blanche
in the disposal of the funds paid into the trust account by the
plaintiff. Nor is
it likely that he would have failed to make
diligent enquiry of both Moosa (in relation to FNB) and Abdoola (in
relation to Standard)
as to the precise use of the trust moneys and
failed to account for such use.
[82] In my view the trial
court was correct in finding that Joubert probably had no first-hand
knowledge of its terms, and, particularly,
those regulating the
obligations of the plaintiff in relation to payment of creditors at
the effective date.
The subjective states
of mind of Abdoola, Joubert, and Goosen in relation to the payment
obligation
[83] The agreements were
drawn by Messrs Garlicke and Bousfield the attorneys of the Moosa /
Abdoola parties. Although Abdoola was
never pertinently questioned
about it, he was almost certainly aware of the limitations on the
plaintiff’s obligations in
respect of creditors and the rights
and obligations of Goosen. He probably understood the obligations
more or less according to
their terms. Nor did he have any cause for
believing that Goosen perceived matters differently to himself since
Goosen never articulated
any misunderstanding. Since Abdoola seems
also to have believed that Joubert had at all material times been
aware of the contents
of the agreement it is also fair to infer that
Abdoola had no reason to believe that he too understood matters
otherwise. Because
Abdoola and Goosen each assumed that the other
shared the same understanding, relations between them continued in an
atmosphere
of amity and trust until at least August 2000.
[84] Where did Joubert
stand in all this, given, as I have found, that he had no knowledge
of the terms of the agreement?
[85] When he spoke to
Joubert at the beginning of January 2000, Goosen painted a rosy
picture of his prospects in the context of
his own perception of the
plaintiff’s obligations and his position within the company.
From the outset, therefore, Joubert
understood that Goosen would
receive R12 million as his share of the price which he would use, in
the first instance, to discharge
creditors of the group. Joubert was
told nothing about the loan account, nor did he have reason to
believe that the payment of
creditors was an obligation cast on
Goosen by the terms of the agreement.
[86] During the
conversation with Moosa on 17 January Joubert’s initial
understanding of Goosen’s position can only
have been affirmed.
Moosa said or, at least, created the impression, that as long as the
creditors did not exceed R12 million the
plaintiff would pay and he
was prepared to make R3.8 million available immediately to make good
his word and more shortly. The
letters exchanged between Joubert and
the plaintiff (Goosen) after the interaction with Moosa make it plain
that Joubert accepted
Goosen’s version of the plaintiff’s
obligations to him.
Did the face to face
meeting take place in January at which Abdoola instructed Joubert as
to payment of the FNB bond obligation?
[87] The January meeting
depends entirely on Abdoola’s say-so. It is unsupported by any
contemporary (or ex post facto) documentation,
or proof that Abdoola
was even in Johannesburg on that day. It is rebutted by both Joubert
and Goosen.
[88] The plaintiff’s
case was not that the telephonic discussion with Moosa did not take
place. That was not put, expressly
or impliedly, to the defendants’
witnesses. Nor was the content of that discussion challenged
(although Moosa’s authority
to give instructions to Joubert
was) and Moosa was not called to give evidence, although he was
obviously in the plaintiff’s
camp, and it was not suggested
that he was unavailable. Although never stated in specific terms, the
inference that the plaintiff
relies on is that the meeting between
Abdoola and Groenewald, Goosen and Joubert must have preceded the
discussion with Moosa.
But that inference is untenable for a number
of reasons. First Joubert, unchallenged, described how the report of
the alleged FNB
payment into his trust account came from Uys, FNB’s
attorney, how he checked for the expected payment from day to day and
discussed the matter frequently with Goosen who finally, clearly in
some desperation, on the last date for payment phoned Moosa.
Such a
sequence of events allows for no meeting such as Abdoola purported to
recall. Second, the conversation with Moosa must necessarily
have
involved reference to the meeting with Abdoola and been influenced by
Abdoola’s promise to pay and instructions to Joubert,
but it
was not suggested that that was the case. Third, if there had been a
prior meeting with Abdoola, he would have been the
logical target of
the call, not Moosa. Finally, the letters written by Joubert and
Goosen contemporaneously make no reference to
Abdoola (save as one of
the persons with whom Goosen had been telephonically in contact
preceding the Moosa conversation) nor his
instructions. If, as
Abdoola would have it, the directions communicated by Goosen to
Joubert in his letter were in opposition to
his own instructions to
Joubert, it is improbable that Joubert would simply have followed one
above the other without query. The
combined weight of all these
considerations results in a clear balance of probability against the
meeting having taken place at
all. That finding which is consistent
with the conclusion of the trial court, necessarily reduces both the
general credibility
and reliability of Abdoola as a witness. The
possibility of an innocent mistake on his part attributable to a
failing memory is
remote, given the importance of the occasion and
the detail supplied by him to validate his version.
Which version of the
April meeting in Kempton Park is more probable?
[89] In this instance the
meeting is common cause but crucial details are in dispute which bear
on the terms of the mandate to Joubert
Scholtz. Once again the
plaintiff’s case suffers from the shortcoming of a failure by
Abdoola to confirm his alleged oral
instructions in writing.
[90] It is not certain
whether the copy of the Standard letter of 1 March 2000 (sent 16
March to Abdoola) was received by Abdoola
before or after the
meeting. Either way it tends to favour the defendants’ version.
The heading to the letter unequivocally
draws attention to the
acceptance by the bank of a settlement offer of R2.6 million ‘in
full and final settlement for the
overdrafts on: P A Goosen-account
numbers 01 282 082 2 and 01 282 339 2 and Elandsfontein Bottling CC –
account number 41
030 035 7.’
In the body of the letter
reference is again made to ‘settlement of the debts in the name
of Mr Goosen and Elandsfontein Bottling
CC’.
To the average reader
this notification would have been clear. To a person having the
knowledge and interest of Mr Abdoola it must
have shouted. Yet he
testified, lamely, that he had overlooked the significance that it
bore to a settlement that included Goosen’s
personal debt to
the bank. Surprisingly, his explanation was not challenged. But even
without challenge it remains improbable and
even if true, his
oversight was consistent with an attitude which would have allowed
him to say (as Joubert testified) ‘Goosen
will decide who and
what to pay’. That his attention was drawn to the true terms of
the settlement in a letter forwarded
by Joubert also belies his own
(and his counsel’s) contention that Joubert subsequently
deliberately misrepresented that
Standard had been paid R2.6 million
whereas he knew that the business debt was some R500 000 less.
[91] As I have earlier
pointed out Abdoola had no particular reason to place a limit on
Goosen’s authority to pay creditors
because he believed
Goosen’s (and Joubert’s) understanding of the agreement
accorded with his own and there was trust
between them. On the other
hand at all material times before the meeting Joubert accepted that
Goosen was entitled to receive up
to R12 million as his share of the
purchase price. If Abdoola had before or during the meeting said
anything to qualify his perception
the probabilities are that:
(1) Joubert would have
queried the statement and the question of Goosen’s entitlement
and authority would have been clarified;
(2) Joubert would have
been astute at all necessary times after that (in relation to the
Standard payments) to confirm his instructions
and make full
accounting to the plaintiff;
(3) Joubert would not
have continued to operate the corporate saver account as if the funds
in it belonged to Goosen;
(4) Abdoola, now aware
that there had been a misunderstanding, would have ensured that
payments were not simply deposited without
clear directions as to
their disposition.
That none of these
consequences followed is, in my view, a strong indication that
Abdoola gave no instruction to Joubert which ran
contrary to the
latter’s perception of Goosen’s entitlement and authority
to deal with the funds as he deemed best.
The evidence of Joubert and
Goosen that Abdoola made a direct statement to that effect is, in the
circumstances, more probable
than the version derived from his
evidence. In thus concluding I have included in the balance of
probabilities the failure by Joubert
to mention his reliance on an
express authorisation by Abdoola in later correspondence.
The deposit by the
plaintiff to settle the interest claim of Standard
[92] The following
probabilities are established by the evidence:
(1) Abdoola was notified
that the bank required payment of interest at the agreed rate before
its claim could be regarded as discharged;
(2) Joubert forwarded the
bank’s letter of 1 September 2000 to the plaintiff;
(3) Joubert had no
personal knowledge of the amount of interest claimed by the bank.
(4) Joubert was not
informed by Abdoola that he should deal with the deposit in any
specific way.
(5) Joubert was not made
aware by Goosen that the bank had waived its claim.
(6) There is no reason to
believe that Joubert acted towards the plaintiff in a deceitful or
dishonest manner in relation to the
disposition of the funds or the
absence of an accounting.
Conclusion
[93] The conclusions I
have reached in relation to the disputed aspects of the case (save in
relation to the interpretation of the
Sale of Business and Property
Agreement) lead to an overall finding that the plaintiff failed to
prove that it conferred a mandate
on Joubert Scholtz in the terms
pleaded by it and, more broadly, either a mandate or a resolution of
the company which limited
the authority of Goosen, as a shareholder
empowered by the MOI and a director whose authority was not impugned
or restricted by
the board, to determine how the funds deposited at
the time of the FNB and Standard negotiations and pursuant to them
should be
used.
[94] The consequence is
that the plaintiff failed to prove that Joubert Scholtz was under a
duty to account for and return ‘surplus’
funds to it. The
trial judge was accordingly correct in her finding and her order must
be restored.
[95] As far as the unjust
enrichment action against the second, third and fourth defendants is
concerned, their counsel submitted
that the claim had to fail on two
grounds: first, that the plaintiff had failed to prove that Joubert
did not act in accordance
with a mandate properly given and,
therefore, on the case pleaded, had failed to prove a lack of just
cause for the payments, and
second that, even if Goosen acted beyond
his authority in receiving the payments to and appropriating them to
liabilities not the
subject of agreement, the plaintiff had not been
impoverished by such receipts or appropriations.
[96] I think both
submissions are sound. As to the first the law is correctly stated by
Rose-Innes J in
Govender v Standard Bank of SA Ltd
1984 (2) SA
392
(C) at 397F:
‘
.
. . in the case of a
condictio
sine causa
,
money which has come into the hands or possession of another for no
justifiable cause, that is to say, not by gift, payment discharging
a
debt, or in terms of a promise, or some other obligation or lawful
ground for passing of the money to the recipient, may be recovered
to
the extent that the recipient has thereby been enriched at the
expense of the person whose money it was.’
[97] The plaintiff
complains that Joubert had no mandate to pay the surplus funds held
in trust, after payment of the secured FNB
and Standard debts, to
other creditors of the Goosen group. The proposition that Joubert
lacked a mandate is based on the contention
that only Abdoola and not
Goosen could instruct Joubert on behalf of the plaintiff how to apply
the trust moneys. I have found
that no such limitation was placed on
Goosen’s authority when Moosa made the funds available in
January 2000. Such evidence
as exists is to the effect that he had
plenary authority equally with Abdoola to control the affairs of the
plaintiff. At the meeting
in April, Abdoola probably authorised
Joubert to dispose of the funds as he was instructed by Goosen to do.
As Joubert and not
the plaintiff made the payments in question and
did so in accordance with his mandate, there was lawful cause for the
payments.
[98] By reason of the
terms of agreement the loan account must stand to Goosen’s
credit in an amount of at least R4 million
(after due allowance has
been made for deduction of the sale price for a proportion of
Goosen’s shares in the plaintiff sold
to his fellow
shareholders). The quantum of an enrichment claim is the lesser of
the amount by which the recipient has been enriched
and the amount,
if any, by which the party claiming has been impoverished:
Kudu
Granite Operations (Pty) Ltd v Caterna Ltd
2003 (5) SA 193
(SCA)
at para 17. Goosen’s credit loan account for the balance of the
purchase price of the business and Portion 86 constituted
a liability
of the plaintiff, however difficult the majority shareholders might
be able to make it for Goosen ever to realise payment
of it. There
can be no doubt that in so far as the surplus funds were used to pay
creditors of Goosen and his group the amount
fell to be deducted from
his loan account. It follows that the liabilities to Goosen on loan
account whether arising under clauses
3.1.2, 5.5 and 6.1.2 of the
agreement or otherwise were reduced, but the plaintiff’s
patrimony was not. Because there was
no impoverishment, no enrichment
claim accordingly lay against the second, third and fourth
defendants.
[99] The following order
is made:
1. The appeals of the
first, second, third and fourth appellants are upheld with costs.
2. The order of the court
a quo is set aside and substituted by the following order:
‘
The appeal and
cross-appeal are dismissed with costs.’
3. All orders for costs
are to include the costs of two counsel where employed.
_________________
J A HEHER
JUDGE OF APPEAL
APPEARANCES
FIRST
APPELLANT: E F Dippenaar SC
Webber
Wentzel, Sandton
Lovius
Block, Bloemfontein
SECOND,
THIRD AND FOURTH APPELLANTS: C E Watt-Pringle SC
Ramsay
Webber, Illovo
Lovius
Block, Bloemfontein
RESPONDENT:
S L Joseph SC
Bouwer,
Kobeli & Morabe, Rosebank
Naudés,
Bloemfontein
1
Goosen
was sequestrated during the course of the proceedings and his joint
trustees are the second appellant.