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[2020] ZAGPPHC 53
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One Vision Investments 344 (Pty) Ltd v Smith and Others (76711/2014) [2020] ZAGPPHC 53 (7 February 2020)
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
number: 76711/2014
7/2/2020
In
the matter between:
ONE
VISION INVESTMENTS 344 (PTY) LTD
PLAINTIFF
Vs
RALSTON
EMMANUEL
SMITH
1
ST
DEFENDANT
MONEY BOX
INVESTMENTS 225 (PTY) LTD
2
ND
DEFENDANT
CARL JACOBUS
POTGIETER
3
RD
DEFENDANT
MARIUS
NIEUWOUDT
4
TH
DEFENDANT
LAURENCE
STEPHEN BIRD
5
TH
DEFENDANT
THEODORUS
BLEEKER
6
TH
DEFENDANT
SAREL
JOHANNES VAN HEERDEN
7
TH
DEFENDANT
FINISHING TOUCH
304 (PTY) LTD
8
TH
DEFENDANT
MURAIBALL
INVESTMENTS (PTY) LTD
9
TH
DEFENDANT
DAVID GLEASON
DEVELOPMENTS (PTY) LTD
10
TH
DEFENDANT
GLOBAL SECURITY
INTERNET INFRASTRUCTURE
(PTY)
LTD
11
TH
DEFENDANT
RAMESH SINGH
12
TH
DEFENDANT
JUDGMENT
TOLMAY,
J:
INTRODUCTION
[1]
The Plaintiff (One Vision), whose sole
director is the Twelfth Defendant (Mr Singh) sought an order
declaring the Memorandum of
Understanding (MOU) as incorporated in
the Sale of Equity, the Sale of Equity itself and the Cession to be
valid and binding on
the parties. One Vision also sought an order for
specific performance in terms of the Sale of Equity, incorporating
the MOU.
[2]
The First Defendant (Mr Smith) and the
Second Defendant (Money Box) sought an order that the claims be
dismissed. It was the case
of Mr Smith and Money Box that he never
resigned as a director of Lahleni, nor did he sell his shares, nor
did he sign the forms
for transfer of the shares in Lahleni. He
alleged that his signatures were forged on the documents and that a
WhatsApp image and
emails relating to this were forgeries. Mr Smith
also filed a conditional counterclaim in reconvention that if the MOU
and Sale
of Equity be found to be valid and enforceable, he claimed
for rectification of the MOU and payment of R24 million in terms of
the rectified MOU. One Vision countered that with a special plea of
prescription of the claim. Despite the fact that Mr Smith, who
appeared in person's attention was drawn to the fact, no evidence was
led regarding rectification and as a result this Court need
not deal
with that claim.
[3]
On 23 July 2017 the parties agreed, as recorded in the pre-trial
minute that, written
communications be deemed to have been dispatched
and received according to their tenure, and unless the parties agree
otherwise,
only those documents in the trial bundle referred to
during evidence would form part of the record.
[4]
The parties attended a pre-trial in front me at their request on 25
April 2019. At
that stage Mr Smith was still represented by senior
counsel and an attorney. During that meeting it was
inter
alia
recorded that:
a)
a
joint chronology of agreed and disputed facts was prepared;
b)
the
documents in regard to the facts which are common cause are contained
in three lever arch files; and
c)
the documents in respect of the disputed
facts will be contained in a trial bundle to be settled between the
parties.
[5]
It
was agreed that the Court read the consolidated chronology before the
commencement of the trial which was scheduled to start
on 6 May 2019.
Importantly it was agreed that the chronology, which contained the
common cause facts would be handed in at the
trial as an exhibit and
would constitute evidence of such facts. Evidence would be led in
respect of the issues in dispute referred
to in the chronology (or as
otherwise agreed to between the parties) with reference to the trial
bundle, insofar as such reference
might be necessary.
[6]
The
parties also agreed that the experts would meet and prepare a joint
minute, this however did not occur, due to the fact that
Mr Smith
terminated his experts' mandate.
[7]
On
29 April 2019 Mr Smith's attorneys withdrew. On 30 April 2019 a
directive was issued by me who,
inter
alia
required the presence of Mr
Smith and his previous legal representatives at a further pre-trial
meeting, to enquire from them why
they did not sign the pre-trial
minute of 25 April 2019, as they did represent Mr Smith at the time,
and as a result the agreements
reached would be binding on Mr Smith.
The further pre-trial was held and the minutes were signed by them in
the presence of Mr
Malulzane, Mr Smith's new attorney of record, who
was appointed in the meantime.
[8]
On
6 May 2019, the day that the trial was supposed to commence an
application for postponement was brought by Mr Smith's new legal
representative. The application for postponement was refused and the
matters stood down until 16 May 2019, to give the new legal
representative an opportunity to prepare for trial. A further
pre-trial was held on 14 May 2019. At the pre-trial that was held
in
open Court, Mr Smith's legal representatives failed to appear,
despite earlier indicating that he would be available. During
this
pre-trial the Court was informed that Mr Pryor, Mr Smith's expert
apparently informed One Vision's experts that his mandate
had been
terminated.
[9]
The
trial finally commenced on 16 May 2019. Mr Smith was informed that
he, was not legally entitled to represent Money Box,
[1]
but he indicated that he would represent only himself.
[10] Mr Smith was
requested to familiarise himself with the chronology of facts, in
order to ensure
that he would be able to represent his case in
accordance with the content thereof. During the trial it transpired
that he did
not do so and the Court again impressed on him the
importance of properly preparing himself. The Court gave him
assistance and
was at pains to explain the procedure to him and to
assist him as far as was possible in the conduct of his case. He was
also advised
to obtain legal representation, as he was represented by
senior counsel initially and also in an appeal based on the same
facts
before the Supreme Court of Appeal (SCA).
[2]
He however preferred to represent himself, despite the fact that
financial considerations were never raised by him as his motivation
for doing so. As the matter was a complicated commercial case he was
clearly at a disadvantage, but the court had to respect his
decision.
He is clearly an intelligent and astute businessman.
[11]
One Vision called the following
witnesses, Mr G B Stockdale, Mr A S Van Dyk, Mr P Erasmus, as
witnesses on the facts. The following
experts were called, Mr B S
Eicker, a chartered accountant in the employ of Price Waterhouse
Cooper, Brigadier J H Hatting, a handwriting
expert, Mr B L Buckton
who is an expert on forensic imaging of computers and data recovery.
[12]
Mr Smith testified and called Mr Henry
Kwami Dua-Ayegemang, Mr J Van Dyk and Mr J P Van Der Walt. After
calling these witnesses
Mr Smith stated that he did not have a fair
trial and would for that reason close his case. He led no evidence
relating to his
counterclaim for rectification, despite the fact that
the Court pointed this aspect out to him.
[13]
After Mr Smith closed his case Mr Van
Loggerenberg called Mr Erasmus again as well as Mr Botha as an expert
digital forensic specialist.
These witnesses were called at this
point as Mr Smith alleged that his signature, WhatsApp images and
e-mails were forgeries and
consequently he carried the
onus
to prove the fraudulent actions he
alleged were committed.
AMENDMENT
OE PRAYERS AND THE MATTER BEFORE THE SCA
[14]
During argument One Vision sought an
amendment of sub-paragraphs 5.1.2. and 5.2.2 of the prayers this was
opposed by Mr Smith.
[15]
Subparagraphs 5.1.2 and 5.2.2 of the
prayers in the amended declaration contain a typing error in that the
word
"payment'
in
these prayers should have been
"cession".
This was a mere typographical error
and One Vision accordingly sought an order that the word
"cession"
be substituted for the word
“
payment”
in
those subparagraphs. There can be no prejudice for Mr Smith in this
regard if the amendments are granted as the amendment is
in
accordance with the contents of the particulars of claim and the
evidence. The amendment is merely formalistic.
[16]
During the period that the matter stood
down for argument Mr Smith delivered a copy of the matter of
R
Singh
&
Others
v The Companies and Intellectual Property Commission &
Others
[3]
to chambers.
[17]
If regard is had to the minutes of the
pre-trial conference that was held before this Court on 25 April
2019, it is clear that the
legal representatives then appearing on
behalf of Mr Smith co-operated in bringing the matter to trial
readiness. No mention was
made by Mr Smith's legal representatives
that the outcome of the appeal in the Supreme Court of Appeal could
possibly impact on
the trial proceedings and that these proceedings
should therefore be postponed until the judgment of the Supreme Court
of Appeal
was delivered.
[18]
The Court requested the parties to
address the Court on the relevance and impact that this judgment may
have on the proceedings
before it. The Court heard argument and
considered the judgment of the SCA. The matter before the SCA
concerned the question whether
the Companies Intellectual Commission
(the Commission) had jurisdiction to investigate a complaint in terms
of sec 185 of the
Companies Act of 2008
and if it had jurisdiction to
investigate a complaint lodged by Mr Smith to the effect that his
removal as a director of Lahleni
had been effected fraudulently.
[4]
The Commission recommended that the complaint be investigated. Mr
Singh was requested to appear before the Commission which he
did not
do. In the end Mr Singh launched an application to review and set
aside the decision to accept and investigate the complaint
against
him. The Court a
quo
dismissed
the application and Mr Singh appealed this decision with the leave of
the Court a
quo.
[5]
[19]
A perusal of the factual matrix of
Singh
v CIPC
revealed that the same
factual allegations were made as those that this Court had to
decide,
[6]
The legal context however differed substantially.
[20]
The judgment also revealed that it was
inter alia
argued
by Mr Singh's representatives that an action was pending in the High
Court which dealt with the same matter and that it ought
to have been
referred to trial and consolidated with the case before the SCA.
[7]
The SCA found that this argument had no merit.
[8]
[21]
The SCA in its judgment emphasised the
fact that the accuracy of company records falls within the
jurisdiction of the CIPC regardless
of what the situation may be with
regard to a private action launched in the High Court concerning
contractual disputes.
[9]
[22]
Having regard to the case law referred
to by the SCA it is clear that the investigation by the CIPC could
run concurrently with
the trial proceedings in the High Court (i e
the present trial proceedings).
[10]
[23]
It would seem then that it was found
that the judgment in
Singh v CIPC
that this Court could independently
proceed with the proceedings before it. It is important to note that
at no stage whatsoever
did Mr Smith bring an· application to
this court for a stay or suspension of the trial proceedings pending
the finalisation
of the statutory investigation by the CIPC.
GENERAL
BACKGROUND
[24]
During 2006, Lahleni Lakes (Pty) Ltd
then known as Morning Tide Investments (89) (Pty) Ltd (Lahleni)
purchased the farm Doornpoort
situated between Emalhaleni and
Middelburg, Mpumalanga. The intention was to develop the land and
establish a township. The directors
at the time were a Mr Bird, Mr
Bleeker, Mr Van Heerden and Mr Potgieter.
[25]
On 21 April 2008 Absa issued a letter of
Grant of Development Loan to Lahleni and on 28 May 2008 the local
municipality of Emahlahleni
signed a final service agreement with
Lahleni.
[26]
On 12 August 2008 a directors' meeting
was held. The points discussed were reflected in a copy of the
minutes and it was recorded
that on 8 September 2008 Lahleni,
represented by Mr Fourie, entered into a Development Property Loan
Agreement with Absa. The loan
provided for a revolving credit
facility in the amount of R240 million, for the financing of phase 1
of the development. As security
for the facility a covering mortgage
bond was to be registered over the property. On the same date a deed
of security for the loan
was signed by Mr Bird, Mr Bleeker, Mr Van
Heerden. Mr Fourie, Mr Nieuwoudt and Mr Potgieter.
[27]
On 14 November 2008 Absa advanced an
amount of R40 700 000-00 to Lahleni in terms of the agreement. On 14
November 2008 a mortgage
bond was registered over Lahleni's immovable
property to secure the loan.
[28]
Mr Singh was appointed as director of
Lahleni on 20 January 2009. During 2008 and 2009 the economic down
turn had a negative effect
on the development. This resulted in
Lahleni not utilising the full credit facility.
[29]
Lahleni could not comply with the terms
of the agreement with Absa, and was unable to serve the interest on
the outstanding capital.
Lahleni's financial situation worsened and a
series of negotiations followed. On 21 April 2010, Mr Nieuwoudt, the
managing director,
addressed a notice to all debenture holders that
Lahleni decided to put the entire development on auction. Mr
Stockdale of All
Core Property Auctioneers testified that the auction
took place, at about 20 May 2010 and that no offers were received. Mr
Smith
did not lead any evidence to contradict this.
[30]
A meeting of directors took place on 3
June 2010 and Mr Peet Ersamus was appointed as the general manager of
Lahleni. At that point
Absa wanted to launch liquidation proceedings
against Lahleni. Further negotiations between the board and Absa
ensued. During the
period negotiations with Mr Smith started, he was
a shareholder in Lahleni. He and Mr Potgieter on behalf of Lahleni
came to an
agreement that Money Box, a company of Mr Smith would pay
the accumulated interest owing to Absa in the amount of approximately
R5.7 million. As
quid pro quo
Mr
Smith's or his nominees' shareholding in Lahleni would increase to
forty shares. The transfer of the additional shares was done
pursuant
to an oral agreement.
[31]
Further negotiations between Absa and
Lahleni followed as well as between Lahleni and Mr Smith. On 5
December 2010 Mr Erasmus on
behalf of Lahleni confirmed payment of
R5.7 million in interest and confirmed an interest roll agreement
with Absa for a period
of 12 months commencing on 10 January 2011.
[32]
During April 2011 two debenture holders
brought a liquidation application against Lahleni and a provisional
liquidation order was
granted. A settlement agreement was reached,
with the assistance of Mr Smith and Money Box. In terms of this
agreement Money Box
bought the claim for R1.5 million and as a result
the order was discharged and became settled in due course and Money
Box paid
the amount of R1.5 million to these creditors.
[33]
After this further negotiations
followed, on 23 June 2011 the debt of Absa amounted to R49 282
592-00. In due course 68.5% of the
shares in Lahleni were transferred
to Mr Smith and his nominees. Absa agreed to hold over further steps,
but the interest on the
outstanding balance had still to be paid.
[34]
There existed a dispute whether Money
Box advanced an amount of R10 156 311-00 to Lahleni to pay various
creditors. One Vision admitted
that certain creditors were however
paid.
[35]
Mr Smith was appointed as a director of
Lahleni on 19 September 2011. After this further negotiations took
place between Mr Smith,
his nominees and other shareholders and it
was agreed that Money Box would pay R1 570 000-00 to a Mr Cromhout
and Mr WS St Ledger
Denny (Mr Denny) to settle all their claims
against Lahleni in terms of an agreement dated 18 May 2010.
[36]
In the meantime negotiations with Absa
continued, as well as further negotiations regarding transfer of
shares to Mr Smith. On 2
March 2012 Absa confirmed that Lahleni had
21 days to settle its debt to Absa and threatened with a liquidation
application, if
the debt was not paid. On 7 March 2012 Mr Smith
forwarded an offer by Tiger Africa (Pty) Ltd to Absa, this was
followed by a written
offer on 15 March 2012. This offer entailed an
acquisition of Absa's claim against Lahleni for an amount of R35
million plus an
additional R5 million. One Vision contended that
Tiger Africa concluded a settlement agreement with Absa, but never
paid any amount.
Mr Smith denied that a settlement was reached. It
was however common cause that the R35 million was not paid by Tiger
Africa to
Absa.
[37]
On 31 May 2012 attorneys acting on
behalf of Absa informed Lahleni that it was indebted to Absa in the
amount of R53 962 065-18
with interest at 19.5% per annum from 31 May
2012 and demanded payment within seven business days, failing which
it would institute
legal action.
[38]
On 10 June 2012 the board of directors
requested from Mr Smith if Tiger Africa had any intention to pay
Absa, as they were sureties
for Lahleni's debt to Absa. Mr Smith did
not respond to this letter and as a result the need for alternative
funding arose, which
ultimately led to the involvement of Mr Singh
and this litigation.
[39]
On 27 September 2012 Absa issued an
application for the liquidation of Lahleni in this Court under case
number 56167/2012. Mr Singh
then extended a financial lifeline to
Lahleni in an amount of R60 million.
[40]
Against the aforementioned background
the following agreements were concluded the MOU, the Absa settlement
agreement, the shareholders
loan agreement. the Sale of Equity and
the Cession.
[41]
The purpose of the MOU was recorded in
clause 3 thereof and was threefold:
a)
to
enable Mr Singh to procure 100% shareholding in Lahleni as well as
all loan accounts held in Lahleni;
b)
compensate
Mr Smith in the amount that Mr Smith and Mr Singh agreed upon as the
loan account acknowledged in Lahleni; and
c)
enable
Mr Singh to settle the Absa indebtedness and other creditors of
Lahleni (under security of the MOU).
[42]
The purpose of the Sale of Equity, which
incorporated the MOU, was to give Mr Singh exclusive control of, and
ownership of all the
shares (albeit by means of One Vision) in
Lahleni.
[43]
The purpose of the Cession was to affect
the cession of all exiting shareholders' rights, title and interest
in and to the sold
shares and claims in Lahleni in favour of One
Vision.
[44]
The following were
inter
alia
terms of the MOU:
44.1
Mr Singh bought all the shares held by
Mr Smith and his nominees as well as Messrs Potgieter, Nieuwoudt and
Bird for R1.00, which
amount was payable upon fulfilment of the
suspensive conditions (clause 4.1);
44.2
Messrs Potgieter, Nieuwoudt, Bird,
Bleeker and Van Heerden undertook, withoutconsideration therefor, to
cede all their rights, title
and interest in and to any loan accounts
held by any of them, or any of their companies, in Lahleni, as from
date of signature
of the MOU (clause 4.2);
44.3
Messrs Smith, Potgieter, Nieuwoudt,
Bird, Bleeker and Van Heerden would, upon signature of the sale of
shares agreement referred
to in clause 2.1.4 of the MOU, forthwith
resign as directors of Lahleni (clause 6.1);
44.4
Mr Smith would be appointed as a
non-executive, non remunerated director of Lahleni until the
amount determined by the auditor
had been paid in full to him;
44.5
Mr Singh would cause the release of
Messrs Smith, Potgieter, Nieuwoudt and Bird from liability towards
the debenture holders in
Lahleni as well as Absa within 30 days of
signature of the sale of shares agreement referred to in clause 2.1.4
of the MOU (clause
7).
[45]
The MOU was subject to the fulfilment of
the following conditions precedent:
45.1
That all the parties to the MOU sign it
(clause 2.1.1);
45.2
That Mr Singh, successfully and to his
satisfaction, settle the Absa facility with Absa within 30 days of
signature of the MOU (clause
2.1.2);
45.3
That Mr Singh secure the release of all
parties to the MOU, other than Mr Singh, from any and/or all
liabilities to the creditors
of Lahleni within 30 days of signature
of the MOU (clause 2.1.3);
45.4
That a purchase of share agreement be
signed by all parties within 45 days of date of signature of the MOU
(clause 2.1.4);
45.5
That the outgoing shareholders, when
signing the aforesaid purchase of share agreement, sign share
transfer deeds (forms CM49) (clause
2.1.4.1 ).
[46]
The relevant terms of the Absa
settlement agreement were the following:
46.1
One Vision
offered
an amount of R40 million to Absa in
full and final settlement of the indebtedness of Lahleni;
46.2
One Vision and Mr Singh, jointly and
severally, undertook to pay the amount of R40 million to Absa by way
of an initial deposit,
followed by eight monthly payments commencing
on 3 December 2012 and terminating on 3 July 2013;
46.3
One Vision and Mr
Singh would secure their liability in terms of the agreement by
furnishing a suretyship and guarantee in favour
of the bank;
46.4
Absa would on receipt of the deposit and
One Vision's guarantee, withdraw the liquidation application against
Lahleni;
46.5
upon payment of the final instalment,
Absa would release the existing sureties from the existing suretyship
and Tiger Africa from
all its obligations to Absa in terms of the
Tiger Africa agreement.
[47]
The following were the relevant terms of
the Sale of Equity:
47.1
the exiting shareholders sold to Mr
Singh, who purchased from the exiting shareholders, as one
indivisible transaction, the shares
and claims (i e the "sold
equity") in Lahleni with effect from 17 October 2012, from which
date all risk in and benefits
attaching to the sold equity would pass
to Mr Singh or his nominee;
47.2
the purchase price payable by Mr Singh
to the exiting shareholders was R1.00 payable on or before the
implementation date;
47.3
on the implementation date, the exiting
shareholders would deliver to Mr Singh:
47.3.1
the share certificates in respect of the
sold shares together with declarations for the transfer thereof;
47.3.2
a written cession of the sold claims
including due delivery of any security held for or in respect of
those claims;
47.3.3
a certified copy of a resolution passed
by the directors of the company approving the transfer of the sold
shares to Mr Singh or
his nominee;
47.3.4
such other documents as were necessary
in order to enable Mr Singh to procure the registration of the sold
shares into his name
or the name of his nominee.
47.8
The Sale of Equity had the following
conditions precedent:
47.8.1
that the transaction set out therein and
the entering into that agreement are approved by the board of
Lahleni;
47.8.2
the acceptance and approval by Absa, of
a settlement offer tendered by Mr Singh or nominee, in full and final
settlement of the
exposure of Lahleni under loan agreement No: 701
005 8953, within 30 days from 3 October 2012;
47.8.3
the resignation by all exiting
shareholders as directors, other than Mr Singh, of Lahleni within 30
days from 3 October 2012.
[48] The Cession
provided inter alia as follows:
48.1
it is recorded that in terms of a Sale
of Equity agreement concluded between the Plaintiff and the exiting
shareholders, the exiting
shareholders sold their shares and the
claims in Lahleni to the Plaintiff;
48.2
the exiting shareholders, in order to
comply with their obligations under clause 6.1.2 of the agreement,
were required to deliver
a written cession of the sold claims to the
Plaintiff;
48.3
the exiting shareholders ceded all of
their rights, title and interest in and to the sold claims to the
Plaintiff, which cession
the Plaintiff duly accepted.
[49] Although Mr
Smith raised various defences, he limited his evidence during the
trial to a denial
that he ever resigned as a director of Lahleni and
that he signed his shares and the shares of the Ninth, Tenth and
Eleventh Defendants
over to Mr Singh.
[50] The common
cause chronology which by agreement constituted evidence indicated
that:
50.1
On 25 September 2012 Mr Erasmus sent an
e-mail to Mr Smith, Mr Singh and Mr Hein Brauckmann ("Mr
Brauckmann"). This e
mail dealt with the fact that Mr Singh
and his group were desirous of taking over the Lahleni project in
totality as well as the
basis upon which they were prepared to do so.
50.2
On 26 September 2012 Mr Erasmus sent an
e-mail to Mr Bleeker, copied to Messrs Van Heerden, Bird, Nieuwoudt,
Potgieter and Smith
confirming that everyone was on board as regards
the proposal from Mr Singh and placing on record that he was awaiting
confirmation
from Mr Smith. On the same day, i e 26 September 2012,
Mr Bleeker addressed an e-mail to Mr Erasmus, copied to Messrs Van
Heerden,
Bird, Nieuwoudt, Potgieter and Smith. In this e-mail Mr
Bleeker confirmed that Mr Smith had also accepted via SMS the terms
of
the transaction proposed by Mr Singh. On 26 September 2012 Mr
Erasmus sent an e-mail to Mr Smith and copied Mr Singh. Attached to
this e-mail was the draft agreement providing for Mr Singh's
proposal.
50.3
On 27 September 2012 Mr Erasmus sent an
e-mail to Mr Potgieter, Mr Smith, Mr Nieuwoudt, Mr Bird, Mr Singh, Mr
Van Heerden and Mr
Bleeker, to which was attached an email received
from Estelle van Heerden of Absa and the final draft of the MOU for
the parties
to sign. Mr Erasmus confirmed that he would be meeting Mr
Smith at 15:00 in order for Mr Smith to sign the MOU. During the
afternoon
of 27 September 2012 Mr Erasmus sent a further e-mail with
the amended MOU to Mr Bleeker, Mr Nieuwoudt, Mr Bird, Mr Potgieter,
Mr Van Heerden, Mr Singh and Mr Smith.
[51] Against this
background the MOU was signed by all parties, including Mr Smith who
signed in Swaziland
on 27 September 2012.
[52] On 1 October
2012 Mr Singh and Mr Erasmus met with Absa and its attorneys to
discuss the proposed
transaction contained in the MOU. Following the
meeting, and on the same day, Mr Erasmus wrote an e mail to all
directors
and shareholders of Lahleni advising them that Absa's
consideration of the proposed transaction was subject to certain
conditions,
one of which was that the offer of Mr Singh to Absa had
to be unconditional. Mr Erasmus called upon the directors and
shareholders
to agree to their immediate resignation and transfer of
shareholding held in Lahleni. All necessary forms had to be signed to
enable
Mr Singh to submit a written offer to Absa the following day.
Time was of the essence as Absa advised that an application for the
liquidation of the company was issued.
[53] On 1 October
2012 a meeting was held at the offices of De Vries Inc, the attorneys
for Absa,
where a settlement proposal was discussed. On 2 October
2012 Ms Wickins of De Vries Inc sent an e-mail to Mr Erasmus wherein
she
referred to the meeting and confirmed that their instructions
were to proceed with the liquidation, until a settlement was
concluded
and that the liquidation application would be served in due
course.
[54] Mr Erasmus
forwarded this e-mail to Messrs Smith, Nieuwoudt, Bird, Potgieter,
Singh, Bleeker
and Van Heerden by e-mail.
[55]
It was clear from all the facts that at
1 October 2012, time was of the essence. At that point there was the
threat of liquidation
proceedings instituted by Absa. All the
directors and shareholders had to sign the necessary forms for their
resignation and transfer
of shares in order to enable Mr Singh to
submit a written offer to Absa on 2 October 2012. Mr Smith resigned
as a director of Lahleni
and sold his shares and that of the ninth,
tenth and eleventh defendants in Lahleni in terms of the MOU, as
confirmed in the Sale
of Equity and by the resignation of all the
exiting directors of Lahleni, including Mr Smith, on 2 October 2012.
This much is clear
from clauses 3.1, 4 and 6.1 of the MOU as well as
clauses 4, 5 and 6 of the Sale of Equity.
[56]
On 2 October 2012 Mr Erasmus requested
Mr Jan van Dyk to prepare mandates for the resignation of the
directors and securities transfer
forms to be signed by all existing
shareholders.
[57]
Insofar as Mr Smith was concerned, he
requested Mr Jan Van Dyk to e-mail him.Mr Smith's mandate for
resignation as director as well
as the securities transfer forms
(CM42) applicable to him and his nominee companies, as he was aware
of the fact that Mr Smith
was in Swaziland at the time and that he
would have to e-mail him the documents for signature.
[58] All the
directors and shareholders signed the necessary resignation and share
transfer forms
on 2 October 2012. Except for Mr Smith, all the others
signed in the presence of Mr Andre Van Dyk.
[59]
As regards Mr Smith's resignation as a
director of Lahleni and the transfer of the relevant shares, the
following transpired:
59.1
On 2 October 2012 at 1:52PM Mr Jan Van
Dyk (e-mail address:
janvandyk@mweb.co.za)
sent an e-mail to Mr Erasmus (e-mail address: peetwater@gmail.com)
which reads:
"Hi
Peet
Sien aangeheg die dokumente soos aangevra.
Groete
"Jan"
59.2
The documents which were sent to Mr
Erasmus were the following:
59.2.1
A MANDATE FOR RESIGNATION OF DIRECTOR
(CoR39) of "Ralston Emmanuel Smith" dated 2 October 2012
but unsigned.
59.2.2
A SECURITIES TRANSFER FORM (Form CM 42)
in respect of Lahleni dated 2 October 2012 but unsigned. The form
indicates Mr Smith as
the transferor.
59.2.3
A SECURITIES TRANSFER FORM (Form CM 42)
in respect of Lahleni dated 2 October 2012 but unsigned. The form
indicated Global Security
as the transferor.
59.2.4
A SECURITIES TRANSFER FORM (Form
CM
42)
in respect of Lahleni dated 2
October 2012 but unsigned. The form indicates Muraiball Investments
as the transferor.
59.2.5
A SECURITIES TRANSFER FORM (Form CM 42)
in respect of Lahleni dated 2 October 2012, but unsigned. The form
indicated David Gleason
Developments as the transferor.
[60]
On receipt by Mr Erasmus of Mr Jan Van
Dyk's e-mail and documents, he, on 2 October 2012 at 2:21pm, sent an
e-mail to the following
persons:
Mr
Smith ("oxfordleasing@yahoo .com");
Mr
Smith ("Ralston Smith");
Mr
Singh (
"joesingh@justcoal.c
o
.za"
).
[61]
It was directed at Mr Smith and read as
follows:
"Hi Ralston Please print the attached
documents, sign, scan and send back ASAP. I need (sic) returned
before submitting (sic)
offer to ABSA Bank in the morning.
Retain originals I need them when you are
back in SA please. Regards
Peet'
[62]
On 2 October 2012 at 17:18pm and
subsequent to his aforesaid e-mail, Mr Henry Kwami Dua-Ayegemang, (an
employee and business associate
of Mr Smith), sent five attachments
via WhatsApp to Mr Erasmus followed by a WhatsApp text message, which
authenticity was disputed
by Mr Smith, and which read as follows:
"Peet got Ralston to sign and have sent
signed copies to u"
[63] During evidence Mr
Smith and Mr Dua-Ayegemang denied that Mr Smith signed the
attachments and that
they were sent as alleged.
[64] The attachments to
the WhatsApp text were colour copies of the documents referred to
above, but which
then contained the signature, on each of them, of Mr
Smith. Mr Smith denied that it was his signature and stated that a
fraud was
committed.
[65] On receipt of the
aforesaid WhatsApp from Mr Dua-Ayegemang, Mr Erasmus replied at
11:20pm:
"
Great and thank you"
[66]
On 3 October 2012 Mr Erasmus forwarded
Mr Dua-Ayegemang's WhatsApp, including the attachments thereto, per
e-mail to Mr Erasmus'
own e-mail address as well as to Mr Singh and
the latter's son, Christopher Singh (at
chris@justcoal.co.za
).
[67]
On 3 October 2012, Mr Singh then made a
written offer to Absa. On 9 October 2012 Mr Erasmus sent Mr
Dua-Ayegemang's WhatsApp referred
to above as a text file via e-mail
to Mr Jan van Dyk. It reads as follows:
"Chat history is attached
as
'WhatsApp Chat with Kwamie.txt' file
to this email'
[68] The evidence of Mr
Andre Van Dyk was that on 8 October 2012 he visited Investec where Mr
Denny and
Mr Cromhout were present and on which occasion they called
Mr Smith and enquired whether all three of them, as the only
directors
on the board of directors of Finishing Touch, could resign.
The evidence was that he confirmed that they could. On 9 October 2012
Mr Andre Van Dyk confirmed the resignation in an e-mail addressed to
Mr Smith and copied it to Mr Denny, Mr P Erasmus and Mr J
Van Dyk.
One would have expected immediate response from Mr Smith, if his
evidence was to be accepted that he did not resign.
[69]
Mr Andre Van Dyk's evidence was also
that Mr Smith confirmed that he resigned and that Mr J Singh would
take office as director
of Finishing Touch and that Mr Jan Van Dyk
could arrange for the CM 42's to be signed. Mr Andre Van Dyk's
evidence was supported
by the objective facts in this matter. A
director may by oral notice to the board of directors resign as a
director of a company.
Such a resignation takes effect when it is
tendered.
[11]
[70]
In the minutes of the pre-trial
conference held on 23 January 2017 the parties agreed that written
communications be deemed to have
been dispatched and received
according to their tenure. Mr Smith did not prove that he did not
receive Mr Van Dyk's e-mail, the
contents of which he confirmed in
reply. Accordingly, the e-mails referred to above must be deemed to
have been dispatched and
received according to their tenure.
[71]
The uncontested, evidence of Mr Erasmus
corroborates the fact that Mr Smith resigned as director of Finishing
Touch. On 18 October
2012 Mr Jan Van Dyk sent an e-mail to Mr
Erasmus. It read as follows:
"Goeie
Dag Peet
Sien
aangehegte dokument.
Groete
Jan"
[72]
The
document which was attached to the aforesaid e-mail was a MANDATE FOR
RESIGNATION OF DIRECTOR (CoR39) of "Ralston Emmanual
Smith"
which was undated and unsigned. On receipt of Mr Jan Van Dyk's
e-mail, Mr Erasmus testified that on 18 October 2012,
he sent an
e-mail to the following persons:
i.
Mr Smith (°Ralston E. Smith");
ii.
Mr Singh (
"joesingh@justcoal.co.za"
);
iii.
Mr Singh's son, Christopher
("Christopher Singh").
iv.
The e-mail read as follows:
"Hi Ralston
..
see
enclosed
..
please print, sign, scan and return
to me.
Kind regards
Peet'
[73] Mr Erasmus's
evidence was accordingly supported and corroborated by documentary
prove.
[74]
On the same day Mr Smith sent an e-mail
from
ralstonl@tigerafrica.com
to Mr Erasmus at
peetwater@gmail.com,
and copied Mr Singh at
joesingh@justcoal.co.za
and to Mr Singh's son Christopher Singh. It read as follows :
"Dear Peet,
Have
you received signed Finishing Touch Resignation from me? Kindest and
warmest regards,
Ralston
E. Smith".
[75]
The aforesaid email supported the
inference supportive of and well aware of the process which
ultimately led to the transfer of
shares and resignation as director,
including the payment to Absa by Mr Singh.
[76]
On 19 October 2012 Mr Erasmus responded
to Mr Smith by e-mail.
The
response read as follows:
"I have Ralston Thanx
a
stack. Did you receive my query on
payment date, to allow me the dignity to make arrangements in the
event payment will be late
again this month?"
[77]
As reflected in the mandate for
appointment of director (CoR39), Mr Singh was appointed the sole
director of Finishing Touch. Mr
Singh became the sole director of
Finishing Touch under circumstances where Mr Denny, Mr Cromhout and
Mr Smith confirmed their
resignations as directors of the company to
Mr Andre van Dyk and that Mr Singh should be appointed as sole
director.
[78]
As reflected in the issued share
certificate, One Vision became the sole shareholder in Finishing
Touch. The shares were transferred
pursua t to Mr Denny, Mr Cromhout
and Mr Smith confirming to Mr Andre Van Dyk that Mr Jan Van Dyk could
arrange for the CM42's
to be signed.
[79]
The evidence of Mr Andre Van Dyk was
that all directors, save for Mr Smith, resigned as directors on 2
October 2012 in his presence
and signed mandates for resignation as
directors (CoR39's) from Lahleni in his presence. The uncontested
evidence of Mr Andre Van
Dyk was further that Messrs Nieuwoudt, Bird
and Potgieter respectively signed security transfer forms,
transferring their respective
shares in Lahleni to One Vision. In the
light of the legal position the shares had in any event been
transferred on conclusion
of the MOU, read with the Sale of Equity.
Mr Jan Van Dyk amended the share register of Lahleni accordingly. On
2 October 2012 Mr
Jan van Dyk issued a share certificate in One
Vision's name holding 100 shares in Lahleni.
[80]
The uncontested evidence of Mr Erasmus
was that the purchase price of R1.00 was paid to each exiting
shareholder as provided for
in the
MOU.
[81]
On 12 October 2012, and in anticipation
of the conclusion of the settlement agreement, One Vision paid the
required deposit of R5
million to Absa. Following the conclusion of
the agreement and during the period 3 December 2012 to 3 July 2013,
One Vision paid
eight equal instalments of R4,375 million to Absa in
full and final settlement of the amount of R40 million. Subsequent
thereto,
and on 16 July 2013, Absa released all sureties and Tiger
Africa from all liability towards Absa.
[82]
Subsequently, Mr Jan Van Dyk, via Mrs R
Pienaar, submitted the director's resignation of Mr Smith to the
CIPC. He also updated Lahleni's
share register.
[83]
In terms of the provisions of the MOU,
as incorporated in the Sale of Equity, and the Cession, Messrs Singh,
Potgieter, Nieuwoudt,
Bird, Bleeker and Van Heerden ceded all their
rights, title and interest in and to any loan accounts held by them
or any of their
companies in Lahleni to One Vision. On 22 October
2012, Mr Singh concluded a settlement agreement with Absa
[84]
In terms of clauses 8.2 and 8.4 of the
agreement with Absa, Mr Singh secured the release of Mr Smith and
Tiger Africa from their
liability towards Absa. Mr Smith never took
issue with this release, as one would have expected, if he did indeed
not resign as
a director nor signed for the transfer of his shares.
In the light of his evidence that his signature was forged one would
have
expected a prompt reaction from him to alert all concerned that
he did not resign or sell his shares.
[85]
On 16 July 2013, Absa confirmed in
writing that it had received full payment in terms of the settlement
agreement and that the sureties
had been released from liability as
provided for in clause 8.3 of the agreement.
[86]
The evidence of Brigadier J F Hattingh,
a handwriting and photographic expert called by One Vision, confirmed
that the signature
which appeared on the WhatsApp images that Mr
Erasmus received from Mr Dua-Ayegemang is in all probability that of
Mr Smith. He
found 16 points of correspondence between those
signatures and specimen signatures of Mr Smith with regard to
individual characteristics
and no fundamental differences.
[87] Brigadier
Hattingh confirmed the contents of his expert report in which he
found, after an examination
of the documents for indications of the
signatures of Mr Smith having possibly been transferred from other
documents by means of
"cut and paste",
that:
"The documents were examined for
indications of the signatures being transferred from other documents
by means
of
'cut
and paste'.
No
indication
of
such
manipulation occurred."
[88] In
conclusion Brigadier Hattingh recorded the following finding in his
expert report, which he
confirmed during evidence, that no
indications of forgery could be found and that the disputed signature
fell within the range
of variation and no fundamental differences
occurred. Mr Smith led no expert evidence to counter Brigadier
Hatting's evidence,
nor did he succeed to successfully cast doubt on
the evidence during cross examination.
[89] The expert
evidence of Mr B L Buckton, called by One Vision, confirmed the
authenticity of the
e-mails that were exchanged in regard to the
resignation and transfer of shares relating to Mr Smith. His
conclusion appears in
his expert report which he confirmed in
evidence, and which reads as follows:
"8.5
The emails
extracted from the Gmail account (peetwater@gmail.com)
as
per
Annexure
"A"
to "I", have no
irregularities within the email header information.
8.
6 From the
email header information accordingly, the emails have originated from
the identified email
accounts."
[90]
The expert evidence of Mr M G Botha,
called by One Vision, with reference to his expert report regarding
the WhatsApp chat of Mr
Dua Ayegemang that Mr Erasmus received
from him and then e-mailed to himself, concluded that
"based
on the characteristics of the text file 'Whatsapp chat with
Kwamie.txt', this
message
could
be a WhatsApp chat that had been emailed from
a
WhatsApp account to the user."
[91]
Mr Bot a's expert evidence was also that
the e-mail by means of which Mr Erasmus forwarded Mr Dua-Ayegemang's
WhatsApp to Mr Singh
appeared in the Gmail account of Mr Erasmus as
well as in the e-mail inbox of Mr Singh.
[92]
Mr Smith did not call any expert
witnesses. The evidence of the plaintiffs experts was therefore
uncontested.
[93]
Mr Smith's witnesses, Mr J A Van Dyk and
Mr J van der Walt, gave evidence which were supportive of the
evidence of Mr Erasmus, Brigadier
Hattingh, Mr Buckton and Mr Botha.
[94]
The evidence of Mr Van der Walt
corroborated the evidence that Mr J A Van Dyk gave with regard to the
e-mail containing Mr Dua
Ayegemang's WhatsApp, which he received
from Mr Erasmus, containing the signatures of Mr Smith with regard to
his resignation as
a director and the transfer of the shares in
Lahleni. In particular, Mr Van der Walt confirmed that he received a
photograph of
the mandate for resignation as a director (CoR39)
depicting the signature of Mr Smith from Mr Van Dyk and that he
confirmed with
the CIPC that they had a similar document.
[95]
Mr Smith led the evidence of Mr Jan Van
Dyk, the son of Mr Andre Van Dyk, who admitted that he did forge the
signatures of Mr Smith
in the CM42 documents, which were submitted to
CIPC. This witness also made contradictory affidavits regarding to
what led to the
forgeries that he committed. He testified that he had
a copy of Mr Smith's signature when he was appointed as a director of
Finishing
Touch. On the one hand he said that he acted on request of
Mr Erasmus and on the other hand he explained that he was told to
sign
this affidavit to avoid prosecution. In Court he testified that
neither his father, Mr Van Dyk nor Mr Erasmus told him to commit
the
fraud and he did it because pressure was put on him by the
shareholders to finalise the procedure for change of directors.
He
said he never met Mr Singh nor has he ever spoken to him. There is
thus no question that Mr Jan Van Dyk forged Mr Smith's signature
on
the documents presented to CIPC. This is a matter that is presently
before CIPC and this Court need say nothing about that.
The issue
before this Court is whether One Vision proved on a balance of
probabilities that Mr Smith resigned as a director and
transferred
his shares accordingly and whether Mr Smith succeeded in proving that
his signature was forged on the documents attached
to the WhatsApp.
Mr Jan Van Dyk played no role in relation to those documents and the
forgery committed by him is not relevant
to these proceedings.
[96]
Mr Smith, in his evidence, denied that
the WhatsApp of Mr Dua Ayegemang existed and Mr Dua-Ayegemang
also disassociated himself
from that WhatsApp during his evidence.
However the uncontested expert evidence indicated otherwise.
[97] Mr Smith was not a
satisfactory witness. He for example changed his version regarding
the WhatsApp
message from Mr Dua-Ayegemang. He also evaded questions.
He for example initially denied that he received the e-mail with the
Absa
settlement agreement, when he was about to sign the equity
agreement, only to admit later on, when proof was provided that it
was
indeed sent to him. Neither did Mr Dua Ayegemang impress as
a witness as he for example initially denied having ever been
involved with Lahleni, while e-mails put to him during
cross-examination indicated otherwise.
[98] If the evidence of
all the witnesses, including and especially those of the experts are
considered,
seen with the unsatisfactory evidence of Mr Smith and Mr
Dua-Ayegemang, this Court had to find on a balance of probabilities
that
Mr Dua-Ayegemang received the resignation and transfer
forms, that Mr Smith signed it and it was transmitted to Mr Erasmus
via WhatsApp. There is no other explanation for the images. Mr
Smith's evidence was that they were forgeries, but he provided no
proof nor led any evidence to prove this fact and the experts
evidence indicated otherwise. Mr Dua-Ayegemang conceded that he could
have received the e-mail from Mr Erasmus containing the unsigned
resignation as a director and transfer of shares forms in regard
to
Lahleni. On the probabilities this Court finds that he would have
presented it to Mr Smith. In the light of all the evidence
the only
logical inference is that Mr Smith did sign those forms.
Significantly Mr Smith did previously admit in an affidavit that
he
did resign as a director.
[99] The uncontested
evidence of Mr Eicker was that the amount of the loan account was, in
accordance with
the provisions of clause 5 of the MOU, determined by
him in the amount of R14,809,625.11.According to him Mr Smith at all
relevant
times co-operated with him in determining the amount of the
loan account and never disputed the correctness of the amount
determined.
Mr Smith led no evidence contradicting this evidence nor
did he lead evidence to prove that the amount is not correct, as a
result
this Court must accept Mr Eicker's calculation.
[100]
This Court finds that the MOU, as
incorporated in the Sale of Equity, the Sale of Equity and the
Cession are valid and binding on
the parties and One Vision is
entitled to an order in terms of prayer 2 of the amended declaration.
[101]
The value of the loan account in Lahleni
had been determined by Mr Eicker in the amount of R14,809,625.-11
pursuant to the provisions
of clauses 5.1 and 5.3 of the MOU, and
such determination of the value of the loan account is final and
binding on One Vision and
Mr Smith.
[102]
One Vision is entitled to an order in
terms of prayer 4 of the amended declaration that the plaintiff be
ordered to pay the amount
of R14,809 ,625-11 to Mr Smith.
THE LEGAL POSITION REGARDING THE TRANSFER OF
SHARES
[103]
For as far as it may be relevant the
legal position regarding the transfer of shares is set out. Section
35(1) of the Companies
Act 71 of 2008 ("the
Companies Act"
;)
provides that a share issued by a company is movable property,
transferrable in any manner provided for, or recognised by the
Act,
or other legislation.
[104]
Section 51(5)
of the
Companies Act
provides
regarding transfer that:
"A
company must enter in its securities register every transfer of any
certified securities."
[105]
This must be done if the transfer
(a)
is evidenced by a proper instrument
of transfer that has been delivered to the company; or
(b)
was effected by operation of law.
The transfer of shares is not a single act, but includes an agreement
to transfer, the execution
of the transfer and finally, the
registration of the transfer.
[12]
[106]
In terms of the MOU, as confirmed by the
signed transfer of share forms, including those signed by Mr Smith,
and the Sale of Equity,
One Vision was entitled to demand that
Lahleni registers, amongst others, the transfer of the shares
purchased by it from Mr Smith
and the ninth, tenth and eleventh
defendants into its name. Mr J A Van Dyk testified that he amended
and updated the register of
Lahleni to reflect the plaintiff as the
only shareholder. The evidence is clear that Mr Smith signed transfer
of share forms in
respect of the transfer of his shares and those of
the ninth, tenth and eleventh defendants on 2 October 2012.
THE
SUSPENSIVE CONDITIONS AND THEIR FULFILMENT OR NOT
[107] Although Mr Smith under oath
stated that the resignation as shareholder and director was the only
dispute, I deal
with the fulfilment of the conditions of the MOU, as
he did refer to this aspect during evidence.
[108] It is common cause that the
suspensive condition contained in clause 2.1.1 of the MOU, ie that
all parties sign
the MOU, had been fulfilled in that all parties
signed the MOU on 27 and 28 September 2012 respectively. The
aforesaid was clear
from the chronology of common cause facts and was
as a result not in dispute.
[109] The suspensive condition
contained in clause 2.1.2 of the MOU, ie that Mr Singh successfully,
to his satisfaction,
settles the Absa facility within 30 days from 28
September 2012, was duly fulfilled upon the conclusion of the Absa
settlement
agreement on 22 October 2012, i e within the 30 day
period.
[110]
The suspensive condition contained in
clause 3.3 of the Sale of Equity, i e the acceptance and approval by
Absa, of a settlement
offer tendered by Mr Singh within 30 days from
3 October 2012, should be read together with clause 2.1.2 of the MOU.
In the light
of these provisions Mr Smith's contention that Absa had
to be paid within 30 days from 28 September 2012 was incorrect and
should
be rejected. Clause 2.1.2 was therefore fulfilled, even if
this is not correct, with the incorporation of the MOU in the Sale of
Equity, clause 2.1.2 of the MOU became superfluous and
pro
non scripto
as by that time Mr Singh
had finally concluded the Absa settlement agreement.
[111]
Mr Smith was aware prior to and after
the conclusion of the Absa settlement that payment would be done over
a period of time and
specifically until July 2013. No evidence was
led that he ever objected at any relevant time to Absa being paid
over a period of
time. In his evidence under cross-examination he, in
any event, conceded that this condition was fulfilled.
[112]
The suspensive condition contained in
clause 2.1.3, ie that Mr Singh secure the release of all parties to
the MOU from any and/or
all liabilities to the creditors of Lahleni
within 30 days from 28 September 2012, was fulfilled upon the
conclusion of the Absa
settlement agreement on 22 October 2012.
[113] Clauses 8.3 and 8.4 of the
Absa settlement agreement provide for the release of the sureties and
Tiger Africa
upon payment of the settlement amount in full.
[114]
The suspensive condition contained in
clause 2.1.4 of the MOU, i.e the purchase of share agreement by all
parties within 45 days
of date of signature of the MOU had been
fulfilled.
114.1
All the parties, except
Mr
M
Nieuwoudt, had signed the Sale of
Equity within 45 days of date of signature of the MOU;
114.2
Mr Nieuwoudt was abroad and could not
sign within the period of 45 days. On his return he signed the Sale
of Equity on 20 November
2012. However, Mr L Ferreira, for and on
behalf of Mr Nieuwoudt, confirmed, in an e-mail to Mr Erasmus on 11
October 2012, the
following:
"I
have considered all the matters listed below.
On
behalf of Marius Nieuwoudt and as discussed with you on the phone I
confirm that we are in agreement and that we have familiarised
ourselves with all matters listed below.
We
have also taken note of the fact that
a
position of default by SING/CAMM will
lead to the situation where parties such as Nieuwoudt will revert to
a
position
as it was the case prior to the date of the conclusion of the
relevant MOU.
Please proceed with this matter
as
contemplated."
[115]
The matters referred to in the e-mail of
Mr Ferreira are common cause. They were set out chronology of common
cause facts. As such
the paragraph in the chronology of common cause
facts referred to an e mail sent by Mr Erasmus to Mr Smith and
the other directors
and shareholders of Lahleni (including Mr
Nieuwoudt) on 11 October 2012 and in which he required a response
from each of them to
the effect that:
115.1
they had taken notice of the settlement
agreement received from Ms Wiggins of Absa for comment;
115.2
the settlement agreement took cognisance
of the MOU that was signed;
115.3
they had no objections to the
transaction;
115.4
they took notice of the fact that the
Sale of Equity would be drafted and signed;
115.5
they agreed to the transfer of shares on
signature of the Absa settlement agreement and the appointment of Mr
Singh as sole director
of Lahleni (albeit that the transfer of shares
and the resignation of directors had by then already in fact taken
place).
[116]
Thus, although Mr Nieuwoudt was, due to
him being overseas at the time, not able to sign within the 45 day
period, he confirmed
that the Sale of Equity could be proceeded with.
In effect, the suspensive condition has therefore been materially
complied with.
[117]
In the alternative it was submitted, and
correctly so, that when the MOU was incorporated into the Sale of
Equity and the latter
was signed, this condition precedent became
superfluous and
pro non scripto
in
the light of the fact that by that point in time all the shares in
Lahleni had already been transferred to One Vision (and ail
the
exiting directors had already resigned).
[118]
The suspensive condition contained in
clause 2.1.4.1, ie that the outgoing shareholders would sign, with
the share sales agreement,
transfer deeds (CM49's) to allow the
transfer of shares, was duly fulfilled on 2 October 2012, when all
exiting shareholders, including
Mr Smith, signed securities transfer
forms (CM49's). In any event in the light of the legal position
referred to above, this suspensive
condition is in law irrelevant.
[119]
The suspensive condition contained in
clause 3.2 of the Sale of Equity, i e that the board of directors of
Lahleni approve the transaction,
was duly fulfilled by Mr Singh,
being the sole director of Lahleni at the time, signing the Sale of
Equity agreement on 13 November
2012.
[120] Mr Smith, in an affidavit
filed in this Court, admitted that the suspensive condition contained
in clause 3.2
of the Sale of Equity was fulfilled.
[121]
The suspensive condition contained in
clause 3.3 of the Sale of Equity, ie the acceptance and approval by
Absa of a settlement offer
tendered by Mr Singh within 30 days from 3
October 2012, was duly fulfilled upon the conclusion of the Absa
settlement agreement
on 22 October 2012.
[122]
The suspensive condition contained in
clause 3.4 of the Sale of Equity, ie that all exiting shareholders
resign as directors of
the company within 30 days from 3 October
2012, was duly fulfilled on 2 October 2012 when all exiting
shareholders, including Mr
Smith, signed mandates for resignation of
director of Lahleni. In any event, and in the light of the legal
position the directors
agreed on signature of the MOU, and in the
light of clause 6.1 of the MOU, to resign as directors, which
resignation, by agreement,
took effect on the conclusion of the Sale
of Equity.
ESTOPPEL AND WAIVER
[123]
In its amended replication One Vision
pleaded that Mr Smith was in any event estopped from denying the
validity and enforceability
of the MOU and the Sale of Equity,
alternatively
that
Mr Smith had expressly or impliedly waived his right to raise any
defence based on the invalidity and enforceability of the
MOU and the
Sale of Equity under circumstances where he at all relevant times had
knowledge of his right to raise such defence,
but decided to abandon
it. I deem it appropriate to also deal with these two aspects, if it
is found that I am . wrong on the conclusions
I came to and set out
above.
[124]
The doctrine of estoppel is an equitable
one, developed in the public interest.
[13]
The essentials for estoppel are the following:
[14]
124.1
Representation by words or conduct of a
certain factual position;
124.2
The representee acted on the correctness
of the facts as represented. There must, therefore, be a causal
connection between the
representation and the act. This entails
proving that reliance was not actuated by an external influence or
factors other than
misrepresentation;
124.3
The representee acted, or failed to act,
to her or his detriment;
124.4
The representation was made negligently.
The requirement of negligence is not always an element.
[125]
Having regard to the facts pleaded in
the amended replication which are common cause and the evidence of Mr
Erasmus, it was clear
that Mr Smith is estopped from denying the
validity and enforceability of the MOU and the Sale of Equity, as he
at no point in
time indicated any opposition to the conclusion of the
agreement with Absa or ultimately payment by Mr Singh to Absa and all
the
consequences of the payment i.e the release of all the sureties
of Lahleni.
[126]
One Vision, at all relevant times,
acting on the correctness of the facts represented by Mr Smith, i e
that the MOU and Sale of
Equity were valid and binding, paid R40
million to Absa and R3.8 million to other creditors of Lahleni and
commissioned the audit
of the loan account of Mr Smith, in which Mr
Smith gave his co-operation.
[127]
It is clear that One Vision would suffer
irreparable financial loss should Mr Smith not be estopped from
denying the validity and
enforceability of both the MOU and Sale of
Equity. Not only would One Vision be out of pocket in the amount of
R43.8 million, but
it would also have, so to speak, given back
Lahleni to Mr Smith and the other former directors and shareholders.
As a result that
would not only be totally unjust but even bizarre.
In my view Mr Smith is indeed estopped from denying the validity and
enforceability
of the MOU and the Sale of Equity.
[128]
In the alternative it was argued that Mr
Smith waived any rights that he might have had regarding Lahleni.
Waiver of a right extinguishes
that right and the concomitant
obligation. Waiver is a question of fact.
[15]
The decision to abandon may be either express or tacit. Tacit
abandonment is proved by conduct plainly inconsistent with an
intention
to enforce the right relied on.
[16]
[129]
The party who abandons the right must
have had full knowledge of the right and must have conveyed the
decision to abandon to the
other party.
[17]
[130]
Having regard to the facts pleaded in
the amended replication which are common cause and the evidence of Mr
Erasmus, it clearly
points to the fact that Mr Smith tacitly waived
his right to raise any defence based on the invalidity and
enforceability of the
MOU and the Sale of Equity under circumstances
where he at all relevant times had knowledge of his right to raise
such defence,
but which he decided to abandon before the delivery of
his plea.
CONCLUSION
[131]
Mr Smith did not lead any evidence
regarding rectification as pleaded, despite this fact being pointed
out to him. As a result this
Court need not deal with this aspect.
[132]
The evidence supports One Vision's
claim, and in any event Mr Smith was also either estopped or waived
his right to dispute the
validity and enforceability of the
agreements.
COSTS
[133] The Plaintiff is entitled to a costs
order against Mr Smith and Money Box, jointly and severally, the one
paying the other
to be absolved. The costs should include the costs
of the action and all the costs of the applications and postponements
under
case number 53735/13, such costs to include the costs attendant
upon the employment of two counsel where applicable.
[134]
One Vision requested a punitive costs
order. I am of the view that the facts of this case did not warrant
such an order. Mr Smith
might have caused delays due to the fact that
he terminated the mandate of his representatives at a late stage and
the way in which
he represented the matter, but I take into
consideration that he as a layperson represented himself.
[135]
In the light of the risk that Mr Smith
might not pay the costs referred to above it was submitted that the
order that One Vision
must pay the amount of R14,809,625.11 to him
must be qualified, in the sense that the aforesaid amount only be
paid to Mr Smith
once he has paid all the taxed costs and only 30
days after taxation. This submission seems to be both fair and
practical and will
not prejudice any of the parties.
[136]
The following order is made:
1.
The amendment
of the prayers is granted.
2.
The Memorandum of Understanding,
as incorporated in the Sale of Equity, the Sale of Equity and the
Cession are declared valid and
binding on the parties.
3.
The Plaintiff is ordered to pay
the amount of R14 809 625.11 to the First Defendant within 30
(thirty) days of payment of all the
taxed cots to the Plaintiff.
4.
The counterclaims are dismissed.
5.
The First and Second Defendants
are ordered jointly and severally, the one paying the other to be
absolved, to pay the costs of
the action, and the reserved costs
related to case number 53735/2013, such costs to include the costs
attendant upon the employment
of two counsel where applicable.
R G TOLMAY
JUDGE OF THE HIGH COURT
DATE
OF HEARING:
3 MAY 2019
DATE
OF JUDGMENT:
7 FEBRUARY 2020
ATTORNEYS
FOR PLAINTIFF: VDT ATTORNEYS INC
ADVOCATE FOR
PLAINITFF: ADV D VAN LOGGERENBERG (SC)
ATTORNEYS FOR
DEFENDANTS: IN PERSON
[1]
Manong & Associates (Pty) Ltd v Minister of Public Works and
Another 2010(2) SA 167 (SCA) at 167
[2]
Ramesh Singh & others v The Companies and Intellectual Property
Commission 9822/2018) [2019] SASCA 68 (30 May 2019)
[3]
(822/2018)
[2019] ZASCA 69
(30 May 2019 (Singh v CIPC)
[4]
See Singh
V
CIPC par 1
[5]
See Singh v CIPC par 2 -
[6]
[6]
See Sing v
Cl
PC par 6
-
8
[7]
Singh v CIPC par2, par 19 - 20
[8]
Singh v CIPC par 11
[9]
Paragraph 26
[10]
In paragraph 22 and 23
[11]
Harding and Others NNO v Standard Bank of South Africa Ltd 2004(6)
SA 464 (C) at 4691- J
[12]
Henochsberg on the
Companies Act 71 of 2008
vol 1, p 159
[13]
Trust Bank van Afrika Bpk v Eksteen 1964(3) SA 402 (A) 415-416
[14]
Amler's Precedents of Pleadings, 9th Edition, p 188
[15]
Laws of Rutherfurd
1924 AD 261
at 263
[16]
Amler's Precedents pf Pleadings, 9
th
Edition, p 378
[17]
Amler's Precedents of Pleadings, 9th 'Edition, p 378