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[2021] ZAGPJHC 434
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Engelbrecht N.O. and Others v Rivella Trading and Investments (Pty) Ltd (17892/20) [2021] ZAGPJHC 434 (19 August 2021)
REPUBLIC
OF SOUTH AFRICA
IN
THE HIGH COURT OF SOUTH AFRICA
GAUTENG
LOCAL DIVISION, JOHANNESBURG
CASE
NO: 17892/20
REPORTABLE:
NO
OF
INTEREST TO OTHER JUDGES: NO
REVISED
19/8/2021
In
the matter between:
HERMANUS
STEPHANUS ENGELBRECHT N.O.
First Applicant
TERESA
ENGELBRECHT N.O.
Second Applicant
HERMANUS
STEPHANUS ENGELBRECHT N.O.
Third Applicant
and
RIVELLA
TRADING AND INVESTMENTS (PTY) LTD
First Respondent
NEFG
AUDIT COMPLIANCE AND LEGAL SERVICES
Second Respondent
(PTY)
LTD (formerly known as N-e-FG HOLDINGS
(PTY)
LTD)
N-e-FG
FUND MANAGEMENT (PTY) LTD
Third Respondent
THE
WEALTH STRATEGIST (PTY) LTD
Fourth Respondent
(formerly
known as N-e-FG CUSTODIAN
SERVICES
(PTY) LTD)
N-e-FG
ADMINISTRATORS (PTY) LTD
Fifth Respondent
ADRIAAN
EVERT
PRAKKE
Sixth Respondent
JUDGMENT
WINDELL,
J:
INTRODUCTION
[1]
This is an application for a money judgment against the first
respondent,
Rivella
Trading and Investments (Pty) Ltd
(“Rivella”),
and
certain ancillary relief
pertaining
to the transfer of the shares held by the Bordeaux Trust
[1]
(‘the Trust”) in the second respondent (“the main
application”).
[2]
The main application is based on a share sale and purchase agreement
(“the sale agreement”), which was concluded
between the
Trust and Rivella on 16 April 2015. In terms of the sale agreement
the Trust sold 48,6% of the issued share capital
of the second
respondent to Rivella for an amount of R33 889 465.92. The
purchase price was payable over a lengthy period,
with a final
payment payable on 1 March 2019. In terms of clause 6.3 of the sale
agreement the subject shares were to be held in
trust by the second
respondent’s auditor and released in tranches and transferred
to Rivella as and when payments were made.
At all material times the
applicants (the trustees) represented the Trust. The sixth
respondent, Mr Prakke, was a trustee of the
Trust at the time of the
conclusion of the sale agreement but he subsequently resigned as
trustee on 6 November 2019. The third,
fourth and fifth respondents
are parties identified in the sale agreement as being interested
parties, hence their inclusion to
the present application.
[3]
It is common cause that Rivella had, from time to time, effected
payment to the Trust, but not in accordance with the sale agreement.
It is also common cause that two written addenda to the sale
agreement were concluded between the parties in May 2016 and July
2016 which,
inter alia,
granted Rivella certain indulgences in
relation to when payments were to be made (addenda 1 and 2). The
applicants aver that notwithstanding
the conclusion of the addenda,
Rivella failed to effect payment of the requisite amount as
undertaken by it. The applicants, therefore,
allege that Rivella is
in arrears and that the balance due and owing to the Trust, as at 1
July 2020, amounted to R 20 116 103.00.
The first to sixth
respondents oppose the application.
[4]
In the answering affidavit, in opposition to the main application,
the respondents, dispute the quantum of the indebtedness
on the basis
of three further addenda (addenda 3 - 5) which the Trust had
allegedly concluded with Rivella, which further regulated
payment,
interest, and the dates upon which payments became due. The
respondents also raised the contractual provision contained
in the
sale agreement that provides for dispute resolution by means of
arbitration proceedings. In the replying affidavit, the
applicants
asserted that the respondents have not raised a real dispute of fact
as far as the merits of the main application is
concerned, and as far
as the arbitration clause is concerned, contended that the
respondents should have launched an application
in terms of section
6(1) of the Arbitration Act,
[2]
and applied to the court for a stay of the proceedings.
[5]
The first and second respondents subsequently filed a formal
application on 14 May 2021 in which the respondents applied for
a
stay of the main application and an order that the dispute between
the parties be referred to arbitration in terms of section
6(1) of
the Arbitration Act in terms of clause 13 of the written agreement,
as well as leave to file a duplicating affidavit in
support thereof
(“the counter-application”).
[6] Prior to the
launching of the counter application, on 11 May 2021, the applicants
brought an application for leave to file a
supplementary affidavit in
terms of which the applicants seek to support a notice of intention
to amend the capital amount claimed
in the main application. Attached
to the supplementary affidavit is a notice of intention to amend
prayers 1.1 and 1.2 of the notice
of motion dated 22 July 2020. (“the
amendment application”).
THE AMENDMENT
APPLICATION
[7] As stated, the
amendment application was served prior to the launching of the
counter-application.
[8] The first respondent
disputes the quantum or the indebtedness on the basis of separate
agreements which the Trust had allegedly
concluded with it. The
purpose of the amendment application is to address the first
respondent’s contentions in its answering
affidavit that
further payments have been made by it, which have not been taken into
account by the Trust. The respondents oppose
the intended amendment
and contend,
inter alia
, that the applicants should have filed
a notice of an intended amendment in terms of Rule 28 and that the
applicant’s apportionment
of the payments referred to in the
notice of motion has to be done with reference to the agreement of 31
March 2018, and not any
other prior agreement it superseded. In
paragraph 4.8 of the counter-application, Mr Janse van Rensburg, on
behalf of the first
respondent, however, stated that: “
What
is not taken into account by the Applicants is that they have been
receiving payments since the start of the pandemic as evidenced
in
the attached annexures marked Annexures "AB2" to "AB8"
as proof of payment".
[9] Annexures "AB2"
to "AB5" do not constitute separate payments. They reflect
one payment made on 30 April
2020, which was identified in the
founding affidavit in the main application. Annexure “AB6”
constitutes a payment
made of R45 000.00 made by the first respondent
on 4 August 2020, correlating to the first amount identified in the
notice of intention
to amend; "AB7", constituting a payment
of R45 000.00, was made on 30 September 2020, correlating to the
second payment
identified in the notice of intention to amend; "AB8",
reflecting a payment of R225 000.00, was made on 9 March 2021 and
it
correlates to the third amount identified in the notice to amend.
[10] The respondents
object not only to the proposed amendment but also to the Trust's
supplementary affidavit identifying what
further payments had been
made (the three amounts reflected in the notice of intention to
amend) and the dates thereof. The amendment
advances the first
respondent's case, and not the Trust's. There is no prejudice to the
respondents, and no reason why the court
should not deal with the
amendment application during these proceedings. In any event, the
Trust was duty bound to disclose the
payments to the court, which it
has now done. The amendment is allowed.
THE
COUNTER-APPLICATION
[11] The respondents seek
an order in terms of section 6(1) of the Arbitration Act that the
main application be stayed pending the
resolution of the dispute by
way of arbitration proceedings in terms of clause 13 of the
agreement.
[12]
The applicants contend that the respondents have failed to adduce any
evidence as to why the counter-application has been launched
so late,
and in the absence of any evidence to this effect, the
counter-application cannot be entertained.
Late
filing of counter-application
[13]
Section 6(1) of the Arbitration Act prescribes that upon legal
proceedings being commenced against a party, the other party
to an
arbitration agreement should, before delivering of pleadings or
before taking any other step in the proceedings, apply to
court for
the stay of the proceedings. It is common cause that the respondents
did not apply for the stay of the proceedings after
the main
application was served on them, and it was only when the non-
compliance with section 6(1) was pertinently raised by the
applicants
in the replying affidavit, that the respondents filed a substantive
application for a stay of the proceedings.
[14]
Clause 13.1.1 of the sale agreement, states that “
any party
shall be entitled to demand in writing that the dispute be referred
for arbitration within 7 (seven) days after agreement
could not be
reached”.
The respondents contend that despite this
provision, the applicants did not grant the respondents such an
opportunity and summarily
launched the application against the
respondents. It is contended that had the applicants complied with
their contractual obligations
formulated in clause 13.1.1, the
respondents would have made the election within seven (7) days to
have the matter referred to
arbitration within their rights in terms
of clause 13 of the agreement. The respondents state that they were,
from their perspective,
compelled to oppose the application and raise
the issue in their answering affidavit. It is contended that on a
proper reading
of the answering affidavit the respondents adopted the
stance that should the application not be dismissed, it should be
stayed
and referred to arbitration. The applicants submitted that the
respondents have elected to reply to the applicants’
application
and are now bound to the proceedings and are precluded
from moving the relief in the counter application to refer the
disputes
to arbitration.
[15]
In the matter of
Rhodesian
Railways Limited v Mackintosh
[3]
,
the court held that the provisions of section 6(1) are not obligatory
but permissive, and does not derogate from the practice of
pleading
the submission clause either by way of a preliminary special plea or
by way of defence. In
Foize
Africa v Foize Beheer BV
[4]
, the Supreme Court of Appeal
stated as follows:
“
As
already mentioned, a party wishing to raise an arbitration or foreign
jurisdiction clause as a reason to stay a court from exercising
jurisdiction, should do so by way of a dilatory plea. As in motion
proceedings the affidavits served as both pleadings and evidence,
in
such case as this it would be necessary to place the relevant facts
upon which reliance is placed before a court by way of an
affidavit”.
[16] Thus, even if the
respondents have elected not to file a substantive application for
the stay of the proceedings, they would
not have been precluded from
relying on the arbitration clause, because they have raised it as a
defence in the answering affidavit
in opposition to the main
application. In any event, the respondents have now filed a
substantive application in which they ask
the court to exercise its
discretion and refer the matter for arbitration. The applicants are
not prejudiced by the late filing
of the counter-application. They
were well aware, even prior to the counter-application being
launched, that the respondents are,
inter alia
, relying on the
arbitration clause. As a result, the applicants have filed a replying
affidavit as well as opposing papers and
heads of argument in
opposition thereof. I am therefore satisfied that the
counter-application is properly before this court.
The arbitration
clause
[17] In terms of clause
13.1 of the sale agreement under the heading “Dispute
resolution”, the parties agreed that any
dispute arising from
any matters relating to the agreement, or the validity or meaning or
execution thereof, must be solved by
means of arbitration in
accordance with the procedures stipulated in clauses 13.1.1 to 13.3.
[18]
The respondents contend that the parties were bound to the provisions
of the agreement and in particular clause 13. Thus, so
it is argued,
where in the ordinary course of the suit the party pleads a defence
that he is entitled to have the dispute settled
by arbitration, the
court will exercise its discretion to refer the matter to
arbitration.
[5]
The applicants
contend that the counter-application is
mala
fide
and was launched solely for the purposes of delay. It is submitted
that it is common cause that the three addenda put up by the
first
respondent in order to resist the main application were not signed by
all the parties to the agreement, as required. Accordingly,
there is
no arbitrable dispute between the parties.
[19] Section 3(2) of the
Arbitration Act, provides that:
“
The
court may at any time on the application of any party to an
arbitration agreement, on good cause shown order that any particular
dispute referred to in the arbitration agreement shall not be
referred to arbitration”.
[20]
The decision to refer a dispute to private arbitration is a choice
respected by the courts in accordance with the principle
pacta
sunt servanda.
[6]
On the other hand, the mere existence of the arbitration clause is
not an automatic bar to the institution of legal proceedings
in
respect of arbitrable disputes,
[7]
and an agreement to arbitrate does not deprive a court of its
jurisdiction over the dispute covered by the agreement.
[8]
The party resisting the stay of court proceedings (in this instance
the applicants) bears the
onus
of convincing the court that the stay should be refused. The
applicants must show good cause within the meaning of sub-section
3(2). It is trite that such
onus
is not easily discharged.
[9]
[21]
The discretion of the court to refuse arbitration, is to be exercised
judicially, and only when a very strong case had been
made out. In
Universiteit
van Stellenbosch v JA Louw,
[10]
the court held that there should be “compelling reasons”
for refusing to hold a party to its contract to have a dispute
resolved by arbitration. The court also remarked that the cases in
which the discretion against arbitration was exercised are “few
and exceptional”.
[22]
In
Foize
Africa,
[11]
the Supreme Court of Appeal considered when and under which
circumstances the court should exercise its discretion that civil
proceedings in a court should be stayed pending the outcome of an
arbitration. It held that no hard-and-fast rule can be laid down
as
to the stage at which a court should exercise its discretion to
enforce an arbitration clause. In each given case much will
depend
upon the particular facts and circumstances of the case as well as
the stage at which and the manner in which the issue
of enforcement
of a clause in question is raised. The mere fact that the respondent
raises the issue when the applicant seeks interim
relief as a
precursor to the trial proceedings does not, in itself, preclude the
court from exercising its discretion to enforce
the arbitration
clause at that stage.
[23]
The applicants, with reliance on
SA
Sentral Ko-öp Graanmaatskappy Bpk v Shifren en Andere,
[12]
contend that the respondents defence is without legal substance as
the non-variation clause in the original agreement between the
parties precludes an amendment which is not in writing. It is
submitted that there is therefore no real dispute, valid in law and
that the court should refuse to refer the matter to arbitration.
[24]
The respondents contend that the facts as set out in the answering
affidavit, clearly establish that after the first and second
addenda
were concluded, that the sales agreement was further amended in terms
of the correspondence exchanged between the parties
by e-mail. It is
submitted that the variation was effected in writing facilitated by
Mr Prakke on behalf of both parties and that
the Electronic
Communications and Transactions Act
[13]
gives legal recognition to transactions concluded electronically by
e-mail. Relying on the matter of
Spring
Forest Trading 599 CC v Wilberry (Pty) Ltd t/a Ecowash &
Another
,
[14]
in which the SCA found that an amendment to an agreement can be
effected by way of e-mail and that the names at the bottom
constitutes
sufficient detail for purposes of signature, it is
submitted that there is a
bona
fide
dispute that is not capable of being resolved on paper. It is further
contended that the first respondent’s version is corroborated
by the correspondence exchanged between the parties (referred to in
the answering affidavit) and by Mr Prakke, the intermediary
who
represented both parties in the execution of the agreement. It is
also argued that the mere fact that the parties have executed
the
contract on the amended terms as agreed upon in the correspondence
over a period of more than two (2) years, confirms that
such an
agreement was indeed entered into.
[25]
Motion proceedings, unless concerned with interim relief, are all
about the resolution of legal issues based on common cause
facts.
Unless the circumstances are special, they cannot be used to resolve
factual issues because they are not designed to determine
probabilities. It is well established under the Plascon-Evans
[15]
rule that when in motion proceedings dispute of facts arise on the
affidavits, a final order can be granted only if the facts stated
by
the respondents’ answering affidavits together with the
admitted facts in the applicant’s founding affidavit justify
such an order. It may be different if the respondent's version
consists of bold or uncreditworthy denials, raises fictitious
disputes
of fact, is palpably implausible, farfetched or so clearly
untenable that the court is justified in rejecting them merely on the
papers.
[26]
Taking into account the facts set out in the answering affidavit and
the correspondence referred to by the respondents, I am
satisfied
that there is a
bona fide
dispute
of fact raised on the papers. The first respondent contends that, in
addition to the conclusion of the first and second
addenda, the
parties concluded three other addenda, dated, respectively, 15 April
2017, 28 February 2018 and 20 April 2018. The
applicants deny this
allegation. There is therefore clearly a dispute with regard to the
question of how many addendums were entered
into which resulted in a
re-calculation of the outstanding amount and interest.
[27]
The applicants have failed to show "good cause", as to why
the current dispute, should not be referred to arbitration.
As
Cameron J observed, in
Brisley
v Drotsky
,
[16]
courts are required to respect the parties' contractual autonomy, as
it informs,
inter
alia
,
the constitutional values of dignity and equality. There is an
arbitrable dispute and in the absence of any special circumstances
why the parties' choice of arbitration, as a dispute resolution
mechanism, should not be respected, the court should exercise its
discretion in favour of the respondents to refer the matter to
arbitration.
[28] In the result the
following order is made:
1. The application to
amend the main application is granted.
2. The
counter-application is granted and the main application is stayed.
3. The matter is referred
to arbitration in terms of clause 13 of the sales agreement.
4. Costs of the amendment
and counter-application to be costs in the arbitration.
L.
WINDELL
JUDGE
OF THE HIGH COURT
GAUTENG
LOCAL DIVISION, JOHANNESBURG
Delivered:
This judgment was prepared and authored by the Judge whose name is
reflected and is handed down electronically to the
parties/their
legal representatives by email and by uploading it to the electronic
file of this matter on CaseLines. The date for
the hand-down is
deemed to be 19 August 2021.
APPEARANCES
Counsel
for applicants:
Advocate M. Segal
Instructed
by:
Witz
Incorporated
Counsel
for respondents:
Advocate M.A. Badenhorst
SC
Instructed
by:
M.J.
Pretorius Attorneys
Date
matter heard:
31 May 2021
Judgment
date:
19
August 2021
[1]
Formerly known as the Teresa Engelbrecht Trust.
[2]
Act
42 of 1965
[3]
1932
AD 359
at 371. See also
PCL
Consulting (Pty) Ltd t/a Phillips Consulting SA v Tresso Trading 119
(Pty) Ltd
2009
(4) SA 68
(SCA) at 72A – C;
Yorigami
Maritime Co. Limited v Nissho-Iwai Co. Limited
1977 (4) SA 682
(C) at 692H;
Delfante
& Another v Delta Electrical Industries Limited
1992 (2) SA 221
(C) at 226F – H. Erasmus Superior Court
Practice: 2
nd
Edition, Vol. 2, p. D1-273
.
[4]
2013
(3) SA 91
(SCA) at 102G-H. Also see
Absa
Bank Limited v Kernsig
17 (Pty) Ltd
2011 (4) SA 492
(SCA) at par. 23.
[5]
Stocks
Construction OFS (Pty) Ltd v Metter-Pingon (Pty) Ltd
1978
(4) SA 35
TPD at 38 C-E.
[6]
Lufuno
Mphaphuli & Associates (Ptv) Limited v Andrews
2009 (4) SA 529
(CC) at 592 E
[7]
Delfante
v Delta Electrical Industries Ltd
1992 2 SA 221
(CPD) at 226 E-G.
[8]
Parekh
v Shah Jehan Cinemas (Pty) Ltd
1980 (1) SA 301 (D).
[9]
Metallurgical
and Commercial Consultants (Pty) Ltd v Metal Sales Co. (Pty) Ltd
1971 (2) SA 388
(W)
at
391 E – H.
[10]
(1983)
4 SA 321
(RD) at 333 G.
[11]
2013
(3) SA 91
(SCA) at 100G-H and 100-101 H-I.
[12]
1964
(4) SA 760 (A).
[13]
No.
25 of 2002
[14]
(2015)
(2) SA 118
(SCA) at par [15]- [17] the court considered whether the
exchange of e-mails met with the writing and signature requirements
where parties have agreed to amend their agreement in writing only
and by signature of the parties. The court found that e-mail
exchanges are governed by
Electronic Communications and Transactions
Act No. 25 of 2002
and that the e-mails satisfied the requirement of
writing.
[15]
Plascon-Evans
Paints (TVL) v Van Riebeck Paints (Pty) Ltd
1984
(3) SA 620
[16]
2002
(4) SA 1
(SCA)