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[2015] ZAGPPHC 118
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Rupert Investments (Pty) Ltd v J.H. Petzer Inc and Others (36878/2013) [2015] ZAGPPHC 118 (13 February 2015)
IN
THE HIGH COURT OF SOUTH AFRICA
(GAUTENG
DIVISION, PRETORIA)
Case
Number: 36878/2013
Date:
13 February 2015
Not
reportable
Not
of interest to other judges
In
the matter between:
RUPERT
INVESTMENTS (PTY)
LTD
.....................................................................
APPLICANT
And
J.
H. PETZER
INC
.....................................................................................
FIRST
RESPONDENT
THE
QUAESTOR
TRUST
....................................................................
SECOND
RESPONDENT
HUGH
MUIRHEAD ROBB BECKER
N.O
...........................................
THIRD
RESPONDENT
THE
FISANTKRAAL
TRUST
..............................................................
FOURTH
RESPONDENT
THE
REGISTRAR OF
DEEDS
................................................................
FIFTH RESPONDENT
JUDGMENT
Fabricius
J,
1.
The
Applicant seeks the cancellation of existing bonds registered in
favour of the Trustees of the Quaestor Trust and the Trustees
of the
Fisantkraal Trust over two immovable properties of the Applicant. The
properties for present purposes are Portion 15 of
the farm
Tarentaalkraal and the farm Fisantkraal.
2.
The
abovementioned immovable properties were owned by the Trustees of the
Quaestor Trust and the Fisantkraal Trust and were sold
to the
Applicant in terms of a written Deed of Sale dated 28 June 2013.
Mortgage bonds are for the balance of the purchase price.
The Third
Respondent as a duly authorised Trustee by the Trustees of the
Quaestor Trust and Fisantkraal Trust concluded the sales
agreements
in respect of the two immovable properties.
3.
The
purchase agreements provided that the purchase price would be secured
by means of a bank guarantee from a financial institution.
This was
the subject matter of clause 2.5, which however is not applicable in
the present debate before me inasmuch as a loan was
not applied for.
Rather, clause 2.6 became applicable and does not at all refer to a
bank guarantee. It is clear that having regard
to the applicability
of the two mentioned clauses that the immovable properties were
bonded in favour of the sellers for the balance
of the purchase price
payable over 30 months. Applicant has been paying off the balance of
the purchase price by means of monthly
instalments as envisaged by
the aforesaid purchase agreements and the terms of the registered
bonds. The Applicant has apparently
obtained financing from a new
financier and seeks the cancellation of the existing bonds and the
substitution thereof with a bond
in favour of the new financier.
4.
The
Applicant initially sought the relief set out in the Notice of
Motion, but when the Respondents pointed out certain defects
inherent
therein, the Applicant requested amended relief as set out in a Draft
Order. Respondents say that this amended relief
also suffers from
fundamental defects which I will deal with hereunder. The Applicant
seeks cancellation of the bonds based on
the payment guarantee issued
by SUIDWES LANDBOU (Pty) Ltd, a private company and the Respondents
do not accept the guarantee.
5.
The
Respondents say that this litigation is unnecessary inasmuch if a
proper bank guarantee for payment of the balance of the purchase
price is received, the existing bonds may be cancelled. The argument
was also that Applicant failed to properly cite the Trustees
of the
Quaestor Trust and the Trustees of the Fisantkraal Trust by citation
of the individual Trustees who held office in those
trusts. If the
Trusts are found not to be properly before Court, the application
cannot proceed at all, and should be dismissed.
It was also argued
that the amended relief was not competent in law as the conveyancing
Attorney, the First Respondent, is not
responsible for the acts of
registration envisaged. Such acts of registration are effected by the
Registrar of Deeds. This objection
must be seen in context of the
Draft Order that Applicants seek where in prayer 1 reads as follows:
“The First Respondent
is asked and ordered to cancel the
restrictive conditions against the title deeds of …
properties.” There are also
objections against other paragraphs
of the Draft Order which I will deal with.
6.
Non-joinder
of Trustees
It
is trite law that a Trust lacks legal capacity, and that it can act
only through its Trustees. It has no legal standing in litigation.
See:
Braun vs Blann and Botha NNO and Another
[1984] ZASCA 19
;
1984 (2) SA 850
(A)
.
The Applicant cited the Trust as if they were legal personae merely
represented by the Third Respondent as Trustee. Third Respondent
pointed out this defective citation of the Trustees, and the
Applicant was provided with the names of the Trustees who should have
been cited, but nevertheless failed to join them. This was the
Respondents objection. On behalf of Applicant it was contended that
this objection was difficult to understand on the facts. The Third
Respondent gave instructions on behalf of all the trustees to
the
First Respondent. The Third Respondent as a duly authorised Trustee
by the Trustees of Quaestor and the Fisantkraal Trusts,
concluded a
written sales agreement in respect of the two immovable properties.
The First Respondent filed a Notice of Intention
to Oppose, which not
only confirmed the citation of the Second and Fourth Respondents but
which specifically spelled out the names
of all the Trustees. The
Third Respondent also filed a resolution of the Trustees of the
Trusts. It was stated that the Third Respondent
was authorized by all
of the Trustees to oppose the application. The Applicant accordingly
submitted that it was clear that all
seven Trustees had notice of the
application, that there was no prejudice, and that there was
therefore no factual basis for relying
on the non-joinder. It relied
on
Brenner’s Service Station and Garage (Pty) Ltd vs Mill
and Another
1983 (4) SA 233
(W) at 237 G – H,
where the
following was said: “I think it emerges from the passage quoted
that, in appropriate cases, the Court is entitled
to refuse to take
heed of a technical irregularity in a procedure that does not cause
prejudice to the opposing party.” In
my view, the answer could
be found in Honoré in
South African Law of Trusts 4
th
Edition at 266
where the author said the following: “All
the Trustees must join in suing and all must be sued though it is
sufficient for
one Trustee, if properly authorised by the remaining
Trustees to sign the power of attorney on their behalf. There appears
moreover
to be no requirement of formality regarding how the
remaining Trustees should signify their association with the action
so long
as adequate proof is produced that the litigating Trustee is
properly authorized to act on behalf of all the other Trustees.”
I agree with Ngwenya J in
Desai-Chilwan N.O vs Ross and Another
2003 (2) SA 644
where he said at 650 par. 21 that: “If
it is permissible that Trustees can delegate or authorize one of them
to sign power
of attorney for all of them to institute legal
proceedings, then surely it must be correct to authorize one of them
to consult
with a lawyer and to depose to an affidavit and bring an
action to Court on their behalf. If this is correct, then what is the
magic in the citation of all the Trustees in the legal proceedings.
Though it is preferable and ideally all the Trustees must be
cited in
legal proceedings, I do not think where one of the Trustees has not
been properly cited that this omission should non-suit
the Trust
where there was clear authority to bring the proceedings to Court.”
This
was said in the context of the decision in
Mariola and Others
vs Kaye-Eddie N.O and Others
1995 (2) SA 728
(W) at 731 C to D
and
Van der Westhuizen vs Van Sandwyk
1996 (2) SA 490
(W).
It is clear from the judgment of Ngwenya J and his reasoning that he
found the relevant
dicta
in these two decisions not to be
supported by Honoré, and in any event by being too dogmatic.
The Court also retained a
discretion to condone a defect in a
citation if regard is had to the facts of any particular case and any
possible prejudice.
In
my view, on the facts of the case it is clear that the Third
Respondent was given authority to file the opposing affidavits
herein, and it is clear that all the Trustees were aware of the
application and what was sought to be achieved thereby. I agree
with
Applicant’s Counsel that there is no prejudice on the present
facts and the objection to the non-joinder is not upheld.
The
Respondents must bear the costs of this part of the litigation.
Is
the guarantee an acceptable guarantee?
The
question rather ought to be in the relevant context, what was asked
for and what was provided? The First Respondent did not
file an
opposing affidavit. In the absence of his explanation for his
objections, one needs to look at the whole matter contextually
and
objectively. Respondents’ Counsel agreed with this approach.
On
12 September 2014 the First Respondent, acting on behalf of the two
Trusts, wrote to Applicant’s Attorney saying that the
copies of
the two relevant Deeds were annexed, and that the cancellation figure
for the two bonds amounted to R 2 851 348
as at 30
September 2014 and required the following guarantee to be able to
cancel them. A guarantee in favour of his firm payable
at ABSA Bank
Sinoville for the mentioned amount, together with interest at 11.25%
per year on the same amount from October 2014
date of payment. The
guarantee had to be payable after cancellation of the bonds over the
two relevant properties and any payment
made by their client in the
interim which would be an over-payment, would be refunded to him.
7.
The
relevant guarantee issued, reflects the following on the face of it:
It was issued by “SUIDWES” but this entity
is not
described in the heading of the document. A guarantee number is
given. Reference is made to the ABSA Bank Sinoville referred
to by
the First Respondent, and the guarantee is dated 22 September 2014. A
membership number is given, and it is stated that “our
client”
was the Applicant. In the body of the guarantee reference is made to
SUIDWES LANDBOU (Pty) Ltd with a given registration
number, and it is
said that this entity “holds at your disposal the
under-mentioned sum, which will become payable to you
upon receipt by
us, of written advice from PSN of the dual registration of the matter
referred to hereunder. SUIDWES LANDBOU
(Pty) Ltd (registration
number) reserves to itself the right to cancel this instrument at any
time prior to its registration, by
giving a written notice to that
effect. … this instrument is neither negotiable nor
transferable and must be surrendered
to the bank against payment on
the said sum.” The amount payable is then given as First
Respondent had stated. Although the
two different properties are
referred to, the size of each individual entity is not given, but
merely the size of the two properties
combined. The guarantee is then
signed by the Chief Executive: SUIDWESFIN.
8.
Respondents
raised a number of objections in the context of this purported
guarantee. With reference to clause 2.5 of the purchase
agreement it
was said that it was expressly required in the purchase agreement
that the guarantee had to be that of a bank. The
document tendered
however seemed to be a guarantee SUIDWES LANDBOU (Pty) Ltd, which was
unacceptable to the First Respondent as
conveyancing Attorney for
sound commercial reasons. The objections were the following:
8.1
The
guarantee was by a private company not a bank. It is however clear
from the facts of this case that 2.5 of the purchase agreement
is not
applicable inasmuch as no loan was applied for. Clause 2.6, which is
applicable, does not refer to a guarantee by a bank.
8.2
The guarantee is
revocable. The risk of revocation by a private company due to a lack
of funds is higher than the risk of such revocation
by a commercial
bank. Applicants in turn argued that though the guarantee is
revocable, the Third Respondent was not contractually
entitled to
insist on an irrevocable guarantee. Neither did he ask for such. The
guarantee also provides that written notice must
be given the
instrument could be cancelled. In addition grounds would have to be
stated for justifying its withdrawal, and the
construction adopted by
the Respondent in this instance unjustifiably exaggerated
characterization of risk.
8.3
The guarantee was
also deficient in that it was purportedly signed by SUIDWESFIN, but
this entity is not defined in the guarantee
itself and guarantor is
reflected as SUIDWES LANDBOU (Pty) Ltd. In the replying affidavit it
is stated that SUIDWESFIN was not
a different entity but the
financial division of SUIDWES LANDBOU (Pty) Ltd. This obviously does
not appear
ex facie
the guarantee.
8.4
Reference
is made to an entity referred to as ”PSN” without this
person or entity being defined or describedin the guarantee.
This is
of correct, but in reply it is stated that “PSN” is a
firm of Attorneys tasked with the registration of the
new restrictive
conditions.
8.5
The
identity of the bank is unknown and it is not stated. As a matter of
proper interpretation it is a reference to SUIDWES LANDBOU
(Pty) Ltd,
but this company is not a bank. In reply it was stated that the
reference to the bank, is obviously the bank that First
Respondent
eluded to in the request for a guarantee.
8.6
There
is an objection as to the non-accuracy of the size of the properties
whereas it is clear that their total size was stated.
8.7
The
guarantee also does not define the mortgagee in whose favour the
mortgage bond of R 5.1 million must be registered. The bonds
which
are sought to be cancelled contained provisions relevant to the
payment of the balance of the purchase price before the conclusion
of
the 30 month payment schedule. Where advanced settlement of the
balance of the purchase price is sought written notice has to
be
given by the bond holder to make such payment. The Applicant gave no
such notice but tendered to effect payment in this regard
only in the
replying affidavit.
In
general, it was contended that the conveyancing Attorney,
representing the bond holders, had to act
arbitrio boni viri,
and
in this context the following had to be considered:
The
intention of the parties at the time of the conclusion of the
agreement;
The
commercial rationality of the First Respondent’s decision not
to accept the guarantee, and
The
reasons for which the guarantee could be withdrawn.
I
have already said that it is not required that the guarantee had to
be issued by a bank. Respondents’ Counsel however argued
that
in any event the guarantee had to be acceptable on reasonable and
commercial grounds. There had to be a commercial rationality
for the
refusal to accept the guarantee. In this context there were two
considerations which had formed the rationality required:
8.7.1
The
Trustees have a statutory and a Common Law duty of utmost good faith
to the beneficiaries of the Trust in dealing with the property
of the
Trust. If their security was placed at risk, and a loss occurred, the
Trustees would be personally liable.
8.7.2
It
is the duty of the conveyancing Attorney to execute his duties
towards the Trusts with the greatest care. Conveyancers must be
fastidious in their work and take great care in the preparation of
their documents. The First Respondent, so it was contended,
in
determining whether the guarantee was acceptable, must act
arbitrio
boni viri.
Where a discretion is given in the present context, so
it was contended by Respondents’ Counsel, the First Respondent
had
to exercise such discretion
arbitrio boni viri,
i.e. as a
reasonable man would under all these circumstances.
See:
Machanick vs Simon
1920 CPD 333
at 335 and further
.
The
relevant principle also appears in
NBS
Boland Bank Ltd vs 1 Berg River Drive CC and Others
1999 (4) SA 928
SCA
where it was said at 937 that
it is a rule of our Common Law that unless a contractual
discretionary power was clearly intended
to be completely unfettered,
the exercise of such a discretion must be made
arbitrio
boni viri.
In modern law by having
regard to the concept of the role of public policy,
bona
fides
and factual equity, an analogous
conclusion could well be reached. Mr Labuscagne SC on behalf of the
Respondents submitted that
this was a duty upon the First Respondent,
but it could of course only be, if there was an agreement between the
parties in the
relevant context. Relying on this, Mr De Villiers on
behalf of the Applicant said that the guarantee contained word for
word what
was asked for by First Respondent. There was therefore an
agreement in place which governed the terms of the guarantee and
Applicant
had complied therewith. Respondents’ objections were
only raised in the answering affidavit. Respondents’ Counsel
submitted
that it was not unreasonable for the First Respondent to
insist upon a guarantee by a bank in any event, as the ability to pay
the guarantee could safely be assumed. The same reasoning did not
apply to a private company.
9.
I
would say that it depends on the facts of each particular case and
any generalisation in this context should be avoided.
I
agree with Applicant’s Counsel that the meaning/purpose of the
word “guarantee” has to be ascertained in relation
to the
context in which it was used.
See:
Mouton vs Mynwerkers Unie
1977 (1) SA 119
(A) at 136 B to C
.
In my view it is correct to say that the Applicant supplied the
guarantee as requested by the First Respondent, inasmuch as he
did
not ask for a guarantee payable at the same time as cancellation. The
other issues concerning the guarantee in that are in
my view however
of a more substantial nature. One does not know the number of
important considerations having regard to the document
itself, and in
my view there is merit in the complaint that such deficiencies, if I
can call them that for present purposes, that
cannot simply be
cleared up by way of a replying affidavit. The guarantee must be in
order on the face of it, at least in the context
of certainty of what
exactly is being intended, on which grounds, when and by whom. The
further difficulty is that First Respondent
did not make an affidavit
explaining what he had required and why, having regard to his duties,
the document did not comply with
the request. If I apply an objective
approach to the matter, I am of the view that Respondents’
complaints relating to the
actual guarantee itself, apart from it not
being a bank guarantee, are of merit. The guarantee has been badly
drafted and provides
more uncertainty than certainty.
10.
I
have also considered the Draft Order which sets out the amended
relief required. Respondents have a number of objections in this
regard and it is clear that in respect of prayer 1, the relief sought
is aimed at the wrong party. The relevant mortgage bonds
are also not
identified in the prayers. Prayers 3 and 5 are also not formulated in
the form of a tender by the Applicant. Also,
no case has been made
out for an interdict, even against the Applicant. Prayer 4 should
also not be meant against the Third Respondent
alone. And prayer 6 is
not competent if prayers 1 and 2 are not competent. No relief has
been sought against the Registrar of the
Deeds. As far as the last
prayer is concerned, a Judge is
functus
officio
after granting an order, unless
it concerns certain procedural matters, and the relief sought in this
context is not competent.
Prayer 7 seeks an order against the Third
Respondent alone. No basis has been advanced why this is appropriate.
11.
Having
regard to all the above mentioned considerations, and even taking
into account that this issue could easily have been resolved
by the
parties themselves, I am obliged to make an order that is in line
with the facts and the relevant legal principles.
Accordingly
the following order is made:
The application
is dismissed with costs, save of these determined by the Taxing
Master to have been related to the objection of
the non-joinder of
the individual Trustees.
_____________________________
JUDGE
H.J FABRICIUS
JUDGE
OF THE NORTH GAUTENG HIGH COURT
Case
no.: 36878/13
Counsel
for the Applicant: Adv R. F. De Villiers
Instructed
by: Rama Annandale Munonde Inc.
Counsel
for the Respondents: Adv E. Labuscagne SC
Instructed
by: J. H. Petzer Inc
Heard
on: 09/02/2015
Date
of Judgment: 13/02/2015 at 09:30