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[2018] ZAGPPHC 10
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Workers Life Direct (Pty) Ltd v Goodford and Another (51810/2014) [2018] ZAGPPHC 10 (11 January 2018)
IN
THE HIGH COURT OF SOUTH AFRICA
GAUNTENG
DIVISION, PRETORIA
CASE NO: 51810/2014
NOT
REPORTABLE
NOT
OF INTEREST TO OTHER JUDGES
REVISED
11/1/2018
In
the matter between
WORKERS
LIFE DIRECT (PTY)
LTD
PLAINTIFF
(PREVIOUSLY
KNOWN AS LESAKA EMPLOYEE BENEFITS)
AND
DENTON
JOHN FRANK
GOODFORD
1
ST
DEFENDANT
MULTISURE
{PTY)
LTD
2
ND
DEFENDANT
JUDGMENT
KHUMALO
J
[1] This is an action
instituted by Workerslife Direct (Pty) Ltd, the Plaintiff, against Mr
Colin J F Goodford ("Goodford"),
the 1
ST
Defendant and Multisure (Pty) Ltd, the 2nd Defendant, jointly and
severally (as "the Defendants") for payment of an amount
of
R175 158.69 which Plaintiff alleges to be the balance of the debt due
to it in terms of an acknowledgment of debt sig ned by
the Defendants
in the Plaintiff's favour on 7 November 2016, plus interest at the
rate of 15.5% a
tempora morae.
[2] The Plaintiff is a
network marketing business and a subsidiary of Popcru Group of
Companies (Pty) Lt d. It was previously known
as Lesaka Employee
Benefit s and had, at the time of the institution of the action,
changed to its present name, that is Workerslife.
[3] Mr Goodford is the
sole director, 100% shareholder of the 2nd Defendant ("Multisure")
which also ran a similar business
as the Plaintiff. The following
facts are common cause between the parties:
[3.1] Goodford signed the
acknowledgment of debt in his personal and representative capacity
acknowledging his and Multisure's indebtedness
to the Plaintiff for
monies lent and advanced in the sum of R300 000.00 from April 2012
bearing interest at the rate of 8.5% from
26 October 2012, which debt
he undertook to settle in monthly instalments of R50 000.00 starting
from 29 October 2012. The last
instalment was to be paid by 5 May
2013.
[3.2] The acknowledgment
of debt recorded that the Plaintiff was willing to reduce the
principal debt by R40 000 .00 for actual
costs that Goodford incurred
when he travelled to Pretoria to meet representatives of the
Plaintiff when they were negotiating
the purchase of Multisure shares
by the Plaintiff ("the deal"), on condition proof of
payment of the costs was provided.
[3.3] The agreement
furthermore recorded that failure to pay any instalment on due date
was to result in the balance of the debt
and interest becoming due
and payable immediately.
A
certificate of balance issued under the signature of the financial
director of the Plaintiff would be accepted as
prima
facie
proof
of Defendants' indebtedness
and
acceptance
of the
onus of disproving the amount
so
stated.
[3.4] Following the
signing of the acknowledgment of debt, the Defendants made payments
totalling R145 000.00, comp rising of single
payment of an amount of
R50 000.00 and various payments amounting to R95 000.00.
[3.5] On August 2013, the
Plaintiff issued a certificate of balance indicating the amount
claimed in their summons as the balance
outstanding.
[4] The Plaintiff's
action followed the Defendant s' failure to make any further
payments. Its alleged in the Plaintiff's particulars
of claim that
despite demand the Defendants had failed to pay the outstanding
amount.
[5] The Defendants deny
that the money for which they signed the acknowledgment of debt was
lent and advanced but plead that the
money was paid by the Plaintiff
in lieu of purchasing a 51 % share stake in Multisure ("the
deal"). Further that the
Plaintiff was to pay the money while
the Defendants hand it the 51% share certificate.
The
Defendants issued the share certificate on
receipt
of the R300
000.00.
[6]
The Defendants allege that the Plaintiff unilaterally repudiated and
cancelled the deal, afterwards demanded the repayment of
the R300
000.00. Whilst they at that time were demanding the return of the
share certificate. Goodford was forced by the Plaintiff
through undue
influence or duress to sign the acknowledgment of debt by refusing to
return the share certificate in the absence
of a signed
acknowledgment of debt.
[7] As a result the
Defendants allege that Goodford had no other choice but forced to
sign the acknowledgment of debt.
The
Defendants therefore plead that the acknowledgment
of debt
was signed under duress.
[8] Pleading in the
alternative, the Defendants also allege that the Plaintiff has
actually been
overpaid
and hence they have a counterclaim
which they were going to institute in due course.
They therefore
deny that the amount or any amount is due to the Plaintiff.
[9] They further dispute
that the Plaintiff's claim
is
of a liquidated amount since they were entitled to set off the
travelling costs
incurred
against the capital amount claimed.
[10] At the pre-trial
meeting the parties recorded that the Defendants carry the onus and
the duty to begin.
[11] Based on the fact
that the Defendants had admitted to having received the money and to
signing the acknowledgment of debt upon
which the certificate of
balance was to be regarded as
prima
facie proof
of
its indebtedness, the proposition was reasonable. Consequently the
issues which were to be decided upon in the trial were whether:
[11.1] the acknowledgment
of debt was signed by Goodford under duress (or force or undue
influence) hence invalid, if not,
[11.2] the debt is of a
liquidated amount, considering the certificate of balance;
[11.3] there was
overpayment and therefore Defendants no longer indebted to the
Plaintiff;
[11.4] A further issue
arising to be proven by the Plaintiff is whether the money demanded
was indeed lent and advanced.
LEGAL
FRAMEWORK
On
duress
[12] A contract proved to
have been signed under duress may be voided by the innocent party. To
prove duress, the innocent party
will have to establish as outlined
by Corbett J in
Arend
&
another v Astra Furnishers (Pty) Ltd
[1974] 1 All SA
522
(C) 1974(1) SA 298
(C):
[12.1] a threat of
considerable evil to him or to her or his family (whether or not the
family limitation makes sense is debatable)
[12.2] actual violence or
reasonable fear;
[12.3] an imminent threat
or inevitable evil and induced fear;
[12.4] the threat or
intimidation was unlawful or
contra bonos
mores:
[12.5] that the contract
was concluded as a result of duress.
[13] Every person who
complains of duress is entitled to be seen as the sort of person he
or she is, but to prevent the remedy getting
out of hand he is not
entitled to resile from the contract if he claims to have succumbed
to a fear that would be
unreasonable
even for the sort of person he is;
see
Paragon Business Forms (Pt y) Ltd v Du Preez
1994 1 SA 434
(SE)
4401-4411.
[14] In
BOE
Bank Bpk v Vanlyl
1999
3 SA 813
(C) 828H -829G it was decided that it is not necessary that
the threat be by express words or deeds.
Like
misrepresentation, it may be implied, tacit or by conduct, and may
also, like extortion, consists in more subtle forms of intimidation.
[15]
In commercial bargaining the exercise of free will is always
fettered to some degree by
the expectation of gain or
the fear
of loss.
Hard bargaining is not the equivalent of duress, even
when the bargaining is the product of imbalance.
The law draws a
distinction between economic duress and hard bargaining which is not
to be overlooked;
see
M edscheme Hold ings {Pty) Ltd v Bhamjee
[2005 ]
4 All SA 16
(SCA).
Benning v Union Government
(Minister of Finance)
1914 AD 420
;
Malilang v MV Houda Pearl
[1986)
2 All SA 17
7 (A),
1986 (2) SA 71
4 (A);
Inequality of
bargaining power overlaps economic duress,
and in some factual
situations the overlap is so complete that the contract could equally
be well scrutinised from either angle.
[16] In
Malilang
and
Van den Berg
&
Kie Rekenkundige Beamptes v Boomprop s
1028 BK
1999 1 SA 7
80 (T) at 786C-787 Corbett JA and Van den
Heever AJ indicated that English Admiralty Law undoubtedly shows that
duress of the person,
duress of goods and economic duress can be
equally unconscionable.
Therefore leading to their finding that
there is a good reason for the law to treat a contract obtained by
economic duress as not
binding on a victim.
[17]
Improper
pressure can also be exerted through duress of goods, when someone
was by an unlawful detention of goods, made to pay money
that is not
due. In such an instance, to recover the payment so extracted, it is
essential to allege and prove that payment was
accompanied by an
unequivocal protest;
see
Hendricks
v Barnett
[1975)
1 All SA 520
(N),
1975 (1) SA 765
(N);
C
F Commissioner for Inland Revenue v First National Industrial Bank
Ltd
[1990)
[1990] ZASCA 49
;
2 All SA 327
(A),
1990 (3) SA 641
(A)
[18] The principle has
been extended beyond the recovery of money paid, to cover property,
including property wrongfully attached
in execution and to
enable
a Defendant to resist enforcement of a contract induced by duress of
goods. The
duress of goods has been duress accepted as
a valid ground for
rescinding a
contract, and as
incorporating the recovery of mon y paid under protest to obtain
possession of goods wrongly detained; see
Ivsee
Assurit
y (Pvt
)
Ltd v
Truck
Sales
(Pvt
)
Ltd
1960
(2) SA 686
(SR) and Hendricks supra
[19]
The onus of
showing that the payment was made unwillingly and that there had been
no abandonment of rights w ould , of course, be
upon the person
seeking to recover it, and hence the importance of a protest or
unequivocal statement of objection made at the
time.
Without such
protest it is difficult to see how the Plaintiff's state of mind
could be established to the satisfaction of the court;
see
Union
Government {Minister of Finance) v Gowar
1915 AD 426
- 434.
EVIDENCE LED
[20] The evidence of the
Plaintiff led by Mr Grosskopf, its executive director and attorney of
record, was that in 2012, the board
of directors of the Plaintiff,
pursing its interest in buying a 51 % share stake in Multisure,
instructed him to draft the relevant
agreements which,
inter
alia,
included
a confidentiality, service and shareholders agreement. After he had
prepared a summary of all the agreements, the Plaintiff
commenced
with a due diligence investigation conducted by KPMG on the financial
and legal affairs of Multisure.
During
that time Goodford approached certain directors in Plaintiff and
borrowed money from them.
The
request was discussed in the board meeting. After the KPMG report was
discussed at the highest level, the board decided not
to proceed with
the deal.
[21]
In
respect of the money advanced to Goodford, it is his testimony that
the two parties were represented by their attorneys to discuss
its
fate. He was with Mpho Dipela ("Dipela"),
the
financial director of the Plaintiff when it was discussed that they
will
keep
the
share certificate as security for the R300 000.00.
At
the time
the
Defendants
wanted
the
share certificate back.
They
were
willing
to let the Defendants have it back
but
required
them to sign an acknowledgment of debt for the R300 000.00.
He
prepared the acknowledgment of debt and forwarded it to Defendants'
attorneys Erasmus Scheepers. When he received the signed
version he
informed the financial division of the Plaintiff to release the share
certificate and the CM 42 Form. The Defendants
at that time made 2
payments into his trust account in terms of the acknowledgment of
debt. He was not sure of the amounts.
They
had negotiated that the Defendants be allowed to
deduct
Goodford's
travelling
costs, which was
indicated
to be in the region of R40 000.00. Multisure had its principal place
of business in Port Elizabeth and Goodford had been
to Pretoria 3
times to further the negotiations on the deal. Goodford but had
failed to date to furnish proof of the travelling
costs he incurred.
When the third instalment was not paid, he sent letters of demand to
the Defendants.
[22]
Consequent to not receiving any further payments from the
Defendants, notwithstanding the demands, Dipela issued a certificate
of
balance for an amount of R175 158.62 in accordance with an
acceleration clause in the acknowledgment of debt, each party was to
pay its own costs. Grosskopf said he was aware of Goodford's plea of
duress
but
could not understand how an advocate of the High
court represented by attorneys can be under duress
when the
acknowledgment of debt he signed was sent to his attorneys. He
claimed that the allegation
that the Defendants handed their share
certificate as security for the amount that was advanced was true. He
said
some board members were unhappy about the advance saying
they are not a bank. He pointed out that the funds emanated from
Popcru,
the business arm of the Plaintiff who expected them to take
caution when lending money to the public, making sure that there is
security and the transaction is properly recorded.
[23]
After the acknowledgment of debt,
Grosskopf alleges
that
he had no further contact with the Defendant's attorneys.
Later when he did they informed him that they do not act for the
Defendants
anymore.
He confirmed that he afterwards
received a
letter from the Defendants' attorneys alleging that the payments were
made under duress.
There were no further payments made by the
Defendants besides the R95 000.00 and the R50 000.00. He also has not
received proof
of the Defendant's R40 000.00 expenses.
[24]
Responding to Goodford's questions posed to him during cross
examination,
he confirmed that he was not a party to the
negotiations for the alleged loan extended to the Defendants.
Also
that he
was not in a meeting where the amount was discussed but
could
only testify to what he was told by Mr Dipela, who
constantly indicated to him that tine money was an advance to the
Defendant.
Dipela was nevertheless not going to testify. He also was
never in a meeting that took place between Mdletshe and Goodford
where
the offer to reimburse Goodford for his expenses was made or
held by Goodford, Mdletshe, the CEO and Dipela.
[25] Grosskopf was also
not sure if he has
ever
seen Dipela's qualifications
and
certificates.
So he said did not know if he has any
accountancy
or financial background although he is a financial director of the
PGC group.
He
could not say if Dipela prepared the certificate of balance himself
or one of the 25 people who work under him did, although
it is likely
that he looked at the calculations and signed the certificate off. He
however cannot say with certainty if that is
how it happened.
When
the
payment was overdue, he requested instructions and received them with
a certificate of balance attached. He confirmed that in
September
2012 Goodford sent an email to Mdletshe, himself and Gregory Rockman
with a breakdown of expenses that Goodford calculated
at the time and
told them that he does not owe the Plaintiff any more money.
He
confirmed that the email was polite and Goodford suggested that they
close that chapter. He said he wrote back to Goodford and
told him
that he cannot renegotiate a transaction that has already been
negotiated with his attorneys and told him that the settlement
proposal was rejected.
Summons
were served a year later.
He
said he did take note of Goodford's calculations
but
did not
arrive at the amount that Dipela has put in the financial
certificate. He
however
commented that the calculation was simple and not difficult to do
taking the amount that was owed and the two payments that
were
made.
[26]
He could not remember whether at the meeting of May 25th the pack
that directors received already had the KPMG diligent report
but
confirms that directors would normally receive a pack of documents
before the beginning of the meeting. The first agreement
was not
fulfilled by 30 April 2012 and had in terms of the head agreement
lapsed. A second agreement was signed by Mr Nkonyana
and Goodford and
amended by him in June 2012. He was not sure if it formed part of the
pack for directors at the board meeting
of 25 May 2012. He could not
confirm if the deal was voted for by the directors after Goodford's
presentation, or after the signing
of the new heads of agreement. But
as far as he was concerned there was a concern about the deal at the
time, as the value placed
by Goodford on Multisure was R6 Million and
they would have bought 51 % shares for R3 Million, yet the profits of
Multisure shown
before tax were only R122 000.00, which shows a
decline in the business.
[27]
He
confirmed that he wrote a letter to the attorneys that they are not
going to release the share certificate which they hold as
security
and would release it only on signing of the acknowledgment of debt.
It was
put to him that the share certificate was never given to Plaintiff as
security for the loan but given as part of the purchasing
deal as a
person would not hand over a certificate for 51% shares worth R6
Million for a loan of R300 000.00. Grosskopf confirmed
that the first
agreement lapsed on 30 April 2012. The second heads were signed in
June whilst the money was paid to Defendant in
May 2012.
So
when the money was paid there was no signed agreement between the
parties. Grosskopf argued that, that indicates that Plaintiff
made
the payment on risk.
[28]
He
also confirmed that Goodford told him that he could not trade in his
company whilst they hold the certificate as security.
Also
that leading up to the signing of the acknowledgment, he received a
letter from the Defendants' attorneys demanding the return
of the
share certificate. Grosskopff accepted what was put to him that on 18
September 2012, after a lot of to and fro about the
share certificate
Goodford sent an email to Mdletshe and Mr Nkonyana informing them
that he is left with no option but to proceed
with legal action to
recover the certificate. The Defendants' attorneys in the next day or
two sent a letter to him demanding the
return of the certificate.
Goodford put to him that he was thereafter threatened by Mdletshe.
Grosskopf allege that the interchange
was followed by negotiations
that took place between Goodford's and Plaintiff's attorneys on 22
October 2012, when Goodford after
being told to do so, signed the
agreement and the terms thereof on 7 November 2012. A third draft of
the acknowledgment accommodated
the indulgence of costs incurred to
be submitted within 6 days.
[29] Goodford put to
Grosskopf that the company was suffering financially, at the time, he
could not apply for a loan or make any
movements. He received calls
from attorneys threatening him with legal action and Mr Mdletshe
demanding payment although the money
was paid to keep the business of
Multisure going. He was in a position where he had no option but to
comply with the acknowledgment
of debt proposal and sign it against
his will because he was desperate. The business was at a standstill
for almost a year, because
of the delay in finalising the deal.
Financially he was strapped. He could not continue litigating in
order to obtain his certificate.
Goodford
said he was literally on his knees begging for his certificate so
as
to
continue
with his
business.
[30] Grosskopf's
testimony in chief that he was in a meeting with Dipela and Goodford
when he was told that the money was an advance
was denied by
Goodford. Goodford put to him that the meeting was only between him
and Dipela on 4 May 2012 and Grosskopf was not
there and nothing was
said about an advance. Goodford put it to him that in a meeting of 25
May 2012 in which a report from KPMG
was made available a decision
was made to continue with the purchasing of Multisure. But on 3rd
July the board manager told him
they were no longer proceeding. He
immediately started the negotiations with Mr Ndaba on the advice of
Mdletshe to have the share
certificate returned as soon as possible.
He also put it to him that he was unduly influenced to sign the
acknowledgment otherwise
he would not have received his certificate.
[31] The Plaintiff closed
its case.
[32] Mr Goodford
testified on behalf of the Defendants.
He
commenced by disputing the authenticity and the contents of the
certificate of his indebtedness, arguing that e nobody has testified
as to its authenticity. He then
applied
for an amendment of his plea to substitute the word duress with undue
influence. The application was denied.
[33] According to
Goodford's testimony Plaintiff had an interest to buy shares in
Multisure as they marketed the same products although
using different
methods. He was invited by the founder of Popcru, Mr Rockman, to a
meeting with Plaintiff's representatives at
PGC head offices who then
had so much interest that they invited him to come to Pretoria so
that they can have a closer look and
meet with him and have more
details about Multisure. At the time he was growing the Multisure
business with cash flow, having no
big investment or a rich
shareholder who could fund its growth. By the end of 2011 Plaintiff
directors were keen and at a brink
of making him an offer to buy
shares. He had made it clear that the business needed funding so he
was on the lookout for investors
or sources of funding. At the end of
2011, he was then desperate for the deal to happen. They asked him to
hold it and promised
to make him an offer and it went on for some
time. He ev·entually pulled out of the deal because they were
wasting his time.
When they again got him to talk again they agreed
that they will engage KPMG to do a due diligence. In February 2012
KPMG started
with the due diligence. By then he was very eager to
find alternative investment.
[34] In March 2012 he met
Mr Mdletshe for the first time at Michael Angelo. He was with Mr
Rockman who acted as a middleman. Mdletshe
informed him that he does
not want the deal to go bad and promised that he was going to take
care and control of the matter. In
that meeting Mdletshe made him a
verbal offer right there for 51 % of the shares in Multisure for R2
Million. He refused the offer
and explained to him that he already in
the previous year in August 2011 met the Plaintiff's representatives
and at that time was
also talking and having negotiations with other
investors and those opportunities gone with many months having passed
due to Plaintiff's
representatives who kept on postponing. Mdletshe
promised that he was going to give the deal to his right hand man Mr
Sibanze.
He started dealing with Mr Sibanze whom Mdletshe has spoken
highly of.
Mdletshe undertook in that meeting to advance an amount
of R300 000.00 to Multisure to keep the business going as they had a
lot
of expenses and to show that he was negotiating in good faith.
Mdletshe could
not understand what was causing the delay and was
going to speak to Mr Mpilo to contact him (Goodford). Ironically
Mdletshe warned
him that these sort of deals may destroy his company
and end up in bankruptcy. Mdletshe promised that the deal was already
a done
deal, they just needed to sort out the logistics, the specific
amounts and so on. Due to that, Multisure's underwriting insurance
products and funeral covers were moved over to Plaintiff. The two
businesses then formed the new part of PGC group.
[35] Notwithstanding
going in the right direction, two months after the meeting the R300
000.00 was still not paid as Mdletshe had
promised. He started having
doubts about the deal especially if even the word of the CEO of the
group could not be taken. He sent
Mdletshe an email asking to meet
with him to discuss the issue further. Subsequent to submitting some
documents, projections and
the KPMG report being available, the R300
000.00 was paid to Multisure as part of the investment in the deal
that was being discussed,
by
then it was already the beginning of May 2012.
The
whole of the sale of shares was about money to be paid into the
company, for growth funding, which in a nutshell was "the
deal".
The understanding from their side was that as the Plaintiff's
directors were aware that they were delaying and causing
Multisure
problems, they still did not want him to cancel the deal and
therefore paid the R300 000.00 as an investment. He could
not have
taken the money as a loan not knowing what the terms of repayment
were, and when there was no certainty about the deal
due to delays.
Based on the KPMG report Plaintiff offered to buy 51 % of the shares
which he first rejected. Later in April he
received another offer,
which was basically the same offer trying to find out if there are
some synergies on the issues at hand.
He complained several times
trying to keep the deal.
[36]
On 4 May 2012, he met with Mr Dipela who then instructed one of his
employees to pay over to Multisure the R300 000.00 after
he has again
threatened to pull out of the deal. No loan agreement was ever
mentioned or entered into. There were obviously agreements
and
documents that needed to be finalised, exchanged as PGC was also
under pressure to obviously move the deal having now shown
their
commitment by paying the amount. From that time they had high level
meetings with Plaintiff's directors, Multisure really
being now part
of the PGC stable. Shortly thereafter he started receiving documents
that indicated condition s of what has to be
exchanged to fulfil the
eventual shareholder agreement, heads of agreement and employment
agreements as mentioned by Grosskopf
because the deal was on a
serious level. All that was happening in mid May, part of that was to
make sur e that he has the share
certificate of 51% shares made out
in the name of the Plaintiff. Mr Dipela now wanted something to show
because of the investment
already made to Multisure. Later on there
was various correspondence between Plaintiff and Multisure. Emails
were going around
in mid May from some directors from PGC to outside
parties, their associates and so on, informing them that PGC has
purchased the
51 % shares in Multisure. PGC had a share in the Protea
Hotels and so they were told that they can use their venues. That is
how
far the relationship had gone. In mid May when the pressure was
there then to hand over the certificate, they complied. At that
time
they had fulfilled most of the conditions, the employment agreements
were signed and a number of other things done. The bank
stuff and a
number of other documents was handed to them.
The
share certificate was more important to Dipela because of the R300
000.00 investment made.
At
the time for him he could not see anything going wrong from thereon.
He acted
bona
fide
and
provided them with the certificate. Even thou he was aware of the
risks he trusted the process and was encouraged by Rockman.
[37]
Thereafter the meeting of the 25 May 2012 happened at the invitation
of Mr Nkonyana a PGC board member and the CEO of the Plaintiff.
He
was accompanied to the meeting by a Multisure employee from their
Midrand office Mr Wandi Goliath (" Goliath"). Nkonyane
introduced them to the rest of the board members and several non-
executive members that were present who came from all over the
country. At the meeting the KPMG report formed the board pack that
was handed to everyone present before the meeting. After Multisure
has completed the presentation, Mr Nkonyane moved that a decision to
purchase 51% shares in Multisure be taken. All directors now
had
sight of the report, seen and heard them and at that point, everybody
was in favour of the deal. That gave him comfort that
a board
decision was then made unanimously to proceed with the deal. He was
comfortable that they had the 51 % share certificate
in their
possession. The Plaintiff then started to have some interactions with
Mr Goliath in Midrand on their business model, how
it was going to be
used and integrated into PGC business. Eventually the heads of
agreements were signed and everything was going
fine for a while
leading up to the final document that needed to be signed, the
shareholders agreement, which just could not be
finalised. Payment
was to be made once the shareholders agreement was signed some of the
money coming to him and the other paid
to the business. No matter how
much he tried to have the conditions met, it just did not work out.
He was so frustrated that he
even refused to speak to Mr Rockman the
middleman. Something would be found wrong with the agreement every
second day. Things were
now dragging on forever without any
sufficient reason. He was getting concerned that something was not
right. He had also eventually
used the investment money for the daily
expenses as the deal was dragging on. Although he was very careful
with it. Ultimately
he was again invited by Mr Mdletshe, although he
was having reservations now, with the influence of Mr Rockman, he saw
Mdletshe.
[38]
In June 2012 Mr Mdletshe who has been in Europe and had a back
operation and had left the deal with the others stepped in again.
He
wanted the agreement finalised so that the money can be paid over.
Mdletshe told him to prepare his family to move to Johannesburg
since
he will be operating from there to be in daily contact with the
directors. He asked him to come up to their offices in Johannesburg
on 3 July 2012 to finalise the deal. He said he was going to get
somebody to lock the boardroom until the shareholders agreement
has
been signed. However before he left PE the meeting venue was changed
to Protea Hotel in Midrand. He had prepared all the documents
and had
the shareholders agreement believing that the agreements was still
going to be finalised. Mdletshe accompanied by Mr Chaka
M da, one of
the directors, met him at the Hotel foyer. They took him to one of
the boardrooms. As he was preparing to sit down
Mdletshe t old him
that the deal was off. Almost a year later after they had their first
meeting when he met Mr Mda in August 2011.
He became emotional and
cried for all the hard work that he had put in and all for nothing.
Mdletshe said to him he realised that
they were at fault but the deal
was being cancelled because of a clash that has happened between Mr
Rockman and the board.
He
said he knew that he had used the R300 000.00 and also realised that
they have wasted costs,
he must
negotiate with Mr Ndaba regarding how they can work out
things
and so on.
He
left the meeting and when he was at the airport, he then sent an
e-mail making reference to the meeting and the reasons of
cancellation.
Mr Mdletshe called him and asked him to take out any
reference to Rockman and he refused.
[39]
Immediately thereafter the negotiations started for the return of the
certificate. Mdletshe had also said it must be sorted
out soon. When
he enquired upon it, the issue of the R300 000.00 suddenly became a
problem. He wrote several emails to Dipela and
others to say that he
urgently needed the certificate to start talking to other potential
investors. Suddenly there was pressure
on him to come up with the
money, pay back this money which was supposed to have been factored
in as an investment on signing of
the shareholders agreement. It was
now for the first time termed to be a loan after cancellation of the
deal. On 18 September 2012,
he still had not received his certificate
so he could not sign for an overdraft or do anything. He again sent
them an email. On
19 September he then got his attorneys to send the
plaintiff a letter demanding the return of the certificate. On that
day he received
a stunning phone call from Mdletshe telling him that
he has started a war and made a big mistake, so his troops will be
waiting
for him. Mdletshe dropped the call before he could explain.
The
Plaintiff's were now demanding the R300 000.00 less the expenses.
He
was
required
to
find
the
invoices
urgently.
It
became
obvious
to
him
that
the
Plaintiff was
not
going
to give
him
his
certificate
until
he
committed
to
repay
the
loan.
He
regarded what they were doing as putting him in a corner to do what
they wanted. He could not do anything with Multisure until
he has the
share certificate. They were not acting with any urgency. It was like
holding a gun on his head that he must sign or
he is not getting his
certificate back. At that time they were liaising with his attorneys.
On receiving Mr Grosskopf's letter
it became obvious to him that they
were going full out to use their financial power. The stakes were
against him he did not have
the money and the transaction took place
in Jhb not in PE, the costs were going to be enormous. What Mdletshe
said to him about
the money did not mean anything now. He had to come
up with a solution to get the certificate. Mr Goliath resigned from
Multisure
saying he is going to a full time study, when he actually
was going to join the Plaintiff to form the same business model with
them. He then received the acknowledgement of debt and he told
himself that he has got to sign it and agree to these terms.
[40]
Mr Grosskopf made it clear that there was no way he was going to get
his certificate unless he has signed the acknowledgment
of debt. He
felt that he was forced into this and there was nothing else he could
do. He had no money to pay attorneys. Therefore
no other options
available to obtain his certificate. On the other hand he did not
want to keep the money that they paid as an
investment although he
felt he was entitled to use it to keep the business running and was
going to make a plan so as to put it
behind him.
He
reluctantly, after he received the acknowledgment of debt, looked at
it, pondered and eventually moved
himself
to
sign
it. He
then
send
it back,
towards
the
end
of
October 2012.
He knew he could come back afterwards and litigate for the
acknowledgment to be declared to have been signed under influence
and
get it set aside as he was being forced to do it.
After
sending the signed acknowledgment of debt he paid the money and still
had to beg for the certificate. He took some of his
available funds
on 12 November 2012, (although he said October which is unlikely
since Undertaking signed on 7 November 2012),
flew to Pretoria to PGC
offices, paid the RSO 000.00 and demanded his certificate. Diana
Makwarela handed the certificate to him
after 45 minutes. They were
running around because they said the certificate was in Mr Dipela or
Mr Grosskopf's office. It crossed
his mind to take action against the
Plaintiff for having made him sign the agreement to get back his
certificate. However he had
no financial resources to spend on
litigation
[41]
He said he was aware that according to the acknowledgment of debt, he
could deduct the expenses that he has incurred, leaving
room for
movement besides the R40 000.00. He still felt that he should not
have done that but he had no option. So he paid what
he could, paid
some more and before he paid any further he decided to check on the
expenses he incurred. He obtained his credit
card statement from
which he had paid for everything and went through it, calculating all
the expenses incurred going to Johannesburg
and Pretoria and some he
could not because he did not keep the slips for everything. He came
up with an amount he had worked out
including his professional time
as advised by Rickman as well as his travelling and accommodation
costs as suggested by Mdletshe.
He then at the recommendation of
Rickman put some detail and explained extensively how he came about
with the amount. He indicated
why he said he did not owe them
anything but had overpaid them. The e-mail was sent to Mdletshe on 4
September 2013 and copied
to Grosskopf. He decided to leave the
litigation about setting aside the acknowledgment and move on. When
for almost a year he
did not receive a response, he thought maybe the
Plaintiff has decided to move on as he had also decided to do. He got
the notification
that summons had been issued, a year after he had
written the e-mail.
[42]
Two months later he heard that Mr Goliath has actually started
working for the Plaintiff and started a similar business within
the
fold of PGC.
He
tried to calculate the amount in the certificate, trying different
methods he could not arrive at the amount in the certificate.
The
certificate does also not explain how the outstanding balance is
constituted, if any payments made (as alluded by Grosskopf)
when
paid.
He
reckons there is a couple of thousand difference and to have made a
good case against disputing the certificate as there is no
explanation for the certificate, how the amount was reached or
constituted, by who and who calculated the balance.
[43]
He indicated that he remembered vaguely that when he signed with
Mdletshe there was sort of an agreement that agrees that the
money
paid during the negotiations would be forfeited by one party to the
other, because it was done in the business negotiations
during the
initial agreement and not in the agreement he signed with Mr
Nkonyane. He could not produce the document. After his
cross
examination by Mr Stevens, Mr Goodford closed the Defendant's case.
ANALYSIS
[44]
It has become clear on Mr Grosskopf evidence that he was not part of
the going-ons between the Plaintiff and the Defendants
that led to
the payment of the R300 000.00 to the Defendant and the signing of
the acknowledgment of debt. As a result his testimony
as to the terms
and purpose for which the money was paid is of no probative value. It
carries no weight as it would be hearsay
evidence. He talks about
being told by Mr Dipela and Mr Mdletshe.
He
confirmed that he was not a party to the negotiations for the alleged
loan extended to the Defendants. He also was not in a meeting
where
the amount was discussed but could only testify to what he was told
by Mr Dipela, who constantly indicated to him that the
money was an
advance to the Defendant. He indicated that Mr Dipela was not going
to testify.
[45]
It is however common cause looking at the sequence of the events as
narrated by Goodford that when the money was paid to the
Defendant
the first agreement had collapsed and it was during negotiations of
the second agreement. Goodford states that at the
time he was
disillusioned due to the time it was taking to finalise the deal and
frustrated by the lapsing of the first agreement
when Mr Mdletshe in
order to show good faith paid the money in lieu of acquiring the 51%
shares the Plaintiff had committed to
buy. The money going to be
tattered in as an investment as he says. Mdletshe had promised that
the deal would materialise.
[46]
Since the negotiations towards the acquiring of the shares by the
Plaintiff were indeed proceeding, there is no reason why
Goodford's
testimony cannot be believed, as a plausible explanation. The idea of
a standalone loan, divorced from the sale of the
shares or
negotiations is on a balance of probabilities very much unlikely. It
is therefore accepted by the court that the R300
000.00 that was paid
by the Plaintiff to the Defendant was not a loan but as explained by
Goodford indeed an investment made in
lieu of the shares that the
Plaintiff was to acquire from the Defendants.
[47]
Grosskopf on the question of the R300 00.00 said that he got involved
to decide on its fate when the deal or negotiations collapsed.
This
could only be due to the money being linked to the deal that was
being negotiated, that the lapse on the deal would necessitate
a
decision on the recovery terms of the R300 000.00 upon its collapse.
Grosskopf's testimony was that at the time the
Defendants
wanted the share certificate back.
He
was with Dipela,
the
financial director of the Plaintiff when it was discussed that they
will keep the share certificate as security for the R300
000.00.
A
discussion they would not have had if there was an agreement already
in that regard. They were
willing
to let the Defendants have the share certificate back on condition he
signed the
acknowledgment
of debt. As
they
lacked a cause of action upon which the amount could
have
been recovered. Goodford had asked that if it was a loan why didn't
the Plaintiff sue the Defendants on that basis instead
of
pressurising him
to sign
the
–
acknowledgement
of debt for him to obtain the
certificate.
[48]
Mr
Stevens argues that it was the result of hard bargaining. Goodford
has
however
indicated that due to the position that the Plaintiff's unilateral
decision not to
proceed
with the contract has put him, which decision came about after a
considerable delay, affecting his business badly, he found
himself in
a compromised position where he was under tremendous pressure to get
his certificate otherwise his business on the verge
of collapsing. A
fact that Grosskopf was aware of, because as soon as the deal
collapsed Goodford asked for the certificate. Grosskopf
conceded that
they decided to use the certificate as security to compel the
Defendants to sign the acknowledgment of debt. The
Defendants were to
have the certificate only on signing of the acknowledgment of debt.
Goodford said he also lacked the financial
strength which fact, the
Plaintiff was aware of thus seeking a signed acknowledgment of debt.
[49]
Hard bargaining is not the equivalent of duress, even when the
bargaining is the product of imbalance. In
Medscheme supra
its
pointed out that
the law draws a distinction between economic
duress and hard (tough, rigid) bargaining. Duress involves
compulsion, pressure, intimidation,
force, bullying or coercion.
Whilst bargaining involves negotiating and haggling for a good deal.
The duress of goods has been
duress accepted as a valid ground for
rescinding a contract, and as incorporating the recovery of money
paid under protest to obtain
possession of goods wrongly or
unlawfully detained; see
lvsee
Assurity (Pvt) Ltd.
The
question that arises is whether the detention of the certificate by
the Plaintiff after its cancellation of the deal was lawful?
[50]
As the Plaintiff did not acquire the 51 % share from the Defendant,
Plaintiff's possession or continued detention of the certificate
of
shares was wrongful and unjustifiable. It was therefore not necessary
for the Defendants to sign the acknowledgment of debt
in order to
secure the release of the certificate. Proof of compulsion of the
Defendant or exertion of improper pressure to sign
the acknowledgment
of debt and his unwillingness to make a payment in order to release
the certificate that is unlawfully detained
is a good ground for its
setting aside. The agreement is vitiated by duress as intimidation or
improper pressure renders the consent
of the party subjected to
duress no true consent.
[51]
Mr Stevens says its bargaining as Goodford was not forced to sign the
acknowledgment. In his own words he received the agreement,
pondered
upon it, talked to certain people including his attorneys being an
advocate himself and decided to sign it. The agreement
was
negotiated, eventually affording him an indulgence to deduct his
expenses. Goodford had argued that he was reduced to his knees
by the
effects of Plaintiff's cancellation of the deal. At the time he had
already started moving some of his business to the Plaintiff,
transferred the shares to the Plaintiff, signed the necessary heads
of agreements and advised to start the preparations for the
relocation of his family. Therefore Plaintiff's detention of the
share certificate that he urgently needed to save or revive his
business, using it as a tool to negotiate the signing of an
acknowledgment of debt had under those circumstances amounted to
force,
pressure or serious coercion. He says he did not see himself
as having an option if he was to regain possession of his certificate
urgently as the Plaintiff were not in a hurry.
[52]
Goodford however failed to register his objection to the Plaintiff's
conduct. He did not indicate or mention to the Plaintiff
his
discontentment about signing the acknowledgment of debt or that he
regarded Plaintiff's demand that he sign the acknowledgment
under
such circumstances to be duress or undue compulsion or influence.
The
onus of showing that the signing of the contract was under duress and
payment made unwillingly, indicating that there has been
no
abandonment of rights would, of course, be upon the person seeking to
·set aside the contract and to recover the payment
and hence
the importance of a protest or unequivocal statement of objection
made at the
time.
[53]
Goodford
made the first payment that is supposed to have been made unwillingly
following the signing of the acknowledgment of debt
he says was under
duress (or force), without any protest, his excuse being that he
needed to obtain his share certificate. He however
when there was no
longer any pressure on him or compelling reason for him to make
further payments, having now obtained his certificate,
made further
payments. A conduct that is
inconsistent
with unwillingness to either abide by
the
acknowledge of debt and/or to pay. The allegations of having signed
the acknowledgment under duress was made only long after
the payments
and an attempt thereafter to settle the
debt.
[54]
There was no registration of protestation or discontentment in any
form made to the Plaintiff or the Plaintiff's attorneys when signing
the acknowledgment of debt and paying the instalments provided
thereunder, the Defendants have failed to establish any ground for
the setting aside of the acknowledgment its nullification or a right
to recovery of the payments made. The letter that has been
agreed was
sent to Grosskopf alleging duress was after the acknowledgment was
signed and the payments made.
Unliquidated
debt
[55]
The Defendants allege that the debt is of an unliquidated amount and
therefore incapable of being easily ascertainable as it
was agreed
that Goodford's travelling expenses were to be deducted from the
amount owing. The certificate of balance does not indicate
how the
amount is constituted.
[56]
According to the terms of the certificate and those of the
acknowledgment, the certificate issued under the signature of the
financial director of the creditor shall be accepted as
prima
facie
proof
of Defendants' indebtedness, having sufficient probative value.
Should any payments due in terms hereof not be made on the
due date,
the
balance of the principal debt and interest owing in terms hereof
shall become due and payable immediately.
The
creditor may allocate any payment to capital, interest, costs or any
other item as he deems fit, despite any allocation made
or deemed to
be made by the debtors.
[57]
However the acknowledgment of debt furthermore provides that the
Plaintiff is prepared or willing to reduce the principal debt
with an
amount equal to the
actual
costs incurred by Mr Goodford for travel to Pretoria to meet the
representatives of the creditor,
provided
proof of such actual cost and proof of payment is provided to the
Plaintiff (the parties record that Mr Goodford had indicated
such
cost to be in the region of R40 000.00 (Forty Thousand rand).
The
acknowledgment of debt or the extent of Defendants' indebtedness
is
therefore conditional upon the deductions of his proven costs of
expenses, which makes the amount thereat not an unequivocal
amount of
indebtedness that makes the claim liquid. The condition or indulgence
provided as referred to by Mr Stevens, kills the
liquidity of the
debt. The debt is therefore neither of a fixed or a determinable sum
of money.
[58]
The document or certificate has to be sufficient in itself and not
require extrinsic evidence to prove that the debt is due;
see
Inter-Union
Finance Ltd v Franskraalstrand Bpk
1965
(4) SA 1180
(W) at 181 G. Notwithstanding the certificate upon which
the attributes of liquidity are conferred by Mr Stevens, the debt
remain
illiquid due to the terms of the acknowledgment of debt. Under
such circumstances bestowing the attributes of liquidity on the
certificate becomes problematic.
[59]
In
Rich
&
Others v Lagerwey
1974 (4) SA 748
(AD) at
754H it was held that "the certificate is not an unconditional
acknowledgement of indebtedness by the debtor, in an
ascertained
amount of money, the payment of which is due to the creditor."
It is settled law that extrinsic evidence cannot
make a liquid
document illiquid or an illiquid document liquid. A document cannot
become liquid ex post facto. A written document
is inherently liquid
or illiquid depending upon its terms.
[60]
The expenses amount for travelling and accommodation, agreed upon by
the Plaintiff that it is owing to Goodford and by the
parties that it
is to be deducted from the capital, has not been ascertained or
quantified as a result was not deducted from the
capital amount.
Consequently the debt, that is the amount upon which interest was to
be levied on default was not ascertained.
Although that was the
intended purpose of the certificate, without extrinsic evidence, it
cannot be found to be proof of the extent
of Defendants'
indebtedness. The claim therefore illiquid.
[61]
Furthermore, even though it is common cause that payments amounting
to R145 000.00 have been made, leaving a balance of R155
000.00, a
simple calculation that has been acknowledged by Grosskopf, indicates
a discrepancy on the certificate. The certificate
does not stipulate
how the amount of indebtedness is constituted, the payments made and
the dates of payment and what amount of
the balance stated
constitutes the capital amount, how much of it is interest and at
what rate is it charged. The Defendant in
the acknowledgment of debt
acknowledges that the principal debt will bear interest at the prime
rate of Absa Bank (which at the
time was 8.5% per annum) compounded
monthly
in
arrears, whilst the rate of interest sought in the
summons is 15.5% a
tempora morae
and also not indicated
whether levied monthly or annually.
[62]
Grosskopf has testified that he does not know how the certificate
came about and what has or has not been taken into consideration.
He
has no clue on Dipela's qualifications, he has never seen his
certificates or qualifications. He could not say if Dipela prepared
the certificate of balance himself or one of the 25 people who work
under him did, but said it is likely he had a look at the
calculations and signed the certificate off. He therefore could not
give any evidence on the amount reflected in the certificate.
So
which leaves the court non- wiser as to what was taken into account
in the calculation of the amount? He however confirms that
the amount
claimed differs considerably from the balance reached on a simple
calculation taking into account what was the principal
debt and
deducting the payments made.
[63]
Dipela who is the preparer of the document did not testify. Not
much could be said by Grosskopf on the certificate. Therefore even
though the Defendants are found to have acknowledged their
indebtedness to the Plaintiff, the extent of Defendants indebtedness
in the amount claimed in the summons has not been proven, the debt
being illiquid.
I accordingly hold that the amount claimed or
agreed upon is not capable of speedy and Judgment is granted in
favour of the Plaintiff
against the 1st and 2nd Defendant, jointly
and severally, the one paying the other to be absolved for:
1.1 Payment of the sum of
R115 000.00;
1.2 Interest on the
amount of R115 000.00 at the prescribed rate of 15.5% a tempore
morae;
1.3 Absolution from the
instance for the payment of the sum of R40 000.00
1.4 Costs on an attorney
and client scale.
KHUMALO
N
JUDGE
OF THE HIGH COURT
MATTER
HEARD ON : 11 JANUARY 2018
ON
BEHALF OF PLAINTIFF : ADV B D STEVENS
INSTRUCTED
BY : GROSSKOPF ATTORNEYS
REF:
J NYSSCHENS/W39
TEL:
012 364 2606
FAX:
012 305 7560
ON
BEHALF OF DEFENDANT : IN PERSON
TEL:
012 328 6180