Gillow v Versfeld and Another (D1211/2020) [2021] ZAKZDHC 21 (23 June 2021)

About SAFLII
Databases
Search
Terms of Use
RSS Feeds
South Africa: Kwazulu-Natal High Court, Durban
SAFLII
>>
Databases
>>
South Africa: Kwazulu-Natal High Court, Durban
>>
2021
>>
[2021] ZAKZDHC 21
|

|

Gillow v Versfeld and Another (D1211/2020) [2021] ZAKZDHC 21 (23 June 2021)

IN
THE HIGH COURT OF SOUTH AFRICA
KWAZULU-NATAL
LOCAL DIVISION, DURBAN
Case
No: D1211/2020
IN
THE MATTER BETWEEN:
LYNETTE
DOREEN
GILLOW
APPLICANT
and
CLIFTON
VERSFELD

FIRST RESPONDENT
NEIL
DAVID BUTTON N.O.

SECOND RESPONDENT
ORDER
(a)
The first respondent’s counter
application is dismissed with costs;
(b)
It is declared that upon a proper
interpretation of the settlement agreement concluded between the
applicant and the first respondent
dated 30 November 2016, clause 19
thereof falls to be interpreted to mean that the second respondent
must only liquidate those assets
of the universal partnership in
respect of which no provision has been made in the settlement
agreement for the retention thereof
by either of the parties;
(c)
The second respondent is directed to sell
the Dorcliff property (clause 3 of the settlement agreement) and the
Breede River property
(clause 4 thereof) by private treaty or by
public auction with the object of obtaining the best price therefor.
If a sale of either
or both of the said properties is not able to be
achieved, then the second respondent shall cause a market valuation
of such property/properties
to be done as at that date and award the
said property/properties in equal shares to the applicant and the
first respondent;
(d)
The second respondent is directed to cause
the accounting to be done as contemplated by the provisions of clause
7 of the settlement
agreement and incorporate the results of such
accounting in the First Liquidation and Distribution Account;
(e)
The second respondent is directed to
prepare the First Liquidation and Distribution Account in accordance
with the provisions of the
settlement agreement, submit such account
to the applicant and the first respondent who are directed to debate
the account with the
second respondent and in the event of any
dispute arising therefrom, all parties are granted leave to approach
this court for further
directions. Within one (1) month of the
finalisation of the First Liquidation and Distribution Account if one
party is owed money
by another party, that party who is indebted to
the other is directed to make payment of such amount to the other
party;
(f)
The first respondent is directed to pay the
costs of this application and such costs shall be brought into
account by the second respondent
in the Liquidation and Distribution
Account and be debited against any amount owing to the first
respondent but in the event of the
second respondent opposing it,
then the first and second respondents shall be jointly and severally
liable for the costs of the application,
the one paying the other to
be absolved.
JUDGMENT
Delivered
on: 23 June 2021
Hadebe
J:
[1]
The applicant and the first respondent (‘the parties’) were
involved in a universal
partnership (‘the partnership’) that
subsisted until it was dissolved on 12 October 2012. As a result of
the said dissolution
and to cater for proprietary consequences of the
dissolution, the parties concluded a written settlement agreement on
30 November
2016 (‘the agreement’).
[2]
In terms of the agreement, the respective attorneys of the parties
were mandated to
attend to the implementation of the agreement and
the preparation of the dissolution account and generally to liquidate
the partnership
as contemplated in terms of the agreement. In the
same document, provision was made for the appointment of the second
respondent
(‘the liquidator’) to liquidate the universal
partnership in the event that the attorneys of the respective parties
are unable
to do so. This eventuality was catered for in clause 19 of
the agreement which provides as follows:
‘
19
The appointment of a Liquidator
(a)
If for any reason any of the attorneys find
that he is unable to agree upon or carry out any of his functions in
terms of this agreement
then attorney Neil Button of Stowell and
Company shall be appointed as sole liquidator to liquidate the
universal partnership.
(b)
The operation of clause 19(a) shall be
suspended for a period of six months from date of the agreement or
such longer period as the
parties may agree in writing’
[3]
The parties having failed to agree on how the assets of the
partnership were to be dealt
with and the respective attorneys not
having been able to implement the dissolution of the partnership, the
provisions of clause
19 then came into effect enabling the liquidator
to take over the liquidation of the partnership. Both parties have
since signed
the document relating to the appointment of the
liquidator. The question that has now arisen between the parties and
on which there
is no agreement is whether the document appointing the
liquidator, replaces the agreement entered into between the parties
or whether
its terms must be read in conjunction with the terms of
the settlement agreement for the purposes of liquidating the
partnership.
[4]
The argument by the applicant in this regard is that the clause in
the appointment of
liquidator agreement directing the liquidator ‘to
take possession of all the assets, both movable and immovable, in the
joint estate’
does not reflect the common intention of the parties.
According to this argument, it was never the intention of the parties
that
the liquidator would take possession of the immovable properties
and other assets which they had agreed would be retained by
themselves.
This, the applicant argues, is based on the fact that the
parties had made specific provision in the settlement agreement that
certain
assets were to be retained by the parties.
[5]
Initially, the first respondent was also of the same view. In a
letter to the applicant’s
attorneys dated 13 February 2018 written
by the first respondent’s attorneys to the attorneys of the
applicant, the third paragraph
of the said letter reads as follows:
‘
We
do not agree that Button is vested with all the rights and
obligations as you allege. We have instructed Button to cease any
further
work until he is instructed by both yourself and the writer.
You will no doubt appreciate that, one of the issues in dispute, is
that when Button is appointed, having regard to the terms of the
agreement, all of the assets of the parties must be liquidated and
divided, and there is no provision made whatsoever for any of the
assets to fall outside of such liquidation process. We do not believe
that this was ever the intention of the parties, and it was certainly
not our client’s intention that this circumstance would be
allowed.
We say this purely by way of example and to demonstrate one of the
issues requiring resolution’.
[6]
Having been endorsed as a liquidator of the assets of the
partnership, the second respondent
went ahead and prepared the first
liquidation account. The parties were informed thereof in a letter
dated 27 September 2019. The
respective attorneys were invited to
comment thereon by 11 October 2019. The attorneys of the applicant
objected to the first liquidation
account in a letter to the
liquidator dated 9 October 2019. They pointed out to him that the
division of the universal estate subsisting
between the parties had
to follow the terms of the settlement agreement. The letter of
objection referred to specific items that
had been dealt with in the
liquidation account and in respect of which objection was being
raised. Likewise, in an email communication
dated 9 October 2019, the
attorneys for the first respondent raised objection to the
Distribution and Liquidation account and the
manner in which certain
items had been dealt with. The objection on behalf of the first
respondent made reference to specific items
that had to be
disregarded entirely for purposes of the Liquidation and Distribution
account.
[7]
The second respondent reverted in an email communication dated 21
October 2019 advising
the respective legal representatives to meet
and make a joint proposal to him and that in the case that they were
unable to agree
on the said proposal, he would then proceed to
liquidate all assets belonging to both parties by way of public
auction and that all
funds would be paid into the liquidator’s
trust account. It is common cause between the parties that despite
this notice by the
liquidator, their respective attorneys were not
able to settle the matter.
[8]
In a letter dated 19 November 2019, the liquidator advised that
seeing that the parties
appeared to have failed to agree on any
settlement, he then had no alternative but to take possession,
liquidate and distribute the
estate at his sole discretion in terms
of his appointment letter. He further gave the parties a breakdown of
how he intended proceeding
in respect of the various assets in the
universal partnership.
[9]
On 26 November 2019, the attorneys of the applicant wrote to the
liquidator expressing
their disagreement with the proposed route. He
was advised that his appointment letter and the powers contained
therein had to be
read in conjunction with the settlement agreement.
His attention was drawn to the relevant provisions of the settlement
agreement.
He was urged to convene a meeting at which the parties and
their legal representatives would present themselves and make oral
submissions
to him regarding their objections to the First
Liquidation and Distribution Account. He was further invited to give
an undertaking
that he was not going to put up for auction certain,
specified items.
[10]
The engagements went back and forth between the attorneys of the
parties and the liquidator until
15 January 2020 when the
liquidator advised the parties that it had become apparent that no
matter what route he took, neither party
would be happy with the
outcome. He indicated that the options were that either the
liquidator had to proceed to liquidate all the
assets of the estate
immediately or one of the aggrieved parties had to bring an urgent
declaratory to court.
[11]
It was the applicant who made the first move by applying to court for
an order on the basis of urgency.
On 3 March 2020, the applicant was
granted the following order that:
‘
1.
The application is adjourned sine die.
2.
The applicant is directed to deliver her replying affidavit by 24
March 2020 and is directed to deliver
her answering affidavit to the
first respondent’s counter application by 24 March 2020.
3.
The first respondent is directed to deliver his replying affidavit to
the applicant’s answering
affidavit in the counter application by 7
April 2020.
4.
Today’s costs are reserved for determination at the hearing of the
application.
5.
In agreeing to this order the parties reserve their rights in regard
to the question of urgency.’
[12]
Having been granted an opportunity to respond, the first respondent
filed his answering affidavit. It
is in this answering affidavit that
the first respondent’s tone clearly changed on the issues in this
matter. In a point in
limine
raised,
the first respondent contended that the liquidator’s mandate
novated and overrode the settlement agreement and that the
liquidator
was empowered and obliged to act in terms of his mandate only. The
other point in
limine
raised
by the second respondent was that the application was out of time.
This, he premised on his understanding that the email by
the
liquidator dated 15 January 2020 amounted to the liquidator’s
ruling. Based on this understanding, he avers that the applicant
should have approached the court by 29 January 2020. The first
respondent argues further that this application, having been issued
out of time, there should have been an application for condonation
explaining the delay. He thus prayed that the application had
to be
struck off the roll for lack of urgency. In so far as the second
respondent is concerned, he averred that the applicant was
seeking
rectification of the liquidator’s mandate by seeking to interpret
the liquidator’s mandate. He indicated that he was
opposed to such
application and pointed out that there was no prayer for such
rectification at any rate.
[13]
In his counter application, the first respondent sought an order
directing the second respondent to deal
with the matter in terms of
the First Liquidation and Distribution Account under cover of the
letter dated 27 September 2019. In
his response to the contents of
the founding affidavit, the first respondent indicated that he was
disputing that the settlement
agreement is legally relevant. He
aligned himself to the terms of the liquidator’s mandate. According
to the first respondent,
the liquidator’s mandate replaced and
superseded the settlement agreement. He pointed out that the
liquidator’s mandate made
no reference to the settlement agreement
nor was it incorporated by reference into the liquidator’s mandate.
[14]
The first respondent disputes that his communication of 13 February
2018 bore the interpretation of the
settlement agreement as
interpreted by the applicant. According to him, this letter was sent
in the context of attempting to resolve
the dispute (between the
parties) and was sent on a ‘without prejudice’ nature,
notwithstanding that it was not marked as such.
The first respondent
argues that he and the applicant could never agree on the issues but
particularly on one of the items of the
partnership i.e. an entity
referred to as Versfeld Enterprises. Whereas the applicant averred
that an accounting had to be done and
had gone ahead and proposed to
the liquidator a debatement of this account, the first respondent
further argues that the liquidator’s
mandate does not make
provision for the debatement. He submitted that the court was the one
to interpret the manner in which the
universal partnership is to be
distributed and to give directions to the parties and the liquidator
in relation thereto.
[15]
In her replying affidavit and answering affidavit to first
respondent’s counter application, the applicant
basically disputed
the submissions of the first respondent as contained in both his
answering affidavit and his counter application.
Of relevance, she
disputed the argument that the second respondent had made a ruling
and that he had implicitly dismissed the parties’
objections. That
being the case, according to the applicant, it followed suit that she
disputed that the time period for her to approach
the court has
expired. She further insisted in her argument that the liquidator’s
mandate did not replace and supercede the settlement
agreement,
instead it is supplementary thereto. Further, according the
applicant, the liquidator’s mandate was concluded at the
request of
the liquidator so as to define his powers insofar as the settlement
agreement did not provide for same. The applicant
highlighted the
fact that the interpretation of the settlement agreement was highly
relevant and that in the circumstances this application
cannot be
said to be misconceived.
[16]
Before the matter was heard in court, the parties signed a joint
statement of issues in dispute in line
with the directives relating
to opposed motions dated 11 January 2021. The issues were detailed as
follows in the said document.
‘
1.1.
Whether the partnership between the Applicant and the First
Respondent falls to be liquidated in terms
of both the Settlement
Agreement and the Liquidator’s mandate (the Applicant’s
contention) or in terms of the Second Respondent’s
mandate only
(the First Respondent’s contention) – this involves an
interpretation of the various agreements;
1.2.
Whether the Liquidator’s Mandate falls to be rectified to accord
with the Applicant’s contentions;
1.3.
Whether annexure M annexed to the Founding Affidavit constitutes the
ruling of the Second Respondent
requiring either party to bring the
proceedings within fourteen (14) days of the date of such decision;
1.4.
Whether the Applicant has launched the present application timeously
– put differently, whether
the Liquidation and Distribution account
is binding on the parties.’
[17]
A consideration of the agreement shows that the parties’ intention
was to have certain items of the
partnership set aside to be the sole
ownership of each party e.g. some immovable properties, investments,
vehicles etc, as far as
would have been possessed by either party at
the dissolution date. In so far as the property that was not meant
for sole ownership
by either party, the respective attorneys were to
arrange for the valuation of such and to have the value thereof
accounted for in
the dissolution account. In so far as the business
venture, the Versfeld Enterpises CC, the settlement agreement makes
provision
for an accounting and debatement in so far as this account
is concerned. This sub-clause in so far as the clauses relating to
this
entity are concerned, clearly envisages the operation of this
account even after the dissolution of the partnership, before the
sale
of the partnership and the dissolution of the proceeds
therefrom.
[18]
The mandate given to the liquidator as per his appointment is ‘to
take possession of all the assets,
both movable and immovable, in the
joint estate. . .’ In pursuance of this mandate, and in a letter
dated 27 September 2019, the
liquidator went ahead and drafted his
First Liquidation and Distribution Account and invited comments from
the parties within a period
of 14 days. In a subsequent letter dated
19 November 2019, the liquidator notes that the parties appear to
have failed to agree on
any settlement and that he had no alternative
but to proceed to take possession, liquidate and distribute the
estate at his sole
discretion in terms of the appointment letter. In
the said letter, he puts the parties on terms to the effect that
unless he received
instructions jointly from both parties or is
interdicted by an application to court by close of business on
Tuesday, the 26
th
November 2019, he would then proceed to instruct the auctioneers to
continue with the realisation of the assets without any further
notice to either party.
[19]
The proposal in which it is intended to deal with the property of the
universal partnership under cover
of the letter of 19 November 2019,
completely disregards the wishes of the parties as expressed in the
agreement. The indications
as per this proposed liquidation account
are that even the residential properties together with the household
furniture therein are
meant to be uplifted and sold by public
auction. A reading of the agreement clearly indicates that that was
never the intention of
the parties, hence the differentiation between
the assets that are to be sold and those to be retained by the
individual parties
for their sole and exclusive ownership.
[20]
I find the following paragraph in
Bothma-Batho
Transport (EDMS) BPK v S Bothma & Seun Transport (EDMS) BPK
2014 (2) SA 494 (SCA)
[1]
to be
apposite in this application. This was what was said in that case:
‘
.
. .Whilst the starting point remains the words of the document, which
are the only relevant medium through which the parties have
expressed
their contractual intentions, the process of interpretation does not
stop at a perceived literal meaning of those words,
but considers
them in the light of all relevant and admissible context, including
the circumstances in which the document came into
being. .
.Interpretation is no longer a process that occurs in stages but is
“essentially one unitary exercise”’. (footnotes
omitted)
[21]
The circumstances under which the two documents came into being
related to the dissolution of the universal
partnership between the
parties. They sought to safeguard their interests, individually and
mutually, in terms of the agreement.
Their intentions are expressed
in the said agreement. The liquidator’s appointment is the product
of the agreement as per clause
19. A reading of this clause does not
seem to suggest that the mandate given to the liquidator grants him
an extended discretion
allowing him to disregard the wishes of the
parties. Sight must not be lost of the fact that the appointment of
the liquidator did
not come about as a result of the parties having
abandoned their wishes in so far as the method of the dissolution of
the partnership
is concerned. The only reason why clause 19 came into
operation, was the failure of the respective parties’ attorneys to
agree
on the manner in which the dissolution should be handled.
[22]
The parties have correctly warned themselves that the issue of
interpretation of these documents resides
with the court. This
principle was confirmed in
KPMG
Chartered Accountants SA v Securefin Ltd and Another
2009
(4) SA 399 (SCA)
[2]
where it was
said that ‘interpretation is a matter of law and not of fact and,
accordingly interpretation is a matter for
the court and not for
witnesses and (or, as said in common-law jurisprudence, it is not a
jury question)’. (Footnotes omitted)
[23]
The art and approach to interpretation of documents was succinctly
stated in
Natal
Joint Municipal Pension Fund v Endumeni Municipality
2012 (4) SA 593 (SCA)
[3]
where
the following was said:
‘
.
. . The present state of the law can be expressed as follows:
Interpretation is the process of attributing meaning to the words
used in a document, be it legislation, some other statutory
instrument, or contract, having regard to the context provided by
reading
the particular provision or provisions in the light of the
document as a whole and the circumstances attendant upon its coming
into
existence. Whatever the nature of the document, consideration
must be given to the language used in the light of the ordinary rules
of grammar and syntax,  the context in which the provision
appears; the apparent purpose to which it is directed and the
material
known to those responsible for its production. Where more
than one meaning is possible each possibility must be weighed in the
light
of all these factors. . . A sensible meaning is to be preferred
to one that leads to insensible or unbusinesslike results or
undermines
the apparent purpose of the document.’
[24]
This approach was refined in
Auction
Alliance (Pty) Ltd v Wade Park (Pty) Ltd
2018
(4) SA 358
SCA
[4]
that in the
interpretation of documents ‘it is not sufficient to merely
regurgitate the relevant principles and to cite the leading
authorities without actually applying them’. It was further stated
that ‘it must be evident from the interpretive process itself
that
the principles have been applied’ and that ‘merely paying lip
service to them undermines the entire exercise’.
[25]
Applying the
Endumeni
approach in the present case and considering the document relating to
the settlement agreement and the circumstances attendant to
its
drafting, and also if consideration is given to the ordinary rules of
grammar and syntax, and also the purpose to which it is
directed, it
is clear that the estate of the partnership had to be dissolved in
two if not three dimensions. Personal property and
certain immovable
property was not to be dealt with in the same manner that the
Versfeld Enterprise CC,
for
instance was to be dealt with. The purpose comes out clearly in this
regard, the residential properties, the household furniture
and also
personal effects had to be retained by the individual parties. The
material known to the two parties was that the universal
partnership
was being dissolved, but in their individual capacities, they made
provision for what would happen after the dissolution
of the
partnership. Hence they made provision for the continuation of their
lives in the sense of setting apart residential homes
and other
personal items.
[26]
The second document, the appointment of the liquidator mandates the
liquidator to ‘take possession
of all the assets, both movable and
immovable in the joint estate…’ What needs to be interrogated in
this part of the mandate
is whether this authority extends to the
property already set apart for the individual ownership of the
parties. Going back to the
approach enunciated in
Endumeni
,
one has to determine if that would give a sensible meaning and
interpretation to this clause or would such interpretation result
in
‘unbusinesslike result or undermine the apparent purpose of the
document’. The parties herein are 67 years and 70 years
respectively
based on their identity numbers contained in the papers.
To have each party’s residential property, and household furniture
and
personal belongings put up for sale by auction as proposed by the
liquidator, this would, in my mind, lead to unbussinesslike results
and will definitely undermine the apparent purpose of this document.
[27]
A consideration of clause 7 of the agreement dealing with the issues
pertaining to
Versfeld Enterprises
gives a clear indication that the enterprise was bound to continue in
operation until the sale of the said entity. It further shows
that
monies will be expended on behalf of both parties and also third
parties until the said sale. This clause makes provision for
the
accounting to be made by either party for monies so expended. The
proposed liquidation does not make provision for such accounting.
The
liquidator indicates that the proposal in this regard is to realise
this asset and the funds will be paid into the estate bank
account.
It is clear that the clause as couched in the settlement agreement
gives a safeguard against undue enrichment of either
party at the
expense of the other party. The proposed liquidation process, as it
stands, does not cater for this eventuality.
[28]
I believe that to attribute this meaning, disregarding the terms of
the agreement, will definitely lead
to insensible and unbusinesslike
results. I have been asked to rule on four issues referred to earlier
in this judgment. I have made
the following ruling  in that
regard:
(a)
In respect of issue 1.1, having considered the authorities that I
have in this judgment, it
stands to reason that my considered view is
that the only rational and sensible way, which is fair to both
parties is to have the
partnership between the applicant and the
first respondent liquidated in terms of both the agreement and the
liquidator’s mandate.
(b)
Regarding issue 1.2, it follows suit from the above ruling that the
liquidator’s mandate
falls to be rectified to accord with the
applicant’s contentions.
(c) and (d)
I intend dealing with issues 1.3 and 1.4 jointly. I am not persuaded
that annexure M constitutes
the ruling of the second respondent for
the following reason:
(i)
A consideration of the last paragraph of annexure M clearly shows
that the liquidator was not ruling
on the matter. He gives options of
either him liquidating all the assets or either party having to bring
an urgent application for
a declaratory to court. The applicant took
up the second option given by the liquidator and on 12 February 2020
issued papers for
an urgent application.
[29]
Clause 1.13 of the Appointment of Liquidator provides:
‘
To
rule on any objection and to allow or disallow either in whole or in
part, and in which event such ruling shall be final should
either or
both of the parties fail to approach this Honourable Court for relief
within 14 (fourteen) days of the date of such decision’.
[30]
I have found that annexure M does not amount to a ruling of the
liquidator and as such this clause does
not come into operation. In
the circumstances, the applicant cannot be said to have launched her
application out of time. Having
ruled on the issues raised by the
parties, I am satisfied that the following order is appropriate in
the circumstances:
(a)
The first respondent’s counter application is dismissed with
costs;
(b)
It is declared that upon a proper interpretation of the settlement
agreement concluded between the applicant
and the first respondent
dated 30 November 2016 clause 19 thereof falls to be interpreted to
mean that the second respondent must
only liquidate those assets of
the universal partnership in respect of which no provision has been
made in the settlement agreement
for the retention thereof by either
of the parties;
(c)
The second respondent is directed to sell the Dorcliff property
(clause 3 of the settlement agreement)
and the Breede River property
(clause 4 thereof) by private treaty or by public auction with the
object of obtaining the best price
therefor. If a sale of either or
both of the said properties is not able to be achieved, then the
second respondent shall cause a
market valuation of such
property/properties to be done as at that date and award the said
property/properties in equal shares to
the applicant and the first
respondent;
(d)
The second respondent is directed to cause the accounting to
be done as contemplated by the provisions of clause
7 of the
settlement agreement and incorporate the results of such accounting
in the First Liquidation and Distribution Account;
(e)
The second respondent is directed to prepare the First Liquidation
and Distribution Account in accordance with
the provisions of the
settlement agreement, submit such account to the applicant and the
first respondent who are directed to debate
the account with the
second respondent and in the event of any dispute arising therefrom,
all parties are granted leave to approach
this Court for further
directions. Within one (1) month of the finalisation of the First
Liquidation and Distribution Account if
one party is owed money by
another party, that party who is indebted to the other is directed to
make payment of such amount to the
other party;
(f)
The first respondent is directed to pay the costs of this application
and such costs shall be brought into
account by the second respondent
in the Liquidation and Distribution Account and be debited against
any amount owing to the first
respondent but in the event of the
second respondent opposing it, then the first and second respondents
shall be jointly and severally
liable for the costs of the
application, the one paying the other to be absolved.
Hadebe
J
APPEARANCES:
Date
of Hearing:

18
January 2021
Date
of Judgment:

23
June 2021
Counsel
for the Applicant:
N.D. Hollis SC
Instructed
by:
G M Parker Attorneys
Counsel
for the 1
st
Respondent:    De Beer SC
Instructed
by:

John Dua Attorneys
[1]
Bothma-Batho
Transport (EDMS) BPK v S Bothma & Seun Transport (Edms) BPK
2014 (2) SA 494
(SCA)
para 12.
[2]
KPMG
Chartered Accountants SA v Securefin Ltd and Another
2009
(4) SA 399
(SCA) para 39.
[3]
Natal
Joint Municipal Pension Fund v Endumeni Municipality
2012 (4) SA 593
(SCA) para 18.
[4]
Auction
Alliance (Pty) Ltd v Wade Park (Pty) Ltd
2018
(4) SA 358
(SCA) para 19.