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[2016] ZAGPPHC 535
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Sentinel Trust and Others v Barns N.O. and Others (A264/2014) [2016] ZAGPPHC 535 (10 March 2016)
REPUBLIC
OF SOUTH AFRICA
IN
THE HIGH COURT OF SOUTH
AFRICA
GAUTENG
DIVISION,
PRETORIA
Heard
on: 28 October 2015
DATE
: 10 MARCH 2016
CASE
NO: A264/2016
In
the matter between
:
SENTINELTRUST
N.O
..........................................................................
FIRSTAPPELLANT
DENNIS
NICOLAS
GALATIS
.........................................................
SECOND APPELLANT
NADIA
GALATIS
N.O.
.........................................................................
THIRD APPELLANT
And
THERESA
ROSE BARNS
N.O
.........................................................
FIRST
RESPONDENT
STANLEY
PRESTON BARNES
.................................................
SECOND RESPONDENT
NO
BRICK EMPORIUM (PTY)
LTD
................................................
THIRD RESPONDENT
JUDGMENT
LEGODI
J
[1]
This is an appeal against the decision of the court a quo (as per
Nkosi AJ) in terms of which the appellants' claim was dismissed
with
costs and the respondents' claim in reconvention upheld. The appeal
is with the leave of the Supreme Court of Appeal granted
on 11 March
2014.
[2]
The parties in this appeal will be referred to as in the court a quo.
The appellants were the plaintiffs in the court a quo
and had sued
in their representative capacity as the trustees of Tideland Trust
(Tideland). The first and second respondents on
the other hand were
the defendants who were sued in their capacity as the trustees of
Sugar Plum Trust (Sugar Plum).
[3]
On 6 February 2009 Tideland duly represented by Dennis Galatis
(Galatis) and Sugar Plum duly represented by Rose Barnes (Barnes)
entered into a written sale agreement (the agreement) in terms of
which Tideland sold its 100 shares in and claims against Brick
Emporium (Pty) Ltd (third defendant) to Sugar Plum at a purchase
price of R 3 000 000.00.
[4]
Clause 6.3 of the agreement became the subject of a dispute in the
court a quo.
It
reads as follows
"6.3
That, unless otherwise provided in this agreement, at the date of
signature and
until
completion date,
the
Company
would
be
the
owner
of
the
fixed
property, fixtures and fittings, plant
and equipment
as set
out in annexure c
thereto,
as
well
as
the mineral rights and old order Mining Rights
attaching to the fixed property
as set
out in annexure
"D".
[5]
The Company referred to in the quotation is the third defendant.
Ideal later in this judgment with clause 6.3. Annexure "D"
is a mining licence issued on 12 December 2002 to the third
defendant trading as Ratanda Bricks and of relevance it reads:
"Unless
this licence suspended, cancelled
or
abandoned
or lapses
it shall
be valid
for a
period (more than two
years), which shall extend from--
the date of issuing
until 2008\12\12
or
until the mineral the mining of which
is
hereby authorised can no longer be mined economically of the
holder on the land concerned."
[6]
The agreement was preceded by the following events:
6.1
On 9 September 2008 an offer to purchase was accepted and signed by
Bahles and Galatis on behalf of Sugar Plum and Tideland
respectively.
6.2
On 29 September 2008 an addendum to the offer to purchase was
concluded and signed by the parties. In the addendum it was
recorded
that a deposit of R500 000.00 will be paid to the plaintiffs by not
later than 3 October 2008. Furthermore, it was recorded:
"This
deposit has been agreed upon by both parties during
a
meeting
held
in Heidelberg on Friday, 28th September 2008 and has
been
done in good faith to
allow the
Purchaser the necessary time in obtaining the full documentations for
the
application
required for submission to the Department of Mineral and Energy (DME)
for
the purpose of conversion from the Old Mining Order to the New Mining
Rights
License".
6.3
The underlining is my emphasis as it would appear later in this
judgment when dealing with who of the parties was responsible
to
lodge the request for conversion. Barnes had sight of the
mining.licence at least by 12 September 2008 and was also aware
at
all times that the licence was to expire on 12 December 2008
6.4
During or about 12 October 2008 Barnes instructed JJP Mining
Consultants (a professional mining firm) to lodge a request for
conversion of the old order mining licence with the Department of
Mineral and Energy (Department) and paid an amount of R71 250,00
being the usual 50% deposit required by the said professional firm
for such an application.
[7]
The application was however only lodged on 30 April 2009. On 20 May
2009 the defendants were advised that the application
was
unsuccessful as the mining licence expired on 12 December 2008. The
process of applying for the mining licence is regulated
in the
Minerals and Petroleum Resources Development of Act 28 of 2002. This
Act came into operation on 1 May 2004 and item 7 of
Schedule II
thereof provides as follows:
"(1)
Subject to sub-items (2) and (8), any old order mining rights in
force immediately before this Act took
effect
continues to
be
in force for
a
period
not exceeding five years from
the date on which this Act took
effect
subject to the
terms
and conditions under which it was granted or issued or was deemed to
have been granted or issued.
(2)
A holder of
a
Mineral Mining right must lodge the right for
conversion
within the period
referred
to in
sub-item
(1) at the office of
the Regional
Manager
in whose region the land in question is situated
..."
[8]
The mining licence issued on 12 December 2002 was subject to the
terms and conditions that it will expire on 12 December 2008.
In
other words, any application for conversion was to be lodged before
the expiry of the licence as any right in force in terms
of the
licence aforesaid immediately before the Act came into effect,
terminated on 12 December 2008.
[9]
In terms of item 1 of Schedule II of the Act, 'old order mining
right,' means, 'any mining lease, mynpachten, consent to mine,
permission to mine, claim licence, mining authorisation or right
listed in table 2 to this Schedule in force immediately before
the
date on which this Act took effect and in respect of which mining
operation are being conducted'.
[10]
The balance of the purchase price in the amount of R2 500 000.00 was
in terms of clause 4.2, supposed to be paid on completion
date and
was to be secured by means of bankers guarantee within 30 days from
date of signature and by means a mortgage bond referred
to in clause
5 being granted.
[11]
The defendants failed to comply with any of the terms of the
agreement relating to payment of the purchase price and also
failed
to provide the guarantee as was required in terms clause 4.2 of the
agreement referred to in paragraph 10 above. The plaintiffs
regarded
such a failure to be a material breach of the agreement entitling
them to terminate the agreement and as a result, issued
summons
against the defendants and asked for relief as follows:
"(a)
An order rectifying the agreement, annexure "POC1", by the
insertion of words "per day" between
the figure
"R612.00" and the words "or part thereof', in
clause 18 of the agreement.
(b)
A declarator that the agreement was validly cancelled by
the Plaintiffs on 19 November 2009;
(c)
Payment of the amount of R1 316
712.33;
(d)
Payment of
a
further amount in damages representing
the
continuing damages suffered by the plaintiffs,
calculating in accordance with
the formula in the table at
paragraph 20 above, from 26 February 2010 to
date of
judgment;
(e)
Interest on the amounts in prayers (b) and (c) above at
the prescribed rate of 15,
5 %
per annum
a
tempore
mora;
(f)
An order directing that the first and second Defendants
and all
those holding title under them are to be evicted
from the property;
(g)
An order directing restitution by the First and Second
Defendants to the Plaintiffs of all performances made by the
plaintiffs
to the First and second defendants in terms of the
agreement.•
[12]
In paragraph 20 of the particulars of claim, it was pleaded:
"The
first and Second Defendants are accordingly also liable to the
plaintiffs in the sum of R1 316 712.33 in damages to
date, being the
value of the mane sold in terms of the agreement prior to the breach
of the agreement, less the value of the
merx at present,
alternatively loss of profits, which value is presented by the net
profit with the plaintiff could reasonably
have realised as sole
shareholders of the Third Defendant operating the mine on the
property from the date the Defendant took
occupation on 10 September
2008 to the current date, calculated on the basis of annual net
profit of R900,000.00 or R 30.00 per
cubic metre of clay mined, at a
reasonable mining rate of 30,000m3 of clay per annum. The
calculation of this amount is set out
in the following table:"
Net
profit m3 of clay mined
R
30.00
Reasonable
production of clay per annum
30
00.00m3
Profit
per annum
R900
000.00
Occupation
start
10
September 2010
Current
date
26
February 2010
Period
in days
534
Period
in years
1.46
Loss
R 1
316 712.33
[13]
The Defendants' main defence was pleaded as follows:
· “11.
The
Defendants plead that the agreement contains, inter alia, the
following express warranty, that is relevant for purposes
hereof:
11.1
that unless otherwise provided or in the agreement, at the date of
signature
and
until
the completion
date,
the
Third Defendant
would be the
owner of the
fixed property, fixtures and fitting, plant and equipment
as
set
out in Annexure “C” thereto,
as
well
as
the
mineral rights and old order mining rights attaching to the fixed
property
as
set out in Annexure "D"
to the
agreement (Clause
6.3).
12.
As
pleaded herein above the agreement was signed on 6 February
2009.
13.
The
applicable mineral rights and\or old order mining rights, allegedly,
attaching to the property, however, had lapsed on 12
December 2008
and,
as
no extension period existed,
a
new
application for mineral rights
and\or mining right would have
to be lodged by the Sugar Plum Trust,
as
opposed to
a
conversation of an old order mineral right and\or mining
right
to
a
new one.
14.
When
making the representation that the Third defendant was the
owner of the old
order
mineral and mining rights attaching to the
property.
the Plaintiff knew it to be
false
as
it knew that
same
had
lapsed, alternatively the plaintiff. though exercising
a
reasonable
degree of care and skill. should have known that the mining
rights and
mining
rights had
lapsed.
15.
When
the Plaintiff made the representation,
as
aforesaid, it
intended the
Sugar Plum Trust to act thereon and pay it the
purchase price of R3 000
000.00
for the Plaintiffs shares in the Third Defendant.
16.
Said
purchase price was substantially in
excess
of the true value
of the shares.
17.
The
Sugar Plum Trust was induced by the representation to purchase
the
shares at the price of R3 000.000.00, whereas had it
known the true
facts it would not have been agreed to pay
said purchase price for the shares.
18.
Specifically,
the true value of the shares amounts to R500 000.00,
only"
[14]
The underlining is my emphasis as it is in paragraph 33 below. The
court a quo in finding for the defendants on the issue
of
misrepresentation expressed itself as follows;
"[103]
The defendants have succeeded to prove on
a
balance of
probabilities
that
clause 6.3 constituted an
intentional or negligent misrepresentation that
an extension
period applied to the rights in annexure "D". The
defendants did not and could not dispute that the wording
of clause
6.3 and annexure
“
D” contained no such
representation. Instead they sought to establish that Galatis'had
advised Ms Barnes that there was
an extension applicable to the
conversation of the mining
licence. In contrast Galatis's
version was that he had been informed by Ms Barnes,
on the
advice of the professional mining consultants
appointed
by
her that the mining licence attached
as annexure “D”
could be converted to
a
new
order mineral right was
set out in the Plaintiffs' plea to the defendants' counterclaim.
[104]
Ms Barnes' evidence in this regard was unreliable and contradictory
and wholly inconsistent with the probabilities that she was made
to believe that there was an extension. The defendants have
therefore
established that representation was
made by
Galatis,
or
with his implied knowledge.
[105]
Further, Ms Barnes's evidence
was that she was at all times
well
aware
of the
expiry date on Annexure
·D
. It
was
therefore
anything but
a
latent
defect. The defendants have therefore succeeded to prove that
they
were entitled to
a
price reduction. This was
supported by evidence that she had to secure clay from other service
providers at a cost instead of
mining itself. Signing of the
agreement on 6 February 2009 long after the expiry of the licence
should have prompted
the
plaintiff to enquire as the
licence holder but chose not
to.
[15]
Before Ideal with the findings as quoted above, I find it necessary
to deal with the principle relating to misrepresentation.
An
innocent misrepresentation, which induced a party to agree to be
bound by a contract, may be relied on by that party to avoid
the
contract. It does not however, give rise to a claim for damages
because it is not a delict. (See Fitt v Louw
(1970) 2 ALL SA 542
(T)
1970 (3)
SA
73
(T). If the contract is one of sale, a price reduction or
cancellation and restitution can be claimed. (See Phame (Pty) Ltd v
Paizes
1973 (3) ALL SA 501(A)
,
1973 (3) SA 39
A).The essential
allegations for avoiding a contract on the ground of innocent
misrepresentation are:
(a)
a representation;
(b)
which was false;
(c)
which was made by the defendant or defendant's agent;
(d)
which is material;
(e)
which was intended to induce the person to whom it was made to enter
into the transaction: and
(f)
that the representation did in fact induce the contract.
(See
Novick and Another v
Comair Holdings and Others Ltd
1979 (3) ALL
SA 73
(W),
1979 (2) SA 116
(W).
[16]
The other issue relevant to representation is an element of latent
defect as mentioned by the court a quo in paragraph 105
of its
judgment. The purchaser must allege and prove not only that the
object had a defect that was latent but also, inter alia,
that the
seller concealed the defects of which he or she, or knowingly
represented their absence. This is said to be simply fraud
in
another form. (See Glaston House (Pty) Ltd v lnag (Pty) Ltd
1977 (3)
ALL SA 88
(A)
1977 (2) SA 846
(A).
[17]
Where a price reduction is claimed based on latent defect, a
purchaser has to allege and prove the following:
(a)
a defect in the article sold, rendering it ineffective for the
purpose acquired;
(b)
that the defect existed at the time of the sale;
(c)
that it was latent; and
(d)
that he or she was unaware of its existence.
(See
Holmdene Brickwork (Pty) Ltd v Roberts Construction Co Ltd
1977
(3) SA 670
(A).
[18]
When a repayment of the purchase price is claimed, in addition to
the allegations to be made and proved, the plaintiff has
to allege
and prove
inter alia,
that he or she would not have
purchased, had he known of the defect and that he or she was not
aware of the defect thereof (See
Holmdene Brickworks (Pty) Ltd
supra).
[19]
The defendants in their claim in reconvention asked for relief,
inter alia, as follows:
"(a)
That it be declared that the First and Second defendants are entitled
to reclaim the shares in the Third Respondent
and that the value of
said shares is equal to the portion of the purchase price paid to
the purchaser, being R500 000 00;
(b)
Payment of R9 443 472.00;
(c).....”
(d)......”
[20]
The amount of R9 443 472.00 for damages were pleaded as follows:
"(a)
As
a
result of the Plaintiff's misrepresentations, the Sugar
Plum Trust suffered damages in the amount of R 9,443,472.00 made up
as
follows:
-Costs
of EMP
…............................................................
R300
000.00
-Application
for Mineral and \or mining rights
.................
R200
000.00
-Rehabilitation
funding
....................................................
R4,00
000.00
-Clay
purchased from outside
sources
….......................
.R1,529,472,00
-Loss
of profit from occupation date until
such
..................
R3,024,000.00
Time
as
new mineral and \or mining rights are obtained
Total
R9,443,472.00
Aforesaid
damages were within the contemplation of the parties when the
agreement was concluded altematively it flows naturally
from the
Plaintiff's breach".
[21]
Insofar as the defendants claimed for reduction of the price from R3
000 000.00 to R500 000.00 based on the alleged latent
defect, they
were also required to show on the balance of probabilities that they
were unaware of the defect. That is, they should
have shown that as
they concluded the contract on 6 February 2009, they were unaware
that the mining license and all rights in
terms thereof had come to
an end on 12 December 2008.
[22]
The court a quo in paragraph 105 of its judgment found that the
defendants 'succeeded to prove that they were entitled to
a price
reduction.' I cannot agree with this finding for the very reason
mentioned by the trial court in paragraph 105 of its
judgment when
it stated that
"Ms Barnes evidence was that she
was
at
all
times well aware of the expiry date on annexure D".
That
it was "anything
but
a
latent
defect,”
cannot in my view be correct bearing in mind the
fact that she knew or must have known that the mining license was to
expire on
12 December 2008. Therefore when she signed the agreement
on 6 February 2009 and agreed to Clause 6.3 of the agreement, she
knew
that the licence had expired. The court a quo also in paragraph
62.4 of its judgment found that "Ms Barnes had sight of the
mining license from the beginning of the negotiations and by at
least 12 September 2008 and was at all times aware of the fact
that
the licence expired on 12 December 2008". Therefore, there can
be no question that the defendants were aware of the
defect when
they concluded the contract on 6 February 2009.
[23]
The court a quo in paragraph 98 of its judgment found that "if
there was no offer to purchase, the owner of the license
would have
taken active role to have the license renewed or converted to a new
order one as required by the law. The decision
to leave it on the
lessee's or the prospective buyer's discretion to convert it could
not be justified as ownership rested with
him". Furthermore, in
paragraph 99 of its judgment the court a quo took the view that "it
is inconceivable that the
plaintiff having an interest to sell the
business to the defendant would not see to it that the mining
licence which was going
to expire sooner be properly transferred to
the prospective buyer who had already paid him with a substantial
deposit of R500
000.00" and that "the mining licence was
not less important.
[24)
I cannot with respect agree. The court a quo should have found
otherwise. The addendum to the offer to purchase signed on
29
September 2009 and annexed to the written agreement of 6 February
2009, makes it quite clear that the defendants were to apply
for the
conversion. The payment of the deposit in the amount of R500 000.00
in terms of the addendum to the offer to purchase
was meant "to
allow the purchaser the necessary time in obtaining the full
documentation for the application required for
submission to the
Department of Mineral and Energy for the purpose of conversion from
the Old Mining order to the New Mining Rights
Licence". That in
my view should have put the issue to rest.
[25]
Insofar as Barnes wanted to suggest that it was the plaintiffs'
obligation to lodge the application for conversion, and that
the
defendants were made to believe that conversion existed or that any
right under the mining licence issued on 12 December
2002 was still
valid, that should be seen in the context of h r evidence which the
court a quo, in my view, correctly rejected
and found her to be
unreliable witness.
[26]
Barnes in her evidence tried to put the blame on the plaintiffs in
seeking to justify the alleged misrepresentation in clause
6.3. But,
when she was asked what was conveyed to her on 9 September 2008, she
answered:
"In
this regard, obviously, coming from
a
mining background myself, I do understand the full
implications of
a
conversation
from start and the time consumed to, to actually do this and or
a
new mining licence, and the cost involved of the new mining licence.
But, at this point in time, what it was, is that Debbie Becker
and
Dennis Galatis, in the same meeting, actually told
me
that there was extension given to them to the end of April
2009, the 3dh of April 2009. I requested
a
document from the DME actually stipulating this and Debbie
Becker, in this meeting, referred me to the Government Gazette,
which
it was read there. But having already applied for conversion,
three months, there, there should have been
a
licence in place, at this, it should have been already
converted."
[27]
Barnes denied the suggestion that it was her appointed Mining
Consultants who wrongly advised her of the alleged extension
of the
mining licence until 30 April 2009 and gave an answer to the
suggestion as follows:
"
That is not true. That is not true, whatsoever. After realising that
Debbie Becker did not have any documentation, supporting
a
conversion, at this point in time, which only came to my
knowledge, after I had paid her money, in November, I, October
,
I consulted with JJP Mining, but I did keep Mr Galatis
informed at all times. I consulted with JJP mining and informed them
that
there was an extension for the 3dh April and this extension,
came to my knowledge through Dennis and Debbie Becker in this very
same
meeting, of 3dh April.
[28]
Thus in a nutshell, the defendants' case took a turn in the course of
the trial. That is, they were made to believe that
there was an
extension of a mining licence which expired on 12 December 2008 and
that they were entitled to apply for conversion
by not later than 30
April 2009. The onus was on the defendants to establish on the
balance of probabilities that such a representation
was made, and if
so by whom, but, most importantly, whether the alleged extension was
pleaded.
[29]
In paragraph 13 of the plea quoted in paragraph 13 of this judgment
it was pleaded: "the mineral rights under old order
mining
rights, allegedly attaching to the property, however had lapsed on
12 December 2008
and as no extension period
existed,
a new application for mineral rights and or mining rights would
have to be lodged by the Sugar Plum Trust, as opposed to a
conversion
of an old mineral right under mining right to a new one".
[30]
The underlining is my emphasis. Clearly no allegation of
representation regarding extension was made in paragraphs 13 to
17
of the plea quoted in paragraph 13 of this judgment. 'No extension
period existed,' does not equate to the allegations which
emerged
for the first time during trial, that on 9 September 2008 Galatis and
Debbie Bekker conveyed to Barnes that there was
extension of the
mining licence until 30 April 2009. The evidence to this effect was
intended to have the purchase price reduced
as claimed in
reconvention and should have been found to be inadmissible for the
reason that the alleged misrepresentation on
extension of the
licence to 30 April 2009, was not pleaded.
[31]
The representation pleaded is amplified in paragraph 14 of the plea.
That is, ‘when making
the representation that the third
defendant was the owner of the old order
mineral rights
attachi ng to the property. the Plaintiff knew i t to be false as i t
knew
that same had lapsed.
'Clearly the representation as
pleaded was not that Barnes was told that there was an extension of
the licence until 30 April 2009.
Consequently evidence on the
extension should have been disallowed.
[32]
If I was to be wrong regarding the finding above, the next question
is whether a representation about extension was made
and if so, by
whom and on behalf of whom. It was
common
cause that during
September 2008 the defendants assumed the responsibility to lodge
the application for conversion of the old order
mineral rights to
the new order mineral rights. It was also common cause that the
defendants knew since the start of the negotiations
in July 2008
that the mining licence would expire on 12 December 2008.
[33]
What appears to have been a further critical issue raised for the
first time during trial was the suggestion that representation
about
extension was made by the plaintiffs. Two witnesses testified in
this regard. Galatis for the plaintiffs alluded to the
fact that it
was in fact the mining consultants the defendants had engaged to
apply for conversion who advised them that there\
was an extension
up to 30 April 2009. While Barnes denied this, the trial court. In
its judgment found her to be unreliable witness,
in my view,
correctly so. The court a quo in dealing with Barnes's evidence,
remarked as follows:
"[69]
Ms Barnes'
evidence did not accord in several material
respects
with what was
put to Galatis and she was
vague and evasive.
[70]In
her evidence in chief she stated that Bekker and Galatis had advised
her that there was an extension. This, she said, occurred
at meeting
held in Zart's office in Johannesburg, where both the "rental
Agreement take over" and
the offer to purchase were
signed. She testified that she has specifically asked
for
some
form of confirmation from the DME that this was the case and that
Bekker had referred her to the Government Gazette.
[71]
She later said that the information regarding the extension "came
from the likes of Debby Bekker with the knowledge
of Dennis
Galatis". However she again subsequently altered this and
stated that Ga/atis told her that there was an extension.
[72]
Under cross- examination she remained unsure who had
allegedly
advised her of the extension, saying first that
both Bekker and Galatis had advised
her and that Galatis had,
by his mere presence at the meeting, merely agreed to this. She
followed this by saying that this was
her assumption that Galatis
knew
about the extension. This was not clarified in
re-examination. Ms Barnes
further conceded that she could not
dispute that Galatis had never appointed
mining consultants
himself.
[73]
It is submitted that this is determinative of the issue, as on her
own version, Ms Barnes has indicated that the advice that there
was
an extension did not come from Galatis at all but rather from
Bekker: The unreliability of Ms
Barnes' testimony on this
point is further apparent from the following:
[73.
1] She conceded under cross-examination that
as
the "Rental
Agreement take over" indicates that it was signed in
Heidelberg, it could not have been signed by all parties
at Zartz's
.office as she had stated previously in her evidence in chief. She
was then clearly uncertain about who was allegedly present at
this
meeting and where the two agreements had been signed and could not
commit to an answer.
[73.2]
Despite testifying in her evidence in chief that she had no reason to
believe that there was not an extension, she quite correctly
conceded under
cross- examination that she was indeed
concerned about the correctness of this information
as
she
had specifically asked for some form of confirmation from the DME,
despite Bekker failing to provide her with
a
copy of the
relevant Government Gazette
as
she allegedly promised, Ms
Barnes insisted that she
still had no reason not to believe
that there was an extension. She in fact testified that she would
have ideally wanted
a
specific directive to this effect from
the
DME addressed to the company.
[73.3]
She also testified that JJP were professionals whom she had
hired
specifically to prepare the application for the conversion and that
she had not only consulted with them and provided them
with the
details of the licence which she required to be converted, but also
specifically informed them that there
was an extension
period. Despite being professional mining consultants JJP did not
advise her that there was no such extension.
In her own words, JJP
"took it
for granted that therein was an extension".
She nevertheless refused to concede that in doing
so
JJP had
been
negligent.•
[34]
The criticism quoted above has merit and I do not find it necessary
to repeat same. It suffices to mention that I share the
finding that
no reliance can be placed on the evidence of Barnes. Insofar as she
pointed at Debbie Bekker for the alleged representation
regarding
extension, that could not be attributable to and imputed to the
plaintiffs.
[35]
Debbie Bekker or her company was the third defendant's lessee. Having
concluded the sale agreement and the first and second
defendants
having taken over the lease agreement during September 2008, certain
amount of money was paid to Debbie Bekker by
Barnes on behalf of
Sugar Plum.
[36]
Regarding the issue as to who made the representation, the
suggestion that Galatis was the source, should be rejected. What
the
trial court said as quoted in paragraph 33 above, in my view,
supports such rejection. If the alleged representation was
made by
Debbie Bekker the plaintiffs cannot be held liable for her actions as
there was no evidence that she acted on behalf of
or as an agent
of
the plaintiffs. Accordingly, the claim in reconvention on this basis
alone should have been dismissed.
[37] There
is another basis on which the defendants sought to establish their
claim in reconvention and this was by challenging
the plaintiffs'
claim. The main claim of the plaintiffs was for damages based on a
breach of the written agreement concluded
on 6 February 2009, which
agreement the plaintiffs cancelled and offered to return the R500
000.00 to the defendants. The entire
relief sought in main is quoted
in paragraph 12 of this judgment. The alternative claim was for the
enforcement of the agreement
and for reasons mentioned earlier, the
alternative claim cannot succeed as conditions mentioned in
paragraphs 10 and 11 of this
judgment were not met.
[38]
In paragraph 11.1 of the plea, it was pleaded that the agreement
contained an express warranty in clause 6.3. Clause 6.3
is quoted in
paragraph 4 of this judgment. In cross-examination, Barnes was
referred to clause 6.3 and her evidence unfolded
as follows:
"Ms
Barnes,
does clause
6.3 gives
the impression; in
its
wording that
there
was an extension
applicable to the conversion?
-
In its wording here?
Yes,
-
No".
[39]
Then in dealing with the request for admissions, the
cross-examination proceeded:
"As
we discussed, the representation was the same
as
clause 6.3
that is, that
is what was meant by representation. Now, if
you look at your response to
that, page
97.
Your
response to paragraph 1.2.6 simply indicates "not
applicable".
So,
despite being asked and given an
opportunity to identify which portion of clause 6.3 constitutes a
representation that opportunity
was never taken
up. Well
, that
was our response at the time.
That
was your response at the time.
So,
you
were
asked
to identify which portion of that indicated that there was a
representation of an extension and your response,
at the
time, was "not
applicable".
So,
I put it to
you,
Ms
Barnes
that the reason your response was "not
applicable" was, in fact, because there are
no portions
of clause
6.3,
which indicates that
there was an
extension
applicable to the conversion of the license. Do you
want to comment on that?
-
No
And
again, I refer you to your various responses there, at page
96
and 97 and all of those responses
are marked
"not
applicable". So you
have now indicated
that
you agree that clause 6.3, in its wording indicates nowhere in it
that there was an extension
and
that that
'impression must have
come from somewhere
else.
That
is,
that is what you have agreed with.
---
No
You, you say you do not agree with that,
-
I do agree with,
that there, the extension
existed
and
whether
there
is
paperwork conflicting,
I
do
not
know. But
, Ms Barnes, you agree that, you said, I mean,
quite clearly 6.3 does not give indication that there was an
extension, not
...
[intervene]-- You are reading it in
isolation ...
[Intervene].
I
am reading it in isolation. But in isolation, it does not indicate
any
-
[intervene]- Correct...
[Intervene].Alright. So,
you would agree that. and as you said. the idea or
the
impression that
there was an extension that applied. must
have come from somewhere else.-
Yes
.
Okay.
Now when,
you were asked
to
provide information on
where that representation may have come, if it did not come from
clause
6.
3,
your response was, "not applicable".
Do
you agree with that? That, that
is
what we
have just gone through. -Well, ja."
[40]
The quotation above in my view brought to an end any allegation of
representation in the written agreement. The point is,
the
defendants undertook to apply for conversion in September 2008,
knowing well that the licence was to expire on 12 December
2008. The
deadline for conversion was not met and despite all of this the
agreement was concluded on 6 February 2009. Extension
of the mining
licence to April 2009 was recorded nowhere in the agreement as
clearly conceded by Barnes in cross-examination.
Seemingly, the
extension was an afterthought, the Department having declined the
application for conversion on 20 May 2009. But
what is striking is
that 30 April 2009 was exactly five years from 1 May 2004 being the
date on which the Act came into operation
particularly taking into
account the fact that in terms of item 7 (1) of the Act and subject
to sub-items (1) and (8) thereof
'any old order mining right in
force immediately before this Act took effect continues in force for
a period not exceeding five
years from the date on which the Act took
effect subject to the terms and conditions under which it as granted
or issued or was
deemed to have been granted or issued.'
[41]
Regarding damages, the parties at the start of the proceedings in
the court a quo indicated that they agreed to have quantum
be
separated from liability and that only the issue of liability be
determined. Therefore, while the court a quo in its judgment
ruled
that the defendants' claim in reconvention was upheld, this was in my
view, with reference to liability only.
[42]
Consequently, an order is hereby made as follows:
42.1
The appeal is upheld with costs.
42.2
The order by the court a quo is set aside and substituted as follows:
"
1. Cancellation by the plaintiffs of the written agreement concluded
on 6 February 2009 is hereby confirmed.
2.
The first and second defendants
are
hereby held liable to pay to the
plaintiffs any proven
damages arising from the breach and cancellation
of the
written agreement
referred
to in 1 above-.
3.
The issue of damages is hereby postponed sine
die.
4.
The
first
and
second defendants are
ordered
to
pay costs
of
the
action to
date
hereof
jointly and
severally, the
one
paying
the
other to
be
absolved."
MF
LEGODI
JUDGE
OF THE HIGH COURT
I
AGREE.
LM
SETHOSA-MOLOPA
JUDGE
OF THE HIGH COURT
I
AGREE
NB
TUCHEN
JUDGE
OF THE HIGH COURT
For
the Applicant:
..............................................
Adv
S Fergus
Instructed
by:
.....................................................
Bridget
Ellender Duster & Ass
For
the First and Second Respondent:
............
Adv D Prinsloo
Instructed
by:
......................................................
.Fourie
Attorneys