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[2023] ZAKZPHC 145
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Versfeld v Gillow and Another (AR142/2022) [2023] ZAKZPHC 145 (29 September 2023)
IN THE HIGH COURT OF
SOUTH AFRICA
KWAZULU-NATAL DIVISION,
PIETERMARITZBURG
Case No: AR142/2022
In the matter between:
CLIFTON
VERSFELD
APPELLANT
and
LYNETTE DOREEN
GILLOW
FIRST RESPONDENT
NEIL
DAVID BUTTON N.O.
SECOND RESPONDENT
ORDER
On
appeal from:
Hadebe J (sitting as court
a quo
):
Save for setting aside
that part of the order that refers to the debatement of the account,
the appeal is dismissed with costs.
JUDGMENT
Delivered on: 29.10.23
Poyo Dlwati JP (Henriques
J and Voormolen AJ concurring)
[1]
This appeal concerns the issue of whether
the estate of the universal partnership that existed between the
appellant and the first
respondent falls to be liquidated in terms of
the settlement agreement and the liquidator’s (the second
respondent) mandate
or in terms of the second respondent’s
mandate only.
[2]
On 23 June 2021 Hadebe J granted an order
in the following terms:
‘
(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 property (clause
4 thereof) by private treaty or by public
auction with the object of obtaining the best price thereof. 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 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’.
[3]
Leave to appeal was granted by the court
a
quo
on 27 January 2022.
[4]
The background to the litigation was that
the appellant and the first respondent were in a universal
partnership which terminated
during November 2012. On 30 November
2016 the parties concluded a settlement agreement to facilitate the
dissolution of the universal
partnership assets. Clause 15 of the
settlement agreement provided that the respective attorneys would act
in good faith and co-operate
with one another in order to bring about
a fair dissolution of the universal partnership. Clause 19 of the
settlement agreement
reads:
‘
(a)
If for any reasons 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.’
[5]
Indeed, some disagreement arose between the
parties’ respective legal representatives relating to the
dissolution of the universal
partnership and that necessitated the
appointment of the second respondent as the liquidator as provided
for in the settlement
agreement. After his appointment, the second
respondent sent to the parties a document headed ‘appointment
of liquidator
agreement’ (letter of appointment), containing
the terms of his mandate, which the parties both signed.
[6]
The letter of appointment gave the second
respondent various powers and duties including:
‘
1.1
To take possession of all of the assets, both
movable and immovable, in the joint estate; to collect all debts owed
to the estate
and, to determine and discharge the estate liabilities;
…
1.4 To sell any
asset either by public auction or by private treaty to whomsoever it
may appear to be most beneficial, allowing
the parties hereto to bid
or tender, whenever the division of such assets cannot conveniently
or advantageously be effected;
…
1.6 Prior to the
preparing of the Final Account, to hear any representation the
Liquidator might deem necessary and in relation
to the manner in
which the assets can or should be advantageously divided.’
[7]
In a letter addressed to the parties, the
second respondent advised the parties through their legal
representatives that he intended
to proceed with the liquidation of
the universal partnership assets in line with the settlement
agreement and if its terms were
impossible to perform, he would use
the wide mandate as contained in the appointment letter. As a result,
the second respondent
prepared a first liquidation and distribution
account and sent it to the parties’ legal representatives on 27
September 2019.
He requested them to provide their comments to the
account by 11 October 2019. The appellant and the first respondent
sent their
objections to the second respondent on 9 October 2019.
[8]
In a letter dated 21 October 2019, the
second respondent invited the parties’ legal representatives to
meet and make proposals
to him failing which, he would proceed to
liquidate all assets belonging to both parties by way of public
auction and to liquidate
the Allan Gray Investment and that all funds
would be paid into his trust account. The parties’ legal
representatives were
not able to agree and the second respondent
advised the parties that he would proceed to liquidate the estate as
per his account
unless one of the parties interdicted him, through a
court order, from doing so. No agreement could be reached and the
first respondent
was not in agreement with how the second respondent
intended to liquidate the estate, hence this application.
[9]
The first respondent’s contention was
that the letter of appointment did not replace the settlement
agreement and ought to
be read in conjunction with it. Where certain
clauses were not in line with the settlement agreement, then those
clauses ought
to be rectified to the extent that the second
respondent ought to deal with those assets that are not provided for
in the settlement
agreement, so the contention went. According to the
first respondent, this contention seemed to have been the appellant’s
understanding earlier in the engagements, even though that seemed to
have changed as reflected in an email addressed to the second
respondent on 27 November 2019.
[10]
The appellant opposed the application. His
contention was that the second respondent’s mandate novated and
overrode the settlement
agreement and the second respondent was
empowered and obliged to act in terms of his mandate only.
Furthermore, in the appellant’s
view, the second respondent had
dismissed the parties’ objections to the liquidation and
distribution account in his letter
dated 15 January 2020. Either
party then ought to have approached the court within 14 days of the
date of such ruling which ought
to have been no later than 29 January
2020. Accordingly, as the application was only launched on 12
February 2020, it was out of
time and as there was no application for
condonation, it ought to have been dismissed.
[11]
The appellant, simultaneously with his
opposition to the application, launched a counter-application where
he sought an order directing
the second respondent to act in terms of
the letter of appointment as liquidator to the exclusion of the prior
settlement agreement
concluded between the parties. He also sought an
order that the second respondent be directed to implement the
provisions of the
first and final distribution account prepared by
him and marked as Annexures ‘F3’ to ‘F10’ to
the first
respondent’s founding affidavit. It was on this
evidence that the court
a quo
found
in favour of the first respondent.
[12]
In this appeal, the appellant takes issue
with whether the application was lodged timeously; whether the estate
ought to be liquidated
in terms of both the settlement agreement and
the second respondent’s mandate or the second respondent’s
mandate only
and whether the liquidation and distribution account
ought to be rectified and debated.
[13]
With
regard to the issue as to whether the second respondent ought to
liquidate the universal partnership in terms of the settlement
agreement and his mandate or his mandate only, it is important to
take note of what was said in
University
of Johannesburg v Auckland Park Theological Seminary and Another
,
[1]
and that is ‘[a] court interpreting a contract has to, from the
onset, consider the contract’s factual matrix, its
purpose, the
circumstances leading up to its conclusion, and the knowledge at the
time of those who negotiated and produced the
contract’. Our
law reports are replete with cases dealing with the interpretation of
contracts and documents and I do not
intend traversing them all save
where necessary. What is relevant for present purposes is what was
stated in
Hoffmann
and Carvalho v Minister of Agriculture
:
[2]
‘
Where
parties intend to conclude a contract, think they have concluded a
contract, and proceed to act as if the contract were binding
and
complete, I think the Court ought rather to try to help the parties
towards what they both intended rather than obstruct them
by legal
subtleties and assist one of the parties to escape the consequences
of all that he has done and all that he has intended;
except, of
course, where parties have not observed statutory formalities
required in certain contracts, such as in a contract for
the sale of
fixed property.’
[14]
It is convenient to refer to some clauses
of the settlement agreement in order
to
determine
the
issue
at
hand.
Clause
2(b)
of
the
settlement
agreement reads:
‘
The
parties agree that the universal partnership has come to an end with
effect from the dissolution date and that the assets of
the
partnership, after payment of any debts of the partnership, and any
other adjustments made in accordance with the terms of
this
agreement, shall be divided amongst the parties as hereinafter set
out’. As held in
Natal
Joint Municipal Pension Fund v Endumeni Municipality
,
[3]
the purpose of the provision must be taken into consideration when
interpreting documents. From clause 2(b), it is evident that
the
settlement agreement was intended to govern the liquidation of the
assets of the universal partnership. In this regard, I agree
with
what the court
a
quo
said,
namely: ‘a reading of the agreement clearly indicated that that
was never the intention of the parties (reference being
to the
disregard of the parties’ wishes), 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’.
[4]
[15]
From there, one has to closely examine
clause 19 of the settlement agreement. In this regard, I agree with
what the court
a quo
held
when it said that the only reason why clause 19 came into operation
was the failure of the parties’ attorneys to agree
on the
manner in which the dissolution should be handled. As clause 19 has
been quoted above, it is evident from it that the second
respondent’s
role was to step into the place of the attorneys and would only deal
with issues that were not agreed upon.
[16]
Therefore, the second respondent, in my
view, ought to liquidate the partnership assets in terms of the
settlement agreement and
where the attorneys ought to have made a
decision and there was no agreement by the parties in relation to the
distribution of
assets, then the second respondent must make that
decision. The second respondent’s mandate would thus be limited
to what
I have alluded to above. In my view, there will therefore be
no need for the rectification of the second respondent’s
mandate
save that the mandate must be read and interpreted together
with the settlement agreement.
[17]
For the sake of completeness, I will deal
with the issue whether annexure ‘M’, being the letter
addressed by the second
respondent to the respective parties’
legal representatives, to the appellant’s founding affidavit
constituted the
ruling of the second respondent. In light of the
finding I have made with regard to the settlement agreement, the
second respondent
would then be obliged to revise the liquidation and
distribution account and thereafter present it to the parties again
as per
the settlement agreement and his decision, where no decision
was made. To the extent whether annexure ‘M’ was the
second
respondent’s ruling, I agree with the court
a
quo
that it was not and could not have
been his final ruling. This as the court
a
quo
held, is evident in the penultimate
paragraph of annexure ‘M’ which reads, ‘in the
absence of the willingness
to settle, either the liquidator must
proceed to liquidate all the assets of the estate immediately, or the
parties must now agree
that either the liquidator or one of the
aggrieved parties must bring an urgent declarator to court in which
case both parties
must place the liquidator in funds to proceed.’
Since two options were presented, that obviously could not have been
a final
ruling under the circumstances as any party could choose
either of the two options. It must follow then that at that stage,
there
was no limitation to the time frames within which the
application ought to be launched. Hence, in my view, it was launched
timeously.
[18]
To
the extent that the court
a
quo
made
an order that the second respondent’s mandate ought to be
rectified, in my view no case has been made out for rectification.
If
one considers the requirements for rectification as set out in
Propfokus
49 (Pty) Ltd and others v Wenhandel 4 (Pty) Ltd
,
[5]
these have not been met by the first respondent. There was also no
prayer for rectification before the court
a
quo
.
It follows that to the extent that the court
a
quo
ordered
the rectification and the debatement of the account which was not
provided for in the settlement agreement, that part of
the order
ought to be set aside.
[19]
As the first respondent was substantially
successful in this appeal, there is no reason why the costs should
not follow the results.
[20]
Consequently, the following order shall
issue:
‘
Save
for setting aside that part of the order that refers to the
debatement of the account, the appeal is dismissed with costs.’
Poyo Dlwati JP
APPEARANCES
Date
of Hearing:
21
April 2023
Date
of Judgment:
29
September 2023
(delivered
electronically at 11:30)
Counsel
for Appellant:
Mr
De Beer SC
Instructed
by:
G
M Parker Attorneys
Counsel
for First Respondent:
Mr
Hollis SC
Instructed
by:
John
Dua Attorneys
[1]
University
of Johannesburg v Auckland Park Theological Seminary and Another
2021
(6) SA 1
(CC) para 66. (Footnote omitted.)
[2]
Hoffmann
and Carvalho v Minister of Agriculture
1947
(2) SA 855
(T) at 860.
[3]
Natal
Joint Municipal Pension Fund v Endumeni Municipality
2012
(4) SA 593 (SCA).
[4]
Paragraph
19 of the judgment at page 136 of the record.
[5]
Propfokus
49 (Pty) Ltd and others v Wenhandel 4 (Pty) Ltd
[2007]
3 All SA 18
(SCA) at 21-23.