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[2016] ZANCHC 55
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Superkolong (Pty) Ltd v Gemcore (Pty) Ltd (1451/2010) [2016] ZANCHC 55 (29 July 2016)
IN
THE HIGH COURT OF SOUTH AFRICA
(Northern
Cape Division, Kimberley)
Saakno / Case
number:
1451/2010
Datum aangehoor /
Date Heard:
18
/ 04 / 2016
Datum
gelewer/Date delivered:
29
/ 07 / 2016
In
the matter between:
SUPERKOLONG
(PTY)
LTD
Appellant
and
GEMCORE
(PTY)
LTD
Respondent
Coram:
Kgomo, JP
et
Williams,
J
et
Erasmus,
AJ
JUDGMENT
WILLIAMS,
J
et
ERASMUS, AJ
INTRODUCTION
[1]
This is an appeal against the judgment of Pakati J, with leave of the
Supreme Court of Appeal to the Full Bench of this Division.
[2]
Gemcore (Pty) Ltd, the respondent, instituted action against
Superkolong (Pty) Ltd, the appellant and Gemrock Resources Ltd
(In
Liquidation) (“Gemrock”). In terms of Claim 1, the
respondent sought rectification of a Memorandum of Understanding
(“MOU”), signed on behalf of the parties on 3 October
2008. The second claim was founded on such rectified contract
and in the alternative to Claims 1 and 2, unjustified enrichment, in
respect of monies paid to the appellant before 15 October
2008. The
third claim was founded upon unjust enrichment, based on payments
made to appellant after 15 October 2008.
[3]
Pakati J dismissed the contractual claims and granted judgment in
favour of the respondent on the alternative claim to Claims
1 and 2,
as well as Claim 3 (the enrichment claims). The appellant was
ordered to pay to the respondent the amounts of R2,942,677.48
and
R1,486,164.79, plus interest and costs.
THE ISSUE ON APPEAL
[4]
The issue to be decided in this appeal is whether the Court
a
quo
correctly
found in favour of the respondent in respect of the claims based on
enrichment. The history of the case is relevant
in deciding
this issue and it is therefore necessary to set out the chronology of
the events leading up to the claims by the respondent.
THE FACTS
[5]
It is common cause between the parties that three Memoranda of
Understanding are relevant, to wit:
5.1
The MOU dated 11 August 2008 concluded
between Gemrock and Kimcor Diamonds PLC (“Kimcor”);
5.2
The MOU dated 2 September 2008 negotiated and prepared by the
representatives of Gemrock and the respondent
for signature by
Gemrock, Kimcor and the appellant and signed on behalf of Gemrock and
the respondent only and not the appellant;
5.3
The MOU of 3 October 2008 entered into by and between Gemrock, the
respondent and the appellant.
[6]
The purpose of the August 2008 MOU was to provide for a complete
takeover of Kimcor by Gemrock, alternatively the acquisition
of
Kimcor’s entire assets by Gemrock. Gemrock agreed to assist
Kimcor with bridging finance in the form of a non-interest
bearing
secured loan to be advanced to Kimcor’s South African operating
subsidiaries on dates and intervals as agreed by
the parties.
Bridging finance in the amount of at least R5 million was envisaged
and Gemrock would take over the management
and control of Kimcor’s
assets.
[7]
Gemrock itself could not afford the R5 million in bridging finance
which led to one of its directors, Mr Johan Buys, approaching
the
respondent for financial assistance. The subsequent agreement
reached between Gemrock and the respondent was in short
that the
respondent would advance R4 million to Gemrock in return for a 40%
shareholding in the appellant, one of the subsidiaries
of Kimcor.
[8]
The September 2008 MOU was negotiated and drafted by Mr Jan Lombard
(a director of the respondent) and Mr Buys (a director of
Gemrock and
by then also the acting managing director of Kimcor) in an attempt
(in part) to put into writing the agreement reached
between Gemrock
and the respondent. Although the appellant was reflected as a
party to this MOU, it did not sign the memorandum,
the reason
apparently being that the appellant could not sell its shares without
first offering it to its existing shareholders.
[9]
However, the respondent had already, at the time of the drafting of
the September MOU, made payments of R1,250,140.03 as part-payment
of
the R4 million advance agreed upon between it and Gemrock.
[10]
The broad terms of the September 2008 MOU were the following:
10.1
The respondent would assume management of the appellant’s Small
Miners Initiative dumps (SMI/4) and would report
directly to the
board of directors of Kimcor;
10.2
The respondent would make a capital investment of
R4 million by no later
than 30 September for a
40 % profit share in SMI/4;
10.3
As security for the R4 million investment the respondent would be
entitled to a covering notarial bond and/or a cession
of the diamonds
recovered;
10.4
It was a condition precedent that the boards of all the parties
reflected in the written document, approved it.
[11]
This September 2008 MOU contained a “
no claim
”
clause in terms of which the parties agreed that if:
“
a)
The date for satisfaction of the conditions precedent is not
extended by agreement in writing by the parties; and
b)
The conditions precedent are not satisfied or waived by the
relevant date, or the transaction does not proceed,
Then
this MOU shall terminate, each party will bear its own expenses in
connection with all negotiations and documentation, and
neither party
will have any claim against the other for any matter arising from the
transactions contemplated by this MOU.
”
[12]
It was common cause between the parties that neither the appellant
nor the respondent were parties to the August 2008
MOU and that the
September 2008 MOU was never accepted or signed by the appellant.
[13]
The October 2008 MOU was then entered into. It was signed by the
representatives of the appellant, the respondent and
Gemrock. It
provided for the following:
13.1
The proposed operational management by the respondent in respect of
SMI/4;
13.2
Convertible loan funding by the respondent to Gemrock in the amount
of R4 million which could increase to R8 million
to achieve the
production output of 120 000 tonnes per month at SMI/4;
13.3
The conversion of a loan to Kimcor into shares once a reverse listing
had been done. It was then recorded that:
13.3.1 The
appellant had approached the respondent to manage the SMI/4 dumps and
provided for a management agreement in terms
of which a management
fee was envisaged, payable by the appellant to the respondent;
13.3.2
Gemrock had approached the respondent to lend R4 million to Gemrock
which would then on-lend this money on a shareholders
loan basis to
the appellant;
13.3.3
The respondent had paid up to 3 October 2008 an amount R3,274,571.19
as part-payment to Gemrock who on-lent the amount
to the appellant.
[14]
Under the heading “
Conditions Precedent
” it was
recorded that the following were required:
14.1
Approval of the boards of the parties to the agreement;
14.2
Payment of an amount of R4 million by no later than 15 October 2008;
14.3
Operating capabilities of 120 tonnes per month by April 2009.
[15]
The “no claim” clause referred to earlier, as reflected
in the September 2008 MOU, was also included in the
October 2008 MOU.
[16]
It is common cause that the conditions precedent were not met in that
the amount of R4 million was not paid on or before
15 October 2008;
the operational capabilities had not increased to 120 tonnes per
month by April 2009 and the boards of the respective
companies never
approved the agreement.
[17]
In fact the whole arrangement between the various entities was dealt
a death blow by the recession of 2008. The
reverse listing and
takeover of Kimcor by Gemrock never materialised. A certain Mr
Chris Kimber purchased the Kimcor group
(including the appellant) at
the end of November 2008. Gemrock was provisionally liquidated
on 15 February 2009, which order
was made final on 20 March 2009.
During June 2009 Mr Kimber intimated that he considered the October
2008 MOU to be of no force
and effect and that the parties did not
have any claim against each other.
[18]
The respondent brought the contractual claim as cessionary,
alternatively in its own name. A deed of cession was entered
into on
23 July 2010 between the liquidators of Gemrock and the respondent.
[19]
It was recorded in the introductory part of the deed of cession that
Gemrock had a claim for R4,850,512.98 against the
appellant for
monies lent and advanced in terms of a written agreement between
Gemrock, the appellant and the respondent.
The details of the
written agreement are not recorded but it can only refer to the
October 2008 MOU. It was also recorded
that the respondent had
a claim against Gemrock in the amount of R4,850,512.98 for “monies
lent and advanced” in terms
of the written agreement.
[20]
From the record it appears that:
20.1
The August 2008 MOU (between Gemrock and Kimcor) was never cancelled
and no evidence was tendered in respect of the actions
taken by the
liquidators of Gemrock relating to this MOU;
20.2
This August 2008 MOU was valid and of full force and effect at all
relevant times until the final liquidation of Gemrock;
20.3
The September 2008 MOU never became binding on the parties because it
was neither signed on behalf of the appellant nor
had it been
approved by the boards of the appellant and/or Kimcor;
20.4
The “no claim” clause contained in the October 2008 MOU
was not rectified;
THE ARGUMENTS
[21]
Mr Bergenthuin SC, for the appellant, submitted that Pakati J
correctly rejected the claim for rectification but should
have found
that the relationship between the parties to the October 2008 MOU was
regulated by the “
no
claim
”
clause. According to him this “
no
claim
”
clause does not leave any doubt as to the intention of the parties.
It stipulates that neither party will have any
claim against the
other party for any matter arising from the transactions contemplated
in the MOU. The reference to “
any
claim
”
necessarily includes a claim founded upon enrichment. As the
claim for rectification was dismissed the respondent
had no claim
against the appellant by virtue of the fact that the respondent had
waived any claim for restitution, including a
claim founded upon
enrichment.
[22]
Mr Bergenthuin also submitted that the respondent had not proved any
claim based on unjustified enrichment, as the payments
made by the
respondent were not made
sine causa.
Counsel further
contended that the respondent had not proved that it was
impoverished:
22.1
In particular because of payments made to the appellant as the
respondent had a claim against Gemrock for payments made
to the
appellant;
22.2
Any impoverishment was caused by the liquidation; and
22.3
Payments made for the creditors of the appellant were made in terms
of an agreement between the respondent and Gemrock.
[23]
It was further argued on behalf of the appellant that :
23.1
There could not have been any issue of enrichment because a legal
liability was discharged when the respondent made payments
to the
appellant’s creditors;
23.2
Payments were made in terms of a valid cause of action, to wit the
August 2008 agreement entered into between Gemrock
and Kimcor; and
23.4
The respondent had not proved that the amounts reflected in the
invoices were actually paid to or on behalf of the appellant
and that
those amounts represent enrichment of the appellant.
[24]
Mr Zietsman SC, for the respondent, submitted that the Court
a
quo
correctly found that the October 2008 MOU did not have any legal
effect in that the conditions contained therein were not met.
He submitted further that the Court
a
quo
correctly found that the payments by the respondent could not have
been made in terms of the October 2008 MOU since the respondent
started making payments during August 2008.
[25]
Mr Zietsman further contended that the Court
a
quo
correctly found that the August 2008 MOU did not constitute the cause
in terms of which advances were made to the appellant as
neither the
appellant nor the respondent were party to the said agreement and
that the respondent was probably not even aware of
the said MOU. The
payments were made directly to the appellant, consequently the
appellant was enriched and the respondent
impoverished. The
payments were made
sine
causa
and
therefore the claims based on enrichment had to succeed, the
submission went.
THE LEGAL POSITION
[26]
The effect of a suspensive condition in a contract is to postpone
enforceability of a right until the happening of future
uncertain
events. If the suspensive condition is not fulfilled the
agreement or the part thereof which was suspended does
not take
effect and anything which has been paid or delivered in expectation
of fulfilment of the condition must be returned
unless
the contract provides otherwise
.
[1]
[27]
In casu
the “no claim” clause (which was not
rectified) in the October 2008 MOU regulated the position the parties
were to
be placed in should the conditions precedent not be fulfilled
as follows:
“
neither
party will have any claim against the other party for any matter
arising from the transactions contemplated by this MOU.
”
[28]
In our view the court
a
quo
should therefore have found, based on the “no claim”
clause and also on the case made out by the respondent i.e. that
the
monies were advanced to the appellant based on the
bona
fide
albeit mistaken belief that the October 2008 MOU was binding, that
the respondent had no claim against the appellant, even one
based on
unjust enrichment.
[29]
Be that as it may, the requirements for a claim based on enrichment
are now trite: (i) the defendant must be enriched;
(ii) the plaintiff
must be impoverished; (iii) the defendant’s enrichment must be
at the expense of the plaintiff; and (iv)
the enrichment of the
defendant must be unjustified or
sine
causa
.
It is also trite that the burden of proof in respect of all elements
of enrichment lies with the plaintiff.
[30]
The court
a
quo
found, based solely on the payments made by the respondent to or on
behalf of the appellant, that the first three requirements
for an
enrichment claim have been met. The court
a
quo
also found in essence that the appellant’s enrichment was
sine
causa
since: a) the September 2008 MOU never came into existence; b) the
October 2008 MOU had no legal effect due to the suspensive conditions
not being met; and c) the payments made by the respondent could not
have been made in terms of the August 2008 MOU since neither
the
appellant nor the respondent were party to that MOU and on the
probabilities were not even aware of the August 2008 MOU.
[31]
The court
a
quo
was correct in finding that neither the September 2008 MOU nor the
October 2008 MOU could be the source of the respondent’s
enrichment. The August 2008 MOU however cannot so easily be
disregarded. In the first instance, and although of little
importance as far as the issue of enrichment liability is concerned,
it can hardly be said that the probabilities are against the
appellant and respondent not being aware of the August 2008 MOU.
In fact, the probabilities are quite the opposite.
It should be
remembered that Mr Buys on behalf of Gemrock, approached the
respondent for financial assistance shortly after Gemrock
entered
into the August 2008 MOU with Kimcor, which made provision for the
take-over of Kimcor by Gemrock. The agreement
reached between
the respondent and Gemrock at that stage, that the respondent advance
R4 million in return for 40% shareholding
in the appellant, would
make no sense had the respondent not been aware of the envisaged
take-over of Kimcor (including the appellant)
by Gemrock.
Likewise the appellant, not only by reason of its being a subsidiary
of Kimcor, but also by its acceptance without
question of monies
on-lent by Gemrock as early as 19 August 2008, must have been aware
of the August 2008 MOU. In any event,
Mr Buys testified that
all the entities involved in the various agreements were aware of the
situation.
[32]
Secondly, the fact that neither the appellant nor the respondent was
party to the August 2008 MOU has little bearing
on the issue of
enrichment liability. The situation is akin to that in
BUZZARD
ELECTRICAL (PTY) LTD v 158 JAN SMUTS AVENUE INVESTMENT (PTY) LTD AND
ANOTHER
[2]
.
In that case the owner C contracted with B to develop his property.
B subcontracted the electrical works to A. A completed
the work but
before he could be paid B was liquidated. A then sought to hold
C liable for payment on the basis of unjust
enrichment. The
court held that the performance of the work by A could be traced to
the agreement between C and B in terms
whereof the electrical work
was to be performed by B. The court held that neither a direct
nor an indirect enrichment liability
had arisen. That it would
be unfair for the owner C who contracted on a specific basis with B,
for his counter-performance,
if any, to increase in effect or that he
should incur an obligation which did not arise out of his contract
with B, simply because
B engaged A to comply with his contractual
obligations. There was no contractual relationship between A
and C and when A
performed the work he complied with his obligations
towards B. At the same time though, A gave effect to B’s
obligation
toward C and therefor also performed indirectly with
respect to C. The agreement between C and B was the primary
source of
the performance of the work and any possible enrichment of
C. The owner C received no more as a result of A’s
performance
than that he had contracted for with B. For that
reason the enrichment was not
sine
causa
.
On the contrary, the agreement with B was the cause of C’s
enrichment. A could enforce his contractual rights
against B
and if it turned out to be illusory due to B’s insolvency, it
was an unhappy coincidence which did not render C’s
enrichment
unjustified.
[33]
If one equates the circumstances in Buzzard
supra
, to those in
casu
the respondent would be in the position of the
subconctractor A, Gemrock would be in the position of the contractor
B and the appellant
(in fact Kimcor) would be in the position of the
owner C. The evidence was that not only did the respondent make
payment
for and on behalf of the appellant, but that other
subsidiaries of Kimcor also received payment from the respondent.
This
fact was recognised by the court
a quo
who stated in her
judgment that:
“
It
is undisputed that Gemcore Sampling advanced amounts of R2,949,677.48
and R2,486,164.79, suitably adjusted, on behalf of Kimcor
Diamonds
PLC and/or its subsidiaries which include Superkolong’s
employees, creditors and/or suppliers.
”
[34]
This factor, as well as the fact that payment had commenced as early
as 19 August 2008, should have alerted the court
a
quo
to the fact that the respondent made payment to the appellant in
fulfilment of Gemrock’s obligation to Kimcor in terms of
the
August 2008 MOU.
[35]
The fact that payment was made directly to the respondent and/or its
creditors and not
via
Gemrock does not alter the position that the primary source of such
performance arose from the August 2008 MOU and as such cannot
be
sine
causa
.
[36]
The respondent’s claim therefore lies against Gemrock and it is
Gemrock’s liquidation which is the cause
of its
impoverishment. The result is that the appeal must succeed.
The
following order is made:
a)
THE APPEAL IS UPHELD WITH COSTS.
b)
THE ORDER OF THE COURT A QUO IS SET ASIDE AND SUBSTITUTED WITH THE
FOLLOWING:
“
THE
PLAINTIFF’S CLAIMSARE DISMISSED WITH COSTS.”
__________________
_____________
WILLIAMS,
CC
ERASMUS, SL
JUDGE
ACTING JUDGE
I
agree.
__________________
KGOMO,
F DIALE
JUDGE-PRESIDENT
On
behalf of the Appellant
:
Adv. Bergenthuin SC (oio Van de Wall &
Partners)
On
behalf of the Respondent
:
Adv. Zietsman SC (oio Engelsman, Magabane Inc.)
[1]
Naidu v Naidoo,
1976 (2) SA 222
NPD at 266 A to G
[2]
1996 (4) SA 19
(A)