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[2015] ZAGPPHC 162
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Maloney and Others v Thebe Tourism Group (Pty) Ltd and Another (9435/2014) [2015] ZAGPPHC 162 (17 February 2015)
IN
THE HIGH COURT OF SOUTH AFRICA
(GAUTENG
DIVISION, PRETORIA)
CASE NO: 9435/2014
DATE: 17 FEBRUARY
2015
IN THE MATTER
BETWEEN
SEAN
MALONEY
............................................................................................................
First
Plaintiff
GILLIAN
MALONEY
.................................................................................................
Second
Plaintiff
EVENING STAR (PTY)
LTD
........................................................................................
Third
Plaintiff
and
THEBE TOURISM GROUP
(PTY)
LTD
.....................................................................
First
Defendant
FX AFRICA FOREIGN
EXCHANGE (PTY)
LTD
.................................................
Second
Defendant
In the exception of:
FX AFRICA FOREIGN
EXHANGE
(PTY)LTD
..................................................................
Excipient
and
SEAN
MALONEY
.......................................................................................................
First
Respondent
GILLIAN
MALONEY
.............................................................................................
Second
Respondent
EVENING START (PTY)
LTD
.................................................................................
Third
Respondent
JUDGMENT
LEGODI. J
[1] This is an
exception taken by the defendants against the plaintiffs’
particulars of claim. There are two grounds upon
which the exception
is based. One, that the plaintiffs do not allege that the alleged
misrepresentations were made by the first
defendant to an entity
referred to in the papers as Travelex Ltd. Two, that the plaintiffs
do not allege that the alleged misrepresentations
induced them to
sell their shares to the first respondent.
[2] The first
defendant, Thebe Tourism Group (PTY) Ltd, owns 50.83% shares in the
second defendant, FX Africa Foreign Exchange (PTY)
Ltd. The rest of
the second defendant’s shares were owned by the second
plaintiff and an identity referred to in the particulars
of claim as
Sanderling.
[3] On the 8
December 2010 a written sale of shares agreement (first agreement)
was concluded between Sanderling, second plaintiff
and Travelex in
terms of which the shares owned by both Sanderling and second
plaintiff, one Gillian Maloney (Maloney) were sold
to Travelex in the
sum of R37 000 000.
[4] The first
agreement was never proceeded with. Instead, on the 8 February 2011,
Sanderling and second plaintiff sold their shares
in the second
defendant to the first defendant for an amount of R5 000 000.
[5] On the 6
February 2014 the three plaintiffs sued both the first and second
defendants for damages in the amount of R32 000 000
based on the
alleged misrepresentations made to them by the defendants.
[7] The defendants
excepted to the particulars of claim on the basis that the averments
made in the particulars of claim disclose
no cause of action. The
grounds of exception are as indicated in paragraph 1 of this
judgment.
[8] The alleged
representatiions are characterized in the particulars of claim as
follows:
'The
Representations:
15.
In and during January 2011 First Defendant, directly
alternatively
indirectly, represented to First
Plaintiff both in his personal capacity and in his capacity as
representative and/or associate
of Sanderling and Second to Third
Plaintiffs, that there had been a material and adversely deleterious
change in the financial
and/or trading affairs of FX Africa and that
this material adverse change in the financial and/or trading affairs
of FX Africa
had occurred during the January 2011 period such that FX
Africa had during such period fallen into a loss making position.
16.
On or about 27 January 2011 the managing director of Second
Defendant, Mr Darren Jenkins-Ferrett, addressed a letter to the
then
directors and shareholders of Second Respondent. This letter
was
dated 27 January
2011 and is annexed marked
“
SOC3 ”.
17. As First
Plaintiff was a director of Second Defendant as at 27 January 2011,
he was sent and received a copy of the aforementioned
letter
(annexure “S0C3”)
18. In this
abovementioned letter;
18.1 First
Plaintiff was informed that Second Defendant was “in a
loss-making position and additional working capital (would)
be
required to sustain operations", and
18.2 In the
circumstances, additional funding of R82 million was asked for.
19. Palpably,
based on these aforementioned assertions (which were encapsulated in
annexure “S0C2”), and in and during
the period January to
February 2011, First Defendant, either directly or indirectly,
represented to First Plaintiff both in his
personal capacity and in
his capacity as representative and/or associate of Sanderling and
Second to Third Plaintiffs that Second
Defendant was in a dire
financial position which, necessarily, severely and detrimentally
affected the value of Sanderling and
Second to Third Plaintiffs'
shares in Second Defendant.
20.
At the time of these aforementioned representations were made, First
Defendant directly
alternatively
indirectly knew,
alternatively
should have known, that
Plaintiffs and Sanderling had already, prior thereto, on 8 December
2010, concluded the aforementioned binding
Sale of Shares Agreement
with a different entity, Travelex Ltd, for the same shares which were
sought to be sold to First Defendant
in terms of the Sale agreement
(annexure “SOC2).
21.
Also at the time of these aforementioned representations were made,
First Defendant directly alternatively indirectly knew,
alternatively
should have known, that this
information concerning Second Defendant's purported parlous financial
situation would,
alternatively
reasonably could have,
considerably and deleteriously affected the aforementioned Sales
Agreement concluded between Plaintiffs’
and Travelex Ltd.
22.
In making these aforementioned representations, First Defendant
directly alternatively indirectly knew,
alternatively
should have known, that
Plaintiffs would rely on the assumption that the aforementioned
representations were factually correct”.
[9] Then in
paragraphs 23 and 24 of the particulars of claim is stated as
follows:
“
Representations
false
23. The
aforegoing representations were however false in that there had not
during the warrant period been a materially adverse
and deleterious
change in the financial or trading affairs of FX Africa as referred
to above;
Representation
intentionally made
24.
The aforegoing representations were intentionally made with the
following purpose/s inter alia,
alternatively
had the following effects:
24.1
To persuade
alternatively
it did so persuade,
alternatively
to induce,
alternatively
it did so induce,
alternatively
to instigate,
alternatively
it did so to instigate, the
purchaser, Travelex Limited, not to comply with its obligations under
the sale Agreement of 8 December
2010, but rather, to repudiate it;
24.2 To persuade
and/or induce the Plaintiffs and Sanderling to accept Travelex
Limited’s repudiation of the Sale Agreement
rather than demand
specific performance thereof and to sell the Second and Third
Plaintiffs’ shareholding in FX Africa to
a third party at a
substantially reduced price; and
24.3
To enable
alternatively
it did so enable, First
Defendant directly alternatively indirectly to acquire the sale
shares at a substantially reduced price”.
[9] The consequences
of the alleged false representations are stated as follows:
“
The
Consequences
26.
As a consequence of First Defendant’s misrepresentations
aforementioned
alternatively
as a consequence of First
Defendant’s conduct aforementioned;
26.1 Travelex Ltd
informed First Plaintiff that it no longer wished to proceed with the
Sale Agreement (referred to in paragraph
7 above “SOC2”);
26.2 First
Plaintiff both in his personal capacity and in his capacity as
representative and/or associate of Sanderling and Second
to Third
Plaintiffs was then informed by Travelex Ltd that, in view of this,
Sanderling and Plaintiffs should take steps to sell
their shares in
Second Defendant, (that had been sold to Travelex Ltd in the sale
Agreement of 8 December 2010), to another party;
26.3
First Plaintiff
both in his personal capacity and in his capacity as representative
and/or associate of Sanderling and Second to
Third Plaintiffs duly
proceeded as Travelex Ltd suggested in paragraph 26.2 above and
sought to sell the Sale Shares (as referred
to in paragraph 6 above)
to First Defendant; and
26.4 On 8
February 2011 the Sale of Shares Agreement was concluded in terms of
which the shares concerned were sold to First Defendant
for R5 000
000".
[10] The plaintiffs
claim that they have suffered damages in the amount of R32 000 000
calculated as R37 000 000 less R5 000 000.
During argument, counsel
for the plaintiffs suggested that the case has nothing to do with
Travelex. That is the plaintiffs did
not have to allege, in order to
sustain a cause of action, that the first defendant made such false
representations to the Travelex,
nor did they have to claim specific
performance from Travelex. On the other hand, counsel for the
defendants contended that in
order to sustain cause of action, it
must be alleged that the misrepresentatives were made by the first
defendant to Travelex,
and that as a result Travelex cancelled the
first agreement and the plaintiffs were induced to sell their shares
to the first defendant
and not to claim damages from Travelex. For
example, the plaintiffs in their particulars of claim, without
alleging that the first
defendant made false representations to
Travelex, and in dealing with what is referred to as ‘alternative
claim based on
wrongful interference in contract, is stated as
follows:
“
31.
In the alternative to the above mentioned claim against First
Defendant based on misrepresentation and in any case, Plaintiffs’
plead as follows.
32. The
aforementioned conduct on First Defendant’s part constituted an
intentional and unlawful interference in the sellers’
contractual relationship with the purchaser, Travelex Limited in
terms of the Sale Agreement of 8 December 2010.
33.
In consequence of the aforegoing, the purchaser, Travelex Limited, as
stated above, repudiated the Sale of Shares Agreement
(“SOC1”)
by informing Plaintiffs and Sanderling that (i.e. Travelex Ltd) no
longer wished to be bound thereby
alternatively
acting in a manner inconsistent
with an intention to be bound by the contract.
34. In an attempt
to mitigate their loss arising from such repudiation, on or about 8
February 2011, Plaintiffs and Sanderling sold
to First Defendant, at
a price of R5 million, the same shares in Second Defendant which they
owned and which they had previously
sold to Travelex in terms of the
aforementioned Sale Agreement of 8 December 2010.
35. In
consequence of First Defendant’s aforegoing unlawful conduct,
Plaintiffs and Sanderling have suffered damages in the
cumulative
amount of R32 800 000.00 being the difference between the purchase
price in terms of the Sale of Shares Agreement of
8 December 2010 and
the price they obtained in terms of the Sale Agreement to the First
Defendant.
36. The details
of how the aforementioned amount of R32 800 000 are more fully set
out in paragraph 27 and 28 above”.
[11] To establish a
cause of action as pleaded, although not limited thereto, but
particularly with reference to paragraph 33 as
quoted, the plaintiff
ought to have alleged that the first respondent made false
representations to Travelex.
[12]
Counsel for the plaintiffs moved from the premises that the
plaintiffs cause of action is founded upon two bases. That is,
misrepresentation causing damages, and wrongful interference in
contract causing damages. Starting with the first leg, he contended
that the claim made by the plaintiffs against the defendants for
damages is based on a misrepresentations made by the defendants
to
the plaintiffs. Whether or not there was a misrepresentation made by
the first defendant to Travelex, is not part of the
facta
propanda
for
the plaintiffs’ claim, so it was contended. It was further
argued that failure to allege any such
facta
probada
does
not render the pleadings excipiable.
[13] From the
submission, the plaintiffs suggested that the fact that an allegation
is made in the particulars of claim that Travelex
purchased the
entire shares of the plaintiffs in the second defendant and that
Travelex was therefore a shareholder in the second
defendant, made it
unnecessary to allege that the first defendant made misrepresentation
to Travelex. I cannot agree.
[14]
The basis for representations is two-fold. That is, during January
2011 the first defendant told the first plaintiff that there
had been
a material and adversely
deleterious
change
in the financial and or trading affairs of the second defendant and
that this material adverse change in the financial and
or trading
affairs of the second defendant had occurred during the January 2011
period such that the second defendant had during
that period fallen
into a loss making position. Secondly, on the 27 January 2011, the
managing director of the second defendant,
one Mr Darren
Jenkins-Ferrel in a letter addressed to the shareholders of the
second defendant indicated that additional funding
of R82 million was
required for the ongoing operations of the second defendant as it was
in dire financial difficulties. These
representations are said to be
false.
[15] Now, as I said,
I cannot agree that allegation of representations to Travelex is not
necessary, simply because Travelex was
a shareholder in the second
defendant in terms of the first agreement. In fact, Travelex was
never a shareholder in terms of the
first agreement. There were
suspensive conditions in the first agreement which were never
fulfilled. For example, in clause 2 there
are several suspensive
conditions which were to be fulfilled by the 15 December 2010 and 31
March 2011. The plaintiffs make no
allegations in their particulars
of claim that those conditions were fulfilled. This was a necessary
averment on alleged ownership
of shares by Travelex. Therefore, the
submission that Travelex at one stage or the other became a
shareholder, is not sustainable
for lack of necessary averments in
the particulars of claim.
[16] Coming to the
second exception, as I said, the complaint is that the plaintiffs do
not allege that the misrepresentations induced
them to sell their
shares to the first defendant at a lower price. Inducement in a cause
of action based on misrepresentation is
an important requirement
which must be alleged in the particulars of claim. At trial, the
aggrieved party having alleged inducement
must prove that the
statement was an inducement.
[17] In his written
heads of argument, counsel for the plaintiff stated as follows:
“
24.
Accordingly it is plain from the above that the allegation that the
misrepresentations of the first defendant induced the plaintiffs
to
sell their shares in the second defendant to first defendant,
particularly in the light of paragraph 26 of the particulars of
claim, has indeed been made and as such the exception taken by the
excipient in this regard should also be dismissed with costs
including the costs of two counsels”.
[18] Paragraph 26 of
the particulars of claim referred to in the quotation above, is
quoted in paragraph [9] of this judgment. Looking
at paragraph 26.1,
26.2 and 26.3 of the particulars of claim the suggestion is that the
first agreement could not be proceeded
with because Travelex directed
so. That in my view, is not an averment of inducement by the first
defendant, neither is such averment
sufficiently made to establish a
cause of action against the defendants.
[19] Consequently,
an order is hereby made as follows:
19.1 Exception is
upheld.
19.2 The plaintiffs
are hereby granted an opportunity to amend their particulars of claim
within 15 days from the date of handing
down of this judgment.
19.3 The plaintiffs
to pay the costs of the exception by the defendants, the one paying
the other to be absolved.
19.4 Such costs to
include the costs of two counsels.
M F LEGODI
JUDGE OF THE HIGH
COURT
FOR THE
APPLICANTS: ADV. STAIS SC
INSTRUCTED BY:
WERKSMANS ATTORNEYS
C/O BRAZINGTON
& McCONNELL
2
nd
Floor, Hatfield Plaza North Tower
Hilda Street
Hatfield, PRETORIA
REF: WER1
/0185/B/McConnell
TEL: 012430 4303
FOR THE
RESPONDENTS: ADV. R A BRUSSER SC
INSTRUCTED BY: WARD
WARD & PIENAAR ATTORNEYS
C/O FRIEDLAND HART
SOLOMON & NICOLSON
Suite 301, Block 4
Monument Office Park
79 Steenbok Avenue
Monument Park,
PRETORIA
REF: MAL50-0007/ER
Ward/dh
Mr Painter/wt/319758
TEL: 012 424 0200
HEARD ON: 03
FEBRUARY 2015
JUDGMENT HANDED
DOWN: 17 FEBRUARY 2015