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[2012] ZASCA 47
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National Scrap Metal v Murray & Roberts (809/2011) [2012] ZASCA 47; 2012 (5) SA 300 (SCA) (29 March 2012)
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THE SUPREME COURT
OF APPEAL
OF
SOUTH AFRICA
JUDGMENT
Case No:
809/2011
Reportable
In
the matter between:
NATIONAL SCRAP METAL (CAPE TOWN) (PTY) LTD
.......................
First Appellant
MUREC
CRUSHING AND MILLING (PTY) LTD
...............................
Second Appellant
and
MURRAY & ROBERTS LTD
..............................................................
First
Respondent
MURRAY & ROBERTS STEEL (PTY) LTD
..................................
Second
Respondent
CAPE
TOWN IRON AND STEEL WORKS (PTY) LTD
.....................
Third
Respondent
Neutral
citation:
National Scrap Metal v Murray & Roberts
(809/2011)
[2012] ZASCA 47
(29 March 2012)
Coram:
Mthiyane DP, Cloete, Leach, Tshiqi and Wallis JJA
Heard:
7 March 2012
Delivered:
29 March 2012
Summary:
Motion proceedings – whether
disputed allegations of fact capable of being rejected on the papers
– factors relevant
thereto.
___________________________________________________________________
O R D E R
___________________________________________________________________
On appeal from:
Western Cape High Court, Cape
Town (Griesel J sitting as court of first instance):
1. The appeal succeeds, and the order of the high court
is set aside and replaced with the following:
‘
(a) The application is
dismissed.
(b) The applicants are to pay the respondents’
costs, jointly and severally, the one paying the others to be
absolved.
(c) The respondents are to pay the applicant’s
costs of the interlocutory proceedings on 31 August 2011 and 13
September 2011,
jointly and severally, the one paying the other to be
absolved.
(d) The above orders as to costs shall include the costs
of two counsel where employed.’
2. The respondents are to pay the appellants’
costs of the appeal, including the costs of two counsel, jointly and
severally,
the one paying the others to be absolved.
___________________________________________________________________
J U D G M E N T
__________________________________________________________________
LEACH JA (MTHIYANE DP, CLOETE, TSHIQI AND WALLIS JJA
concurring)
[1] The appellants appeal against an order of the
Western Cape High Court (Griesel J) granted on 9 November 2011
evicting them from
certain immovable property in Kuilsrivier owned by
the first respondent. It was common cause that the appellants had
earlier leased
portions of the property, the first appellant under a
written agreement which had expired on 31 October 2010 and the second
appellant
under a lease which the respondents had purported to
terminate in 2011. Both appellants relied upon an oral lease
agreement allegedly
concluded in 2008 which entitled them to remain
in occupation for at least ten years after the expiry of the first
appellant’s
written lease. This agreement was, in turn, denied
by the respondents. Without resorting to oral evidence, the high
court concluded
that the appellants’ allegations in regard to
the oral lease were not sustainable and granted the eviction order
sought by
the respondents. With leave of the high court, the
appellants now appeal to this court, contending that in the light of
the dispute
of facts raised on the papers, the eviction application
ought to have been dismissed.
[2] The respondents are all members of the Murray &
Roberts group of companies. The first respondent, Murray &
Roberts Ltd
(‘M&R Ltd’), is a subsidiary of Murray &
Roberts Holdings Ltd, a public company listed on the Johannesburg
Stock Exchange. M&R Ltd is, in turn, the holding company of the
second respondent, Murray & Roberts Steel (Pty) Ltd (‘MRS’)
of which the third respondent, Cape Town Iron & Steel Works (Pty)
Ltd (‘CISCO’) is a wholly owned subsidiary. (For
convenience I intend to adopt the nomenclature used by counsel by
referring to the respondents collectively as ‘M&R’.)
[3] Not only are the respondents related to each other
in this way, but MRS holds 42.8 per cent of the ordinary issued share
capital
of the first respondent, National Scrap Metal (Cape) (Pty)
Ltd (‘NSM’). The second appellant, Murec Crushing &
Milling (Pty) Ltd (‘Murec’) is a wholly owned subsidiary
of NSM.
[4] At all material times each of the parties was, in
some way or other, involved in the scrap metal industry. NSM was
established
by MRS, effectively as a joint venture with a company
that for present purposes may simply be referred to as ‘Reclam’,
which also holds 42.8 per cent of NSM’s shares. The principal
motivation behind the establishment of NSM was for it to provide
CISCO with an adequate supply of the ferrous scrap it required for
its manufacturing steel plant. Pursuant to this, in September
1999,
CISCO and NSM concluded a supply agreement under which CISCO agreed
to purchase its scrap metal requirements exclusively
from NSM which
agreed, in turn, to supply the scrap metal it collected exclusively
to CISCO. CISCO retained the right to purchase
scrap metal from other
sources if NSM was unable to fulfil its requirements, while NSM had
the right to supply other customers
if it had scrap metal available
surplus to CISCO’s requirements. This initial supply agreement
was later amended in May 2001.
In terms of the agreement as amended,
it was to remain in force until 31 October 2010.
[5] M&R Ltd is the owner of a piece of immovable
property in Kuilsrivier, approximately 20.25 hectares in extent. Of
this CISCO
was using a portion of some 15.5 hectares (referred to in
the papers as ‘the CISCO portion’). Shortly after it had
been established, and in order to facilitate its supply of scrap to
CISCO, NSM leased another portion of the property from CISCO
(‘the
leased portion’). Situated immediately adjacent to the CISCO
portion, it was let for a period of 12 months with
effect from 1 July
1999, the stated intention in the lease being that NSM would use the
premises for the ‘procurement, processing,
handling and
distribution of scrap metals’.
[6] Although the lease contained an option to renew for
an indefinite period, neither NSM nor CISCO actually exercised the
option
before the lease expired in mid-2000. Despite this, they
thereafter conducted themselves as if the lease had in fact been
renewed,
with the rental escalating at eight per cent. Eventually,
however, as NSM found it was spending a considerable amount of money
on improvements to the property, it decided to formalise the
agreement, and it is recorded in the minutes of an NSM board meeting
held on 27 August 2003 that a director was tasked with finalising a
rental agreement by 30 September 2003.
But
although the existence of a rental agreement between CISCO and NSM
was confirmed in the minutes of the NSM board meeting of
27 November
2003, a written agreement was not finalised until 13 March 2007 to do
so when a so-called ‘amending agreement’
was concluded
which extended the terms of the lease until 31 October 2010.
[7] The initial lease included a gantry and existing
cranes on the leased premises. NSM’s operations duly flourished
and by
the time it came to amend the initial lease it had spent vast
sums on various improvements, as I have mentioned. This gave rise
to
protracted problems which took years to resolve but which finally led
to NSM’s ownership of the gantry being recognised
and
adjustments to the rental being made. Ultimately this was reflected
in the amending agreement.
[8] In October 2003, CISCO and NSM entered into a waste
removal and disposal agreement with Murec to provide for the
collection,
removal and disposal of waste products known as ‘slag’
produced by CISCO’s operations from an area of the CISCO
property. This portion of the property, approximately 1.2 hectares in
extent, has been referred to as ‘the services site’.
Under this agreement, Murec operated and used the services site with
effect from 20 January 2003. The initial agreement provided
for the
lease to be valid until 31 January 2008 but it was amended to
continue indefinitely, subject to the right of either CISCO
or Murec
to terminate on not less than six months notice. The services site
was the property from which Murec was evicted under
the order of the
court below.
[9] As appears more fully below, in 2009 NSM purchased a
heavy duty shredder with integrated hydraulic and electrical control
systems.
It is an extremely large plant. Its feeding belt alone
weighs 140 tons; the shredder weighs 80 tons; its router 25 tons; its
motor
12 tons; and its feed rollers 20 tons. Due to its size and
weight it is necessary for the shredder to be based on substantial
concrete
foundations which had to be erected when it was installed.
[10] In 2008, Murec and CISCO agreed to allow NSM to
install the shredder on a portion of the services site. This portion
is referred
to in the papers as ‘the shredder site’. For
illustrative purposes a diagram of the CISCO portion, the leased
portion,
the shredder portion and the slag handling area (being the
remainder of the services side excluding the shredder portion) is
attached
to this judgment.
[11] During the course of 2010, due to a change in
economic circumstances, MRS decided to dispose of CISCO and its
business. Pursuant
to this decision, the respondents’ attorneys
wrote to NSM on 6 May 2011 and instructed it to vacate both the
leased portion
and the shredder portion by 8 August 2011. The same
day, the attorneys sent a notice to Murec, terminating its lease of
the services
site and requiring it to vacate by 8 November 2011. This
notice was later withdrawn and a second notice of termination was
given
to Murec on 3 June 2011 requiring it to vacate by 31 December
that year. When both NSM and Murec indicated that they would not
vacate their respective portions of the property, the respondents
applied to court for their eviction.
[12] In seeking to avoid eviction, the appellants relied
upon the oral agreement mentioned at the outset of this judgment.
They
drew attention to an NSM board meeting held on 19 June 2008 at
which the board had agreed to purchase a heavy duty shredder at an
anticipated cost of some R45 million on condition that a long-term
lease be concluded with CISCO relating to the property on which
the
shredder would be erected. On behalf of the appellants, Mr Michael
Movsas and Mr Dave Kassel, both members of the NSM board,
alleged
they had met with Mr Robert Noonan who was on the boards of both MRS
and NSM, but who had not attended the meeting of 19
June 2008. They
stated that to the best of their recollection, this meeting occurred
at the Johannesburg airport. They alleged
that Noonan was fairly
assertive at the meeting and, after referring to a competitor known
as ‘SA Metal’, which had
ordered a steel rolling mill,
had stated that M&R could not be in the hands of its opposition
and would therefore purchase
a shredder if NSM did not do so. Kassel
and Movsas alleged that they then told Noonan that ‘as he was
aware the board of
[NSM] had resolved to proceed with the purchase of
a shredder on condition that a long-term lease agreement be entered
into with
[CISCO] in respect of the premises where the shredder was
to be located’. They went on to say that they had stated that
if
Noonan agreed on behalf of M&R that such a lease would be
entered into, they (on behalf of NSM) would confirm that NSM would
acquire and install a shredder that would meet M&R’s
requirements. They further alleged that Noonan had immediately
responded by saying that M&R would be prepared to let the
premises to NSM for a further period of ten years following 31
October
2010 when the existing lease would lapse, and that:
‘
After
a brief discussion, Noonan . . . Kassel and [Movsas] agreed that
following the expiry of the existing lease on 31 October
2010, [NSM]
would continue occupation of the premises (including the premises in
which the shredder would be installed) on the
same terms and
conditions as those recorded in the existing lease and that such
occupation would be for a period of at least ten
years commencing 1
November 2010. The rental was to be on the basis of the built-in
escalation in the existing lease over the ten
year period.’
[13] Movsas alleged that after this he had advised NSM’s
remaining board members who were not M&R appointees that
agreement
had been reached with M&R as to the terms which would
govern NSM’s continued occupation of the leased premises,
including
the portion on which the shredder would be installed.
[14] The respondents denied that this meeting had ever
taken place or that Noonan had ever purported to conclude an oral
lease on
such terms. According to them there had been two meetings at
the airport attended by Noonan and Movsas. The first had been much
earlier, on 17 March 2008, and had been attended by various other
persons, including a representative of SA Metal; that the discussions
had centred on whether the SA Metal’s increase in its steel
mill capacity would result in there being insufficient shred
to
satisfy both its and CISCO’s requirements; and that there had
been no discussion concerning a lease for NSM. The second,
they
alleged, had been on unspecified date at which Noonan had indeed said
that unless NSM installed a shredder, M&R would
purchase one
itself. M&R averred this latter meeting had taken place well
before the June 2008 board meeting.
[15] The respondents also alleged that Noonan had in any
event not been authorised on behalf of any entity in the M&R
group
to conclude a ten-year lease which, they said, would have been
highly unusual and would have required the approval of M&R’s
board of directors – which had neither been sought nor
obtained. I intend to deal with this issue at the outset.
[16] Although the appellants denied that Noonan lacked
the necessary authority to bind M&R, it was contended by the
respondents
that this amounted to no more than a bare denial which
did not raise a genuine and bona fide dispute on the issue. They
therefore
contended that the matter had to be decided on what they
had alleged the facts to have been viz that only a board decision,
and
not Noonan acting alone, was required to conclude a long lease.
[17] Of course NSM was not a party to whatever
authorisation M&R may or may not have given to Noonan relevant to
the conclusion
of a lease, and the original denial in the appellants’
answering papers did in fact consist of no more than the bold
assertion
that M&R’s appointee to the NSM board (Noonan)
‘was authorised to and agreed to a lease for a period of at
least
ten years’. However, as pointed out by this court in
Wightman
1
:
‘
A
real, genuine and bona fide dispute of fact can exist only where the
court is satisfied that the party who purports to raise the
dispute
has in his affidavit seriously and unambiguously addressed the fact
said to be disputed. There will of course be instances
where bare
denial meets the requirement because there is no other way open to
the disputing party and nothing more can be expected
of him. But even
that may not be sufficient if the fact averred lies purely within the
knowledge of the averring party and no basis
is laid for disputing
the veracity or accuracy of the averment’ .
[18] Here, not only were the appellants probably not
privy to the extent of the authority M&R had vested in Noonan,
but in a
further affidavit Movsas stressed that it had taken seven
years for the amending agreement to be concluded after the original
lease
had lapsed; that during that period Noonan had been intimately
involved in the interactions in regard to the conclusion of a fresh
lease and that he had, effectively, been allowed to represent M&R
in the negotiations which led to the amending agreement.
Consequently
there was no reason to suspect that he lacked authority to represent
M&R in concluding another lease on its behalf.
[19] These are valid considerations. Accordingly, in the
light of the respondents’ failure to either attach any
documentation
or provide any other evidence to demonstrate Noonan’s
alleged limited authority or showing that the consent of M&R’s
boards was a prequisite for the conclusion of a ten year lease, in my
view the appellants made sufficient allegations relevant
to Noonan’s
actual authority for there to be a genuine and bona fide dispute
between the parties on the issue. The matter
must therefore be
decided on the basis of the averments made by appellants in their
affidavits ie that Noonan in fact had the necessary
authority.
[20] Consequently, I turn to consider the respondent’s
contention that the appellants’ allegation of the conclusion of
an oral lease for a period of ten years can be rejected on the
papers. In attacking what was referred to as the ‘implausibility’
of the appellants’ allegations concerning an oral lease agreed
at the Johannesburg airport, counsel for the appellant argued
that
there were eight main reasons why the appellants’ version could
not be seriously entertained, expressed by counsel as
the following:
(a) First, the documentation shows that M&R’s
approach had consistently been that any new lease agreement could
only be
concluded in tandem with a new supply agreement, the terms of
which could only be agreed once there was certainty as to what supply
arrangements would be permitted under competition law. This was
crucial as the Competition Commission had already found that the
original supply agreement between CISCO and NSM involved the
commission of prohibited practices. As it had not been possible to
conclude a new supply agreement before the alleged oral lease was
concluded, and as indeed there still remained great uncertainty
as to
what supply arrangements would be permitted under competition law at
that time, it was wholly improbable that M&R would
have committed
to a long-term lease in 2008.
(b) Second, there was no correspondence or any other
document either confirming the terms of the alleged oral agreement or
supporting
the allegation that such an agreement had been reached. In
particular, none of the NSM’s board meeting minutes pertinently
reflect that such an agreement had been reached.
(c) Third, as none of the other agreements between any
of the interested parties relating to the premises, or indeed the
supply
agreements, were for a period of ten years, it was wholly
improbable that Noonan, ‘off the cuff’ so to speak, would
agree to a ten year lease.
(d) Fourth, in the light of the conclusion of written
lease agreements relating to the premises in the past, it was
extremely unlikely
for M&R to have concluded an oral lease for a
period of ten years.
(e) Fifth, that the rental allegedly agreed under the
oral lease was unrealistic as the lease purportedly encompassed a
bigger area
than that leased under the amending agreement (it
included not only the portion NSM had leased but also the shredder
portion as
well) but at the same rental charged for the leased
portion alone, and at a rental which was well below the current
market value.
This was all the more unlikely as under the oral lease
M&R would have been liable for all electricity consumed on both
the
leased portion and the shredder portion.
(f) Sixth, it was inherently improbable that discussions
about a shedder to be installed on the shredder portion would have
led
to the conclusion of a lease relating to both the leased portion
and the shredder portion on the same terms as the lease agreement,
particularly as: the occupation and use of the shredder portion was
governed by the Murec agreement which was to endure indefinitely
subject to the right of either CISCO or Murec to terminate it on six
months’ written notice; any new lease agreement would
therefore
have involved a variation of the parties’ rights under the
Murec agreement; given that the shredder portion was
not the subject
of the lease agreement, it made no sense for a purported long-term
agreement in respect of the shredder portion
to mirror the terms of
the lease agreement.
(g) Seventh, it was unlikely for the meeting at which
Noonan told NSM that if it did not acquire a shredder M&R would
do so,
to have taken place after the 19 June 2008 board meeting of
NSM. It was far more likely that this ultimatum had been given before
that date which would have precipitated NSM‘s decision to
purchase and install the shredder.
(h) Eighth, and finally, that as M&R were intending
to purchase a shredder if NSM did not do so, there was no reason for
it
to agree to a long-term lease even for the shredder portion, as
NSM was given no choice and was in no position to bargain.
[21] These factors, particularly collectively, do cast a
measure of doubt on the appellants’ version, which is certainly
improbable
in a number of respects. However, as the high court was
called on to decide the matter without the benefit of oral evidence,
it
had to accept the facts alleged by the appellants (as respondents
below) unless they are ‘so far-fetched or clearly untenable
that the court is justified in rejecting them merely on the papers.
2
An attempt to evaluate the competing versions of either
side is thus both inadvisable and unnecessary as the issue is not
which
version is the more probable but whether that of the appellants
is so far-fetched and improbable that it can be rejected without
evidence.
[22] As was recently remarked in this court, the test in
that regard is ‘a stringent one not easily satisfied’.
3
In considering whether it has been satisfied in this
case, it is necessary to bear in mind that, all too often, after
evidence has
been led and tested by cross examination, things turn
out differently from the way they might have appeared at first
blush.
4
As Megarry J observed in a well-known dictum in
John
v Rees
[1970] Ch 345
at 402:
‘
As
everybody who has anything to do with the law well knows, the path of
the law is strewn with examples of open and shut cases
which,
somehow, were not; of unanswerable charges which, in the event, were
completely answered; of inexplicable conduct which
was fully
explained; of fixed and unalterable determinations that, by
discussion, suffered a change.’
[23] Moreover, it is also necessary to guard against
approaching a case such as the present on the assumption that
businessmen will
act in a businesslike manner or with meticulous
concern for the keeping of accurate records. All too often they do
not. As Harms
JA has pointed out:
‘
Businessmen
are often content to conduct their affairs with only vague or
incomplete agreements in hand. They then tend to rely
on hope, good
spirits,
bona
fides
and
commercial expediency to make such agreements work.
’
5
This is all the more so in this case where there was not
only a close symbiotic relationship between NSM and M&R, but
where
M&R also had representation on NSM’s board and was
therefore a party to its business plans and strategies. The closeness
of the relationship between M&R on the one hand and NSM and Murec
on the other may readily explain why the respective parties
did not
conduct their business relationships with greater formality. In
particular it may well explain why agreement on a ten-year
oral lease
did not result in it immediately being reduced to writing. And in
regard to this latter issue, it is significant, as
Movsas pointed
out, that it had taken years for the amending agreement to be reduced
to writing despite consensus on its terms
having been reached.
Consequently, so he alleged, NSM’s board had become accustomed
to the slow processes that took place
within M&R’s
organisation and that he therefore never entertained any doubts that
M&R would honour the oral agreement.
This is a telling comment,
and in the light of the relationship between M&R and NSM and the
previous delay that Movsas mentioned,
his explanation cannot be
regarded as being one which is so far-fetched or untenable that a
court is justified in rejecting it
merely on the papers.
[24] In addition, as is clear from what I have already
said, the respondents’ argument is based in various respects
upon what
was or was not said at a number of NSM board meetings,
relying on the minutes kept of those meetings for that purpose. It is
necessary
to remember that minutes of board meetings do not purport
to be a verbatim record of what was said; rather they tend to be a
fairly
terse synopsis of what was discussed, highlighting what the
compiler, usually the company secretary, considered to have been of
importance. Merely because something is not specifically recorded in
a minute does not necessarily mean that it was not mentioned,
even in
passing, and this should be borne in mind when considering what
effect the minutes have upon the probabilities.
[25] In the light of these remarks, it is clear that
undue weight should not be accorded to the fact that the oral
agreement the
respondents rely upon was not specifically recorded in
the minutes of any NSM board meetings. As clearly mentioned, the
minutes
of 19 June 2008 record that after a presentation had been
made in regard to the installation of a Newell 300 HP heavy duty
shredder
at an anticipated cost of approximately R45 million, the
board ‘agreed to go ahead with installation of this shredder on
condition that a long term lease agreement be entered into with CISCO
where the shredder is to be erected’. While it is so
that
Noonan, M&R’s representative on NSM’s board, did not
attend that particular meeting, he must have received
the minutes as
he attended the following NSM board meeting on 5 August 2008 when the
minutes of the meeting of 19 June 2008 were
confirmed and the
shredder issue was again discussed. By then, according to the
appellants, the meeting at the airport at which
they alleged Noonan
had agreed to bind M&R to a lease for ten years, had already
occurred. Such a lease would have fulfilled
the condition stipulated
at the 19 June 2008 meeting as being necessary for the board to
persist with the purchase of a shredder.
Significantly, it did so
persist. The acquisition of a shredder was discussed again at the
board meetings of 20 November 2008 and
5 March 2009, both of which
Noonan attended. Neither the minutes of these nor any other board
meeting mention a failure to obtain
the required commitment to a long
term lease as a potential stumbling block to NSM making the
substantial capital investment required
to purchase a shredder. It is
hard to conceive that no-one on the board ever thought about the
issue, Noonan included. Movsas,
however, stressed that after the
agreement on the oral lease was concluded, he informed the other
non-M&R members of the board
thereof and, if he did, this might
well explain why the issue was never raised pertinently at subsequent
board meetings. By the
same token, Noonan’s failure to raise
the issue could also be explained by his knowledge of the lease. In
these circumstances
there really is nothing overtly sinister in the
failure of the minutes to specifically record that oral agreement had
been reached
in regard to a long term lease to accommodate the new
shredder.
[26] What the minutes do reflect are discussions
relating to a potential lease between NSM and CISCO in regard to the
shredder portion.
It was argued that on the appellants’ version
no separate agreement for the shredder portion would have been
necessary as
that portion was included in the premises leased under
the oral agreement, and the fact that these discussions took place is
therefore
destructive of that version. But the appellants explained
that a specific lease relating to the shredder portions was required
in order to obviate similar difficulties to those that had arisen in
regard to the improvements they had effected on the leased
premises
after the lapse of the 1999 lease which had led to a dispute as to
ownership of the gantry that took several years to
resolve. A similar
dispute could once more be a potential problem, bearing in mind that
a good deal of civil construction was required
to install a shredder.
Moreover, as Movsas explained, the local municipality was prohibited
from supplying electricity to premises
that were being supplied by
Eskom. Eskom was already supplying electricity to CISCO’s
premises but was unable to supply sufficient
power to satisfy the
demand of the shredder. Accordingly, in order to enable the shredder
to operate using power from the municipality,
it was agreed with
CISCO for the property to be sub-divided to enable the municipality
to supply power to the portion housing the
shredder. Indeed it is
recorded in the minute of an NSM board meeting held on 12 May 2011
that the sub-division had been effected,
that a municipal substation
had been commissioned from which the shredder was being powered, and
that NSM was being billed directly
by the municipality.
[27] In the light of the proposed sub-division, Movsas
explained that it was desirable for a separate lease relating to the
shredder
portion to be concluded, despite that portion having already
been part of the premises leased under earlier oral agreement. A
separate
lease also had the advantage of recording that NSM was the
owner of the shredder and that it was not a permanent fixture that
acceded
to the property. This is by no means an improbable
explanation for the parties’ discussions in regard to a
separate lease
for the shredder portion.
[28] In this regard, it is also significant that after
the original lease agreement between CISCO and NSM had lapsed in June
2000,
no formal lease relating to the lease premises was concluded
until 13 March 2007 when agreement was reached on the ‘amending
agreement’. The fact that both sides conducted their affairs in
such an informal manner is probably the product of the close
relationship between them. This relationship appears also to have
been the reason why, when NSM installed the shredder on the shredder
portion (being part of the premises subject to the Murec lease), it
did so without any formal agreement having been concluded and
without
thereafter paying any rental.
[29] In considering the inherent probabilities, it seems
to me, as was strenuously argued by the appellants, that it is highly
unlikely,
particularly given the concern expressed at the board
meeting of 19 June 2008 that the shredder should only be acquired if
M&R
would commit itself to a long-term lease, that NSM would then
go ahead and incur the substantial capital expenditure required to
acquire and install the shredder if it had not obtained such a
commitment. This must also be considered in the light of the events
which occurred at the board meeting on 2 December 2010 when M&R
indicated it proposed to close down CISCO’s operations.
A
discussion about the shredder followed immediately after this
revelation. Movsas recorded that NSM board had approved and entered
into the shredder project with the commitment from M&R to extend
the necessary lease and that M&R would be going back on
its
previous assurance if it now refused to execute a written lease.
Another director stated that he would be ‘shocked’
if M&R
would not honour its commitment to execute a written lease. Faced
with this indignation, Noonan appears not to have
denied having
committed M&R to a lease. Instead he stated that NSM needed to
write to M&R in regard to the issue. If ever
there was a time for
Noonan to have alleged that he had not committed M&R to a lease,
this was it. He did not do so and his
failure in that regard can, at
the very least, be interpreted as an implied admission of that with
which he was being confronted,
namely, that he had indeed committed
M&R to a lease.
[30] I do not think that any useful purpose would be
served by attempting to analyse the various allegations, minutes,
correspondence
and other documentary evidence in any greater detail.
Suffice it to say that there are probabilities and improbabilities in
the
versions of both sides. But, as I have already stressed, that is
not the issue. In the light of the facts as I have already mentioned,
it does not seem to me that, even though the appellants’
version is improbable in certain respects, it can on the papers
be
rejected as palpably false in regard to the allegation that on oral
long-term lease had been concluded, as both Movsas and Kassel
alleged
was the case. In my view, the high court erred in reaching the
contrary conclusion.
[31] Both sides were agreed that if this court should
find that the high court had reached the wrong conclusion, the matter
should
not be referred for the hearing of oral evidence and that the
appropriate course would be to allow the appeal and dismiss the
application.
[32] Finally, I must deal with the costs of two opposed
interlocutory applications which had been awarded against the
appellants:
the first relating to a discovery of certain documents
pursuant to a rule 35(12) notice; the second relating to the question
of
urgency. The costs of both these applications were reserved for
decision in the main application. In dealing therewith, the high
court observed that the present respondents had been substantially
successful in both instances and should be awarded their costs.
This
conclusion was attacked on appeal, but with no real force. In my
view, the respondents indeed achieved substantial success
and,
therefore, there seems to be no reason to interfere with the high
court’s decision in the exercise of its discretion
to order the
appellants to pay such costs, including the costs of two counsel
where so employed.
[33] On the other hand, there is reason to interfere
with the scale on which those costs were awarded. Persuaded that the
appellants’
allegations in their answering affidavits had been
fabricated, the high court awarded costs on the scale as between
attorney and
own client. But as is apparent from what I have set out
above, the high court erred in finding the appellants’ case to
be
a fabrication and, in these circumstances, I see no reason for the
appellants to pay costs on a punitive scale. The attorney and
client
award thus cannot be allowed to stand. This will be reflected in the
order below.
[34] In the result the following order is made:
1. The appeal succeeds, and the order of the high court
is set aside and replaced with the following:
‘
(a) The application is
dismissed.
(b) The applicants are to pay the respondents’
costs, jointly and severally, the one paying the others to be
absolved.
(c) The respondents are to pay the applicant’s
costs of the interlocutory proceedings on 31 August 2011 and 13
September 2011,
jointly and severally, the one paying the other to be
absolved.
(d) The above orders as to costs shall include the costs
of two counsel where employed.’
2. The respondents are to pay the appellants’
costs of the appeal, including the costs of two counsel, jointly and
severally,
the one paying the others to be absolved.
______________________
L E Leach
Judge of Appeal
VIEW ATTACHEMENT ON PDF
APPEARANCES:
For
Appellant: A Subel SC (with him R Howie)
Instructed by:
Werksmans Attorneys, Sandown, Sandton Naudes Inc,
Bloemfontein
For Respondent: W H G van der Linde SC (with him P B J
Farlam)
Instructed
by:
Webber Wentzel, Johannesburg
Symington & De Kok, Bloemfontein
1
Wightman
t/a J W Construction v Headfour (Pty) Ltd
and another
[2008] ZASCA 6
;
2008 (3) SA 371
(SCA);
[2008] 2 ALL SA 512
, para 13.
2
Per
Cameron JA in
Fakie NO v CCII Systems (Pty) Ltd
[2006] ZASCA 52
;
2006 (4) SA
326
(SCA) para 55 ─ referring to the phrase used by Corbett CJ
in
Plascon-Evans Paints Ltd v Van Riebeeck Paints (Pty)Ltd
[1984] ZASCA 51
;
1984 (3) SA 623(A)
at 635C.
3
Mathewson
and another v Van Niekerk and others
[2012] ZASCA 12
para 7.
4
Cf
Metallurgical & Commercial Consultants (Pty) Ltd v Metal
Sales Co (Pty) Ltd
1971 (2) SA 388
(W) at 390F-H and
Sewmungal
& another NNO v Regent Cinema
1977 (1) SA 814
(N) at 819A-D
─ also an ejectment case.
5
Namibian
Minerals Corporation Ltd v Benguela Concessions Ltd
[1996] ZASCA 140
;
1997 (2) SA
548
(A) at 561G.