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[2021] ZAGPPHC 15
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Begere v Tecmed Africa (Pty) Ltd (38869/2018) [2021] ZAGPPHC 15 (19 January 2021)
IN
THE HIGH COURT OF SOUTH AFRICA
GAUTENG
DIVISION, PRETORIA
(1)
REPORTABLE:
YES
/NO
(2)
OF INTEREST TO OTHER
JUDGES:
YES
/NO
(3)
REVISED: YES/NO
9/01/2021
Case
number: 38869/2018
In
the matter between:
WERNER
BEGERE
APPLICANT
And
TECMED
AFRICA (PTY)
LTD
RESPONDENT
(Reg.
No: 1998/021499/07)
JUDGEMENT
KOLLAPEN
J
Introduction
[1]
This is an opposed application in which the Applicant, a former
director and shareholder
of the Respondent, seeks the following
relief: -
1.
Payment of the amount of R31 794 012.41;
2.
Interest on the amount of R31 794 012.41
from 1 April 2018 to date of payment at the prime rate published by
First Rand
Bank Limited as being its prime overdraft rate, compounded
monthly in arrear and calculated on a 365 year;
3.
The costs of this application on an
attorney and own client scale including the costs of two counsel
[2]
Following the exchange of affidavits and heads of argument, the
matter was heard remotely
in accordance with the Practice Directive
of this division. After the conclusion of the hearing, a
further set of affidavits
were filed in what the Respondent termed
was an interlocutory application, in which the relief sought was a
referral of the dispute
to evidence.
Preliminary
issue – Possible dispute of fact
[3]
At the commencement of argument, the stance of the Respondent was
that given the likelihood
that the Court would find that there was an
irreconcilable dispute of fact on the papers, the Applicant was
required to make an
election upfront as to whether it sought a
referral to evidence or to argue the matter in its entirety, mindful
of the risk that
if the Court concluded that there was a dispute of
fact, it would be required to dismiss the application.
[4]
In response thereto, counsel for
the Applicant took the view that there was no risk of
a dispute of
fact arising as it was of the view that the Applicant was entitled to
obtain the relief it sought based purely on
the version the
Respondent has put up. In particular, the Applicant elected to
proceed to argue its case only on the basis of the
alleged oral
agreements of loan and not the written agreements upon which reliance
was also placed in the case advanced. While
reliance on the written
agreements was not abandoned , for the purpose of this hearing and
the relief sought, the Applicant would
only rely on the terms of the
oral agreements and in order to obviate any possible dispute of fact
would seek the relief it seeks
on the version of the Respondent in
respect of those claims.
[5]
The Respondent however appeared to have a change in stance when it
placed on record
that it would, even if the Applicant was not
successful in obtaining relief based on the version of the
Respondent, consent to
have the matter referred to trial as opposed
to seeking the dismissal of the application. Even though the Court is
not bound by
this stance of the Respondent, it is a factor that will
be relevant if the Court reaches such a point in its determination.
The
facts
[6]
Given the narrow remit of the basis on which the relief sought has
been advanced in
argument, namely whether on the version of the
Respondent the relief sought is competent in respect of the alleged
oral loan agreements,
it is then necessary to only focus on the
common cause facts together with the version of the Respondent in
adjudicating the application.
[7]
The relief claimed in the Notice of Motion relates to two
transactions and are referred
to as the ‘Lerato’
transaction which relates to the transaction of Dr Motsekuoa and the
‘FNB’ transaction
respectively.
[8]
The Applicant was the founder and shareholder of the Respondent,
which was founded
in 1992 and whose main business involved the
importation and sale of medical equipment. In March 2016, the
Applicant sold his shareholding
in the Respondent, which stood at
77.9% of the shares in the Respondent to AngloRand Medical (ARM) but
continued to remain involved
in the management of the business of the
Respondent until October 2017.
[9]
The business model of the Respondent involved the import and sale of
expensive medical
equipment. The Respondent would be required to pay
its foreign suppliers for equipment purchased and would often then
have to wait
for payment from clients to whom the equipment was sold.
This was largely on account of the fact that the financing that the
clients
applied for was still pending and that they were unable to
pay at the time of delivery and invoicing.
[10]
To make up for the gap in the payment timeline between when the
Respondent was required to pay
its suppliers and when it was likely
to receive payment from its clients, a funding model developed. This
model required trade
finance in the form of short-term financing to
manage the gap in the financial timeline between paying suppliers and
receiving
payment from clients. While the Respondent was able to
secure such financing facilities at financial institutions, these
would
often not be sufficient and the Applicant would then step in
and advance money to the Respondent to ensure payment to suppliers
was made timeously. The Respondent would then reimburse the
Applicant for the loan/s.
[11]
This is what the parties have referred to as the standing arrangement
but there appears to be
some differences with regard to the precise
terms of that arrangement. As indicated, the Applicant, while not
accepting the correctness
of the Respondent’s version, has
elected to advance its case on that version.
The
‘Lerato’ transaction
[12]
The client in question, Dr Motsekuoa, purchased medical equipment and
pending the finalisation
of the financing application, the Applicant
in terms of the standing arrangement, advanced amounts of
R8 460 000.00 on
3 July 2016 and R8 768 881.00 on
22 August 2016 to the Respondent, in order to facilitate the purchase
by Dr Motsekuoa
of medical equipment from the Respondent.
[13]
The Respondent says the standing arrangement that would also apply to
this loan was in the following
terms: -
a)
That the Applicant would normally be repaid when
the particular customer paid in full to the Respondent.
b)
In some instances, payment would only be made
when the Respondent was able to afford repayment.
c)
The loans would attract interest at FNB prime
rate minus 0.5%.
[14]
Therefore, on the version of the Respondent, the loan would become
repayable when the customer
paid in full, but in addition, provided
that the Respondent was able to afford it. It is not clear in which
instances the affordability
of the repayment on the part of the
Respondent would apply but it does appear from the answering
affidavit that the stance of the
Respondent is that this loan was
also subject to that condition of affordability on the part of the
Respondent.
[15]
In the answering affidavit, the Respondent says the following with
regard to the conditions attached
to the loans: -
50.1.
Begere would normally be repaid when the
particular customer in respect of whom the transaction for which the
loan was granted had
made full repayment to Tecmed, but in some
instances only when Tecmed was able to afford repayment. As will
appear from that which
is stated below, the Lerato loans is only
repayable when Tecmed was able to afford repayment; and
50.2.
The loans would attract interest at FNB
prime rate minus 0,5%;
[16]
Accordingly, on the Respondent’s version, both conditions that
would trigger repayment
of the loan had not been fulfilled and the
loan was accordingly, on its version, not repayable. I proceed to
deal with these two
conditions and analyse the issue from the
perspective of the stance adopted by the Respondent.
Was
the loan repaid in full by Dr Motsekuoa?
[17]
In the answering affidavit, it says that the Lerato loan was not
repaid in full. Following the
conclusion of the hearing, the
Respondent filed what is termed an interlocutory application, in
which it sought leave to introduce
the further affidavit of Mr M H
Lotz, who also deposed to the main answering affidavit. In that
affidavit the Respondent took issue
with what it says was the
impermissible conduct of the Applicant in argument in referring to
the replying affidavit, when its stance
had always been that it would
advance its case on the strength of the answering affidavit only.
[18]
It contended that on the basis of the answering affidavit, it was
clear that the stance of the
Respondent was that the loan had not
been repaid in full and therefore on this score alone, the condition
for repayment was not
fulfilled and the loan was accordingly not due.
The Respondent bemoans attempts by the Applicant to purport, in
reply, to place
reliance on the Applicant’s replying affidavit
and to introduce further evidence relating to the repayment of the
loan.
[19]
Whatever the merits of that complaint are, as well as the procedure
in seeking to file a further
affidavit, the Respondent went further
in the affidavit in the interlocutory application by providing detail
of the outstanding
amount due by Dr Motsekuoa in respect of this loan
and in this regard says the following: -
15.3.
I am able to confirm, from my own
knowledge, that the Lerato loans have
to
this day not been repaid in full
and
in terms of the agreements which I explained in the answering
affidavit Begere is not entitled to repayment by Tecmed. I have
specifically checked the accounting records and confirm that R
2 854 613,07 remains unpaid on the Lerato loans until
today. This Court is respectfully requested to receive this further
piece of evidence in order to assuage the prejudice inherent
in the
impermissible manner in which counsel for Begere argued the case, in
particular by his attempt to present ‘evidence
from the Bar’;
[20]
In answer thereto, the Applicant explained how the indebtedness of Dr
Motsekuoa was computed
and concluded that the Respondent erred in
seeking to draw the conclusion that the account was not paid in full.
In reply, the
Respondent then accepted that the account was indeed
paid in full and in para 16.4 of the replying affidavit in the
interlocutory
application says the following: -
16.4.
Upon further investigation at the
respondent’s offices after receipt of the 31 August affidavit,
it was established that,
contrary to what other senior management
members of the respondent and I has believed all along, a settlement
had been concluded.
16.5.
The settlement is therefore conceded by
the respondent and I accept that such settlement should be regarded
as payment in full by
Dr Lerato.
16.6.
I apologise to the Court for the
misunderstanding and consequent misstatement in my previous
affidavit. It was a bona fide error
on my side and on the side of the
other management members of the respondent. I did not at any stage
intend to mislead the Court.
[21]
Thus, on the version of the Respondent as set out in the answering
affidavit, read with the affidavits
filed by the Respondent in the
interlocutory application, there is no dispute and indeed on the
version of the Respondent, the
account of Dr Motsekuoa has been paid
in full.
[22]
While this evidence emerged after the conclusion of the hearing, it
was triggered by the Respondent’s
decision to file an
interlocutory application supported by an affidavit and the
concession ultimately by the Respondent that the
account was paid in
full. That it occurred after the hearing hardly matters and it was
the intervention of the Respondent that
resulted in this information
and the concession being made. The Court would be failing in its duty
if it did not have regard to
this evidence which the parties placed
before the Court, which is not disputed and which disposes of a
significant part of the
dispute that existed between them.
[23]
Accordingly, it must follow that on the version of the Respondent,
the account of Dr Motsekuoa
was indeed paid in full and that this
would have occurred by 31 August 2018.
The
affordability question
[24]
The second condition for repayment raised by the Respondent is its
ability to repay the loan
and it says that even if payment from the
client was received in full, the loan would only become repayable if
the Respondent could
afford to pay. In this regard it says the
following at paragraph 101 of the answering affidavit: -
101.1.
The usual terms of the loans as stated
above were applicable. The cash flow of Tecmed did not allow for a
repayment of the loans
in addition thereto that the full purchase
price in respect of the Lerato deal has to date not been paid yet.
This was confirmed
by Begere to Sykes on or about 3 April 2018.
101.2.
In addition, I remind the Court of
Tecmed’s counterclaim.
101.3.
Accordingly, the Lerato Loans are not
repayable.
[25]
This statement ‘that the cashflow of Tecmed did not allow for a
repayment of the loans
...’ is extremely vague. It is not clear
which period this is a reference to. While that paragraph is a
response to Para
64 of the founding affidavit which largely deals
with the Section 345 letter and the response thereto which was in
April 2018.
[26]
The matter of the loan being repayable when the Respondent was able
to afford it raises the question
of whether the loan was repayable at
the instance of the Respondent. Surely affordability must at least be
capable of some objective
verification and assessment.
[27]
The answering affidavit makes reference to some discussion between
the Applicant and Mr Sykes
regarding affordability and the
non-payment of the full account that occurred in April 2018, but
there is nothing beyond that on
the papers from the perspective of
the Respondent that deals clearly and squarely with its inability to
pay the loan based on its
affordability. One would have
expected a party who relies on the defence of affordability as part
of its failure to repay
a loan to put up some evidence for the Court
to at least conclude that the Respondent says that it is unable to
pay the loan. This
is certainly not the case here. Even if
ultimately the Court is required to determine the issue on the
version of the Respondent,
there is nothing before the Court to at
the very least understand and accept the cogency of the version put
up.
[28]
In this regard the Respondent, in response to the Section 345 letter
of the Applicant, replied
substantively through its attorneys on 24
April 2018. After dealing with all of the claims of the Applicant, as
well as its own
claims against the Applicant, the Respondent then
states the following in the letter: -
8.
In case your client pursue its alleged
claim in terms of the second loan agreement, the merits of which are
still denied, our client
is in the process of transferring the amount
of R14,840 594,59 into our trust account, to be held in an
interesting bearing account
with a registered bank for the benefit of
our client, as proof that such claim can be honoured should your
client succeed with
it. Should such claim not be instituted within 30
court days from date hereof, same will be refunded to our client.
[29]
Thus, on the version of the Respondent, no evidence whatsoever is
offered of its inability to
afford to repay the loan. On the
contrary, its ability to pay a substantial amount into trust must at
the very least question its
claims impecuniosity.
[30]
Therefore, if regard is had to the two conditions raised by the
Respondent as triggering the
repayment of the loan, I conclude that
both have been met. Firstly, the account has been repaid in full and
secondly, the Respondent
has not advanced anything in support of its
stance of its inability to afford the repayment the loan. Having
raised it as a condition
that would trigger repayment, the Respondent
is obliged to advance facts in support of the condition having not
been met but has
failed to do so.
[31]
I will deal later with the defence of set-off that the Respondent
also relies on.
The
FNB transaction
[32]
On 6 January 2011 and 14 October 2011, two loan agreements were
entered into between FNB as lender
and Tecmed Properties as borrower,
for the loan amounts of R24 400 000.00 and R20 342 000.00
respectively. The Applicant
says that there was an error in how the
loans were recorded as in truth, the loan recorded in the agreement
of 6 January 2011 between
FNB and Tecmed Properties was intended and
should have been recorded as a loan to the Respondent, Tecmed Africa.
[33]
In this regard, it says that while the accounting records of both
Tecmed Properties and the Respondent
reflected the full amount of
both loans from FNB, it also recorded the liability of the Respondent
to Tecmed Properties in respect
of the loan that the Applicant says
was intended for and utilised by the Respondent to acquire the shares
of Mr Milford (a former
shareholder), as well as for operational
expenses of the Respondent.
[34]
The Respondent’s version is that Tecmed Africa was the
principal debtor in respect of both
loans and that the Respondent
acted as surety in favour of FNB for these loans. It also says in
para 104 of its answering affidavit
that -
‘
In
essence FNB advanced both loans to Properties and Properties in turn
advanced the one loan to Tecmed’
[35]
Leaving aside the matter of how the loans were recorded on the part
of FNB and Tecmed Properties,
what is not in dispute and clearly
emerges from para 109 of the answering affidavit (read with para 73
of the founding affidavit)
is that: -
The
loan from FNB (even though recorded as a loan to Tecmed Properties)
was intended for the use of the Respondent and that it was
secured in
order to fund: -
a)
The repurchase of Mr Milford’s shares in
Tecmed Africa; and
b)
Cash flow for the company’s general
operations and working capital.
[36]
In this regard, the Respondent also accepts that the idea was
originally to have two loans, the
one in the name of Tecmed
Properties and the other in the name of the Respondent but that this
was not possible, as FNB was not
prepared to structure them that way
as they required security in the form of immovable property owned by
Tecmed Properties.
[37]
It is also not in dispute that the Applicant paid the sum of R29 926
178.79 to FNB on 22
April 2016, that being the outstanding balance in
respect of both loans. On this basis and even accepting that
the principal
debtor in respect of both FNB loans was Tecmed
Properties, on the version of the Respondent, the payment by the
Applicant to FNB
would have extinguished the loan of the Respondent
to Tecmed Properties.
[38]
Thus, on the Respondent’s version, the payment by the Applicant
to FNB was a payment made
in respect of a liability of the
Respondent. It is not in dispute that of the amount paid to FNB, the
sum of R14 840 594.59
represented what may either be termed
the loan that related to Tecmed Africa, alternatively the loan of the
Respondent to Tecmed
Properties. Not much turns on the difference, if
any, at the end of the day.
[39]
The Respondent says however, that the Applicant cannot claim the
payment from it as the Applicant
warranted in the Sales of Shares
agreement in respect of Tecmed Properties, that the amount owing on
the mortgage bond of Tecmed
Properties was in the region of R16
million and therefore, the payment of some R29 million to FNB was to
ensure that the warranty
was honoured. It says that the difference
between R29 million and R16 million, which is some R13 900 000,
had to be settled
by the Applicant as it exceeded the warranted
liability of R16 million.
[40]
Even though the Applicant was obliged to bring the mortgage amount
down to R16 million, it does
not detract from the admitted facts that
of the payment of R29 million, some R14.8 million reflected the
indebtedness of the Respondent
for funds that were admittedly used
for its purposes (namely, to acquire the shares of Mr Milford and to
fund the operations of
the Respondent). The purpose of the payment
(to bring the mortgage within the limits warranted) must be
distinguished from the
consequences of the payment – to
extinguish the liability of the Respondent to Tecmed Properties and
to create a liability
in favour of the Applicant on the part of the
Respondent.
[41]
It can hardly be open to the Respondent to on the one hand, admit a
liability which it does in
favour of Tecmed Properties and then when
that liability is extinguished by payment made by the Applicant, to
seek to simply claim
the full benefit of that payment made by a third
party.
[42]
I am therefore of the view that on the version of the Respondent, the
FNB loan created a liability
on its part to Tecmed Properties and
that the payment of the sum of R29 million to FNB by the Applicant
was a payment that both
extinguished the liability of the Respondent
to Tecmed and constituted a loan in favour of the Respondent for the
same amount.
[43]
What the Respondent however raises, as it were, separate to the loan
and the recording thereof,
is that the existence of the loan was not
disclosed during the negotiations for the sale of shares in Tecmed
and that the non–disclosure
constituted a material breach of
the warranties in the Tecmed Properties sale agreement. It says that
to the extent that this loan
was not disclosed, the Applicant was
responsible for settling it and therefore cannot seek to claim its
repayment from the Respondent.
[44]
To this end, it therefore takes the position that ARM has a claim
against the Applicant in respect
of this breach, as well as a claim
for repayments made in terms of this loan in the amount of some
R5 498 689.00, which
it says were made in the
bona fide
but mistaken belief that the same was due and payable. It says that
ARM has ceded this claim to the Respondent.
The
defence of set-off
[45]
Beyond disputing whether the amounts advanced to it constituted loans
and whether they had become
repayable, the Respondent has also raised
the defence of set-off in the event of the Court finding that the
claims of the Applicant
were valid and enforceable.
[46]
The reliance on set-off is set out in the Respondent’s response
to the Section 345 letter
and is premised on what the Respondent
refers to as the fraudulent non-disclosure on the part of the
Applicant of various liabilities
in Tecmed Properties and Tecmed
Africa at the time that the sale of shares agreement was concluded
with AngloRand Medical (ARM)
in respect of the Applicant’s
shareholding in Tecmed. It goes on to detail those liabilities as
being: -
4.10.1.
a claim by SARS for R1 235 282,94
against Tecmed Properties (Pty) Ltd;
4.10.2.
a claim of R945 981,81 in respect of
legal fees and expenses incurred in the Stephen Cilliers matter by
Tecmed Africa (Pty)
Ltd; and
4.10.3.
an amount of R13 679 470,00
relating to unpaid profit share payments in Tecmed Africa.
[47]
In addition, the Respondent says that the amount in respect of legal
fees in the Cilliers matter
has since increased by a further
R800 000.00.
[48]
It says that ARM ceded, transferred and made over its right title and
interest in those claims
to the Respondent on 19 April 2018 and that
it is entitled to apply set-off in respect of any obligation found to
exist in favour
of the Applicant. While the Applicant disputes both
the entitlement of the Respondent to raise the principle of set-off,
as well
as the validity of the amounts raised as being non-disclosed
liabilities, on the version of the Respondent it cannot be said that
they are so unsustainable that they fall to be rejected or indeed
that a genuine dispute of fact has not been raised.
[49]
They, at the very least, create a dispute of fact and in the light of
the dicta in
Plascon-Evans Paints Ltd v Van Riebeeck Paints
(Pty) Ltd
[1984] ZASCA 51
;
1984 (3) SA 623
(A)
, that final relief can only be
granted on motion ‘
if those facts averred in the applicant’s
founding affidavits which have been admitted by the respondent
together with the
facts alleged by the respondent, justify such an
order
’, this Court should be wary of granting the final
relief sought.
[50]
Thus, the raising of the defence of set-off must at the very least
stand as an obstacle to the
granting of the relief sought. These
proceedings cannot make a definitive finding on those claims that
form the basis of the set-off
defence given their disputed nature.
[51]
In the circumstances and in summary, what the Respondent has raised
as defences that must stand
in the way of the granting of the relief
sought are that: -
a)
It is the cessionary in respect of claims against
the Applicant based on fraudulent non-disclosure in the total amount
of about
of some R16 million.
b)
It is the cessionary in respect of a claims
against the Applicant based on a mistaken repayment of the Milford
Loan and has raised
a defence that it is not liable to repay this
loan on the basis of the failure by the Applicant to disclose this
loan to ARM during
the negotiations and the conclusion of the sale of
shares agreements.
[52]
Under those circumstances and when I have regard to the version of
the Respondent, the proper
order would be to refer the matter to
trial in the light of the disputes of fact that arise in respect of
the defences raised.
[53]
I make the following order: -
1.
The application is referred to trial and will
remain in the Commercial Court;
2.
The notice of motion will stand as the simple
summons;
3.
The answering affidavit will stand as the notice
of intention to defend;
4.
The applicant will file its declaration within 20
days of the handing down of this order, thereafter the rules of the
Commercial
Court will apply to further pleadings and the conduct of
this matter;
5.
The costs of the application to date, and the
costs of the trial, will be reserved for the trail court to
determine, on the basis
that the costs of two counsel are included.
N
KOLLAPEN
JUDGE
OF THE HIGH COURT,
PRETORIA
Appearances:
For
the Applicant:
Adv S Symon SC
Adv A Armstrong
Instructed
by:
Werksmans Attorneys
For
the Defendant:
Adv CH Badenhorst SC
Adv JW Steyn
Instructed
by:
Rossouws, Lesie Inc.