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[2014] ZAGPPHC 92
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Van Der Merwe v Jensen and Others (71030/2009) [2014] ZAGPPHC 92 (7 February 2014)
IN
THE NORTH GAUTENG HIGH COURT, PRETORIA
(REPUBLIC
OF SOUTH AFRICA)
CASE
NO: 71030/2009
DATE:
07 FEBRUARY 2014
In the matter between:
VAN
DER MERWE I N
0
.........................................................
Applicant
And
JENSEN M &
OTHERS
......................................................
Respondents
JUDGMENT
MALINDI AJ
INTRODUCTION
[1]
On 9 November 2011 Izak van der Merwe
(the Applicant) filed a Notice of Motion and affidavit seeking that
the Respondents be held
for commital of contempt of the Court Order
by this Court delivered by Botha J on 29 November 2011 under Case No.
71030/2009.
[2.] If they were to be found
guilty of such contempt:
(a)
That Respondents be commited to gaol on
such conditions as the Court may deem fit.
(b)
That Respondents are ordered to comply
with the aforementioned Court Order, including but not limited to the
payment of all proceeds
of the 10% member’s interest of the
deceased in the Third Respondent and pay to the Applicant, against
transfer of such interest,
the value of such interest which was
determined by a chartered accountant nominated by the chairperson of
the South African Institute
of Chartered Accountants amounting to R2
800 788.00 including interest thereon at 15.5% a tempora morae to
Applicant.
(c)
That Respondent pay the cost of the
application on an attorney and client scale.
[3.] The relevant part of the
Order reads as follows:
(a)
It is ordered that the third respondent
alternatively the first and second respondents jointly alternatively
the first respondent
alternatively the second respondent buy the 10%
member’s interest of the deceased in the third respondent and
pay to the
applicant, against transfer of such interest, the value of
such interest as determined by the chairperson of the South African
Institute of Chartered Accountants.
(b)
The chairperson of South African
Institute of Chartered Accountants is requested to nominate a
chartered accountant to audit the
financial statements and financial
affairs of the third respondent to the extent that it may be
necessary to determine the present
value of the deceased’s 10%
member’s interest in the third respondent.
(c)
The chartered accountant so nominated is
to determine the present value of the deceased’s 10% member’s
interest in the
third respondent.
(d)
The said chartered accountant may, if
the need arises, approach the court for directions.
(e)
The applicant, in his respresentative
capacity, must pay the remuneration of the said chartered accountant.
(f)
The respondents must pay the costs of
the applicant, which costs shall include the costs attendant upon
employing senior counsel.
[4.] Wahl Schreuder (Chartered
Accountants (SA)) were duly appointed and produced their assessment
report. They valued the 10% share
of Estate Late Paul van der Merwe
in the 3
rd
Respondent as being worth R2 800 788,00 at 31
July 2011.
[5.] However, on 31 August 2011,
after receipt of a demand by the Applicant that the Respondents pay
the amount, the Respondents
communicated to the Applicant
that they were not in agreement
with the valuation. They sought an indulgence to discuss the
valuation with Mr Schreuder and were
granted the indulgence until 9
September 2011.
[6.] They were warned by the
Aplicant by letter dated 21 September 2011 that failure to pay the
amount constituted contempt of court
and demand for payment was made.
Legal proceedings were also foreshadowed in the letter.
[7.] To cut a long story short,
the Respondents sought and obtained their own assessment of the 3
rd
Respondent. The 10% value in the 3
rd
Respondent was
evaluated at R1,27 million by Vaibridge {a corporate finance company)
in their report dated 6 September 2011.
[8.] On 23 January 2012 the
Respondents opposed the application to be held in contempt and
simultaneously lodged a counter application
seeking an order:
(a)
That the above Honourable Court gives
directions requiring the further conduct of the enquiry into the
value of the deceased’s
10% interest in the Third Respondent.
(b)
Costs of the counter-application, such
costs to include the costs of senior counsel on an attorney and own
client scale.
[9 ] On 29 February 2012 the
parties reached a settlement agreement whereby the 10% deceased
member’s interest in the 3
rd
Respondent was valued
at R1 650 000,00. R1 200 000,00 was paid over to the Applicant.
[10.] In the settlement agreement
the parties incorporated clause 3 which reads as follows:
“
The balance of R450 000-00
(Four Hundred and Fifty Thousand Rand) will only be payable on
finalisation (either by settlement or
taxation) of the legal cost on
case 71030/2009. Any legal cost (agreed or taxed) in favour of the
first and second respondents
against the applicant will be set off
against the amount of R450 000-00 (Four Hundred and Fifty Thousand
Rand) before payment."
[11.] The Respondents contend that
this clause is to be read in their favour as contemplating that the
Appliant is to pay the Respondents’
costs, hence the amount of
R450 000 was held over in order to off-set the taxed or agreed costs
of the Respondents.
[12.] The Applicant contends, on
the other hand that no agreement was reached as to costs and
therefore that if a costs order is
made in their favour then the
Applicant is entitled to both the R450 000 plus such costs as may be
ordered in his favour.
[13.] The Notice of Motion issued
on 9 November 2011 was directed at seeking relief for the commital of
the Respondents to gaol
and that they simultaneously be ordered to
comply with the Court Order, especially the Applicant’s claim
of R2 800 788,00
as valued by a firm of chartered accountants that
was appointed in terms of that Order. The merits of the main
application and
the counter application are relevant only for
consideration of an appropriate costs order should I come to the
conclusion that
the Notice of Motion dated 21 October 2013 is in
respect of determining the question of costs only.
[14.] The Respondents’
Answering Affidavit contends that the Court Order envisaged the
appointment of an expert or referee
as contemplated in S19(bis) of
the Supreme Court Act 59 of 1959. The section reads as follows:
“
(1) In any civil
proceedings any court of a provincial or local division may, with the
consent of the parties, refer-
(a)
any matter which requires extensive
examination of documents or scientific, technical or local
investigation which in the opinion
of the court cannot be
conveniently conducted by it; or
(b)
any matter which relates wholly or in
part to accounts; or
(c)
any other matter arising in such
proceedings,
For enquiry and report to a
referee, and the court may adopt the report of any such referee,
either wholly or in part, and either
with or without modifications,
or may remit such report for further enquiry or report or
consideration by such referee, or make
such other order in regard
thereto as may necessary or desirable.
(2)
Any such report or any part thereof
which is adopted by the court, whwter with or without modifications,
shall have effect as if
it were a finding by the court in the civil
proceedings in question.
(3)
Any such referee shall for the purpose
of such enquiry have such powers and shall conduct the enquiry in
such manner as may be prescribed
by a special order of court or by
rules of court”.
[15.] It is contended that the
conduct of such expert in the event of a disagreement with his/her
report “will act reasonably
and apply his/her mind fully, and,
in particular; address concerns raised by a party affected by the
expert’s opinion- and
when such concerns cannot be addressed-
approach the Above Honourable Court for directions, particularly when
such an option has
been granted, in an excess of caution to him/her,
by the Above Honourable Court. This the Applicant's expert
conspicuously failed
to do.
11
[16.] In the counter application
the Respondents contend that:
\..the
applicant was duly bound to have approached the above Honourable
Court not only for directions, once the referee’s
was disputed,
but only to request the Court to adopt Mr Schreuder and Mr Crawford’s
report if the applicant wished it to
be enforced."
[17 ] When giving judgment Botha J
stated:
“
Sect 35 does not determine
how a forced sale should be effected, but guidance can be obtained
from section 36, which deals with
a cessation of membership by order
of court. No doubt a court must have the power to give appropriate
directions for the determination
of the value of a member’s
interest of a deceased member."
[18.] The terms of Botha J’s
order are manifestly clear. The Respondents were neither entitled to
challenge the report of
the chartered accountants nor to review the
report. If anything was brought to their attention they would have
had to approach
the court for further directions. They were only
confronted with the Valbridge report and had to defend their own
report. Nobody
suggested that they seek further directions nor did
the Respondents approach the court for an order that Wahl Schreuder
be compelled
to consider the Valbridge report. The court would, in
all likelihood, have given further directions, if necessary, to
Schreuder.
The review application was directed at setting the report
aside not for further directions.
[19.] The counter application was
aimed at requesting the court to give further directions as to the
conduct of the enquiry. This
was done on 23 January 2012, nearly 5
months after the report dated 1 August 2011.
[20.] It is clear from the
judgment that the appointed chartered accountants would “approach
the court for directions, should
the need arise" in their view.
None of
the requirements of S19 (bis)
(i)(c) were imposed. There was no requirement for the report to first
be adopted by the court or for
it to be subjected to modification as
the court pleases such as when an expert report is presented under
Rule 36(9) of the Uniform
Rules.
[21.] In fact, the Respondents did
not behave as if S19 (bis) applied. They did not seek the consent of
the Applicant that the report
be “reviewed" by the Court
in view of their disagreements therewith. Instead they sought a
second opinion. Even after
receipt of their report they did not
approach the court with a view of applying subsect (1)(c).
[22.] On 29 February 2012 the
parties settled.
[23.] The notice of set down filed
on 21 October 2013 and delivered to the Respondents on 22 October
2013 makes reference to the
Applicant’s Heads of Argument
delivered on 25 September 2013. These Heads of Argument were filed on
21 November 2013.
[24.] In the Applicant’s
Heads of Argument and his practice note the relief sought is for the
court to make an order as to
costs.
[25.] On the other hand, as stated
before, the Respondents have argued that from a plain reading of
clause 3 of the settlement agreement,
it is clear that the Applicant
was to pay the Respondents’ costs, and that the amount of R450
000,00 was specifically held
over to effect such payment of the
agrred or
taxed costs of the Respondents.
First, they dispute the competency of setting this matter down for
costs when the paries have agreed
that the Applicant will pay the
costs, and secondly, when clause 3 can only be read to mean that
costs were agreed in favour of
the Respondents.
[26.] This submission is made on
the basis of their interpretation of Clause 3.
[27.] They submit further that the
relief sought by the Applicant is for the court to interpret Clause 3
and therefore an application
seeking such a declaratory order should
have been brought instead of setting the matter down for costs. It is
submitted that since
the settlement agreement was an inter partes
agreement and never made an order of court in terms of Rule 41(4),
the Applicant cannot
get the relief sought without taking this step
first.
[28.] Lastly the Respondents
submit that the issue of costs was agreed in favour of the
Respondents and that they require an opportunity
to prove this. They
therefore seek a postponement in order to place before court facts
that with prove the settlement on costs.
[29.] I am of the view that the
Respondents knew from the Applciant’s Heads of Argument that
this matter is set down for determination
of an appropriate costs
order in respect of the main application and the counter application.
The Respondents have referred to
their review application filed on 12
February 2012, before the settlement agreement on 29 February 2013.
They contend that had
it been heard it would have wiped off the
Applicant’s assessment of the
10% value in 3
rd
Respondent and therefore of the underlying causa. The review
applicaton was not part of the papers before court, its existence
is
common cause and will therefore be takein into account if costs have
to be considered as prayed for by the applicant.
[30.] I will therefore consider
Clause 3 alone and decide whether it settles the issue of costs in
favour of the Respondents. If
it settled the issue in favour of the
Respondents then their taxed or agreed fees will be off-set from the
amount of R450 000.
If it does not settle the issue in favour of the
Respondents then l have to make an order as to costs.
[31.] As already stated, it is
common cause that Clause 3 formed part of the settlement agreement.
It is also common cause that
the agreement did not contain a
self-standing clause setting out which party will be liable for
costs. At least none of the parties
have pleaded such a clause.
[32.] On the plain reading of
clause 3 of the settlement agreement it is contemplated that the
Respondents are to hold-over R450
000 from which their costs would be
off-set in the event of a favourable costs order. Since the parties
have not reached agreement
on which party should pay the costs,
either party is entittled to approach the court for a order.
[33.] This plain interepretation
arises from the fact that no specific agreement as to costs was
cntained in the settlement agreement.
Had it been so agreed the
clause would have read something to the effect that the Applicant is
to pay the agreed or taxed costs
and that the amount of R450 000,00
would be held-over to off-set such costs.
[34.] In view of the conclusion
that I have reached that this court must make an order as to costs I
need not traverse the other
contentions by the Respondents.
[35.] The only contention that I
need to deal with is whether the Applicant ought to have set the
matter down first for the settlement
to be made an order of court and
only thereafter seek an order for compliance therewith.
[36.] Rule 41(4) provides that:
“Unless such proceedings have been withdrawn, any party to a
settlement which has been reduced
to writing and signed by the
parties or their legal representatives but which has not been carried
out, may apply for judgment
in terms thereof on at least five days’
notice to all interested parties”.
[37.] This is an interlocutory
application brought on notice
[1]
.
[38.] In this case the agreement
between the parties has been carried out, save for the question of
costs. The Applicant need not
apply for judgment in terms thereof,
because the rule applies to a party who has failed to comply with the
terms of a settlement.
[39.] In addition, besides making
the settlement an order, the Applicant could also seek judgment for
the outstanding obligation
[2]
.
Therefore the Applicant could seek judgment for payment of the R450
000,00 as an outstanding obligation.
[40 ] This court is therefore
seized with the issue of costs only.
[41.] In the circumstances I find
that the Respondents were the cause of the Applicant having to launch
this application. The Applicant’s
conduct therein was not
unreasonable. On the other hand, opposition to the application was
ill- conceived and would not have succeeded.
[42.] Having considered the events
preceding the settlement of this matter out of court, and thereafter,
I am inclined to order
the Respondents to pay the Applicant’s
costs incurred in the process of asserting compliance with the Order
of Botha J.
[43.] Since the Applicant was
justified in approaching the court as he did, and since the
Respondents’ misunderstanding of
Clause 3 caused these
proceedings I find that the Applicant should not be made to pay costs
thereof. I also take into account that
even though the settlement
resulted in the amount of R2 800 000,00 being reduced by some 41% to
R1 650 000,00 he is the substantial
winner becase he obtained the
order, that the deceased’s share in the 3
rd
Respondent be sold to the Respondents.
[44.] I therefore order as
follows: -
44.1.
The 1
st
and 2
nd
Respondents are to pay the costs in the main application under case
No. 71030/2009 on a party-and-party scale.
44.2.
The 1
st
and 2
nd
Respondents are to pay the costs of the counter - application on a
party-and-party scale.
44.3.
The 1
st
and 2
nd
Respondents are to pay the costs of today on the party- and-party
scale.
SIGNED AT PRETORIA ON THIS DAY
OF 7th FEBRUARY 2014.
Malindi, AJ
Acting Judge of the North
Gauteng High Court of South Africa
[1]
Massey-Ferguson (SA) Ltd v Ermelo Motors Ltd
1973 (4) SA 206(T)
at
214.
[2]
See Joffe et al: High Court Motion Procudure: A Practical Guide,
LexisNexis [Issue 1] at 1-74