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[2021] ZAGPPHC 260
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MWRK Accountants & Consultants (Pty) Ltd v HLB International SA (Pty) Ltd and Another (72514/2018) [2021] ZAGPPHC 260 (5 May 2021)
IN
THE HIGH COURT OF SOUTH AFRICA
(GAUTENG
DIVISION, PRETORIA)
(1)
REPORTABLE:
YES
/NO
(2)
OF INTEREST TO OTHERS
JUDGES:
YES
/NO
(3)
REVISED
05
MAY 2021
Case
No:
72514/2018
In
the matter between:
MWRK ACCOUNTANTS &
CONSULTANTS (PTY) LTD
APPLICANT
and
HLB
INTERNATIONAL SA (PTY)
LTD
FIRST RESPONDENT
PAR EXCELLENCE
FINANCE & LEASING (PTY) LTD
SECOND
RESPONDENT
JUDGMENT:
LEAVE TO APPEAL
DAVIES AJ:
[1]
On concluding the hearing of this application for leave to appeal,
which
was conducted on Microsoft Teams in terms of the prevailing
practice directives, this court granted an
ex tempore
judgment
and order granting leave to appeal to the Supreme Court of Appeal. I
have subsequently on 1 April 2021 been requested
to furnish written
reasons for that judgment, and I apologise for my delay in doing so.
[2[
The parties and their business relationships with one another are as
set
out in paragraphs 2 to 4 of the judgment dated 15 November 2019.
[3]
For the purposes hereof, I emphasise that at the time of the merger
between
MWRK Accountants and Certified Master Auditors Pty) Ltd
(“CMA”), the parties envisaged that CMA would lease the
immovable
property under consideration, that had already been
purchased. Clause 6 of the relevant shareholders agreement records
that HLB
purchased the relevant immovable property Erf 3726, Benoni,
and that payment of the purchase price is divided
pro rata
according to the shareholding. Thereafter clause 8 records that the
immovable property will be rented exclusively to CMA for an
initial
period of nine years, renewable for an additional nine years at the
election of CMA, and on the basis that CMA would pay
all operating
costs. The aforesaid terms are replicated in the agreement of lease
entered into between HLB International (South
Africa) Inc. and CMA on
31 May 2017. Clause 25 records that the validity of the lease shall
not be affected by the transfer of
the premises from the lessor,
embodying the common law “
huur gaat voor
koop
” principle.
[4]
The terms pertaining to the rental amount and the duration of the
lease
are contractual rights inuring to the commercial benefit of
CMA, and as such constitute an asset or at least part of the goodwill
of CMA]. [The first and second respondent’s seek leave to
appeal the judgment of this Honourable Court,
inter
alia
on the grounds
that CMA had not been joined as a respondent in the application, as
appears from paragraph 6.2 of the first respondent’s
application for leave to appeal].
[1]
Objectively viewed, the sweetheart arrangements obviously have
commercial value to CMA. The fact of the matter is that CMA
has
contractual rights, albeit it in the context of the commercial
arrangements between the parties.
[5]
The judgment of this Honourable Court, as clarified, makes it clear
that
the relief granted was intended to assist the applicant in
withdrawing its capital on equitable terms. The mechanism ordered in
the form of a sale through estate agents was aimed at achieving a
fair market-related price for this investment, which necessarily
entails ending the existence of the lease agreement which diminishes
the value of the immovable property, and which would in all
probability be renewed after nine years. It was therefore necessary
to clarify the orders to make specific provision for the envisaged
sale to be free of any lease.
[6]
The judgment and the orders of this Honourable Court therefore
directly
impact on the contractual rights and the commercial
interests of CMA, which are of course intertwined with the interests
of the
parties, and those of Reynolds and Maritz.
[7]
Where a third party has (or may have) a direct and substantial
interest
in any order that the court might make in proceedings to
which it has not been joined, or if such an order cannot be sustained
or carried into effect without prejudicing the third party, then he
is a necessary party and should be joined in the proceedings
unless
the court is satisfied that the third party has waived its right to
be joined.
[2]
[8]
Where a party is or may be a necessary party in the sense alluded to
above,
the court should not deal with the issues without a joinder
being effected, and no question of discretion or convenience
arises.
[3]
[9]
The interest of CMA is not nearly a financial interest, or a
contingent
and indirect commercial interest in the litigation. By
virtue of its contractual rights, it has a direct legal interest.
[4]
[10]
The case is therefore distinguishable from that where for instance a
sub-tenant,
who has no legal interest in the contract between the
landlord and the tenant, and therefore need not be joined.
[5]
[11]
In his heads of argument dated 12 January 2021, Bergentuin SC, it is
argued that:
“
Maritz
is the controlling mind (and ultimate beneficiary in terms of various
agreements) of all profits arising from the property
of first
respondent . He, and CMA had full knowledge of applicant’s
applications, and could have intervened, but decided
not to do so.
Eventually the question whether CMA will be entitled to any
compensation has never been an issue before the Honourable
Court
”.
Even accepting the truth of this proposition, it is nonetheless
irrelevant the Maritz or CMA knew of the proceedings. As
I understand
the position, the interested third party such as CMA must either be
joined or must receive “
judicial
notice
”
emanating from the court which is formally served on the third party.
Informal notice will not suffice.
[6]
[12]
Moreover, while it is true that the application for clarification was
indeed served
upon CMA, by this time the proverbial horse had bolted.
A final order had been granted in the absence of a directly
interested
third party, and belated intervention on the part of CMA
or its successor in title would not change the fact that an order
prejudicial
to its contractual rights had been granted in its
absence, and without its input. It was not open to this Honourable
Court in the
Rule 42 clarification proceedings, to amend the order to
cater for a rule
nisi
as ought to have occurred initially, and
as would have satisfied the requirement of judicial notice.
[13]
In the premises, and for the above reasons, I ordered that the first
respondent should
be afforded leave to appeal to the Supreme Court of
Appeal, with costs to be costs in the cause.
SW
DAVIES AJ
ACTING
JUDGE OF THE HIGH COURT
GAUTENG DIVISION,
PRETORIA
Appearances:
For
the applicant:
Adv JG Bergentuin SC
(Respondent
in the leave to appeal.)
Instructed
by:
Griesel & Breytenbach Attorneys
For
the first respondent:
Adv MM Oosthuizen SC
Instructed
by:
Carel Van Der Merwe Attorneys
Date
of hearing:
21 January 2021
Date
of
ex tempore
judgment:
21 January 2021
Date
of written reasons:
5 May 2021
[1]
Caterham
Car Sales & Coachworks Ltd v Birkin Cars (Pty) Ltd
1998 (3) SA 938 (SCA).
[2]
Amalgamated
Engineering Union v Minister of Labour
1949 (3) SA 637
(A);
Henri
Viljoen (Pty) Ltd v Awerbuch Brothers
1953 (2) SA 151
(O) at 165-171;
Toekies
Butchery (Edms) Bpk en Andere v Stassen
1974 (4) SA 771
(T).
[3]
Licenses
and General Insurance Co. Ltd v Van Zyl and Others
1961 (3) SA 105
(D) at 110.
[4]
Abrahamse
and Others v Cape Town City Council
1954 (2) SA 178
(C)
;
Toekies Butchery
(
supra
).
[5]
Sheshe
v Vereeniging Municipality
1951
(3) SA 661
(A) at 667A;
Henri
Viljoen
(
supra
)
at 167;
United
Watch and Diamond Co. (Pty) Ltd and Others v Disa Hotels Ltd and
Another
1972 (4)
SA 409
(C) at 417.
[6]
Toekies
Butchery
(
supra
)
at 774H;
Smith v
Conelect
1987 (3)
SA 689
(W) at 694.