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[2016] ZAGPPHC 728
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Ebrahim v Breezewood Trading 88 CC t/a Mica Celtis (A5/2015) [2016] ZAGPPHC 728 (18 August 2016)
REPUBLIC
OF SOUTH AFRICA
IN
THE HIGH COURT OF SOUTH AFRICA
GAUTENG
DIVISION, PRETORIA
DATE:
18/8/2016
CASE
NO: A5/2015
In
the matter between:
ESSOP
ISMAIL
EBRAHIM APPELLANT
And
BREEZEWOOD
TRADING 88 CC t/a
MICA
CELTIS
RESPONDENT
JUDGMENT
MAKHOBA,
AJ
[1]
This appeal comes before us following an action for damages
instituted by the respondent against the appellant in the court
a
quo.
Leave to appeal was sought and granted by the trial court in
respect of the order as well as costs of the action.
[2]
In addition the appellant seeks for condonation in terms of rule
49(7), for the late filing of the outstanding portion of the
complete
record, and application in terms of section 22(a) of the Supreme
Court Act 59 of 1959 to introduce new evidence on appeal.
[3]
The respondent did not oppose the condonation application and it was
duly granted by us. What remains to be decided by us is
the
application for the introduction of new evidence and the whole
judgment and orders granted by the court
a
quo.
[4]
In order to facilitate an easy understanding of the legal issues
involved herein, a brief resume of the facts of this case is
necessary.
[5]
Appellant and Mr Karim were members of the respondent a close
corporation Breezewood Trading 88CC t/a Mica Celtis. They were
the
only two members and each held a 50% share in the respondent.
Appellant became a member of the respondent during February 2008.
The
store was run by the brother of Mr Karim assisted by the wife of the
said brother but the brother and his wife were not members
of the
respondent. Mr Karim did not participate in the business as he was
permanently employed by Telkom. The bank account of respondent
was
solely controlled by the appellant.
[6]
During the subsistence of the business the relationship between the
appellant and Mr Karim became acrimonious. Mr Abdool Khalik
Karim
testified to the effect that in May 2010 the Appellant was requested
to bring all financial statements to the meeting of
13 May 2010 and
before the 50% shareholding was purchased and any agreements were
signed. He testified that on 13 May 2010 the
Appellant and his
attorney arrived at the meeting, however, did not bring the financial
statements and bank statements with. As
a result thereof a further
agreement was entered into between the parties, namely the Memorandum
of Agreement entered into between
the Appellant and Abdool Khalik
Karim. According to Abdool Khalik Karim the sole purpose of the
Memorandum of Agreement was to
safeguard the interest of the
Respondent because at that stage the Appellant had not been
forthcoming in respect of the bank statement
and financial
statements.
[7]
The reasons advanced by appellant for selling his 50% share in the
business to Mr Karim are as follows:
-He
had colon cancer.
-Mr
Karim did not bank the monies he received from the business.
-Mr
Karim's sister in law opened a card machine account in her own name
in a fraudulent manner and took the proceeds from this account
for
her own benefit.
[8]
The purchase price for the appellant's 50% share was R600 000.00 and
was paid the same day when the contract was signed between
the
parties. It was paid the same day into the trust account of the
appellant's attorney.
[9]
Mr Karim testified in the court
a quo
that he received the
bank statements later from the appellant he found that money had been
withdrawn from the respondent's account
without his knowledge. It is
common cause that appellant transferred four separate amounts
(totalling R388 000.00) from the bank
account of the respondent
either into his own personal bank accounts and or the transfer of the
monies was to his benefit. Appellant
was then sued by respondent to
pay back to respondent monies fraudulently withdrawn from the
respondent. The appellant's main defences
were as follows:
(i)
He withdrew these monies from his loan account to the respondent. The
loan amount was R750 000.00.
(ii)
Whatever withdrawals he made was with the consent of Mr Karim.
(iii)The
purchase price would have been higher had he not withdrawn these
monies.
(iv)The
withdrawals of these monies had been resolved between the parties
before signing the agreement.
(v)
He relies also on paragraph 12.3 of the sale of shares agreement
which states that the agreement would be full in and final
settlement
of all issues between the parties.
[10]
After evidence was led in the court
a quo
the trial court
found that the version of Mr Karim was far more probable and that
appellant did not bring the bank statements he
was requested to bring
with him when the agreement was signed. The court
a quo
found
further that appellant acted in bad faith and could not rely on the
protection afforded by a non-
variation clause.
Judgment was then granted in favour of the respondent in the amount
of R338 000.00.
[11]
The crisp issues in this appeal are whether we should admit new
evidence that the Appellant seeks to have admitted on the merits
to
determine whether the court
a quo
was correct in concluding
that the probabilities favour the Respondent.
Legal
position
( new
evidence)
[12]
The question whether new evidence should be admitted has been the
subject of numerous judgments of our courts and a particular
approach
has crystalized over time. In S
v De Jager
1965 (2) SA 612
(A)
p613, para B the court said the following:
"(a)
There should be some reasonably sufficient explanation, based on
allegations which may be true, why evidence which it
is sought to
lead was not led at the trial.
(b)
There should be a
prima facie
likelihood of the
truth of the evidence.
The
evidence should be materially relevant to the outcome
of
the trial."
[13]
The Supreme Court of Appeal in
DeAguiar v Real People Housing
2011
(1)
SA 16
(SCA)
page 19 from par 10 dealt with the issue of
adducing new evidence on appeal as follows:
"These
provisions have been the subject of judicial scrutiny on innumerable
occasions over the years and, although the requirements
have not
always been formulated in the same words, the basic tenor of the
various judgments throughout has been to emphasise the
court 's
reluctance to reopen a trial in the interest of finality, the court
's powers should be exercised sparingly and further
evidence on
appeal should only be admitted in exceptional circumstances. It is
incumbent upon an applicant for leave to adduce
further evidence to
satisfy the court that it was not owing to any remissness or
negligence on his or her part that the evidence
in question was not
adduced at the trial. Furthermore, inadequate presentation of the
litigant 's case at the trial will only in
the rarest instances be
remediable by the adduction of further evidence at the appeal stage."
[14]
I now proceed to apply the foregoing principles to the evidence
before us.
(i)
A reasonable
explanation
Counsel
for the appellant submitted to us that Mr Karim testified that he
became aware for the first time of fraudulent transactions
by the
appellant after the bank statements were handed over to him and that
failure to plead this assertion by the respondent resulted
in the
appellant's failure to discover the documents which constitute new
evidence before this court. In my view this argument
cannot succeed
because in paragraphs 6, 7 and 8 of respondent 's particulars of
claim, respondent pleaded that the monies were
fraudulently withdrawn
from the account of the respondent without the knowledge of Mr Karim.
In the court a quo during the hearing
of the evidence reference was
made to the documents not discovered. Appellant when he testified
intimated that the documents might
be with his lawyers. However these
documents, if they did indeed exist, were not discovered nor
presented at the trial. Consequently
I am of the view that there is
no reasonable explanation for the Appellant's failure to lead the
evidence during the trial.
(ii)
Prima facie
likelihood of the truth of the
evidence
[15]
In this regard it was submitted to us that the evidence sought to be
introduced will rebut Mr Karim's evidence that he became
aware of the
withdrawals two weeks after signing the agreement. Mr Karim has
already denied knowledge of the withdrawals and the
loan account and
this was dealt with at length in the court
a quo.
In addition
the evidence sought to be produced by the appellant contradicts the
evidence of the appellant on page 39 of the record
where appellant
says there was nothing in writing. Therefore, in my view, this court
will be misdirecting itself in admitting evidence
that contradicts
appellant's evidence in chief. Furthermore it is clear to me that
what the appellant contemplates is a new trial
involving documents
which will be strenuously contested by the respondent. This is a
compelling consideration against granting
the relief sought. See
De
Aguiar v Real People Housing supra
on par 23 paragraph B.
(iii)
Evidence
materially relevant to the
outcome
[16]
Counsel for the appellant argued that the effect of the new evidence
to be introduced will substantially sway the balance of
probabilities
in favour of the appellant, and will therefore have a material and
direct impact on the outcome of the trial. On
the other hand counsel
for the respondent in my opinion correctly argues that evidence
sought to be introduced contradicts the
version already before court.
The financial statements appellant seeks to introduce are not even
signed and, the authenticity therefore
is put in dispute by the
respondent. It is my view that this is another compelling
consideration against granting the relief sought.
[17]
I am of the view that the appellant has not satisfied any of the
requirements set out in S
v De Jager supra
for the
introduction of the further evidence and the application should be
refused.
The
merits
[18]
It was submitted to us that respondent failed to plead essential
elements required to sustain a cause of action of misappropriation.
We were referred to the decision in
Trope
v
South
African Reserve Bank
[1993] ZASCA 54
;
1993 (3) SA 264
(A). However, this decision dealt with the upholding of an exception
that the plaintiff's particulars of claim were vague and
embarrassing. In any event in the matter before us the particulars of
claim in my view sets out satisfactory the necessary allegations
to
sustain the cause of action.
[19]
In his judgment the learned judge of the court
a quo
found
that from the evidence before him there was no evidence of a loan
account between appellant and the respondent. In my view
there is no
tangible evidence to show that there was a loan account. I therefore
agree with the finding of the court
a quo
in this regards.
[20]
Counsel for appellant attempted to bring this matter within the ambit
of the
Shifren
rule. The
Shifren
rule originated from
the decision in
Sentrale Ko-op Graan Maatskappy Bpk v Shifren
1964
(4) SA 760
(A). The
Shifren
rule is lucidly described in
Christie:
The law of contract in
South Africa
6th
edition on page 465 as follows:
"Having
thus cleared their non-variation clause out of the way the parties
may then do informally what the clause restricted
them to do in
writing. An entrenched non variation clause cannot be treated in the
same fashion, as it entrenches not only the
other clauses in the
contract but also itself against the possibility of information
variation, so if it is desired to vary any
clause in the contract
informally or to do informally whatever it is that the non-variation
clause restricts the parties to doing
in writing the non-variation
clause must first be varied in writing. This is what Shifren
primarily decided."
In
Van As v Du Preez
1981 (3) SA 760
(T) the decision was
referred to and relied on by the trial court in this matter on page
765 paragraph H the court said
"A non-variation clause would
of course not protect a
party against his own fraud
(Shifren and Others v SA Sentrale Ko-op
Graan
Maatskappy Bpk
1964 (2) SA 343
(0) at 366D-E)"
In
Brisley v Drotsky
2002 (4) SA 1
(SCA) on page 34 CAMERON JA as
he then was in support of the majority judgment said
"And
where
a
contracting party, strong or
weak, seeks to invoke the writing only requirement in deceit
or
to
attain
fraud,
the
court
will
not
permit
it
to do
so."
In
the matter before us the parties did not vary or seek to vary their
agreement hence the court a quo said the following on page
227 line
20 of the judgment
"Disregarding the Shifren rule is not
relevant in this
case, as it is clear based on the testimony
of Mr Abdool Ictialiq Karim, that there was no variation to the
memorandum of agreement
or the sale
of members interest
agreement and therefore, the Shifren rule remains
in
full
force and
effect."
It is
therefore in my view incorrect that the court
a
quo
in
determining whether the appellant was not
bona fide
towards
the respondent when signing the agreements relied on the Shifren
rule. The court
a
quo
only referred to
the Shifren rule to illustrate that it was not applicable in this
case.
The
parole evidence rule
[21]
It was argued by the counsel for the appellant that the court
a
quo
disregarded the principles of the parole evidence rule, and
in doing so found that the appellant should be precluded from relying
on the provisions of clause 12.3 of the sale agreement.
[22]
Clause 12.3 of the sale agreement reads as follows:
"Having
regard to the existing acrimonious relationship between the parties,
as at date of signature of this agreement, the
parties wish to record
that this agreement, in addition to the sale of the sellers members
interest, is infull and final settlement
of all issues between the
parties on the one hand, and the parties and the close corporation on
the other hand, arising from any
existing or future civil or criminal
liabilities."
[23]
Christie
The law of contract in South Africa
defines parole
evidence or integration rule as follows on page 200
"But
despite the difficulties attendant upon it, it serves the important
purpose of ensuring that where the parties have decided
that their
contract should be recorded in writing, their decision will be
respected and the resulting document or document will
be accepted as
the sole evidence of the terms of the contract."
[24]
In
KPMG
v Securefin
Ltd
2009
(4) SA 399
(13) (SCA) p409 para (39) the court of appeal defined the
parole evidence rule as follows:
"First,
the integration (or parole evidence) rule remains part of our
law.
However, is
frequently
ignored
by
practitioners and
seldom
enforced by
trial
courts.
If a document was intended to
provide a complete memorial of a
...
act, extrinsic
evidence may not
contradict,
add
to or
modify
its meaning
(Johnson
v Leal
1980
(3) SA 927
(A) at 943B)."
In
my view therefore considering the findings of the court
a quo in
reference to the parole evidence rule, the court
a quo
did not
add or modify the meaning of the agreement before the parties but the
court
a
quo
simply found that respondent when
entering into the agreement with the appellant was not aware of the
withdrawals already made by
the appellant from respondent's bank
account. See page 229, paragraph 10 of the judgment of the court
a
quo.
Therefore the submission that the court
a
quo
disregarded the parole evidence cannot succeed.
[25]
The court a quo made a finding pertaining to credibility,
contradictions and improbabilities of the appellant. Therefore I
see
no need to repeat them in this judgment. I accept the findings of the
trial court in this regard as correct. The trial court
rightly found
that failure by respondent to deliver the bank statements to Mr Karim
prior to the sale of his 50o/o membership was
to deceive the
purchaser.
[26]
Again for reasons already alluded to above the court
a quo
correctly found that on the probabilities the defendant did not
bring all financial statements and bank statements to the meeting
of
13 May 2010. The trial court rightly remarked as follows in his
judgment on page 230 paragraph 10 of the record of the trial.
"Had
he done so I fail to see why it was deemed necessary to draw up the
Memorandum of Agreement. "
The court
a quo
accepted
that Karim would never have entered into the agreements had he known
that the appellant had misappropriated the amounts
sued for and that
the version of Karim is far more probable.
[27]
Relying on the authorities referred to above the court
a quo
in
my view rightly rejected the evidence by appellant and correctly
found that the probabilities favoured the respondent.
[28]
I agree therefore with the submission by counsel for the respondent
that on a balance of probabilities the version of the appellant
does
not ring true.
[29]
In the circumstances the conclusion reached by the court
a quo
is
not assailable and it must follow that the appeal must fail.
Order
I
make the following order:
1.
That the application to adduce further evidence is dismissed with
costs.
2.
That the appeal is dismissed with costs.
D
MAKHOBA
ACTING
JUDGE OF THE GAUTENG DIVISION, PRETORIA
R
G TOLMAY
JUDGE
OF THE GAUTENG DIVISION,PRETORIA
I
agree
N
KOLLAPEN
JUDGE
OF THE GAUTENG DIVISION, PRETORIA
I
agree
Heard
o
n: 8
JUNE 2016
For
the A
pplicant: Adv.
M. Jorge
Instructed
b
y: Afzal
Lahree Attorneys
For
the
Respondent:
Adv.
B.D.Stevens
Instructed
b
y: Johan
Nysschen Attorneys
Date
of
J
udgment: