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[2008] ZASCA 40
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Miloc Financial Solutions (Pty) Ltd v Logistic Technologies (Pty) Ltd (233/07) [2008] ZASCA 40; [2008] 3 All SA 395 (SCA); 2008 (4) SA 325 (SCA) (28 March 2008)
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REPUBLIC OF SOUTH AFRICA
THE SUPREME COURT OF APPEAL
OF SOUTH AFRICA
Case
number:
233/07
Reportable
In the matter between:
MILOC FINANCIAL SOLUTIONS (PTY) LTD
... APPELLANT
(Applicant
a
quo
)
and
LOGISTIC
TECHNOLOGIES (PTY) LTD ... FIRST RESPONDENT
(First
Respondent
a
quo)
LOG-TEK
GROUP INVESTMENTS (PTY) LTD ... SECOND RESPONDENT
(Second
Respondent
a
quo
)
IRIS INTEGRATED RESEARCH
INFORMATION ... THIRD RESPONDENT
SYSTEMS
(PTY) LTD (Third Respondent
a
quo
)
TECHNIPRINT
(PTY) LTD ... FOURTH RESPONDENT (Fourth Respondent
a
quo
)
ROTER DESIGN (PTY) LTD ... FIFTH
RESPONDENT
(Fifth
Respondent
a
quo
)
UBUNTU
EDUNET (PTY) LTD ... SIXTH RESPONDENT
(Sixth
Respondent
a
quo
)
TECHNICAL ILLUSTRATIONS (PTY) LTD
SEVENTH RESPONDENT
(Seventh
Respondent
a
quo
)
LOG-TEK TRAINING & SIMULATION
(PTY) LTD ... EIGHTH RESPONDENT
(Eighth
Respondent
a
quo
)
Q-TECH
SERVICES (PTY)
LTD ... NINTH RESPONDENT
(Ninth
Respondent
a
quo
)
INFORMATION DYNAMICS (PTY) LTD ...
TENTH RESPONDENT
(Tenth
Respondent
a
quo
)
MAXWELL NAESTED MOOLMAN ...
ELEVENTH RESPONDENT
(Eleventh
Respondent
a
quo
)
LOG-TEK MANAGEMENT SERVICES (PTY)
LTD ... TWELFTH RESPONDENT
(Twelfth
Respondent
a
quo
)
LOG-TEK 1993 (PTY) LTD ...
THIRTEENTH RESPONDENT
(Thirteenth
Respondent
a
quo
)
MOOLMAN TRUST ... FOURTEENTH
RESPONDENT
(Fourteenth
Respondent
a
quo
)
CORAM
:
HOWIE P, FARLAM, CLOETE, VAN HEERDEN JJA et SNYDERS AJA
HEARD
:
22 FEBRUARY 2008
DELIVERED
:
28 MARCH 2008
SUMMARY:
Contract -
exceptio
non adimpleti
contractus â
principle
of reciprocity â when applicable â payment, allocation of.
Neutral
citation: This judgment may be referred to as
Miloc
Financial Solutions (Pty) Ltd v Logistic Technologies (Pty) Ltd
(233/2007)
[2008] ZASCA 40
(28/03/08).
__________________________________________________
JUDGMENT
FARLAM JA
[1]
INTRODUCTION
This is an appeal from a
judgment of Van Rooyen AJ, sitting in the Pretoria High Court,
dismissing an application in which the appellant
sought judgment in
respect of two money claims and also certain ancillary relief against
twelve of the respondents, in the case of
the first claim, and
against eleven of the respondents, in the case of the second claim.
[2] The appellantâs
first claim, which was brought against the first respondent as
principal debtor and eleven of the other respondents
as sureties, was
for payment of R9 985 455,10, being the total of the unpaid balance
allegedly owing on the first respondentâs
current accounts with the
Standard Bank of South Africa Ltd, which had ceded its claims and the
securities it held to the appellant.
[3] The appellantâs
second claim, which was also brought against the first respondent as
principal debtor and against ten of the
respondents as sureties, was
for payment of R3 141 337,87, being the total of the amounts
allegedly advanced to the first respondent
by the appellant, and the
interest which had accrued thereon, pursuant to a loan agreement
concluded between the appellant and the
first respondent on 6 May
2004.
APPELLANTâS FOUNDING
AFFIDAVIT
[4] In the founding
affidavit which accompanied the notice of motion the deponent, Mr JD
Lightfoot, a manager employed by the appellant,
dealt with the
conclusion of the loan agreement which formed the basis of the second
claim and the cession agreement in terms of
which the amounts forming
the subject matter of the first claim were ceded to the appellant. He
also annexed two certificates of
balance signed by one of the
appellantâs directors in respect of the two claims. (The loan
agreement authorised the appellant to
prove the balance owing under
the loan agreement by the first respondent and the other relevant
respondents by means of a certificate
issued by one of its directors.
I shall assume that the appellant was authorised by the various
contractual documents to prove as
against the first respondent and
the other relevant respondents the balance owing on the overdrawn
bank accounts in the same way.)
[5] Mr Lightfoot also
referred in his affidavit to an agreement concluded on 19 July 2005
in terms of which the second respondent,
Log-Tek Group Investments
(Pty) Ltd, sold 200 shares (20% of the issued share capital) in Sigma
Logistic Solutions (Pty) Ltd and
20% of the existing claims on loan
account in that company to the eleventh respondent, Mr MN Moolman,
for R1.5 million. This amount
was to be paid to the appellant, which
held the shares so sold under a perfected pledge and which agreed to
allow the second respondent
to sell and transfer the shares to the
eleventh respondent and to release them from its pledge. The pledge
referred to, as appears
from the share sale agreement (to which I
shall refer in what follows as âthe Moolman-Sigma agreementâ),
was concluded on 6 May
2004, the date the loan agreement was
concluded, and it clearly forms part of the securities furnished to
the appellant to secure
the amounts owing to the appellant under the
loan agreement.
[6] Clause 5.2 of the
Moolman-Sigma agreement reads as follows:
â
After payment of the purchase
consideration [ie, the amount of R1.5 million] by the purchaser [the
eleventh respondent] to Miloc [the
appellant] the sale shares will be
released from the operation of the pledge, and the companyâs
obligations [ie, the obligations
of Sigma Logistic Solutions (Pty)
Ltd] to Miloc, and or any of its nominees, will have been fully
discharged.â
[7] Mr Lightfoot also
referred in his affidavit to another agreement for the purchase by
the eleventh respondent of other shares pledged
to the appellant on 6
May 2004 by the first respondent. In what follows I shall call this
agreement âthe USA agreementâ.
[8] The shares sold under
the USA agreement were 100 shares in Information Dynamics (Pty) Ltd,
the tenth respondent, and 100 shares
in Logtek USA Inc. The price to
be paid was R4 million, payable to the appellant, which agreed to
allow the first respondent to sell
the shares to the eleventh
respondent. The USA agreement provided for the purchase price of the
shares sold to be paid in three instalments,
viz (i) R100 000 on the
date when certain suspensive conditions were fulfilled; (ii) R2.9
million within a period of 30 days thereafter;
and (iii) R1 million
on 30 November 2005 or the date on which either of the companies
whose shares were sold received the annual
licence fee payable to
Logtek USA Inc.
[9] Clause 7.2.3 of the
USA agreement provides as follows:
â
On the final payment date, the sale
shares and all other shares held by Miloc [the appellant] in terms of
the pledge, will be released
from the operation of the pledge, and
Miloc shall procure that all other securities provided by the seller,
Logtek Group Investments
(Proprietary) Limited [the second
respondent], their subsidiaries, [the eleventh respondent] and the
Moolman Trust [the fourteenth
respondent] for all the sellerâs and
[the eleventh respondentâs] obligations to Miloc, and/or any of
their nominees in connection
with the sellerâs indebtedness to
Miloc, will have been fully discharged and Miloc will hand over all
the original security documents
to the seller.â
[10] Mr Lightfoot stated
that the eleventh respondent failed to adhere to the terms of the
Moolman-Sigma agreement and the USA agreement
and in particular he
âfailed to make payment of the amounts as agreed.â He stated that
the eleventh respondent only paid a total
of R2 million to the
appellant, namely R1 million on 3 September 2005 and a further amount
of R1 million on 2 December 2005. He continued:
â
Since the Eleventh Respondentâs
failure to adhere to the terms of the [Moolman-Sigma] Agreement and
the USA Agreement, I have on
a regular basis communicated with the
Eleventh Respondent. Numerous meetings were also held. The purpose of
the communication and
the meetings was to discuss the payment by the
Eleventh Respondent of the amount of R4 million, in order for all
dealings between
the various Respondents and the Applicant to come to
an end. It was provided by the USA Agreement that, upon payment of
the amount,
all securities would be released to the First Respondent
and the Applicant would walk away from the remaining debt.â
[11] On 13 April 2006, Mr
Lightfoot stated, he wrote a letter on behalf of the appellant to the
eleventh respondent informing him
that the appellant was âprepared
to extend the final payment date of the amount due to [it] of R3.5
million in terms of the [Moolman
Sigma agreement and the USA
agreement] and to postpone cancellation thereof until 30
th
June 2006â on certain
conditions. These included the signature of a CM 42 document in
respect of the Sigma Logistic Solutions (Pty)
Ltd shares pledged to
the appellant as security for the amount due to it by the first
respondent and that what Mr Lightfoot called
âthe R3.5 million
balanceâ would bear interest from 1 December 2006 (
sic:
I take
it he meant 2005) until payment at the rate of prime plus 1%. The
letter continued:
â
In terms of the sale of share
agreements, on payment of the R3.5 million plus interest . . ., all
pledges, sureties, covering bonds
and cessions we hold in respect of
Log Tekâs indebtedness to us will be cancelled and returned to you.
Unfortunately we will not
be able to extend the validity of the sale
of share agreements beyond 30 June 2006.
We hope this concession will be of
assistance to you and ask that [you] acknowledge your acceptance of
these terms and conditions
by signing the attached copy of this
letter.â
[12] Mr Lightfoot
explained that the amount of R3.5 million to which he had referred in
the letter was arrived at âby adding the
R1.5 million in terms of
the [Moolman-Sigma agreement] to the R4 million in terms of the USA
Agreement (totaling R5.5 million) less
the R2 million paidâ.
[13] Mr Lightfoot stated
that the eleventh respondent failed to make payment by 30 June 2006
and that, on that date, he caused the
appellantâs attorneys to
direct two letters of demand to the eleventh respondent and a third
to the first respondent. In the letters
sent to the eleventh
respondent the amounts of R1.5 million allegedly due under the
Moolman-Sigma agreement and R3.5 million, plus
interest, calculated
at prime plus 1% from 1 December 2006 (presumably 2005 was meant) due
under the USA agreement were demanded
and notice was given that, if
these amounts were not paid within fourteen days, the agreement would
be cancelled. In the letter to
the first respondent the appellant
demanded payment of R13 126 792,84, which it was said was the total
amount due by the first respondent
to it as cessionary of the amounts
previously due to the Standard Bank of South Africa Ltd, plus the
amount which had been advanced
to the first respondent under the loan
agreement dated 6 May 2004.
[14] As no payments were
made by the eleventh respondent after receipt of the letters dealing
with the Moolman-Sigma agreement and
the USA agreement, further
letters were sent to him on 17 July 2006 purporting to cancel those
agreements.
[15] Mr Lightfoot stated
that âin lightâ, as he put it, of the cancellation of both the
Moolman-Sigma and the USA agreements,
the respondents were liable
towards the appellant to pay the amounts outstanding in terms of both
the cession and the loan agreement.
[16] Mr Lightfoot stated
further that the appellantâs attorneys received a letter dated 18
July 2006 from the eleventh respondentâs
attorneys, responding to
the letters of the 17 July 2006 in which the appellant had purported
to cancel the Moolman-Sigma and USA
agreements. Attached to the
eleventh respondentâs attorneyâs letter was a copy of a letter
which the appellant had sent to the
eleventh respondent on 8 March
2006, in which the date of payment of the amounts outstanding under
the Moolman-Sigma and USA agreements
(which, so it was stated, were
due by no later than 30 November 2005) was extended to 18 April 2006.
(It will be recalled that this
was later further extended to 30 June
2006.) The letter contained the following paragraphs:
â
2. The total amount payable in
terms of the sale of shares agreements is R5.5 million of which only
R2 million has been received,
leaving a balance of R3.5 million
unpaid.
. . .
We understand that you wish to
utilize the shares in Sigma Logistic Solutions (Pty) Ltd as
collateral in raising funds to settle
the unpaid balance of R3.5
million referred to above,
and
we confirm that we will be prepared to release these shares from the
pledge, provided that we receive suitable guarantees for
payment of
the R3.5 million balance.â
(The
italics are mine.)
[17] In their letter of
18 July 2006 the eleventh respondentâs attorneys referred to the
paragraphs of the appellantâs attorneyâs
letter of 8 March 2006
which I have quoted. They then stated that as the amount due under
the Moolman-Sigma agreement had been paid
to it, the appellant, by
refusing to release the Sigma shares in question unless suitable
guarantees for payment of the R3.5 million
balance under the USA
agreement were furnished (something to which it was not entitled
under the Moolman-Sigma agreement), had breached
clause 5 of the
Moolman-Sigma agreement and was accordingly not entitled to claim the
outstanding balance due under the USA agreement.
In this regard the
eleventh respondentâs attorneys pointed out that the appellantâs
failure to release the shares had rendered
it impossible for the
eleventh respondent at that stage to raise the capital required to
pay the outstanding balance of R3.5 million.
[18] Referring to the
appellantâs attorneysâ letter demanding payment by the first
appellant of the full amounts due under the
Standard Bank cession and
the loan agreement, the attorneys stated that they, as they put it,
placed it pertinently on record that
the amounts outstanding under
the cession and the loan agreement were not owing because of the
Moolman-Sigma and the USA agreements.
If these two agreements could
not be carried out, they continued, it was possible that what they
called the over-arching (oorkoepelende)
debt under the cession and
the loan agreement would be of application. In the present case, they
said, it did not apply and they
enquired how what they called this
âdead pointâ could be sorted out with the appellant.
[19] In dealing with the
eleventh respondentâs attorneysâ letter Mr Lightfoot said that it
did ânot affect the entitlement to
relief sought in this
applicationâ. In support of this contention he said the following:
â
57.1 The USA Agreement provides for
an amount of R4 million to be paid, whereafter the parties would go
their separate ways. It is
common cause that only R2 million was
paid. The full amount has not been paid as alleged in the letter.
Accordingly the Applicant
was entitled to, and cancelled the USA
Agreement;
57.2 Both the [Moolman-Sigma]
Agreement and the USA Agreement contain . . . non-variation clauses.
Any variation has to be in writing
and signed by the parties,
otherwise it would have no effect;
57.3 The letter that I directed on 8
March 2006 . . . makes it clear that the Sigma shares would be
released, provided that a suitable
guarantee for R3 million be
received by the Applicant. This did not happen;
57.4 My letters of 8 March 2006 and 13
April 2006 . . . clearly reflect that, if payment of R3,5 million is
not made to the Applicant,
both the sale of shares agreements would
be cancelled;
57.5 At no point in time was a demand
made for the release of the Sigma shares. If the Eleventh Respondent
contends that the R2 million
was paid [in terms] of the Sigma
Agreement, one would have expected the Eleventh Respondent to have
informed the Applicant that the
payment was for such purpose, and to
have demanded the release of the shares soon thereafter. This did not
happen;
57.6 It appears from my letter of 13
April 2006 . . . that the Eleventh Respondent accepted its terms and
conditions, which were
inter
alia
the applicant would
retain all securities until payment of R3,5 million, whereafter it
would be cancelled and returned;
57.7 The Eleventh Respondent at no
time indicated, that without the Sigma shares being released to it,
the Eleventh Respondent would
not be able to raise the funds;
57.8 The letter . . . in fact reflects
an admission of the liability for the full amount, but seems to
reflect a contention that the
sale of shares agreements are still
operative. It follows that, due to the cancellation of those
agreements, the full amount of the
liability on strength of the ceded
claims and loan facility, [is] owing;
57.9 On any construction, it is
submitted that R3,5 million is due and payable;
57.10 The letter does not raise any
dispute as to the entitlement to the relief sought.â
OPPOSING AFFIDAVIT
FILED ON BEHALF OF RESPONDENTS
[20] In his opposing
affidavit filed on behalf of all fourteen respondents the eleventh
respondent denied that any amounts had been
advanced to the first
respondent under the loan agreement. He also denied the total amount
owing by the first respondent to the Standard
Bank of South Africa
Ltd on 19 April 2004. In this regard he stated that the bank had
charged interest at a rate above the rate agreed.
He also said that,
after the cession, the appellant had charged interest above the
agreed rate, had wrongly charged two so-called
âsuccess feesâ of
R603 253 and R375 250 and had further charged interest on these fees.
He further alleged that the appellant
had, totally contrary to the
agreement, charged VAT at 14% on the interest which it had debited,
which rendered the effective interest
levied excessive. The
appellant, he said, would thus have to reconcile what he called the
whole transaction history (âdie gehele
transaksie geskiedenisâ).
[21] He explained that it
was for this reason that the appellant was prepared to accept R7
million for the full liability for the
outstanding indebtedness
towards itself. Settlement discussions took place between the
respondentsâ attorneys and those acting
for the appellant. They
took place in about June 2005 and were held with the purpose of
replacing and settling the total liability
of the first respondent
(and also of all the other respondents which stood surety for the
debts of the first respondent and provided
security therefor) and
also in order to determine methods for the final disposal and payment
of all amounts.
[22] Thereafter, said the
eleventh respondent, discussions took place between Mr Lightfoot and
himself and eventually, in July 2005
and at Pretoria, they orally
settled the matter on the following basis and terms:
(a) the appellant was to
receive an amount of R7 million in full and final settlement of all
its claims against the first respondent
and the other respondents;
(b) the settlement would
be implemented by means of the conclusion of three agreements, viz
(i) an agreement for the sale, to one
WC Swanepoel, of Sigma shares
for R1.5 million, payable to the appellant (what I shall call the
Swanepoel-Sigma agreement); (ii)
an agreement for the sale, to
eleventh respondent, of Sigma shares for R1.5 million, payable to the
appellant (what I have, in summarising
Mr Lightfootâs affidavit,
called âthe Moolman-Sigma agreementâ) and (iii) an agreement for
the sale to the eleventh respondent
of shares in the tenth respondent
and Logtek USA Inc for R4 million, payable to the appellant (what I
have, in summarising Mr Lightfootâs
affidavit, called âthe USA
agreementâ).
[23] The purpose of these
three agreements, said the eleventh respondent, was to put in place a
practical mechanism to pay the R7
million and to carry out the terms
of the settlement agreement, to which all the respondents were
parties. The eleventh respondent
also said that it was part of the
settlement that, on payment to the appellant of the two amounts of
R1.5 million under the two Sigma
agreements, the shares sold would be
immediately released from the pledge to which they were subject. As
far as the eleventh respondent
was concerned, this was in order to
enable him to utilise his shares to provide security to a financial
institution so that he could
raise the necessary funds to pay the R4
million under the USA agreement. The provision that the appellant was
to release the Sigma
shares was, he said, a material provision and a
reciprocal term of the settlement. Both he and Mr Lightfoot were
thoroughly aware
of the fact and agreed that the remaining R4 million
due under the settlement would have to be paid by using the Sigma
shares in
order to get the necessary funding.
[24] The eleventh
respondent also said that the intention of the settlement between Mr
Lightfoot and himself was that it and the resulting
three agreements
would constitute a novation of the rights the appellant had received
under the cession and the loan agreement. He
explained further that
the actual intention of himself and the appellantâs representative
was that there would be only one final
settlement agreement, in terms
of which R7 million would be paid to the appellant in order to
discharge the whole debt. He submitted
that, if the appellant were to
contend that there was not one agreement but three separate
agreements, it should be estopped from
relying on the precise literal
interpretation of the three agreements. Alternatively, he said, he
and the respondents concerned were
entitled to have the agreements
rectified so that they were in accordance with the oral settlement
agreement.
[25] The eleventh
respondent stated both he and Mr Swanepoel had paid the amounts due
under the Sigma agreements and he had in addition
paid R500,000 in
respect of the USA contract. Mr Swanepoel had received his shares
under the Swanepoel-Sigma agreement but he (the
eleventh respondent)
had not.
[26] He annexed to his
affidavit a letter which he sent to Mr Lightfoot on 20 February 2006.
This letter contains the following:
â
1) With regard to the
two payments, totalling R2 million, made by myself towards the
[Moolman-Sigma and USA] transactions, I wish
to confirm that the
Sigma transaction is now paid in full, being R1.5 million. The
balance of R500 000 was paid towards the [USA]
transaction and the
balance owing on this transaction is currently R3.5 million as per
our agreement last year.
2) I therefore
respectfully request the return of the original Sigma share
certificates and signed transfer documentation to conclude
the Sigma
transaction.
3) I require the
certificates and transfer documentation as a matter of urgency to
enable me to raise the final capital in my own
name to effect the
final R3.5 million payment to you.â
[27] The appellantâs
demand in paragraph 4 of its letter of 8 March 2006 (which was
written in answer to his letter of 20 February
2006) that he provide
extra security for payment of the R3.5 million before the Sigma
shares were released was, he said, completely
in conflict both with
the settlement agreement and the terms of the three written
agreements. The appellant, he contended, by refusing
to release his
Sigma shares was
in
mora
in
respect of its obligations under the agreement. It was accordingly
unable to demand payment of the balance due in respect of the
USA
agreement.
[28] The eleventh
respondent contended that the appellant was in the circumstances not
entitled to cancel the Moolman-Sigma and the
USA agreements. As
regards the Moolman-Sigma agreement, this was because he had paid the
R1.5 million due in respect of the shares
and, as regards the USA
agreement, because the R3.5 million, the balance outstanding under
the agreement, could for the reasons stated
above not be demanded
until the appellant had complied with its obligation to release his
Sigma shares.
[29] He also contended
that, in any event, even if the two agreements were validly
cancelled, this would not revive the old indebtedness
in terms of the
loan agreement and the indebtedness which formed the subject matter
of the cession by the Standard Bank of South
Africa Ltd.
APPELLANTâS REPLYING
AFFIDAVIT
[30] In a replying
affidavit deposed to by Mr Lightfoot, which was filed on behalf of
the appellant, it is contended that the appellant
is entitled to
judgment against the respondent in the amount of R3.5 million, namely
the amount outstanding under the USA agreement,
in which amount - Mr
Lightfoot said - the respondents admitted they were indebted to the
appellant but which they alleged was not
due because of the
appellantâs failure to release the Sigma shares. Mr Lightfoot
further argued that the respondents could not
rely on the settlement
alleged by the eleventh respondent because of non-variation clauses
contained in the loan agreement and the
agreements between the
respondents and the Standard Bank of South Africa Ltd which allegedly
gave rise to the rights ceded to the
appellant. Furthermore, so Mr
Lightfoot contended, the eleventh respondent, by signing the letter
of 13 April 2006, to which I referred
in para [11] above, âaccepted
the terms and conditions contained in [that letter], which [included]
that only upon payment of R3.5
million together with interest would
all pledges, sureties, covering bonds and cessions be cancelled and
returned. Also a term of
[the letter] is that a CM42 document in
respect of the Sigma shares was to be signed. This flies in the face
of the allegation that
payment had been made: the R2 million had been
paid by 3 December 2005, [the eleventh respondent] had directed the
letter of 20 February
2006 . . ., yet on 13 April 2006 [he] signed
[the letter in question] with this condition stipulated therein.â
Mr Lightfoot also
stated that the eleventh respondent had signed the
relevant CM42 document.
[31] Mr Lightfoot stated
that the respondents never demanded the release of the Sigma shares,
with the result that â[e]ven if payment
had been made of R1.5
million, as is alleged by [the eleventh respondent], the [appellant]
has not been placed in
mora
to
release the Sigma shares. On this basis aloneâ, he continued, âthe
allegation that the agreements were not cancelled, is bad
in law.â
[32] Mr Lightfoot stated
that the appellant did lend and advance the amount of R2 489 127 to
the first respondent and he annexed two
documents as proof of payment
of this amount.
[33] The first of the
documents annexed, headed âTransaction Historyâ, relates to a
âCFS Call Accountâ and contains an entry
apparently dated 30 June
2004. Under the heading âAmountâ appear the figures â-469705,87â
and under the heading âDescriptionâ
are the words âBANKIT TRF
TRF TO MFS-LOGTEKâ. (Presumably âMFSâ is a reference to the
appellant.) The next entry on this
document, apparently dated 2 July
2004, also refers to LOGTEK. Under the heading âAmountâ appear
the figures â469705-87â
and under the heading âDescriptionâ
are the words âBANKIT PMT TRF FROM LOGTEK TO Câ. Someone has
drawn an arrow from the
entry dated 30 June 2004 and immediately
below the head of the arrow the following appears in manuscript:
â
LOAN FACILITY
R469,705,87 TRANSFERRED 30 JUNE 2006â.
[34] The second annexed
document, headed âStandard Bank of South Africa Ltdâ, describes
itself as a âComputer Generated Copyâ
and âCustomer All
Payments Interim Audit Reportâ. The âUser Nameâ reflected on
the document is âCredit Management Solutionâ
and the transaction
reflected relates to an amount of R2 019 421.05. The âAccount Nameâ
is given as âLOGISTIC TECHNOLOGIESâ,
the âStatement Referenceâ
is âCREDIT MANAGEMENT SOLUTIONS Gâ and the âStatus Descriptionâ
is âVALIDATED-ADDITIONâ.
(Presumably âCREDIT MANAGEMENT
SOLUTIONSâ is a reference to Credit Management Solutions (Pty) Ltd
which, according to other letters
in the papers, is a subsidiary of
Credit Management Solutions Group (Pty) Ltd. According to other
letters in the papers the appellant
is also a subsidiary of Credit
Management Solutions Group (Pty) Ltd.)
An arrow has been drawn
from the amount âR2 019 421.05â, which appears against the entry
âTotal Batch amountâ, and below the
arrow are hand-written the
words:
â
LOAN FACILITY â R2, 019,421-05
TRANSFERRED 17 MAY 2004â.
FURTHER AFFIDAVIT BY
ELEVENTH RESPONDENT
[35] The statement in the
replying affidavit that the eleventh respondent by signing the letter
of 13 April 2006 accepted the âterms
and conditionsâ set out in
the letter elicited a further affidavit from the eleventh respondent.
In this affidavit the eleventh
respondent pointed out that the
allegation in question was a new one which had not been included in
the founding affidavit. He stated
that he signed the letter when Mr
Lightfoot handed it to him, not because he agreed with the terms and
conditions for the extension
of payment, but merely because Mr
Lightfoot requested him to acknowledge receipt of the letter by
placing his initials thereon before
he was aware of the contents.
JUDGMENT IN COURT
A
QUO
[36] The learned judge in
the court
a
quo,
applying
the general rule set out in
Plascon-Evans
Paints Ltd v Van Riebeeck Paints (Pty) Ltd
[1984] ZASCA 51
;
1984
(3) SA 623
(A), held that on the eleventh respondentâs version,
which had to be accepted for present purposes, the appellantâs
claim could
successfully be resisted by the respondents by raising
the
exceptio
non adimpleti contractus.
He
held that there was no reason to reject the eleventh respondentâs
averment âthat the common intention was to make use of the
share
agreements to, as it were, finance each otherâ. He pointed out that
there was no reference in the Moolman-Sigma agreement
or the USA
agreement âthat before shares may be released a guarantee would
have to be provided for payment of the balance due under
the other
contract.â He also made the point that Mr Lightfootâs demand in
the letter dated 8 March 2006 âthat a guarantee must
be provided
for the R3.5 million owing if the Sigma shares are transferred to
[the eleventh respondent] conflicts with the introductory
part of the
sentence: âWe understand that you wish to utilize the shares in
Sigma . . . as collateral in raising funds to settle
the unpaid
balance of R3.5 million referred to above . . .â Although the
settlement by way of the share agreements was intended
to be a unitâ,
he continued, âthere is no indication in one of them that the
release of the shares under it could be made dependent
on the other.
If it were possible for [the eleventh respondent] to obtain âsuitable
guaranteesâ for R3.5 million based on the
shares which have been
paid for, it is unlikely that he would need the release of the Sigma
shares at all.â
APPELLANTâS
CONTENTIONS
[37]
Mr
Van Nieuwenhuizen
for
the appellant submitted that this was not a case where the general
rule in
Plascon-Evans,
supra,
should
be applied. On the contrary, he contended, the court should find that
the factual dispute raised on behalf of the respondents
in the
eleventh respondentâs opposing affidavit was not
bona
fide.
He
submitted that the eleventh respondentâs denial that any moneys had
been advanced to the first respondent under the loan agreement
was
false. He argued in this regard that Mr Lightfoot had demonstrated in
his replying affidavit that the appellant had lent and
advanced R2
489 127 to the first respondent pursuant to the loan agreement.
Counsel drew attention to the fact that the eleventh
respondent had
chosen not to deal in the further affidavit filed on his behalf with
this aspect of Mr Lightfootâs replying affidavit
nor with Mr
Lightfootâs statement that he had signed the CM42 form referred to
in the letter of 13 April 2006.
[38]
Mr
Van Nieuwenhuizen
submitted
that, once it was clear that the eleventh respondentâs denial that
moneys had been advanced under the loan agreement was
false, this was
relevant on the broader question as to the
bona
fides
of
the whole defence and that accordingly the appeal should on that
ground alone succeed.
[39] In the alternative,
even if the case were to be decided on the basis of what was
contained in the eleventh respondentâs affidavit,
counsel submitted
that the appeal should succeed because it was clear that the
appellant had validly cancelled the Moolman-Sigma
and USA agreements
on 17 July 2006. He sought to answer the respondentâs contentions
based on the
exceptio
non adimpleti contractus
by
submitting that the eleventh respondent was not entitled to transfer
of the Sigma shares because he had not paid for them. It follows,
so
he contended, that the appellant was entitled to cancel the
Moolman-Sigma agreement when the eleventh respondent failed to pay
for the shares by 30 June 2006, the extended date for payment. As the
appellant had, on this approach, not breached any reciprocal
obligation under the settlement agreement, it followed that it was
also entitled to cancel the USA agreement.
[40] When asked about the
two amounts totalling R2 million paid by the eleventh respondent on 3
September 2005 and 2 December 2005
and whether R1.5 million thereof
should not be regarded as having constituted payment for the shares
purchased under the Moolman-Sigma
agreement, Mr
Van
Nieuwenhuizen
submitted
that, as neither the eleventh respondent nor the appellant had
allocated the amounts paid to one of the debts due to the
appellant,
the payment was to be regarded as being, as counsel put it, âin
suspenseâ until it could be ascertained which debt
was the most
burdensome, whereupon the common law rules as to appropriation of
payments would be applied. He submitted in the alternative
that, on 2
December 2005, the most burdensome debt was the USA debt of R4
million because until it was discharged, the securities
held by the
appellant would not be released.
[41] Mr
Van
Nieuwenhuizen
did
not press the contention foreshadowed in the papers that the
rectification contended for by the respondents could not be relied
on
because of the non-variation clauses in the various agreements. As
the clauses in question did not in clear and explicit terms
prevent
reliance on rectification of a written variation contract, there was
in any event, in my view, no substance in the contention:
see
Gralio
(Pty) Ltd v DE Claassen (Pty) Ltd
1980
(1) SA 816
(A) at 824A-B;
Leyland
(SA) (Pty) Ltd v Rex Evans Motors (Pty) Ltd
1980
(4) SA 271
(W) at 273B-D and
Primavera
Construction SA v Government North-West Province
2003
(3) SA 579
(B) at 598Iâ599A.
[42] At the end of his
argument Mr
Van
Nieuwenhuizen
submitted
that, if the court was against him on the question as to whether the
appellant had validly cancelled the agreements for
the sale of
shares, the court should order that the matter be referred to trial.
He conceded that he had not asked for this in the
court
a
quo
but
submitted that, if he had done so, he would have been entitled to
such an order. It was also not a point raised in the notice
of
appeal.
DISCUSSION
(1)
BONA
FIDE
DISPUTE?
[43] In my opinion it is
not possible to find that the factual dispute raised on the papers by
the eleventh respondent is not
bona
fide.
Apart
from the fact that I am not persuaded that the documents annexed to
Mr Lightfootâs replying affidavit do âdemonstrateâ
that the
eleventh respondentâs denial that
the
appellant
lent
and advanced R2 489 127 to the first respondent is false, it does not
follow, even if the denial can be rejected, that the rest
of the
eleventh respondentâs version cannot be correct, particularly in
view of the fact that there is considerable corroboration
for the
main parts thereof. I also do not think that the fact that the
eleventh respondent signed the CM42 document relating to the
shares
takes the case any further.
(2)
WERE
THE SALE OF SHARES AGREEMENTS VALIDLY CANCELLED?
[44] I turn now to
consider Mr
Van
Nieuwenhuizenâs
submission
that the appellant validly cancelled the Moolman-Sigma and the USA
agreements and that it can claim what were alleged to
be the correct
amounts under the old indebtedness.
[45] I shall assume,
without deciding, that if the agreements in question were validly
cancelled, it is possible for the appellant
to claim the full amounts
allegedly owing under the old indebtedness and that it was not
limited to claiming the balance of the amount
outstanding under the
USA agreement, plus interest thereon.
[46] On 3 September 2005,
when the first amount of R1 million was paid by the eleventh
respondent, only the Moolman-Sigma agreement
had been concluded and
the amount paid thus reduced the amount owing under that contract.
When the second amount of R1 million was
paid on 2 December 2005
there were two amounts owing: the balance of R500 000 under the
Moolman-Sigma agreement and the R4 million
under the USA agreement.
As neither the debtor nor the creditor appropriated the payment to
either of the two debts, the common law
rules (which are set out in
Wessels
The
Law of Contract in South Africa
2
ed (1951) vol 2, paras 2306-2313) apply. âThe fundamental principle
underlying these rulesâ, as was pointed out by Henning J
in
Ebrahim
(Pty) Ltd v Mahomed
1962
(1) SA 90
(D) at 97G-H, âis that payment made by a debtor to his
creditor should, in the absence of express appropriation by either
party,
be appropriated to the debt which is most onerous to the
debtor (
Wolhuter
v Zeederberg
(1885)
3 H.C.G 437 at p 441), or, as it has been put, to the debt which it
would be most in the interest of the debtor to pay (
Western
Province Bank, In Liquidation v Du Toit, Smith & Co
(1892)
2 C.T.R 22).â We were not referred to any authority in support of
Mr
Van
Nieuwenhuizenâs
main
proposition, viz that where it is not clear what debt is most
burdensome the payment goes, as it were, into suspense, nor could
I
find any authority on the point.
[47] In any event the
submission lacks a factual basis. It is clear which debt, as on 2
December 2005, it was more in the interest
of the eleventh respondent
to pay: the balance due under the Moolman-Sigma agreement. The
discharge of that debt would have released
the Sigma shares which the
eleventh respondent had purchased from the pledge to which they were
subject, thus enabling the seller
to transfer them to him, whereupon
he could have used them in an endeavour to obtain financing to enable
him to pay the amount due
under the USA agreement. Mr
Van
Nieuwenhuizenâs
alternative
argument that the payment is to be appropriated to the debt due under
the USA agreement overlooks the fact that such appropriation
would
only have partly discharged the debt in question, whereas an
appropriation to the Moolman-Sigma agreement debt would have
discharged
the indebtedness and thereby, as I have said, brought
about the release of the shares.
[48] It follows, that as
the eleventh respondent must be taken to have paid the amount due
under the Moolman-Sigma agreement on 2
December 2005, the appellant
was not entitled to cancel the agreement on 17 July 2006.
[49] Mr Lightfootâs
statement that the respondents never demanded release of the Sigma
shares is clearly false, as the eleventh
respondentâs letter of 20
February 2006, which has been quoted in para 26 demonstrates. It is
thus clear the appellant was
in
mora
from
20 February 2006 in respect of its obligation to release the shares.
(3)
PRINCIPLE
OF RECIPROCITY
[50] It is clear, in my
view, that on the version of the contract deposed to by him, the
eleventh respondentâs obligation to pay
the balance due under the
USA agreement was so closely linked to the appellantâs obligation
to release the Sigma shares that the
principle of reciprocity
applies: that is to say the appellant must release the Sigma shares
before being able to claim the price
of the USA shares. In the
interim the eleventh respondent is entitled to withhold performance
of his obligation to pay for the USA
shares, which obligation is
suspended: see
BK
Tooling (Edms) Bpk v Scope Precision Engineering (Edms) Bpk
[1996] ZASCA 107
;
1997
(1) SA 391
(A) at 418B-H.
[51]
The fact that the
overall transaction deposed to by the eleventh respondent was given
effect to by the conclusion of three separate
agreements will not in
itself exclude the operation of the principle of reciprocity, which
can still apply if âthe terms of the
agreements considered as a
whole clearly evince the intention that there would be reciprocity
between the obligations undertaken
in eachâ:
Wynns
Car Care Products (Pty) Ltd v First National Industrial Bank Ltd
[1991] ZASCA 34
;
1991
(2) SA 754
(A) at 758C-D. It is the failure of the agreements taken
as a whole to evince that intention which the respondents seek to
deal with
by having them rectified.
[52] It follows that the
appellant was not entitled to cancel the USA agreement on 17 July
2006 nor is it entitled, as Mr
Van
Nieuwenhuizen
argued
in the alternative, to judgment in the amount of R3.5 million, being
the balance due under the USA agreement.
(4)
REFERENCE
TO TRIAL?
[53] I now turn to deal
with Mr
Van
Nieuwenhuizenâs
last
minute application for the matter to be referred to trial. He
conceded, as I have said, that he did not apply for a reference
to
trial at any stage before the court
a
quo.
The
circumstances were such that, if it had the power to do so, the court
a quo
was not obliged to have
acted
mero
motu
in
ordering a reference to trial:
cf
Joh-Air (Pty) Ltd v Rudman
1980
(2) SA 420
(T) at 428H-429H. (Whether it had the power to do so has
been described as a question ânot free from difficultyâ which has
not
yet been decided by this court: see
Minister
of Land Affairs and Agriculture v D&F Wevell Trust
2008
(2) SA 184
(SCA) at para 60.)
[54] The judge
a
quo
can
accordingly in my view not be faulted for not having done so. While I
am not prepared to say that a court of appeal should never
order a
reference to trial where it has not been sought in the court below
nor raised in the notice of appeal, such an order would
in my view
only be appropriate, if at all, in special circumstances, which have
not been shown to be present in this case.
[55] The appeal must
accordingly fail.
ORDER
[56] The following order
is made:
The appeal is dismissed
with costs.
â¦â¦â¦â¦â¦
..
IG
FARLAM
JUDGE
OF APPEAL
CONCURRING
HOWIE
P
CLOETE
JA
VAN
HEERDEN JA
SNYDERS
AJA