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[2020] ZAGPPHC 8
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Thumos properties (Pty) Ltd and Others v Sharemax Zambezi Retail Investments (Pty) Ltd (Formerly known as Brookfield Investments 256 (Pty) Ltd and Another (18384/2014) [2020] ZAGPPHC 8 (10 January 2020)
REPUBLIC
OF SOUTH AFRICA
IN
THE HIGH COURT OF SOUTH AFRICA
GAUTENG
DIVISION, PRETORIA
(1)
REPORTABLE:
YES
/NO
(2)
OF
INTEREST TO OTHER JUDGES:
YES
/NO
(3)
REVISED
CASE
NO: 18384/2014
10/1/2020
In
the matter between:
THUMOS
PROPERTIES (PTY) LTD
(FORMERLY
KNOWN AS CAPICOL (PTY) LTD
)
First Plaintiff
CAPICOL
REM (PTY)
LTD
Second Plaintiff
FINE ASSET INVESTMENT 119 (PTY) LTD
Third Plaintiff
And
SHAREMAXZAMBEZI
RETAIL PARK
INVESTMENTS(PTY)LTD
(FORMERLY
KNOWN AS BROOKFIELD
INVESTMENTS
256 (PTY)
LTD
First Defendant
SHAREMAX
ZAMBEZI RETAIL PARK HOLDINGS LTD
Second
Defendant
JUDGMENT
RAULINGA J,
[1]
On
or about 5 March 2014, the plaintiffs issued summons against the
defendants. The plaintiffs' particulars of claim comprise five
claims
advanced by the plaintiffs.
[2]
The
plaintiffs' claims are based upon conclusion of a series of
agreements and the consequences flowing from the alleged
non-fulfilment
of certain suspensive conditions contained in a number
of those agreements.
[3]
The
agreement which forms the subject matter of the present hearing, is a
Sale of Business Amendment Agreement ("SOSA")
concluded on
5 July 2011. This SOSA was purportedly approved or ratified by the
members of the Board on 6 July 2011.
[4]
A
further agreement which was extensively referred to in evidence was
the prior iteration of the SOSA concluded on 18 June 2011,
subsequent
to the settlement agreement but prior to SOBA and which was overtaken
and superseded by the SOBA. For ease of reference
this agreement will
hereafter be referred to as "the additional agreement."
[5]
It
is important to note that the plaintiffs contend that the Sale of
Business Amendment Agreement entered into on 18 June 2011 is
not the
SOSA upon which this Court is required to adjudicate in this trial.
However, the plaintiffs in their papers repeatedly
refer to this
SOBA. It is indeed the SOBA entered into by the first plaintiff,
second plaintiff, the third plaintiff, the first
defendant and the
second defendant on 5 July 2011 which contains the suspensive
conditions which forms the subject of the present
hearing.
[6]
Having said that, it is also prudent to recognise that on 20 June
2011 a meeting was
held of the common directors of the five companies
including the first defendant and second defendant. The evidence of
Mr Myburgh
who testified on behalf of the defendants was that the
Sale of Business Amendment Agreement dated 18 June 2011 was
circulated to
the directors and thoroughly worked through and
discussed at this meeting. A resolution was passed at the meeting in
relation to
this agreement which was recorded in the signed and
approved minute of the meeting as follows:
"4.1 Daar word besluit om die
aanvu/lende vooreenkoms met Capitol en Zambezi Retail Park wat deur
me D
Haese
namens
die direksie onderleken is, te bekragtig en ook haar aan te wys as
die gemagtigde persoon
om
die
aanvullende ooreenkoms te onderleken."
(in English: "It is decided to ratify the
supplementary additional agreement with Capitol in respect of Zambezi
Retail Park
which was signed by Ms D Haese on behalf of the Board of
Directors and also to designate her as the authorised person to sign
the
supplementary additional agreement.")
[7]
It
is common cause that due to the non-fulfilment of one of the other
suspensive conditions, this Sale of Business Amendment Agreement
signed on 18 June 2011 lapsed and became of no force and effect by
the end of June 2011. Although this agreement is not the subject
for
determination, however, for the purpose of interpretation, it might
be advisable to look at this resolution and others which
may be
relevant to the issue at hand.
[8]
The
suspensive conditions contained in clause 14 of the SOSA read as
follows:
"14
Suspensive Conditions
14.1
This agreement is subject to the
fulfilment of all the following suspensive conditions:
14.1.1
The approval being obtained from
the board of directors
of
Zambezi
Holdings and Zambezi Retail approving the entering into of this
agreement and the cancelation of the settlement agreement,
together
with all the addendums thereto as per the provisions of this
agreement, and the settlement
of
the
claims and the disputes between the parties
as
provided for in clause
5
above, by no later than 17h00 on
Wednesday
6
July
2011."
[9]
At the commencement of the trial the
Court made an order at the request and by agreement between the
parties, to separate certain
issues for initial determination by the
Court in terms of Rule 33(4). The order granted by the Court is as
follows:
"1
The following issues be separated for determination by the Court, in
terms of
Rule 33(4)
of
the
Uniform Rules of Court, and that the remaining issues be postpone for
determination at
a
later
date.
2
The
issues to be separated and determined are those arising
from
the following paragraphs of the
plaintiffs' particulars of claim in the consolidated actions and the
defendants'
plea and counterclaim:
2.1
The
introductory part of paragraph 17 together with paragraph 17.1
of
the particulars
of
claim, read with paragraphs 16.1 and
16.2 (including paragraphs 16.2.1 and 16.2.2) of the defendants'
plea; and
2.2
Paragraph 15A of the first defendant's claim in reconvention read
with paragraph 8.4 of the plaintiffs' plea in respect thereof."
[10] If the separated
issue is decided in the defendants' favour and it is held that the
suspensive condition
contained in clause 14 of the SOBA was
fulfilled, then the plaintiffs' claim fall to be dismissed and the
defendants' counterclaim
will stand over for adjudication on a future
date. A finding on this issue in favour of the plaintiffs, however,
will not be dispositive
of either if the parties' claims and the
balance of the issues will stand over for a determination on a future
date.
[11]
In paragraph 17 read with paragraph 17.1
of the plaintiffs' particulars of claim it was alleged that the
suspensive conditions contained
in clause 14 of the SOBA dated 5 July
2011 were not fulfilled, which allegations were denied by the
defendants, who contended that
the suspensive conditions had been
properly and timeously fulfilled. In paragraph 15A of the defendants'
claim in reconvention
it was alleged that the suspensive condition
stipulated in clause 14 of the SOBA dated 5 July 2011 was timeously
fulfilled and
that the agreement remains of full force and effect,
which allegations were denied by the plaintiffs.
[12]
In paragraphs 12 and 13 of the minute of
the pre-trial conference held on 15 October 2018 it was recorded that
the parties were
in agreement that the plaintiffs bear the onus of
proof insofar as they rely on non-fulfilment of the suspensive
conditions, that
the defendants bear the onus of proof insofar as
they rely on the fulfilment of the conditions, that the plaintiffs
had the duty
to begin, and that both parties commit themselves to
lead evidence on the separated issues.
[13]
Accordingly, the issue which this Court
is required to determine is whether or not the suspensive conditions
as stipulated in clause
14 of the SOSA dated 5 July 2011 were
fulfilled. In this regard Mr Kyriacou testified on behalf of the
plaintiffs, and Mr Myburgh
testified on behalf of the defendants. At
the relevant time in July 2011 Mr Kyriacou was a director of all
plaintiffs' companies,
whereas Mr Myburgh
was
a
practising attorney and consultant
to the defendants' companies. He has recently earlier in 2018 been
appointed as director of the
defendants' companies. The directors of
the defendants' companies at the relevant time in 2011 were W.J.
Hartzenberg, R.P Badenhorst,
D. Haese, D.R. Koekemoer and Roodt. None
of these directors was called to testify.
[14]
It is instructive to note that the
plaintiff's view the suspensive conditions as three separate
suspensive conditions. On the other
hand, the defendants view this as
one suspensive condition with component parts. The defendants submit
that this distinction is,
however, of no moment because, whether it
is viewed as one suspensive condition or separate suspensive
conditions, the result is
the same. The plaintiffs contend that the
suspensive condition (or each of its component parts) was not
fulfilled, and the defendants
contend that the suspensive condition
(or each of its component parts) was fulfilled.
[15]
For one to contrast the distinction
between the approach taken by the plaintiffs and the one taken by the
defendants, guidance can
be found in Clause 5 of the SOBA dated 4
July 2011 which provides that the first plaintiff and the third
plaintiff and the first
defendant agree and confirm that "subject
to the fulfilment of all the suspensive conditions in clause 14"
the Buy Back
Agreement is cancelled and that the first and third
plaintiff and the other parties will have no claims against one
another arising
from the cancellation or prior existence of that
agreement, further, Clause 5 of the SOBA dated 5 July 2011 provides
that all disputes
which have arisen and exist, and all claims which
the parties have against each other arising from the previous
agreements entered
into between them, are finally and fully settled,
"subject to the fulfilment of all the suspensive conditions in
Clause 14
infra."
[16]
In this regard I refer to the suspensive
conditions in Clause 14 as regurgitated in paragraph 8 of this
judgment. This therefore
serves to confirm the view contended by the
plaintiffs that there are three separate suspensive conditions, each
of which had to
be fulfilled before the meeting of the Boards of
Directors of the companies concerned held on 6 July 2011.
[17]
The defendants argue that the plaintiffs
do not rely on any direct evidence of what transpired at the meeting
as Kyriacou was not
present. That the plaintiffs rely entirely on
circumstantial evidence and require the Court to find in their favour
by drawing
inferences. By contrast, the defendants are of the opinion
that they rely on direct evidence in the form of first-hand knowledge
and observations of what transpired at the meeting through Myburgh
who was in attendance and stated that he specifically recalls
the
events which transpired.
[18]
This argument may be dismissed on the
basis that, as a matter of law, evidence is nor admitted merely
because it was tendered directly.
Evidence is admitted on the basis
of its veracity after a proper evaluation of the facts before the
Court. In the first place,
it is significant that Myburgh testified
that it was his view that there had been an omission of words from
the suspensive conditions
contained in Clause 14.1.3 of the agreement
dated 18 June 2011, and that the words "approving the entering
into of the agreement"
should also have appeared there, as it
appeared in the subsequent SOBA signed on 5 July 2011.
[19]
As he was not a signatory or party to
the agreement signed on 18 June 2011, Myburgh's view as to what
should or should not have
been contained in Clause 14.1.3 or as to
what the parties might have contemplated or intended is irrelevant
and inadmissible in
evidence. I therefore agree with the plaintiffs
that he being the person who claims to have informed the Board of
Directors of
the terms of the agreement at both the meetings on 20
June 2011 and on 6 July 2011, believed that in order for the
suspensive condition
to be fulfilled no more was required of the
Board of Directors than to approve the entering into of the
agreement. His proffered
view and belief was that the remainder of
the suspensive conditions (both in the agreement dated 18 June 2011
and in the agreement
dated 5 July 2011) was superfluous in that, if
the Board of Directors approved the entering into of the agreement,
they would in
his view of necessity and by implication also have
approved the cancellation of the Settlement Agreement in terms of
Clause 2 as
well as the settlement of claims and disputes in terms of
Clause 5.
[20]
This means that he gave the Board the
impression that all they were required to do was to approve the
entering into of the agreement,
in other words, to ratify the
conclusion of the agreement and no more. Secondly, Myburgh conceded
under cross-examination that
the English version of the resolution
passed on 6 July 2011 on a proper interpretation thereof does not
constitute fulfilment of
the suspensive conditions stipulated in
Clause 14. Regarding he Afrikaans version of the resolution as
contained in the minute
of 6 July 2011, interpreted in the context of
what is recorded in the minute, Myburgh conceded that if the words
"Zambezi
Retail Park" which appear in paragraph 5.3.1 of
the minute of 6 July 2011 are a reference to Sharemax Zambezi Retail
Park
Investments (Pty) Ltd, the meaning and wording of the Afrikaans
version of the resolution and that the English version of the
resolution
are the same. It would inevitably follow that the
suspensive conditions were not fulfilled.
[21]
The evidence of Myburgh must be
evaluated and weighed against the evidence of Kyriacou who confirmed
in his testimony that he had
in an earlier affidavit stated the
following:
"Neither of the Sharemax respondents
informed any of the applicants prior to or subsequent to 17h00 on
Wednesday
6
July
2011 that the suspensive conditions
as
stipulated in Clause 14 of the
agreement had been fulfilled. The applicants, through their attorneys
Bent Smith Incorporated, addressed
several written demands to the
Sharemax respondents to furnish proof of fulfilment of suspensive
conditions, but despite such demands
the Sharemax respondents failed
to furnish proof that the Board
of
Directors of the two respondents had
given the approvals as contemplated in Clause 14 and that the
suspensive conditions had been
timeous/y fulfilled."
[22]
Kyriacou
also testified under cross-examination that he had called Ms Haese
several times after 6 July 2011 and before he received
her letter
dated 12 July 2011. In regard to this version, it was put to Kyriacou
in cross-examination that Myburgh and Ms Haese
would testify that Ms
Haese telephoned Kyriacou on 6 July 2011 to say that the agreement
had been approved. As the plaintiffs correctly
submit, this was not
put, nor was it testified by Myburgh that Kyriacou had been told that
the suspensive conditions had been fulfilled
or that the Board of
Directors of both companies had given the approach as required and
contemplated in Clause 14.
[23]
It
has been stated by our Courts, that if a point in dispute is left
unchallenged in cross-examination, the party calling the witness
is
entitled to assume that the unchallenged witness's testimony is
accepted as correct.
[1]
[24]
In
my view, both Kyriacou and Myburgh gave direct evidence. The
difference is that Myburgh attended the meeting of 6 July 2011,
whereas Kyriacou did not. Kyriacou as a Director of one or the other
company of the plaintiff had the knowledge of what transpired.
Therefore, the plaintiffs and the defendants tendered both direct and
circumstantial evidence. However, the defendants failed to
prove that
the suspensive conditions were fulfilled, in that the evidence is not
convincing. The plaintiff's evidence is further
plagued by their
failure to call retired Judge Hartzenburg and Ms Haese to testify on
their behalf. Moreover, Judge Hartzenburg
is the author of the
Afrikaans version of minute of the Board of Directors resolution.
[25]
Section
73 of the Companies Act
[2]
,
deals with meetings of the Board of Directors of a company. Sections
75(6)- (8) provide as follows:
"75(6)
A
company must keep minutes
of
the meetings of the board, and any of
its committees, and include in the minutes
-
(a)
A declaration given by notice or
made by
a
director
as required by section
75;
and
(b)
Every resolution adopted by the
board
(7)
Resolutions adopted by the board
-
(a)
must be dated and sequentially
numbered, and
(b)
are effective as of date of
resolution, unless the resolution states otherwise;
(8)
Any minutes of a meeting, or a
resolution, signed by the chair of meeting, or by the chair of the
next meeting of the board, is
evidence of the proceedings of the
meetings, or adoption of that resolution, as the case may be."
[26]
As the plaintiffs correctly submit, the
minutes of the meeting of the Board held on 6 July 2011 were signed
and approved by the
chair, retired Judge Hartzenberg, and were also
confirmed by the Board at the subsequent meeting. The minutes of the
meeting of
6 July 2011 and resolutions recorded in those minutes, are
accordingly evidence of the proceedings of that meeting and the
adoption
of those resolutions. Having produced and tendered the
minutes to the Court, the defendants are bound by the contents
thereof.
[27]
The
English version of the resolution of the Board of Directors of
Sharemax Zambezi Retail Park Investments (Pty) Ltd passed on
6 July
2011 is signed not only by the chair of the meeting held on 6 July
2011, but also by the other three directors who were
present at the
meeting. Accordingly, in terms of section 73{8) of the Companies Act,
that document is evidence of the adoption
of a resolution by the
Board of Directors of Sharemax Zambezi Retail Park Investments (Pty)
Ltd that "the Board herewith ratifies
the Sale of Business
Amendment Agreement between Capicol (Pty) Ltd and Sharemax Zambezi
Retail Park Investments (Pty} ltd as signed
on 5 July 2011. As a
matter of fact, Myburgh under cross-examination confirmed that the
English wording of this resolution is a
correct translation of, and
has the same meaning as the Afrikaans wording of the resolution as
contained in the signed and approved
minutes of the meeting held on 6
July 2011.
[28]
I
have considered the steps followed in the process of drafting the
suspensive conditions, in the SOBA signed on 5 July 2011 and
including the subsequent meeting of the Board of Directors on 6 July
2011. As stated above in this judgment, for a proper interpretation
of the suspensive conditions this includes the SOBA signed on 18 June
2011 and the subsequent Board of Directors meeting of 20
June 2011. I
have had regard to the context reflected in the contract, its
provisions as a whole and the circumstances attendant
upon its coming
into existence. Having scrutinized the language used and all other
factors I am of the view that the process was
objective and leads to
a sensible and reasonable result.
[3]
[29] In the
circumstances, I have decided to concentrate only on the aspects
discussed in the judgment with
the exclusion of all other issues
raised by the parties. The gist of this matter hinges on the
interpretation of the suspensive
conditions as contained in Clause 14
of the SOBA signed on 5 July 2011 and the subsequent minutes of the
Board of Directors meeting
held on 6 July 2011.
[30] Consequently, the
following order is made:
30.1
The
suspensive conditions contained in Clause 14 of the Sale of Business
Amendment Agreement signed on 5 July 2011 were not fulfilled.
30.2
The defendants are jointly and severally
ordered to pay the costs of the trial relating to the separated
issues, inclusive of the
costs of two counsel.
TJ
RAULINGA
JUDGE OF THE GAUTENG HIGH
COURT
DIVISION
Heard
on:
29 October - 1 November
2018
Delivered:
... January 2020
APPEARANCES
For
the Plaintiffs:
Adv. NGO Maritz SC;
Adv. WS Jungbluth
Instructed
by:
Bert Smith Incorporated
For
the Defendants:
Adv. JJ Brett SC; Adv. D Mahon
Instructed
by:
Faber Goertz Ellis Austen Incorporated
[1]
President of the Republic of South Africa and others v South
African Rugby Football Association and Others
2000 (1) SA 1
(CC)
at
para
(61) - [63]
[2]
Act 71 of 2008
[3]
Natal Joint Municipal Pension Fund
v
Endumeni Municipality
2012 (4) SA 593
(A).