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[2018] ZAGPJHC 577
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Jassat v Casojee Insurance Brokers CC (CK19854/007970/23) and Another (0041802/2017) [2018] ZAGPJHC 577 (12 October 2018)
REPUBLIC
OF SOUTH AFRICA
IN
THE HIGH COURT OF SOUTH AFRICA
GAUTENG
LOCAL DIVISION, JOHANNESBURG
CASE
NO: 0041802/2017
In
the matter between:
Jassat
Mahomed
(Baboo) Applicant
and
Casoojee
Insurance Brokers CC
(CK19854/007970/23) 1
st
Respondent
Casoojee: Faruck
Suliman 2
nd
Respondent
Judgment
Van
der Linde, J
:
[1]
The applicant and the 2
nd
respondent were the two sole
members of the 1
st
respondent, an insurance brokerage
close corporation. The applicant sold his interest in the
brokerage to the 2
nd
respondent in terms of a written
agreement of sale for R2 350 000,00 with effect from 1
March 2010. The written agreement
which was signed on 8 March 2010
has a sole memorial clause in clause 10.1, and a non-variation clause
other than in writing in
clause 10.2. What was sold in terms of
clause 2.1 of the agreement was the seller’s member’s
interest and his
loan account in the brokerage.
[2]
The present dispute between the parties concerns certain shares held
in Santam Limited in the name of the brokerage but –
according
to the applicant - not actually constituting assets of the
brokerage. The applicant says that in terms of an agreement
that he and the 2
nd
respondent had concluded orally, those
Santam shares would not be an asset of the brokerage, but would
simply be registered in
the name of the brokerage until, after the
passage of three years, the brokerage would be entitled to transfer
those shares to
the applicant and the 2
nd
respondent
respectively.
[3]
The applicant therefore contends in these proceedings that he is the
owner of 55% of the Santam shares registered in the name
of the
brokerage (55% represents the size of the applicant’s member’s
interest in the brokerage CC before he sold it);
and the applicant
wants all dividends on those shares that may have been received by
the brokerage, to be paid over to him.
[4]
The 2
nd
respondent disputes the applicant’s factual
version. The 2
nd
respondent says that those Santam
shares were assets of the brokerage, and when the applicant sold his
interest in the brokerage
close corporation with effect from 1 March
2010, he lost all interest, direct or indirect, in those Santam
shares.
[5]
The second respondent, by way of a point
in limine
, also
argues that Santam at least should also have been joined to these
proceedings. The applicant contests this, saying that Santam’s
interest is limited to being entitled to ensure that the brokerage
close corporation remains BBBEE compliant.
[6]
This argument relies on the written agreement that came into
existence between Santam Limited and the brokerage close corporation
when on 26 November 2008 the applicant, expressly acting on behalf of
the brokerage CC, in writing accepted the award of Santam
dated 3
November 2008. The relationship that came into existence
between the parties is contained in the letter by Santam
dated 3
November 2008 at page 51 of the papers, read with the letter of the
same date at page 52 of the papers by the Emthunzini
Black Economic
Empowerment Business Partners Trust, both addressed to the brokerage;
and then the written acceptance at pages 56
and 57 of the award
concerned by the applicant on behalf of the brokerage close
corporation.
[7]
It is sufficient for present purposes if the structure of the
shareholding which the close corporation would acquire is set
out in
basic terms. It was as follows: the brokerage was
selected for participation under the Santam Black Economic
Empowerment Business Partners Trust scheme, and through its
participation in that Trust, the brokerage would be awarded the
rights
to units in the BEE Business Partners Trust. Those
rights would entitle the brokerage to a
pro rata
distribution
of ordinary shares in the issued share capital of Santam Limited held
by the BEE Trust (using an abbreviated description).
[8]
In other words, the BEE Trust would acquire shares in Santam Limited,
whether by way of transfer or by way of fresh issue not
being
material; the BEE Trust would then in due course, depending on the
number of units that the brokerage would hold into the
BEE Trust,
transfer to the brokerage the determined number of shares held by the
Trust into Santam Limited.
[9]
It was an express term of that award of the rights to units in the
BEE Trust, and consequently upon that, the acquisition thereafter
by
the brokerage of shares into Santam, that Santam reserved the right
to conduct verification audits from time to time on all
the unit
holders who hold units or Santam shares, to ensure that those unit
holders “…
are black people or black entities …
”
as contemplated in the Trust Deed, and the unit holder or shareholder
undertook to provide Santam with all information,
records and
assistance as Santam might require for such purposes.
[10]
It was also an express term of the agreement so reached that Santam
was granted a right of pre-emption should the unit holder
or
shareholder wished to sell, transfer or otherwise dispose of the
shares.
[11]
Reverting then to the dispute between the applicant and the 2
nd
respondent: after the sale agreement had been concluded and
executed, the applicant began corresponding with the 2
nd
respondent, claiming an entitlement as to 55% of the Santam shares
(and dividends) that were registered in the name of the brokerage.
There is some dispute as to whether the correspondence concerned show
definitively that the 2
nd
respondent accepted that the
Santam shares were never an asset in the brokerage, or whether what
happened was that the applicant’s
entitlement to dividends up
to the effective date of the sale agreement, not thereafter, was
being acknowledged. Be that as it
may, the applicant then eventually
launched the present application on 27 November 2017, pleadings (in
the form of affidavits)
were exchanged, and the matter is now ripe
for hearing.
[12]
In the notice of motion the applicant claims first to be declared the
beneficial owner of 55% of the shares which the 1
st
respondent ostensibly holds into Santam Limited. Following on
that prayer, the applicant then claims that the 1
st
respondent should be ordered to do all things necessary to transfer
55% of those shares into the name of the applicant.
[13]
Alternative relief is sought in prayers 3 and following. The
relief there sought is an order directing the brokerage
to address a
written offer to Santam advising that it intends to transfer 55% of
the shares to the applicant at no cost, and offering
to sell those
shares to Santam, in compliance therefore of the pre-emption in terms
of the agreement between the brokerage and
Santam. Prayers 4
and following of the notice of motion are prayers consequent upon the
primary relief to which I have referred.
[14]
The applicant’s case for ownership of the shares is set out in
paragraph 19.4 of the founding affidavit. That is
a critical
paragraph and it is necessary that I quote it in full:
“
In the course
of discussions with the 2
nd
respondent, we
agreed that although the share offer had to be accepted by the 1
st
respondent, same would not become an asset of the 1
st
respondent and all shares allocated would, once the scheme allowed
same, be divided between and transferred to the two of us in
the
percentage of our member’s interest in the 1
st
respondent, namely 55% to me and 45% to 2
nd
respondent. We also agreed that any dividends received in
respect of the shares would be divided between us in the same
proportion.
”
[15]
There was some vacillation at the Bar about this oral agreement.
In particular, the applicant was uncertain whether the
impact of this
agreement was that the brokerage would be a nominee shareholder on
behalf of the applicant and the 2
nd
respondent of the
Santam shares; or whether the brokerage would in fact be the true
beneficial owner, subject to a condition that
at some future date it
would become obliged to transfer those shares to the applicant and
the 2
nd
respondent respectively.
[16]
This is of course a critical issue, because if the brokerage was not
to become the owner, in the true beneficial sense, of
the shares, as
is asserted in this paragraph 19.4 of the founding affidavit, then
the question arises as to who in law became the
owner of those shares
when they were transferred by the BEE Trust to the brokerage. The
only conceivable owners could be the applicant
and the 2
nd
respondent.
[17]
But, contrary to that scenario, counsel for the applicant abandoned
the relief sought in prayers 1 and 2 of the notice of motion.
That was, as will appear presently, in my view unavoidable.
[18]
If the applicant and the 2
nd
respondent were to become the
owners of those shares from the get-go, then that is inconsistent
with the written terms of the award
by Santam and its acceptance by
the brokerage of the units in the BEE Trust, for this reason.
The whole point about the BEE
Trust was to distribute shares in
Santam to BEE entities; the express power given to Santam from time
to time to inspect the entity
to which the shares were allocated to
ensure that it remained BEE compliant, underscores this notion.
[19]
It is inconsistent with the allocation of the units in the BEE Trust
and, pursuant thereto, the transfer of Santam shares to
the
brokerage, if the applicant and the 2
nd
respondent, and
not the brokerage, were to become the owner of those units and the
owner of those shares. The inconsistency
lies in this:
the written agreement unqualifiedly describes only the brokerage as
the beneficiary of the units and of the
shares; not the applicant and
the 2
nd
respondent. And there is no provision in the award
of the units in the BEE Trust and the prospective transfer of the
shares in
Santam, for a mere nominee holding by the brokerage of
those shares.
[20]
It follows therefore that, as I see it, the agreement upon which the
applicant relies could not have conferred upon the applicant
and the
2
nd
respondent any immediate true ownership of the Santam
shares, because the brokerage had no immediate right to confer such
true
ownership upon the applicant and the 2
nd
respondent.
It was the brokerage that would become the true beneficial owner of
the units and consequent upon that of the shares.
That was what
Santam intended, and the transfer of shares pursuant to that
agreement vested the brokerage, and no-one else, true
owner of the
units in the BEE Trust and consequent upon that, true owner of the
shares in Santam.
[21]
It is of course not notionally inconceivable that the applicant and
the 2
nd
respondent could have agreed with the 1
st
respondent that the 1
st
respondent would first become true
owner of those shares; but that in due course the 1
st
respondent would transfer 55% of those shares to the applicant and
45% of those shares to the 2
nd
respondent. But such
an agreement is not borne out by what the applicant alleges in
paragraph 19.4 of the founding affidavit.
[22]
It follows that in my view the applicant’s cause of action for
the relief it seeks is excipiable as disclosing no cause
of action.
But if I am wrong, then there is in the way of success for the
applicant the difficulty that the 2
nd
respondent disputes
the factual basis of the applicant’s cause of action. Mr
Basslian, SC for the applicant argued
persuasively that there are
probabilities strongly favouring his client’s version and are
inconsistent with the respondents’
version.
[23]
The difficulty with that submission is that it was held by the
Supreme Court of Appeal in
National Director of Public
Prosecutions v Zuma
(572/08) [2009] ZASCA1 (12 January 2009) at
[26] (emphasis supplied):
“
Motion
proceedings, unless concerned with interim relief, are all about the
resolution of legal issues based on common cause facts.
Unless
the circumstances are special they cannot be used to resolve factual
issues
because they are not designed to determine
probabilities
.
”
[24]
In this matter the applicant applies for final relief and therefore
cannot succeed, under the
Plascon-Evans
rule, unless the facts
alleged by the applicant which the 2
nd
respondent admits,
together with the 2
nd
respondent’s version, would
justify such an order. In view of the 2
nd
respondent’s
denial of the agreement on which the applicant relies, no final
relief in favour of the applicant can, irrespective
of the legal
difficulties to which I have alluded above, be granted.
[25]
Faced with these problems, Mr Basslian applied in the alternative for
a reference to oral evidence. But a Full Bench
of this Division
in the matter of
Absa Bank Limited v Molotsi
,
TT
in an
unreported judgment Appeal Case No. A5022/2015 delivered on 8 March
2016 declined such an application on the basis that it
was not made
at the outset of the hearing.
[26]
That judgment, to which I am bound, referred to
Marques v Trust
Bank of Africa Limited and Another
1988 (2) SA 526
(WLD) at
530E-531F, in which Morris, AJ permitted an applicant to argue in the
alternative: to ask for final relief and then
to ask,
conditional on the court refusing the final relief, for a referral
order. That judgment was followed recently by
Spilg, J in
Fikre
v Minister of Home Affairs and Others
2012 (4) SA 348
(GSJ).
[27]
However, as the Full Court pointed out, the Supreme Court of Appeal
in
Law Society, Northern Provinces v Mogani,
2010 (1) SA 186
(SCA) at [23] said that an application for the hearing of oral
evidence must, as a rule, be made
in limine
and not only once
it becomes clear that the applicant is failing to convince the court
on the papers or on appeal. The circumstances
must be
exceptional, so held the SCA, before a court will permit an applicant
to apply in the alternative for the matter to be
referred to evidence
should the main argument fail.
[28]
In so reasoning, the court referred to
De Reszke v Marais and
Others
2006 (1) SA 410
(C) at paragraphs [32] to [33] where the
Full Court of the then Cape Provincial Division said:
“
It is my
impression in this Division, however, that the pendulum has swung too
far the other way. Some younger counsel, in particular,
seem to take
it half for granted that a court will hear argument notwithstanding
disputes of fact and, failing success on such
argument, will refer
such disputes, or some of them, for oral evidence. That is not the
procedure sanctioned by the Supreme Court
of Appeal. On the
contrary, the general rule of practice remains that an application to
refer for oral evidence should be
made prior to argument on the
merits.
”
[29]
The reference here to the Supreme Court of Appeal is a reference to
judgments in which that court has widened the exceptions
to that
general rule, but they still remained only exceptions. No basis
for such an exception was placed before this court.
[30]
It seems to me therefore inevitable that the application must fail.
In the result I make the following order:
(a) The application is
dismissed with costs, including the costs of two counsel.
WHG
van der Linde
Judge,
High Court
Johannesburg
Date
argued: 8 October 2018
Date
judgment: 12 October 2018
For
the applicant: Adv. M Basslian, SC
Instructed
by: Saders Attorneys
Applicant’s
Attorneys
Cinetech
Centre
1
Frost Avenue
Corner
Line Street
Sunnyside
Johannesburg
Tel:
011 726 3711
Fax:
011 726 3710
Ref:
HSader/J440
For
the respondents: Adv. N A Cassim, SC
with
him
Adv.
S Ebrahim
Instructed
by: Webber Wentzel Attorneys
Respondents’
Attorneys
90
Rivonia Road
Sandton
Tel:
011 530 5000
Ref:
PDaya/SMakara/3022831