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[2011] ZASCA 44
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Transnet Ltd v Newlyn Investments (Pty) Ltd (2011 (5) SA 543 (SCA)) [2011] ZASCA 44; 553/09 (29 March 2011)
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THE SUPREME COURT OF APPEAL OF
SOUTH AFRICA
JUDGMENT
Case No: 553/09
In the matter between:
TRANSNET
LIMITED
...................................................................................
Appellant
and
NEWLYN
INVESTMENTS (PTY) LIMITED
..............................................
Respondent
Neutral citation:
Transnet Ltd v Newlyn
Investments (Pty) Ltd
(553/09)
[2011] ZASCA 44
(29 March 2011).
Coram:
MPATI P, CLOETE, HEHER and SHONGWE JJA and
PETSE AJA
Heard:
14 March 2011
Delivered:
29 March 2011
Summary:
Evidence:
(1) Technical objections to the admissibility of
documentary evidence not taken in the court below and which might
have been met
by the calling of further evidence, should not be
entertained on appeal;
(2) Where the nature of the proceedings is such as to
inform the opposite party, by necessary implication, that production
of a
document in its possession will be required, secondary evidence
of the document is admissible;
(3) There are no degrees of secondary evidence and
although production of a photocopy would be more reliable than oral
evidence,
and failure to produce a photocopy may be cause for
comment, this goes to weight and not admissibility;
(4) Putting argument to a witness in cross-examination
can be improper.
______________________________________________________________
ORDER
______________________________________________________________
On appeal from:
KwaZulu-Natal High Court
(Pietermaritzburg) (Koen J sitting
as court of first instance):
The appeal is dismissed with costs, including the costs
of two counsel.
______________________________________________________________
JUDGMENT
______________________________________________________________
CLOETE JA (MPATI P, HEHER, SHONGWE JJA and PETSE AJA
concurring):
Introduction
[1] The appellant instituted action in the KwaZulu-Natal
High Court, Pietermaritzburg, against the respondent for the
respondent's
eviction from immovable property commonly referred to as
'the Pinetown PX' situated at Kirk Road, Pinetown. The cause of
action
pleaded by the appellant was the rei vindicatio. The
respondent admitted that the appellant owned the property in question
but
pleaded that it had a contractual right to occupy part of the
property in terms of an addendum to a written lease, and the
remainder
of the property in terms of an oral agreement which gave it
the right to occupy for so long as the written lease continued in
force.
The oral agreement was not in contention. The existence of the
addendum was the crux of the dispute.
[2] The court a quo (Koen J) found the addendum relied
upon by the respondent to have been proved and dismissed the
appellant's
claim. The appeal is with the leave of that court.
[3] It is common cause that the Pinetown PX was
initially leased by the appellant to Kirk Road Properties, Pinetown
CC in terms
of a written agreement dated 12 November 1996. The lease
was due to expire on 31 December 2001 but by written agreement it was
extended to 31 December 2005. In terms of a further written agreement
dated 15 September 1998 to which the appellant was a party,
the
lessee ceded its rights and assigned its obligations in terms of the
lease to the respondent. The lease agreement did not provide
for any
right to extend or renew the lease beyond 31 December 2005 and
contained a non-variation clause reading as follows:
'8.1 This Lease incorporates the
entire agreement between the LESSOR and the LESSEE and no addition,
amendment, cancellation or
variation hereof shall be of any force or
effect unless it is in writing and signed by both the LESSOR and the
LESSEE, who hereby
acknowledge that no representations or warranties
have been made by either the LESSOR or the LESSEE nor are there any
understandings
or Terms of the Lease other than those set out
herein.'
[4] In its initial plea, the respondent averred only
that it had concluded a written addendum to the lease agreement
(annexed to
its plea) which afforded to it the right to renew the
lease for two successive periods of nine years and eleven months
each, and
that it had renewed the lease for the first period. It
subsequently transpired that the document annexed was a forgery. The
plea
was amended to allege that in the event of the court finding
that the document already annexed 'is not an agreement for any reason
whatever' then a written addendum to the lease in the same terms as
the document already annexed was concluded between the parties.
The
respondent pleaded that a copy of the (genuine) addendum was not in
its possession and was last in the possession of the appellant.
[5] To prove its case, the respondent relied on
contemporaneous documents and the oral evidence of four witnesses,
who testified
that an addendum to the lease had been concluded and
gave evidence as to its terms. The witnesses were:
(a) Mr Sipho Mashinini, the former CEO of Propnet (a
division of the appellant), who said that he had signed the addendum
on behalf
of the appellant;
(b) Mr Beston Silungwe, a former Propnet manager for the
KwaZulu-Natal region, who was intimately involved with negotiations
relating
to the addendum and who said that he had witnessed the
signature of the respondent's managing director on the original;
(c) Mr Surendra Garach, an attorney in the employ of the
respondent, who said that he had prepared the addendum on the
instructions
of the respondent's managing director; and
(d) Mr Rajendra Balmakhun, the managing director of the
respondent, who said that he had signed the addendum on behalf of the
respondent.
Documents
[6] I shall start with an analysis of the documents. On
11 July 2000, the respondent wrote to Mr Beni, the Regional Manager
of Propnet,
stating:
'We refer to our meeting of 10
July 2000 when we advised you of our intention to carry out extensive
renovations to the shed which
will enhance the value of the property.
The renovations to be undertaken
and the cost estimates are attached per schedule A in detail. The
total cost is R2 997 060-00
and we envisage completion of
the project in three months.
In lieu of [sic, sc: in view of]
the above representation we request your kind consideration to the
following:
(1) . . .
(2) Extension of the lease
agreement for a further period (to be negotiated) in order for us to
justify amortisation of the investment.'
[7] On 3 October 2000 the appellant replied to the
respondent's letter, stating:
'Item 2 regarding the extension
of the lease to justify amortisation of the investment[:] Propnet is
not in a position to extend
the lease as the land is required for
future development.'
The appellant, however changed its mind.
[8] According to the minutes of the Propnet Project
Adjudication Committee ('PPAC', a committee of Propnet) held on 26
February
2001 (attended by Mashinini and Silungwe):
'
PINETOWN PX
SHED: APPROVAL TO APPROACH THE MANAGING DIRECTOR TO APPOINT
CONSULTANTS AND APPROVAL TO REPLACE ROOF SHEETING.
Mr Beni tabled a proposal
received from the KwaZulu-Natal Region, Propnet Property Management,
for the appointment of DE Consultants
to implement the replacement of
the roof sheeting and necessary structural repairs to the value not
exceeding R1,5 mil (excl. VAT)
and including professional fees.'
The proposal of Mr Beni reads as follows:
'PRESENTATION TO PROPNET PROJECT
ADJUDICATION COMMITTEE
. . .
MOTIVATION
Propnet is under extreme
pressure from the Tenant [the respondent] to replace the roof as it
is badly corroded and leaks terribly.
The Tenant is presently
withholding rental due to the unavailability of the premises. Propnet
has an existing Lease Agreement with
the Tenant for a 9 year period
of which 5 years are remaining. The Tenant will exercise his option
to renew his Lease for a further
10 year period and spend ±
R2 000 000 (two million rand) on additional alterations
required.
RECOMMENDATION
In view of Propnet's lease
obligations, it is recommended that approval be granted to appoint a
consultant and replace the roofing
on the shed, thereby guaranteeing
an income of no less than R67 000.00 per month for the next 15
years . . . .
. . .
ESTIMATED TIME
Should the Committee approve the
project and should the budget be approved, tenders would be called
for in the month of April 2001
. . . .
FINANCIAL
. . .
An extension of Lease for a
period of 10 years with an option of 10 years, will be concluded
prior to any expenditure.
. . .
CONCLUSION
. . .
Propnet cannot afford to lose
this tenant and/or the income therefore it is of the utmost
importance to replace the roof as soon
as possible.
RECOMMENDATION
It is recommended that approval
be granted for the appointment of a consultant to oversee the
project, an approval for the replacement
of the ex PX shed in
Pinetown to the value of approximately R1 500 000,00 excl.
VAT.'
The PPAC adopted the following resolution at the
meeting:
'RESOLUTION
The Committee resolved that the
project be approved subject to the following conditions:
(a) The source of funding
(capital or maintenance) to be verified by the finance department;
(b) The 2001/02 budget being
approved;
(c) The professional fees not to
exceed R60 000.00.'
[9] An internal memorandum headed 'APPOINTMENT OF
CONSULTANTS FOR DESIGN AND PROJECT MANAGEMENT OF PX SHED ROOF
REPLACEMENT (PINETOWN)'
addressed on 14 June 2001 by Mashinini to Dr
Jardine (the Executive Director, Technology and Property of the
appellant) records
under a section entitled 'Motivation':
'Propnet has an existing Lease
Agreement with the Tenant for a 9 year period of which 5 years are
remaining. If repaired the Tenant
will exercise his option to renew
his Lease for a further 10 year period and spend ±
R2 000 000.00 (two million)
on additional alterations
required.'
[10] Extensive improvements were thereafter effected to
the property by both parties although no written agreement between
them
had been concluded prior to the expenditure being incurred. On 1
October 2002 Silungwe wrote from the appellant's regional office
to
Balmakhun:
'This serves to confirm that the
Propnet warehouse commonly known as "Pinetown PX Shed" has
been fully renovated.
We are pleased to grant you
occupation of the premises as from 1 November 2002 and rental payment
thereof is to commence on the
same date.
You will recall that the
approval conditions for Propnet to carry major renovations [sic]
rested upon you to accept [sic] an extended
Lease Agreement period of
10 years with an option to renew for another 10 years. A
supplementary agreement is in the process of
preparation in this
regard and will be forwarded to you shortly.
. . .
The billing for November will be
as follows:
R87 812.97 (incl VAT) which
is broken as
R75 528.92 rent for the
main warehouse
R1500 rent for the additional
ablution block and offices, VAT @ 14%
R10 784.05.'
[11] The forged document is dated 14 November 2002. It
purports to reflect the signature of Balmakhun on behalf of the
respondent
on that day and the signature of Mashinini representing
the respondent on 4 November 2002.
[12] A year later, on 10 October 2003, Ms Hassan, then
the managing director of the respondent, wrote to Beni of the
plaintiff recording:
'"URGENT" "URGENT"
Dear Sir
RE: KIRK ROAD, PINETOWN
We refer to your letter dated
1
st
October 2002 and hereby exercise
our option to extend the lease agreement for a further period of ten
years commencing 1
st
January 2006.
Kindly confirm receipt hereof.'
No acknowledgement of receipt or reply was produced in
evidence.
[13] On 18 December 2003 Ms Hassan on behalf of the
defendant again wrote to Mr Beni of the plaintiff:
'"URGENT"
Dear Sir
RE:
LEASE
AGREEMENT – NEWLYN INVESTMENTS (PTY) LTD / PROPNET KIRK ROAD,
PINETOWN
The above matter refers.
In a letter dated 1
st
October 2002, Mr Silungwe
confirmed our option on the property for a further period of 10
years.
Kindly, advise in writing as to
when our offices can expect an agreement for signature.
We attach hereto a copy of the
letter that was forwarded to our offices.
We look for (sic) to your reply
at your early convenience.'
[14] On 13 August 2004 Garach signed a letter to the
appellant which he said demonstrated that agreement had already been
reached
in regard to the lease of PX. I shall deal with the letter
when discussing his evidence.
[15] On 22 September 2004 Garach wrote a letter on
behalf of the respondent querying certain rental charges. The reply
thereto dated
5 October 2004 (it incorrectly refers to '5 October
2005') includes the following:
'The cession of lease between
Newlyn Investments (Pty) Ltd and Transnet Limited is still valid and
enforceable up to December 2005.'
[16] On 12 October 2005 Mr Ken Buller of the appellant
wrote to the respondent, for the attention Balmakhun, recording the
following:
'Notwithstanding numerous
meetings and phone calls the following issues have been outstanding
for a long period of time and need
to be afforded urgent attention.
1) Bayhead: Bank 11 the lease
has since expired on 31 May 2005.
. . .
4) Pinetown: Lease expires 31
December 2005 need to negotiate lease.
. . .'
To this letter Balmakhun replied on 2 November 2005 as
follows:
'We
acknowledge receipt of your letter dated 12
th
October 2005,
which was however faxed to us on 27
th
October 2005
and record our surprise with regard to items 1 and 4. We have always
advised you that the agreements in question were
extended beyond the
expiry date.
With regard
to the Pinetown lease, we refer to your letter dated 2
nd
October 2002,
the terms whereof it was a condition that we extend the lease prior
to Propnet replacing the roof. We accordingly
signed the agreement to
extend the lease and enclose herewith a copy for ease of reference.
We further enclose a copy of the
agreement for the extension of Bank 11 as requested in your previous
correspondence.
Please advise of your
availability to address the various outstanding issues.'
Annexed were two memoranda of agreement in respect of
the property described as Bank 11 and in respect of the Pinetown PX.
Both
were in precisely the same form. Both were forgeries.
Admissibility of oral evidence
[17] Before dealing with the evidence
of the witnesses called on behalf of the respondent to prove the
existence and terms of the
addendum, it would be convenient to deal
with the argument, raised for the first time on appeal, that such
evidence was inadmissible
in as much as the respondent failed to
demonstrate that after a proper search, the lost addendum could not
be found. It was submitted,
relying on
S
v Tshabalala
1
and
Singh
v Govender Brothers Construction
,
2
that such a search would have to be
thorough and it would not suffice merely to say, as the respondent's
witnesses had done, that
the document was lost. It was further
submitted that the learned judge a quo had completely overlooked the
requirement of a thorough
search for the lost document before
allowing secondary evidence.
[18] The reason why the learned judge
a quo did not consider the admissibility of the evidence, is because
the point was never raised
in any shape or form before him. So far as
this court is concerned, it is a salutary principle that an appeal
court will not entertain
technical objections to documentary evidence
which were not taken in the court below and which might have been met
by the calling
of further evidence. In
Bradshaw
v Widdrington
3
Collins MR said:
'If the question of
admissibility had been seriously argued in the Court below on the
ground which Mr Terrell [counsel for the appellant]
has urged before
us, and if the learned judge had been disposed to adopt his view, it
would have been competent to Mr Astbury [counsel
for the respondents]
there and then to call Mr W Bradshaw, the person who knows most about
the matter, but who, I have no doubt
for very good reasons, thought
it desirable not to go into the box. We could not now replace Mr
Astbury's clients in the position
in which they stood at the trial,
and therefore, Mr Terrell is not now entitled to rely on the
technical objections which he has
urged as to the admissibility of
these documents, though I must say that, after hearing his arguments,
I am not disposed to attach
very great weight to them. But I think
the question is not now open to us, any more than it was open to the
learned judge before
whom it was not raised, and the advantage of
whose opinion upon it we have therefore not got.'
Bradshaw's
case
was followed in
R v
Press
4
to overrule what the court termed 'a
technical objection'. I agree with this approach. It would be
unfortunate in cases such as
the present if a party could claim a
forfeit on appeal.
[19] Furthermore, there was only one original addendum.
The evidence (to which I shall refer presently) was that it was never
in
the possession of the respondent after it had been signed on
behalf of the appellant. If it had ever existed, the original
remained
in the possession of the appellant. That being so, two rules
of evidence came into play:
(a) It is well established that a
party may adduce secondary evidence of a document in the possession
of the opposite party if the
latter has failed to produce it after
having been given written notice to do so.
5
But notice is not required where the
nature of the proceedings is such as to inform the opposite party, by
necessary implication,
that production of the document will be
required:
S v
Miles
.
6
If ever there was such a case, this
is it. If it be accepted that the original had been lost by the
appellant, then the second rule
of evidence, which I shall now deal
with, becomes applicable anyway.
(b) Once secondary evidence is
admissible, there are no degrees of secondary evidence ie the common
law no longer requires that
the best secondary evidence has to be
produced.
7
Phipson
8
states the position as follows:
'The general rule is that there
are no degrees in secondary evidence; and that a party is at liberty
(subject to comment if more
satisfactory proof is withheld) to adduce
any admissible description he may choose. The reason assigned is the
inconvenience of
requiring evidence to be strictly marshalled
according to weight; and of compelling a party, before tendering
inferior evidence,
to account for the absence of all which is of
superior value, but the very existence of which he may have no means
of ascertaining.'
The respondent was therefore entitled
to give whatever evidence it could in respect of the contents of the
missing addendum. It
was not obliged to satisfy the court that its
copy was missing and could not be found despite a diligent search. Of
course, production
of a photocopy would be more reliable than oral
evidence as to the contents of a document, but that goes to weight,
not admissibility:
R
v Green
.
9
Mashinini
[20] I turn to analyse the evidence of the witnesses who
testified on behalf of the respondent. The first was Mashinini. As I
have
said, he was the chief executive officer of Propnet. He was also
the general manager of properties of the appellant. He developed
a
strategy whereby tenants of Transnet would be granted long leases
(ranging from 10 to 50 years) in exchange for revamping the
properties at their own expense. He himself visited the Pinetown PX
on several occasions. At first, the property management division
of
Propnet wanted to have the property redeveloped but there was no
market response. He met Balmakhun who indicated that the respondent
wished to take a long term lease of the property and would contribute
to its renovation. A series of internal discussions followed
at
regional and national level to ensure that Propnet would be in a
position to grant a long term lease to guarantee an income
on the
property but, what was more important, according to Mashinini, was
that he wanted to ensure what he called a 'catalyst development'
to
upgrade the area as a whole. Mashinini emphasised that the extension
of the respondent's lease was 'extremely important' to
both Propnet
and to him as the CEO ─ to Propnet, as the value of its asset
base would increase, so enabling Transnet to borrow
money on the
strength of this; and to him as CEO, because he needed a long term
annuity income in order to run a profitable business.
[21] Mashinini explained the role of the Propnet
Property Approval Committee (to which I have already referred when
dealing with
the documentation) which he established: All major
projects which required capital, long term leases or had long term
implications,
went first to the region and then to this committee;
and its mandate was to approve projects and to look at payback
periods. But,
stressed Mashinini, he did not require the approval of
the committee to enter into a lease such as the addendum for which
the respondent
contends; he himself had such authority and he used
the committee, as he put it, as a 'springboard' to debate issues.
Ultimately,
he had to make the decision himself.
[22] Mashinini was present at the meeting of the PPAC of
26 February 2001 (referred to in para 8 above) and he confirmed that
Beni
made the presentation in the document (also referred to in para
8 above) which was approved, as the minutes record.
[23] The crux of Mashinini's evidence was that he
himself had seen a document like the forgery. It had been signed by
the respondent
before it reached his office for final signature. (As
he had not yet signed it, this document could not have been the
forgery.)
He signed it 'around November' 2002. In cross-examination
he said that he had done so in his office and that there were already
three signatures on the document, one being that of Balmakhun and
one, that of Silungwe. When it was pointed out to him in his
evidence
in chief that the negotiations with the respondent were for an
extension of the lease and thereafter, a renewal at the
respondent's
option, both for 10 years, whereas the forged document provided for
two successive options, each for a period of nine
years and 11
months, he said that he had not read the document in detail. I am
unimpressed with the criticisms advanced by the
appellant that he was
unable to recall the length of the document, the number of clauses it
contained or the clauses that were
amended, whereas he said that the
document was one with which he was 'extremely familiar because the
key issue was the PX shed
and the roof'. I am equally unimpressed
with the criticism that he described the document as 'a lease
agreement' whereas it was
an addendum to the lease. He gave evidence
in 2009. The addendum about which he testified was signed in 2002.
Many such documents
would have crossed his desk. Nor could he be
expected to speak with the precision of a lawyer.
[24] When Mashinini was asked, again in chief, how he
could remember signing the document some seven years before he gave
evidence,
he replied, testily, that 'I have, I think, three times
repeated the significance of the lease to ourselves in terms of its
importance
. . .'.
[25] Mashinini explained that once he had signed a lease
such as the one in contention, either the original would be kept at
head
office and a copy sent to the regional office in Durban, or a
copy would be kept at head office and the original sent to Durban
─
he was not sure of the general practice; and the lessee would be sent
a copy. He agreed with the proposition put in cross-examination
that
there was 'something wrong' and that it was 'too much of a
coincidence' that all three were missing. But there is no evidence
that a stamped or unstamped copy of the addendum was ever retained by
or sent to the appellant's head office in Johannesburg. So
as far as
the original is concerned, the learned trial judge said:
'In the ordinary course it is
expected that if the addendum had been received back in Durban, it
would, according to the undisputed
evidence of Mr Silungwe, have been
put in an asset management file bearing a prefix "AR". The
plaintiff could only produce
the development file with the prefix
"KN" in respect of the property and not the asset
management file. Mr Beni's file
was also produced. It was formally
placed on record by the parties that his file had an index of
dividers and that the divider
for contract documents was completely
empty, ie not only the missing addendum was not there, but no other
contractual documents
with respect to Pinetown PX. Mr Beni, who was
the regional manager at the time, did not testify. There is no
evidence as to why
all the contract documents in his file were
missing. It suggests that all the lease documents contained therein
were removed or
lost.'
[26] Mashinini was challenged in cross-examination on
the contents of the statement he had given to the police on 3 March
2006.
He told the police with reference to two leases, one being the
addendum at issue in this matter:
'According to my knowledge of
lease agreements marked annexure "A & B" I cannot
without the following documents: ─
(i) The minutes of the PPAC
meeting where the lease was approved
(ii) The PPAC approval document
conclusively confirm or deny
having signed the said lease agreements due to the fact of the time
that has elapsed, and the large
number of documents I have signed at
Propnet on various occasions during the time of my employment.'
His explanation was that he was busy and wanted to get
rid of the police as they were unprepared, they had booked only 30
minutes
of his time which was not sufficient and he had back to back
meetings. That is not the co-operation which a civic minded person
could and should give, but the explanation is not inherently
improbable. I disagree with the hyperbole in the appellant's heads
of
argument that:
'His statement to the police was
extraordinary and nonsensical and his determination to avoid the
police's questioning is highly
suspect. His explanation as to why he
gave such a statement to the police is incredible.'
[27] No motive was put to Mashinini as to why he would
lie about the existence, and his execution, of the addendum and none
suggests
itself from the record. Nor is there any warrant for
describing him, as the appellant's heads of argument do, as 'an ally
of Mr
Balmakhun'.
Silungwe
[28] The second witness was Silungwe. At the relevant
time he was employed by the development division of Propnet as the
manager
in charge of the whole of the KwaZulu-Natal region. The work
involved looking at converting underutilised Transnet properties into
development opportunities. He confirmed Mashinini's evidence that the
Pinetown PX was considered for development as it was in a
bad state
of repair, but despite adverts placed in newspapers, no credible
proposal for the development of the site was received;
and that the
property division accordingly changed its mind in respect of the
strategy for the property. Some time after the respondent
had taken
over the lease of the Pinetown PX, the respondent approached Propnet
and indicated that the premises were not in a good
state of repair,
in consequence of which its sub-tenants had moved out, and that the
respondent was accordingly going to suspend
the payment of rentals
until the premises had been renovated. Silungwe and others in the
KwaZulu-Natal regional office of the appellant
accordingly started
the process of obtaining the approvals necessary for the property to
be renovated. According to him, the outcome
of the negotiations
between the appellant and the respondent was that the appellant would
spend money on the roof and the respondent
had to spend money to
provide the cladding for the warehouse and provide the surrounding
paving for the premises. After that was
done, the appellant was
supposed to enter into an extension of the lease with the respondent
in order to recoup whatever money
the appellant had put in.
[29] Silungwe oversaw the preparation of the document
(referred to in para 8 above) presented by Beni to the meeting of the
PPAC
on 26 February 2001, which meeting (as I have said) the witness
attended. He, too, confirmed the correctness of the minutes.
[30] Silungwe said that he was part of the team which
negotiated the terms of the addendum with the respondent. He said in
cross-examination
that he was present when the proverbial handshake
took place at the conclusion of this process.
[31] The crux of Silungwe's evidence was that Balmakhun
handed an addendum to the lease to him personally at the respondent's
offices,
possibly in about November or December 2002. The document
had already been signed by Balmakhun and another person as a witness
and he then also witnessed Balmakhun's signature. He couriered the
document to Johannesburg for signature by Mashinini. His evidence
reads:
'Was [the addendum] signed or
unsigned when it was sent through for signature by the CEO? Or was it
signed or unsigned by Newlyn
when it was sent through for signature
by the CEO? .--- It was signed by the tenant first.
Did you see it in that form? ---
Yes.
Are you speaking from your own
knowledge? --- Yes.
Can you remember how you came to
see it? --- Well, all leases that were supposed to be signed by
tenants came through me as I was
the person in charge in terms of the
leases, so I particularly remember that one.'
[32] Silungwe said that after signature by Mashinini,
the original would be couriered from head office in Johannesburg to
the regional
office in Durban for stamping and it would then
ultimately go back to Johannesburg for safekeeping, with a copy being
kept on file;
although a copy would be sent to the tenant before
stamping where (as here) the rental exceeded R15 000 per month.
In the
present case the witness did not stamp the document and he did
not intend to do so until 2005 because that was when the document
took effect. When he last saw it (he left the appellant's employ in
September 2005), it was attached to a file for which he was
responsible.
[33] Silungwe admitted that a note would in the ordinary
course have been made on the appellant's PROMIS computer system of
the
fact that such an agreement existed, and the appellant called Mrs
Davids to say that there was no such record. However, the possibility
exists, as Silungwe said in cross-examination, that although he gave
an instruction for the relevant entry to be made, it was not
─
and according to Mrs Davids, such an omission would not have been
picked up.
[34] Silungwe was challenged in cross-examination to
explain, in view of his letter of 1 October 2002 to the respondent
stating
that a supplementary agreement was in the process of
preparation, how it came about that the document was prepared by the
respondent.
His answer amounted to this: Buller produced drafts which
contained nonsensical mistakes which he rejected and the respondent
then
presented an agreement drafted and signed by it. When asked what
the urgency was, he replied that the respondent had spent R2 million
on the property and it 'had to be concerned about that'. He also
pointed to the fact that he had asked the respondent to recommence
paying rental in November 2002. Silungwe's evidence was that the
appellant did sign leases prepared by tenants depending on how
fast
he wanted the lease done 'and how fast the other one volunteered to
do it'. Buller was not called to deal with his alleged
incompetence
and Silungwe's evidence is not in the least improbable, particularly
in view of several draft documents discovered
by the appellant
relating to the PX property which would fit Silungwe's description as
containing nonsensical mistakes.
[35] I do not understand the criticism advanced in the
appellant's heads of argument that Silungwe 'could not give
satisfactory
answers as to why the responsible person, Buller, could
not produce an acceptable document'. If the suggestion is that he had
not
asked Buller to do so, that should have been put to Silungwe and
Buller called to say so. And if Buller had drafted an acceptable
document, it is surprising that such a document was not discovered by
the appellant and there is no reason why, if it had been
drafted,
Silungwe would not have sent it to the respondent.
[36] Silungwe, too, confirmed that the document he saw
should have referred to an extension for ten years and an option to
extend
for a further ten years. The submission on behalf of the
appellant was that:
'According to Silungwe, the
parties had agreed that the lease would be extended for a further
period of ten years, with an option
to renew for another period of
ten years after the expiry of the extended ten year period. He
clearly understood the distinction
between an extension of the lease
on the one hand and an option to renew on the other hand. Therefore,
if the missing addendum
ever existed and if its terms were similar to
those of the forged document, then clearly the parties did not reach
consensus on
its terms.'
The argument has no merit. As the learned judge a quo
succinctly put it:
'Technically it is argued that
what was negotiated and agreed during negotiations (an extension of
the lease by 10 years with an
option for a further 10 years) and what
was contained in the missing addendum (2 options of 10 years each
[sic; in fact, two options
of nine years and eleven months each])
meant that there was not
consensus
.
I do not believe that argument to be correct as the ultimate
agreement was to be found in the terms of the addendum, Mr Mashinini
having the authority to consent to the terms agreed upon.'
[37] It was submitted that Silungwe's evidence, to the
effect that Balmakhun presented him with a signed addendum out of the
blue,
is at variance with Balmakhun's own evidence. But it appears
from the cross-examination of Silungwe that he was not at all sure
whether or not the addendum was preceded by discussions between him
and Balmakhun. And in any event, one would expect Balmakhun
to have a
clearer memory of what had transpired as he continued to be involved
in the matter after the forgery came to light whereas
Silungwe had
left the appellant's employ and had no particular reason to think
back on the details of what had happened.
[38] The appellant's counsel submitted that there was a
contradiction between the evidence of Silungwe and Mashinini in that
Silungwe
said that a signed and completed document had been sent to
Johannesburg, whereas Mashinini said that he had seen drafts.
Silungwe's
explanation, when the contradiction was put to him in
cross-examination, was that Mashinini could have seen drafts from
sources
other than himself. However that may be, the trial judge
considered that there had been a contradiction but took it into
account
in his judgment.
[39] Finally, criticism was levelled at Silungwe based
on the statement he made to the police. It was submitted that
Silungwe could
give no satisfactory explanation as to why the
statement did not mention that the document was in fact a forgery, or
at the very
least, why the statement did not mention that he
entertain suspicions about it possibly being a forgery. He was also
criticised
for not saying that he had signed a similar document, if
the one subject to investigation was a forgery. I am not impressed by
these criticisms. On the respondent's case, the terms of the forgery
and the genuine addendum were identical; and Silungwe did not
know at
the time he gave the statement that the genuine addendum to which he
testified, had gone missing from the file which was
in his custody
whilst he was employed by the appellant.
Impartiality of Mashinini and Silungwe
[40] Before dealing with the other evidence, I wish to
emphasise that Mashinini and Silungwe were independent and impartial.
Mashinini
left the employ of the appellant and joined Absa at the end
of March 2004, more than five years before he gave evidence.
Balmakhun
was no longer a client of his. When asked separately
whether he felt loyalty to Transnet, and to Balmakhun, his answer was
the
same: 'Not really'. Silungwe left the appellant's employ in
September 2005 because he received a better offer from Tongaat Hulett
Developments. The high water mark of the challenge to his
impartiality was the suggestion that he had been to the wedding of
Balmakhun's
daughter ─ which he flatly denied.
Garach
[41] Garach originally practised as an advocate and then
as an attorney. He became, as he put it, a consultant for the
respondent
in January 2002 and subsequently occupied this position
full time from August of that year. He saw the letter from Silungwe
dated
1 October 2002 (see para 10 above) almost immediately after the
respondent received it. He said that Balmakhun brought it to his
attention and requested him to prepare an addendum along the lines of
addenda drafted by attorneys Cox Yeats which had previously
been
accepted by Transnet. According to Garach, Balmakhun indicated to him
that if the respondent had to wait for the appellant
to prepare the
agreement it would take some time and it would be quicker if the
respondent did so. Garach accordingly prepared
a contract using the
precedents which provided for two successive renewal periods of nine
years and eleven months each.
[42] The evidence of Garach as to how he drafted the
addendum explains why the parties had agreed that the lease would be
extended
for ten years with an option to renew for a further ten
years, whereas the addendum for which the respondent contends
provides
for two successive options each for nine years and eleven
months: the Cox Yeats precedents which he followed contain two
successive
options for those latter periods.
[43] Garach said that he had had reason to look at the
Pinetown PX file kept by the respondent in January or February 2003.
He saw
a document duly signed which was the document he had drafted:
'It was the addendum relating to the Pinetown property'. It was
submitted
in argument that the document Garach saw may have been the
forged document because it is not known when the forgery was
produced.
But the evidence quoted was not directly challenged in
cross-examination ─ Garach was not asked whether the document
he saw
may have been the forgery. But the possibility exists, as the
respondent's counsel fairly conceded, that it may have been ─
although no convincing reason was advanced why a forged document
would have been necessary at that stage and in addition, the genuine
document, on the respondent's evidence, would have been in existence
and had already been forwarded to the respondent by the time
Garach
saw the document which he did.
[44] Garach (jointly with another employee of the
defendant) prepared a letter dated 13 August 2004 which he signed and
sent to
the appellant. The heading of the letter is 'OUTSTANDING
AGREEMENTS OF LEASE ─ NEWLYN GROUP OF COMPANIES'. The four
leases
referred to do not include the PX. The reason, said Garach, is
because the PX lease was not outstanding.
[45] Garach had no knowledge of the letters sent by Ms
Hassen referred to in paras 12 and 13 above. She had been dismissed
by the
respondent because, according to Balmakhun, she had diverted
corporate opportunities from the appellant, which should have gone
to
the respondent, to a company in which her husband had an interest. It
is evident from the record that the appellant's counsel
had consulted
with her, but she was not called to give evidence to explain the
letters she had written. In the circumstances, the
respondent cannot
be faulted for not having called her either.
Balmakhun
[46] Balmakhun said that prior to Beni's proposal to the
PPAC he had agreed with Mashinini that the appellant would replace
the
roof of the structure at the PX property, the respondent would
effect other improvements pertaining to the cladding, the yard and
refurbishment of the floor of the warehouse, and that the lease would
be extended by a period of ten years with an option for a
further ten
years. Escalation for the renewal period was agreed at 11 per cent.
He was told that the PPAC had approved the project
in March 2001.
[47] On 6 September 2002 Balmakhun attended a meeting at
Propnet with Beni, Silungwe and Buller. The Propnet minute of the
meeting,
which Balmakhun confirmed, reads:
'
5.0
Pinetown
5.1 Billing will resume once the
electricity and lights are sorted out.
5.2 Raj [a reference to
Balmakhun] requires a 30-day notice to resume paying rent.
5.3 Amendment to extend lease to
be expedited.'
The minute reflects that Propnet was to attend to these
matters. As of 1 October 2002, when Silungwe sent the letter stating
that
a supplementary agreement to extend the lease for ten years with
an option to renew for the same period was in the process of
preparation,
no supplementary agreement had been forthcoming.
Balmakhun accordingly had a discussion with Silungwe and agreed that
the respondent
would utilise the precedent of previous agreements
with the appellant to draft a contract, and would send it to the
appellant.
Balmakhun then gave instructions to Garach to do just
that. Garach drafted the document and Balmakhun signed it. He was
subsequently
informed that Mashinini had signed the document.
[48] Balmakhun could not explain how the forgery had
come into existence. He said in cross-examination:
'M'Lord, I've – the
defendant or I have had no part in this despicable act. M'Lord, I've
outlined in my earlier evidence that
inasmuch as this particular
lease appears to be – is a substantial one, it is –
comprises a small percentage of the
defendant's group income, and
having regard to the long established and trustworthy relationship we
endured, it would have been
unthinkable for the defendant to have
engaged in this. In any event, M'Lord, as I've stated in my evidence
earlier, that we were
invited to enter into a lease agreement, or
negotiate a lease agreement, and if this document – and if this
matter had not
been finalised at this stage, and respectfully, we
should have taken advantage of that invitation. As I've stated
earlier, M'Lord,
that we're aware of our rights, we could have
applied to Court for an appropriate relief, having regard to the
circumstances that
led to the upgrade of that property.'
Balmakhun suspected that the forgery may have been
brought into existence by the respondent's then managing director, Ms
Hassan,
in order to discredit the respondent in the eyes of the
appellant. The implausibility of this theory adversely affects the
respondent's
case on the probabilities. But I am not prepared to
find, as the appellant argued that:
'[Balmakhun's] recital of his
suspicions are baseless and are the product of his mendacity.'
It is noteworthy that the appellant also did not put any
specific reason for the forgery having taken place at a particular
time,
to Balmakhun. Two theories were advanced in argument on appeal.
As neither was put to Balmakhun they do not require further comment.
[49] The learned judge, having examined the evidence and
the probabilities, concluded that it is difficult to make a finding
on
probability as to whether Balmakhun was responsible for the
creation of the forged document. I agree with this conclusion.
[50] Balmakhun was criticised in argument for relying on
the authenticity of the forgery on six occasions prior to the trial.
But
the criticism is only valid if Balmakhun knew that the document
was a forgery when he relied on it. Garach, whose signature appears
on the document as a witness, did not believe it was. It was
submitted that at least when the summaries of the appellant's experts
were filed, Balmakhun knew that the two experts had determined the
document to have been forged by a 'cut and paste' method. But
Balmakhun was entitled to have his own expert examine the document
and he was also entitled to refuse to make the admission that
it was
a forgery when he gave evidence. That of course was ill-advised and
reflects adversely on his reliability as a witness.
Conclusion
[51] The primary criticism of the judgment of the court
a quo was that it had misdirected itself in relation to the weight it
accorded
to the evidence of the respondent's witnesses without
properly evaluating the probabilities. There is no merit in this
criticism.
The learned trial judge carefully analysed the evidence of
each of the witnesses called on behalf of the respondent and weighed
up all the probabilities both for and against the respondent's case.
The judgment was comprehensive and meticulous in its detail.
The
learned judge came to the conclusion that as a matter of probability,
the parties had concluded an addendum during or about
November 2002
in terms similar to those contained in the forged addendum. I am not
in the least persuaded that he erred.
[52] The learned judge committed no factual or legal
misdirection. He was aware that the conclusion of such a document was
important
to both parties, and why; and that the terms that the
document was to contain, had been agreed. The fact that the oral
agreement
and the written addendum differed, is of no importance as
there was no question of the respondent not exercising at least the
first
option contained in the addendum. On the other hand, the
learned judge was also fully alive to the fact that the only party to
benefit from the forged addendum would be the respondent; and that,
on the assumption that the respondent was somehow responsible
for the
forgery, the question arose why such a document would be produced at
the instance or request of the respondent if an addendum
in similar
terms had already been concluded. He did overlook the probability in
favour of the respondent that there was no reason
disclosed on the
evidence why the forged document would have been produced by
Balmakhun at the stage when he did so. As he said
in the passage I
have quoted, he could simply have arranged the conclusion of a
genuine document. There was no suggestion whatever
that the appellant
had changed its mind about leasing the property to the respondent
prior to the production of the forgery. The
learned trial judge also
did not take into account the improbability that Balmakhun would, by
making or authorising a forgery and
sending it to the appellant, risk
losing the respondent's entire business relationship with the
appellant, when the income from
the sub-lease of the PX represented
less than four per cent of the turnover of the respondent.
[53] The learned judge said specifically that the
evidence of Balmakhun, and to a lesser extent Garach (by virtue of
his association
with the respondent), had to be approached with
caution. He pointed to the fact that Balmakhun was intimately
associated with the
forgery because he was the first to produce it
and by virtue of the position that he occupied in the respondent. He
also found
that Balmakhun was not a particularly impressive witness
as he was at times evasive, loquacious and uncomfortable. He took
into
account the fact that neither the original nor a copy of the
addendum could be produced. And he reasoned that:
'To conclude that, because the
addendum was forged, the only reasonable inference is that no written
document had existed prior
to that date (otherwise why the forgery?),
would necessarily entail disbelieving and rejecting the direct
evidence of Mr Mashinini,
Mr Silungwe, Mr Garach and Mr Balmakhun . .
. .'
[54] I entirely agree with this approach. When all is
said and done, Mashinini and Silungwe were impartial. They could not
have
been mistaken; and there is simply no warrant for finding that
they committed perjury. On their evidence, both sides considered
it
essential that a valid addendum be executed, and it was. The balance
of probabilities supports this evidence.
Cross-examination
[55] Before making the order, I wish to comment on the
following cross-examination of Balmakhun:
'You see, Mr Balmakhun, I'm
trying to be fair to you, because you can rest assured that we will
argue to His Lordship that your
evidence should be rejected, that you
are untruthful, that you are evasive, that you are a person who
manufactured this story in
the endeavour to hoodwink the Court, that
you are not worthy of any credence . . . .
. . .
I want to tell you, that we are
going to do our best to condemn you as a irredeemable liar.'
[56] It is obviously necessary to
repeat what was said in
Kentz
(Pty) Ltd v Power
;
10
although I propose on this occasion
quoting more fully from the book
Cross-Examination:
A Practical Handbook
by
Mr Justice Colman:
11
'A less serious misuse of
cross-examination, but one which should be avoided, is the
introduction, under the guise of questions,
of what is in truth
argument. In some degree, that can hardly be avoided; and, indeed, it
is sometimes perfectly proper to give
a witness the opportunity of
meeting a submission which counsel has it in mind to make about his
evidence. Thus:
Unless you tell me from whom
you received that piece of news, I shall probably submit to the
court, in due course, that you didn't
receive it at all. Now, from
whom was it?
But it is quite a different
thing to address a witness thus:
I put it to you that you are
the most unmitigated blackguard who ever entered this courtroom.
That is not a question. Counsel
expects no answer from the witness which can be of the slightest help
to anyone. Although such assertions
are often made to witnesses, one
wonders whether they have any purpose unconnected with the presence
of a newspaper reporter in
the courtroom, or counsel's delight in the
sound of his own voice.'
Although counsel disavowed either of the motives
suggested by the learned author, he readily conceded that the
cross-examination
was rude. It was also unjustifiable and should not
have been permitted.
Order
[57] The appeal is dismissed with costs, including the
costs of two counsel.
_______________
T D CLOETE
JUDGE OF APPEAL
APPEARANCES:
APPELLANTS: D A Gordon SC (with him P F Rossouw SC and
Ms T Norman)
Instructed by Cliffe Dekker Hofmeyer, Sandown
McIntyre & Van der Post, Bloemfontein
RESPONDENTS: P J Olsen SC (with him A K Kissoon Singh SC
and MW Collins)
Instructed by Naidoo Maharaj Inc, Durban
Honey Attorneys, Bloemfontein
1
S
v Tshabalala
1980 (3) SA 99
(A) at 102H and
104D-F.
2
Singh
v Govender Brothers Construction
1986 (3) SA
613
(N) at 616J-617E.
3
Bradshaw
v Widdrington
[1902] 2 Ch 430
(CA) at 449.
4
R
v Press
1923 CPD 310
at 311.
5
R
v Radziwill
(1902) 19 SC 195
;
Dalgleish v J & H Israel
1909 TH 229
;
S v
Shepard
1966 (4) SA 530
(W) at 531E-F;
S v Miles
1978
(3) SA 407
(N) at 410-411;
Singh v
Govender Brothers Construction
, above
n 2 at 617G-618B.
6
Above
n 5 at 412.
7
R
v Green
1911 CPD 823
at 825;
R
v Press
above, n 4 at 311-2.
8
Hodge
M Malek QC (ed)
Phipson on Evidence
16 ed (2005) para 41-26.
9
Above
n 7 at p 825.
10
Kentz
(Pty) Ltd v Power
[2002] 1 All SA 605
(W)
para 50.
11
1970
p 21.