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[2017] ZAFSHC 194
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Engen Petroleum Limited v AAC Agri Foods CC and Another (4057/2013) [2017] ZAFSHC 194 (31 August 2017)
IN
THE HIGH COURT OF SOUTH AFRICA,
FREE
STATE DIVISION, BLOEMFONTEIN
Case
number: 4057/2013
In
the matter between:
ENGEN
PETROLEUM
LIMITED
Plaintiff
and
AAC
AGRI FOODS CC
(Reg:
2005/052381/23)
1
st
Defendant
ADAM
JOHANNES
SWANEPOEL
2
nd
Defendant
HEARD
ON:
18 APRIL 2017
JUDGMENT
BY:
REINDERS, J
DELIVERED
ON:
31 AUGUST 2017
[1]
The plaintiff is Engen Petroleum Limited, a company incorporated in
terms of the company laws of South Africa with head offices
in Cape
Town ( "Engen South Africa"). The summons avers that the
first defendant AAC Agri Foods CC (and for that matter
the second
defendant Mr Adam Johannes Swanepoel, a surety) is indebted to
plaintiff for payment of the amount of R 8 077 714.98
together with
interest at the rate of 15,5% calculated from 3 March 2011 to date of
final payment. A further order as to costs
is sought.
[2]
The defendant's alleged indebtedness arose in that the first
defendant did business with Engen Lesotho Pty Ltd, a company
registered
as such in the Kingdom of Lesotho ("Engen Lesotho").
Engen South Africa acquired this claim on or about 10
th
October 2013 when Engen Lesotho sold the aforesaid claim to
plaintiff. Plaintiff further avers that delivery of such claim took
place by way of a cession of rights of action by Engen Lesotho in
favour of the plaintiff. A copy of the sale agreement and cession
of
rights of action is annexed to the particulars of claim as
respectively “
POC 2.1”
and “
POC2.2.”
[3]
The defendants deny being indebted to the plaintiff in the amount
alleged or any amount at all. In particular for purposes hereof
the
defendants deny the sale agreement and cession of rights of action
upon which plaintiff relies.
[4]
In a minute of pre-trial conference held on 21 September 2015 it was
agreed between the parties that the court at the commencement
of the
trial would be requested to first adjudicate two questions, to wit
whether the claim of Engen Lesotho has been effectively
ceded to the
plaintiff as evidenced in annexures
"POC 2.1"
and
"POC 2.2"
and further whether the written deed of
surety annexed as annexure
"POC 3"
to the
particulars of claim complies with the provisions of sec 6 of the
General Law
Amendment Act 10 of 1956
(the
"Act") at the time of the execution thereof. At the
commencement of the trial I so ordered and all remaining issues
were
to stand over in terms of rule 33 (4) of the Uniform Rules of Court
for later adjudication.
[5]
The plaintiff called six witnesses in total to testify. The first
three witnesses, Messrs Francis Kennedy, Francis (Moonsamy)
Chetty
and Theodor Molopo testified as to the authority of the parties to
enter into the agreement
(“POC
2.1”
and “
P
OC
2.2”).
The remaining witnesses Mrs Hooper, Mr Hooper and Mr Visser
testified
inter alia
as to the completeness of the suretyship
when it was executed. All the witnesses were good and honest
witnesses and their testimonies
were not gainsaid or seriously broken
down in cross-examination. The defendants did not adduce any
evidence.
[6]
Relevant for purposes hereof Mr Kennedy's testimony boiled down
thereto that he was the signatory on behalf of Engen South Africa
of
“
POC
2.1”
and “
POC
2.2”.
He did not rely on
any delegation or decision by the board of directors of Engen
South Africa
to sign the documents but was instructed to do so by Mr
Chetty. He was a business manager of Engen South Africa
but
not a director of the company. In cross examination he conceded
that none of the delegated authorities authorised him to so purchase
on behalf of Engen South Africa any moveables nor incorporeal rights
to the value of eight million rands.
[7]
Mr Chatty for purposes of his authority relied on a written
resolution of the board of directors of Engen South Africa which
was
passed apparently at Cape Town on 10 August 2014 (the “resolution”).
The said document resolves as follows:
“
JUDICIAL,
ADMINISTRATIVE AND OTHER PROCEEDINGS RESOLVED,
1.
That any Director of this Company or any Legal Advisor of Engen
Petroleum Limited for the time being be, and
each of them
individually is hereby authorised, for and on behalf of this Company
to:
1.1
institute, prosecute, defend, oppose or partake in any legal
administrative or other proceedings
(urgent or otherwise) whether in
a court of law, special court arbitration tribunal, mediation or
other forum in the RSA or elsewhere
and generally to represent this
company in any proceedings of whatever nature and to make any
affidavit and execute powers of attorney
and/or any other document on
behalf of this Company and in regard thereto.
1.2
Sign all such proofs, affidavits, powers of attorney (containing such
terms and conditions
as he/she in his/her discretion deemed fit) as
may be required from time to time for the proof of this Company's
claims or object
or oppose any other claims of any nature whatsoever
against any insolvent, deceased or other estates, any natural or
legal persons
in liquidation (provisional or final), or under
judicial management, or in respect of any procedures regarding an
offer of compromise,
arrangement or any other scheme and to attend
and vote at any meeting (either in person or by proxy) of any nature
whatsoever and
to vote thereat in respect of this Company's claims as
he/she in his/her discretion deems fit.
1.3
Note, prosecute and partake in any appeal or review against any
judgement, decision, order or
other determination made in respect of
any of the aforesaid proceedings.
2.
That any Director of this Company or Legal Advisor of Engen Petroleum
Limited may delegate all or any of these
powers and authorities in
this regard to anyone else.
3.
That a written certificate under the hand of the said authorised
person, or the Secretary or any Director of
this Company, as to any
such delegation, shall be proof of that fact for all purposes.''
[8]
Mr Chetty who was the credit manager of Engen South Africa at the
time opined that “
POC
2.1”
and
“
POC
2.2”
were
documents contemplated in clause 1.1 of the written resolution of the
board of directors.
[9]
Mr Molapo is the managing director of Engen Lesotho and signed “
POC
2.1”
and “
POC 2.2”
at the time in his
capacity as the territorial manager. According to the plaintiffs
trial bundle the authority that was delegated
to Mr Molapo at the
time reflects similar provisions as the Engen South Africa's
resolution dated 10 August 2004 alluded to herein
before.
[10]
On behalf of the plaintiff Mr Van der Spuy contended that the
plaintiff could rely on the Kingdom of Lesotho's Companies Act
18 of
2011 (with the regulations thereto) and that in terms of sec 1(1) and
(2) of the
Law of Evidence Amendment Act 45 of 1998
I
could take judicial notice of the law of a foreign state. I was
referred to
KWIKSPACE MODULAR BUILDINGS LTD V SABODALA
MINING CO SARL AND ANOTHER
2010 (6) SA
477
(SCA) where the Supreme Court reiterated
inter alia
the
principle that there is a presumption that South African and foreign
law are the same. I agree with him.
[11]
Mr Van der Spuy submitted that Engen South Africa merely took over
the bad debt of Engen Lesotho as it was crippling to the
Lesotho
company and that similar cessions were frequently executed in order
to assist them with various operational requirements.
The decision to
execute the documentation was however taken for legal purposes by
Engen South Africa. In that regard Mr Molapo
merely complied with the
holding company's wishes and executed the documents on 10 October
2013. He did so with the knowledge of
Mr Kennedy. On the face of it,
so was argued, the transaction was performed in the ordinary course
of business and between Messrs
Chetty, Kennedy and Molapo was never
any doubt that their actions were properly authorised. As such they
reported to their superiors
in the normal course of business.
[12]
With regards to authority the plaintiff accepted that it carries the
onus to proof same on a balance of probabilities. It
was
contended that the facts suggest that Mr Molapo had ostensible
authority having regard to the following factors:
12.1
His job description.
12.2
His position as director of Engen Lesotho.
12.3
Engen Lesotho is a subsidiary company and (in the ordinary course of
business) follows the instructions of the
holding company (Engen
South Africa), and/or that repeatedly different constituted boards
failed to object to Mr Molapo's management
of the company.
12.4
Mr Molapo's actions have been reported via management reports and
audits without questioning his authority.
[13]
It was submitted that in dealing with Engen Lesotho the officials of
Engen South Africa would have been under the impression
that Mr
Molapo was duly authorised to execute the documents. I was
urged to find that the impression created by his position
and title
was similar to a fa9ade of regularity.
See:
NBS BANK LTD V CAPE PRODUCE CO (PTY) LTD AND OTHERS
2002
(1) SA 396
(SCA) at 414 par [33] ;
NORTHERN METRO COUNCIL
V COMPANY UNIQUE
2012 (5) SA 323
(SCA) at 340 E to 341 E.
[14]
It was contended by Mr Van der Spuy that Mr Chetty had express
authority to instruct Mr Kennedy to execute the documentation
and at
worst Engen South Africa had ratified the actions of Messrs Chetty
and Kennedy.
[15]
Mr Pretorius argued that plaintiff had to properly identify the
signatories as well as their authority so to act and plaintiff
in its
pleadings did not rely on either estoppel or ostensible authority. In
its replication it relied on ratification by Mr Chetty.
He referred
me to
ROSEN V BARCLAYS NATIONAL BANK LTD
1984 (3) SA
974
(W) and contended that in our law estoppel can in any event only
be used as a weapon of defence and it cannot create a cause of
action
where none existed before (at 983 I). It was contended if neither of
the signatories to the deed of sale or the cession
had the necessary
authority they were invalid.
See:
CITY OF TSHWANE METROPOLITAN
MUNICIPALITY
v RPM BRICKS (PTY)
LTD 2008 (3) SA 1 (SCA).
[16]
Relying on
MAKATE v VODACOM
2016 (4)
SA 211 (CC) Mr
Pretorius
argued that ostensible authority had to be pleaded and proved whilst
in casu
it was not relied upon in the pleadings.
[17]
The authority of an agent is a question of fact and may either be
actual or implied.
See:
INTERCONTINENTAL FINANCE AND LEASING
CORPORATION
(PTY) LTD v STANDS 56 AND
57
INDUSTRIA
LTD AND ANOTHER
1979 ( 3 ) SA 740 (W);
MAKATE
supra
at par [120];
NBS BANK LTD
supra
[18]
Having studied the written resolution of the board of directors on
behalf of plaintiff I am not convinced that the company
authorised in
terms thereof Mr Chetty to enter into agreements such as “
POC
2.1”
and “
POC 2.2”.
It
rather on a reading as a whole seems to authorise who may
authorise, act and institute legal proceedings on its behalf.
As
correctly conceded on behalf of plaintiff it bears the onus to
convince me on a balance of probabilities that the plaintiff
authorised Mr Chetty (and therefore also Mr Kennedy) to enter into
these agreements. The plaintiff did not so convince me. But
even if I
am wrong, no actual authority was proven of Mr Molapo to enter into
these agreements at the time on behalf of Engen Lesotho.
In order to
prove that plaintiff acquired the claim and the right to enforce same
from Engen Lesotho I am not convinced that it
is good enough for
plaintiff to rely on ostensible authority to do so. In relying on
ostensible authority it is conceded that he
did not have actual
authority. Where reliance is placed on ostensible authority, the
elements of estoppel have to be pleaded and
proved.
In casu
it
was not only not pleaded but could in any event not be raised against
the present defendants as they were not parties to “
POC 2.1”
and “
POC
2.2”.
This could explain why
the plaintiff in its replication did not rely on estoppel but in
stead ratification. In as far as ratification
is relied upon I share
defendants' view that a nullity cannot through ratification achieve
the status of a binding contract.
[19]
I refused an application for absolution at the end of plaintiffs case
as the test at the time was merely whether a court acting
carefully
could (and not should) find for the plaintiff. The
viva voce
evidence of the witnesses were that they were authorised to
act
on
behalf of Engen South Africa and Engen Lesotho. However, the test
changed and the question now is whether plaintiff on a preponderance
of probabilities proved the authority of its signatories.
[20]
Having concluded that the plaintiff failed to prove the various
signatories' authority, it is not necessary to consider the
second
question whether there was compliance with sec 6 of the
General
Law Amendment Act 50 of 1956
.
As mentioned I accepted
the evidence of the three witnesses on behalf of plaintiff in this
regard and the second defendant did not
testify. I would have been
inclined therefore to have found in favour of the plaintiff on this
issue.
[21]
Accordingly the following order is issued:
1.
The plaintiff's claim is dismissed with costs.
_________________
C
REINDERS, J
On
behalf of plaintiff:
Adv C. van der Spuy
Instructed by:
Lanham-Love Attorneys
c/o McIntyre Van der Post
Bloemfontein
On
behalf of respondents: Adv. B.
Pretorius
Instructed by:
Kramer Weihmann &
Joubert Attorneys
Bloemfontein