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[2016] ZAGPPHC 97
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Davids NO and Another v Tai Ross Properties VDBP (Pty) Ltd (24523/2015) [2016] ZAGPPHC 97 (2 March 2016)
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IN THE HIGH COURT OF
SOUTH AFRICA
/ES
(
GAUTENG DIVISION,
PRETORIA
)
CASE NO: 24523/2015
DATE: 2/3/2016
Not reportable
Not of interest to other
judges
Revised
IN THE MATTER BETWEEN
BRENDAN ARN DAVIDS
N.O. 1
ST
APPLICANT
RIAAN WINTER
N.O. 2
ND
APPLICANT
AND
TAI ROSS PROPERTIES VDBP
(PTY) LTD RESPONDENT
JUDGMENT
MSIMEKI, J
[1] Applicants, in this
application, seek an order which finally liquidates respondent.
In the alternative, applicants
seek the granting of a
rule
nisi
inviting all interested parties to show cause on the return
date as to why respondent should not be placed under final
liquidation.
Costs of the application are to be costs in the cause.
The application is opposed.
[2] The parties are
represented by Adv W W Gibbs ("Mr Gibbs") and Adv J A
Venter ("Mr Venter") who
represent applicant and
respondent respectively. Applicants' heads of argument were
prepared by Adv B Bergenthuin.
[3] Applicants brought
their application in their capacities as trustees of the Greenlands
Investment Trust ("the Trust").
The application is
brought in terms of section 344(f) read with sections 345(1)(a) and
(c) and/or on the ground set out in section
344(h) of the Companies
Act, Act 61 of 1973 ("the old Act").
[4] Applicants contend
that respondent is indebted to the Trust in the sum of
R1 292 564,29. The debt is said to
emanate from a
loan agreement ("the agreement") concluded between the
trustees of the Trust and respondent on 19 September
2013.
Respondent denies the force, effect and validity of the agreement on
the basis of the non fulfilment of suspensive
conditions and the
National Credit Act, Act 34 of 2005.
[5] Points
in limine
were raised on behalf of respondent. I shall only deal with the
only remaining point
in limine
as the others were not
pursued.
[6] The point
in
limine
to be dealt with by the court is that the agreement was
not authorised and that that rendered same void and unenforceable.
Mr Gibbs denies this.
[7] There are two
resolutions which Mr Gibbs termed "extracts" simply by
reason of the fact that the one, annexure "BAD1",
is headed
"EXTRACT OF A RESOLUTION BY THE TRUSTEES FOR THE TIME BEING OF
GREENLANDS INVESTMENT TRUST (REGISTRATION NUMBER
IT1809/2011 ('THE
TRUST') PASSED AT CAPE TOWN ON 16/08/2014" and the other,
"appendix B" headed "EXTRACT
OF A RESOLUTION OF THE
TRUSTEES FOR THE TIME BEING OF GREENLANDS INVESTMENT TRUST
(REGISTRATION NUMBER IT809/2011 ('THE TRUST')
PASSED AT CAPE TOWN ON
19/09/13".
[8] Annexure "BAD1"
has been signed by the two trustees appointed by the Master of the
High Court in terms of letters
of authority, annexure "BAD2"
dated 4 August 2011. The two trustees are Riaan Winter and
Brendan Arn Davids.
Appendix "B" bears only one
signature. It does not indicate as to who the person is who
signed. It can only
be assumed that it is one of the trustees.
This is not denied.
[9] Appendix "B"
states:
"RESOLVED:
1. That the Trust enters
into a loan Agreement with Tai Ross Properties VDBP Proprietary
Limited (Registration Number 2004/026716/07)
substantially upon the
terms and conditions of the Agreement submitted to and approved by
the trustees for the time being of the
Trust.
RESOLVED FURTHER:
2. THAT MR BRENDAN ARN
DAVIDS in his capacity as trustee of the Trust be and is hereby
authorised and empowered to –
2.1 negotiate the final
terms and conditions of the Agreement referred to in the preceding
resolution;
2.2 sign the said
Agreement and all other deeds or documents which may be necessary for
the implementation of the abovementioned
Agreement; and
2.3 generally do
everything that may be necessary for the implementation of the
abovementioned Agreement.
And any agreement, deeds
or documents signed by the said Mr Brendan Arn Davids acting
under authority of this and the preceding
resolution, shall
conclusively be deemed to be the agreement, deeds and documents
authorised by this and the preceding resolution."
Appendix "B"
ends:
"CERTIFIED A TRUE
COPY
(There is a signature)
TRUSTEES"
[10] Annexure "BAD1"
starts with:
Present:
1.
BRENDAN ARN DAVIDS (…)
2.
Riaan Winter (…).
It reflects apologies,
notice and background. It is not necessary to repeat
everything.
Page 2 of the annexure
bears the resolution. This I shall quote. It reads:
"THEREFORE IT IS
HEREBY UNANIMOUSLY RESOLVED THAT:
1. The Trust hereby
authorise and empower BRENDAN ARN DAVIDS (…), in his capacity
as trustee of the Trust, to –
2.1 conclude, sign and
execute all loan agreements and all other agreements, deeds,
documents or forms
to institute legal proceedings
and to
conclude negotiations on behalf of the Trust which may be necessary
to give effect to, implement and conduct the business
of the Trust as
defined in the Trust Deed; and
2. generally do
everything that may be necessary for the implementation of the
business of the Trust.
2. The Trust hereby
ratifies and approves all that may have been done
by BRENDAN
ARN DAVIDS (…) in respect of the business of Trust until date
hereof." (My emphasis.)
The annexure ends:
CERTIFIED TO BE A TRUE
COPY
(
There
is a signature
)
16/08/2014
TRUSTEE
DATE
(There is a
signature
)
16/08/2014
TRUSTEE
DATE
[11] It is common cause
that:
1. a Trust has life of
its own;
2. it functions and
operates through trustees;
3. trustees act in
accordance with authority. Put differently a trustee has
authority or does not have authority;
4. authority is an
expression of will by one person that another shall have the power to
conclude juristic acts on his behalf;
5. an
ab initio
invalid contract of agency cannot be resuscitated or rectified
retrospectively;
6. Trustees have to act
jointly if they are to act legally. They must act, decide and
participate together as one.
[12] The court has to
determine if appendix "B", annexure "BAD1" and
the agreement are legal in the eyes of
the law.
[13] To determine all
this, proper scrutiny must begin with the appendix, annexure "BAD1"
and the agreement.
[14] Appendix "B"
was executed first on 19 September 2013. The agreement, annexure
"BAD6", was concluded on
19 September 2013 and lastly
annexure "BAD1" was executed on 16 August 2014.
[15] Mr Venter conceded
that annexure "BAD1" is without fault. However, he has
problems with appendix "B" and
the agreement. He contends
that appendix "B" is invalid. His reason is that the
trustees did not act jointly in
producing appendix "B" and
that that has the effect of rendering the agreement
ab initio
,
null and void.
[16] Starting with
annexure "BAD1", the following emerges:
1. The two trustees
attended the meeting when annexure "BAD1" was born.
2. Both of them signed
annexure "BAD1".
3. Annexure "BAD1"
speaks of those who were present. This is borne out by the use
of the words "Present, apologies,
notice and the background".
4. Annexure "BAD1"
purports to ratify and approve "all that may have been done by
Brendan Arn Davids".
The question is whether this can be
done. Based on the common cause facts, this cannot be done.
5. Mr Venter, apart from
the ratification of what B A Davids did, regards annexure
"BAD1" as proper. This
is so because the two trustees
acted jointly.
[17] Appendix "B"
reveals the following:
1. Only one trustee acted
when the appendix was produced.
2. Only one trustee
signed the appendix.
3. The appendix does not
tell us if it was produced at a duly attended meeting as is the case
with annexure "BAD1".
4. It is clear that the
trustees, here, did not act jointly.
5. If there was a
resolution from which appendix "B" was extracted such
resolution is not part of these papers.
6. Mr Venter submitted
that this shows that such a resolution never saw the light of day.
Mr Gibbs did not request that
the matter be postponed to enable
them to produce the full resolution. The reason for his failure
to do so is not known.
[18] Mr Venter submitted
that if appendix "B" falls then the loan agreement must
fall and that eventually the application
must fail.
[19] It will be
remembered that the case law and the work of the different authors
referred to in respondent's heads of argument
represent the law as it
stands. This is that trustees must act jointly. The one
trustee purporting to represent the
Trust must be authorised so to
act by both trustees and that an
ab initio
invalid
contract cannot be resuscitated. (See
Thorpe and others v
Trittenwein and another
2007 2 SA 172
(SCA);
Van der
Westhuizen v Van Sandwyk
1996 2 SA 490
(W) at 496H;
Nieuwoudt
and another NNO v Vrystaat Mielies (Edms) Bpk
2004 3 SA 486
(SCA)
at 494D-E, 494G-H, 494I J and 495A-B;
Steyn and others NNO v
Blockpave (Pty) Ltd
2011 3 SA 528
(FB) at 532D-E and 537B B;
Coetzee v Peet Smith Trust en andere
2003 5 SA 647
(T) and
Goolam Family Trust v Textile, Curtaining and Trimming
1989 4
SA 985
(CPD) at 988D-J and
Van der Merwe v Van der Merwe en andere
2000 2 SA 519
(KPA) at 523E-G and 525B-.)
W A Joubert:
The Law
of South Africa
Vol 1 at pp110-111 and 113-117 and A J Kerr:
The Law of Agency
3
rd
edition at p74 also deal with
authority that is required when one represents the other.
[20] It will be
remembered that Mr Venter submitted that appendix "B" was
invalid in that Mr B A Davids
had not been properly
authorised to act on behalf of Mr R Winter and therefore on
behalf of the Trust. Mr Gibbs
submitted that annexure
"BAD1" and appendix "B" were but extracts.
The complete resolutions have to date
not been produced.
Appendix "B" the basis of Mr David's authority has only
been signed by one trustee. This
is not proper. Apart
from appendix "B" there is nothing that gives Mr Davids
authority to act as he did when the
agreement was concluded.
[21] It is important to
note that both annexure "BAD1" and appendix "B"
end the same way. The questions
therefore are:
1. Why was appendix "B"
signed by one trustee and not two?
2. Why, all of a sudden,
is annexure "BAD1" signed by two trustees?
Two trustees, in my view,
signed annexure "BAD1" because they realised that appendix
"B" had been defective.
This then begs the question
whether the defect can be rectified. As shown above it cannot
legally be rectified.
[22] It will again be
remembered that applicants have based their application and in
particular their cause of action for the debt
that they claim
respondent owes the Trust on the agreement. If appendix "B",
as shown above, is invalid, that means
that even the agreement is
tainted and invalid and this simply means that there cannot be a debt
based on applicants' cause of
action, as correctly submitted by Mr
Venter.
[23] Indeed if appendix
"B" cannot be rectified or ratified that disposes of the
application. This has clearly been
demonstrated.
[24] Mr Gibbs submitted
that even if the court were to uphold the point
in limine
applicants would still be able to proceed with the application as it
was conceded that the amount of R800 000,00 had been
received by
respondent. This loses sight of the fact that the application
and in particular applicants' cause of action is
the agreement.
The agreement, as shown above, is tainted and
ab initio
void
and invalid. Applicants are left only with other causes of
action, for instance, enrichment on the part of respondent.
This then clearly demonstrates that applicants have other alternative
remedies. Applicants' founding affidavit fails to deal
with
undue enrichment. This again simply means that the application
cannot succeed.
[25] In the result, I
make the following order:
1. The point
in limine
is upheld.
2. The application is
dismissed with costs.
M W MSIMEKI
JUDGE OF THE GAUTENG
DIVISION, PRETORIA
24523-2015
HEARD ON: 2 MARCH
2016
FOR THE APPLICANTS: ADV
W W GIBBS
INSTRUCTED BY: DE
KLERK AND VAN GEND ATTORNEYS
FOR THE RESPONDENT: ADV
J A VENTER
INSTRUCTED BY: W W
B BOTHA ATTORNEYS