About SAFLII
Databases
Search
Terms of Use
RSS Feeds
South Africa: North Gauteng High Court, Pretoria
SAFLII
>>
Databases
>>
South Africa: North Gauteng High Court, Pretoria
>>
2014
>>
[2014] ZAGPPHC 279
|
|
Sci Essel Offshore Services Ltd v Fantasy Construction Central (Pty) Ltd and Others (17195/2010) [2014] ZAGPPHC 279 (13 May 2014)
IN THE HIGH COURT
OF SOUTH AFRICA
GAUTENG DIVISION, PRETORIA
Case No: 17195/2010
Last date heard: 17 September 2013
Date of judgment:
13 May 2014
In the matter between:
SCI
ESSEL OFFSHORE SERVICES
LTD
..........................................................
Plaintiff
And
FANTASY CONSTRUCTION CENTRAL (PTY)
LTD
..............................
First
Defendant
DAVID HENRY
SMITH.
...........................................................................
Second
Defendant
KENNETH BERNARD
STRICKER
…......................................................
Third
Defendant
ADAM JOHANNES
SHEPHERD
..............................................................
Fourth
Defendant
JUDGMENT
PHATUDI J:
[1] The
plaintiff instituted this action against the defendants by way of
provisional sentence summons.
The plaintiff claims an amount of
R130 million against the first defendant, allegedly represented by
the second, third and fourth
defendants, who unconditionally
acknowledged the first defendant’s indebtedness to the
plaintiff.
[1]
[2] The
plaintiff further claims the aforesaid sum against the second, third
and fourth defendants personally,
who allegedly bound themselves as
sureties and co-principal debtors with the first defendant in favour
of the plaintiff for the
repayment on demand of any sum or sums of
money the first defendant owed or owe the plaintiff from whatever
cause arsing.
[2]
[3] It is important to note that
prior to the commencement of the trial, the fourth defendant applied
for
the postponement of the hearing on the basis that the plaintiff
undertook not to pursue the claim against fourth defendant.
It
is further submitted that the plaintiff failed to substitute the
fourth defendant with the trustees by virtue of the fourth
defendant
being sequestrated. It was lastly submitted that if the
plaintiff does not pursue the claim against the fourth
defendant,
then the plaintiff must withdraw against the fourth defendant.
[4] The plaintiff, pursuant to
the submissions made by counsel representing the defendants,
unconditionally
withdrew the action against the fourth defendant.
I then made an order to that effect. I further ordered the
plaintiff
to pay the fourth defendant’s costs including the
costs reserved on the 8 December 2012 on an attorney and client
scale.
[5] The
plaintiff’s counsel
[3]
places on record in his opening statement that the plaintiff obtained
judgment in this division before Kollapen (AJ) as he then
was, on 08
December 2010 against the first defendant in the amount of R130
million. He submits that the plaintiff now proceeds
against the
second and third defendants as sureties to the first defendant.
He further submits that the issues to be determined
by this court are
5.1 the second and third defendants’
acknowledgment of debt and or undertaking to pay R130 million in
respect
of the cause of action thereto and the counter claim by the
third defendant.
5.2 the issue of settlement agreement
concluded by the parties of which the plaintiff is not a party
thereto,
which is raised by the third defendant by way of special
plea, that they are thus not liable to pay the sum of money the
plaintiff
claims.
5.3 Whether the plaintiff and RRI have
ceded its claim to Keiskamma and back from Keiskamma to the
plaintiff.
[6] I find it prudent to mention
at this stage that after a week of the trial proceedings, the
plaintiff’s
counsel placed on record the plaintiff’s
withdrawal of the action against the third defendant. He submitted
that this court
is not required to make any order arising out of the
plaintiff and third defendant out of court settlement. Counsel
submitted
that he places the withdrawal on record only for this court
to take note thereof. He lastly submitted that the evidence the
plaintiff alluded stands as against the second defendant. The
plaintiff is thus proceeding only against the second defendant.
Facts
[7] The factual synopsis of the
matter is set out by Andrè Badenhorst (Badenhorst), Peter
Charles
Spies (Spies) and Johan Christiaan Coetzee (Coetzee) who
testified for and on behalf of the plaintiff and Kenneth Bernard
Stricker
(Stricker), the only witnesses who testified for and on
behalf of the defendant in his capacity as trustee of Zandele Trust.
[8] David Henry Smith (Smith),
Kenneth Bernard Stricker (Stricker) in his capacity of trustee of
KyleCourt
Trust and Adam Johannes Shepherd (Shepherd) became
shareholders of Fantasy Construction Central (Pty) Ltd (Fantasy).
[9] Fantasy concluded a deed of
sale over the property owned by Tara Sugar Estate subject to a
successful
adjudication of a DFA document. The property is
situated between Ballito and Salt Rock and located between the N2
Highway
and the ocean on the North Coast of Kwa-Zulu Natal.
Fantasy intended to develop the area by establishing a township by
the
name of Mount Richmere Village Estate.
[10] Fantasy had applied
for financial assistance from Landbank of South Africa. It is
apparent from the Landbank
document that guarantees for the value of
R225 million rand would be issued in favour of Mavava Trading 137
(Pty) Ltd in respect
of a development of Mount Richmere Village
Estate at Salt Rock Kwa-Zulu.
[4]
The guarantees were subject to certain conditions. The
guarantees could not be issued on the due date as per deed of
sale.
[11] DFA was approved. The suspensive
condition in the deed of sale between Fantasy and Tara became
fulfilled.
Fantasy encountered challenges with the payment of
the purchase price. Solutions to the challenges were required.
Badenhorst
advised Smith of a financer, one Mr Frikkie Lutzkie
(Lutzkie).
[12] Lutzkie was contacted, informed of the
project and what was needed to secure at least the land. R80
million
was required to pay Tara Estate. Badenhorst stood to
gain R10 million for facilitating the finance. Lutzkie became
interested. Fantasy, through Smith, undertook to pay back the
financier the loaned amount within seven (7) days.
[13] Lutzkie undertook to provide R80
million to fulfil the requirements of Fantasy to Tara Estates for the
purchase
of the land. Lutzkie would be paid back an amount of
R120 million for making funds available and R10 million would be paid
to Badenhorst by Fantasy as a facilitation fee. The total to be
repaid by Fantasy is R130 million. This led to the
signing of
the “acknowledgment of debt” referred to throughout in
this trial as “annexure A”. This
is the first issue
that requires determination.
Acknowledgment of debt
[14] The acknowledgment of debt is worded:
‘
WE, the undersigned
Fantasy Construction (central) Proprietary Limited (the debtor) …
(herein represented by Kenneth Bernard Stricker, David Henry Smith
and Adam Johannes Shepherd in their capacities as Directors
and duly
authorised thereto by virtue of a resolution)… do hereby
acknowledge Fantasy Construction (Central)(Proprietary)
Limited to be
indebted to
SCI Essel offshore Services Limited (herein represented by ICF Ho
Fong and duly authorised thereto) (the creditor) …
And its heirs, Executors, Administrators or
Assigns, in the sum of R130, 000,000-00 (ONE HUNDRED AND THIRTY
MILLION ADVANCED payable
within 6 (six) months from date of signature
hereof …’
[5]
[15] Smith pleaded that
‘
2.2.1. Annexure “A”
specifically provides that the acknowledgment of debt is given on the
basis that an amount of R130
million was lent and advanced by the
plaintiff to the first defendant (Fantasy). The second
defendant denies that such a
loan took place as alleged or at all.
2.2.2. The plaintiff is aware that it did not advance such
amount or any amount at all to the first defendant therefore pleads
that the claim by the plaintiff has no basis in law.
2.2.3. The second defendant further pleads that Annexure “A”
does not have a
causa
and is therefore void and unenforceable,
alternatively voidable.’
[16] It is trite law that an acknowledgement
of debt (AOD) is a document which contains an unequivocal admission
of
liability by a debtor. The debtor must acknowledge that he
or she owes a particular sum of money occasioned by a certain
causa
to the creditor. The debtor undertakes to pay what is owed.
The AOD can also be referred to as a “liquid document”,
which, in simpler terms proves a debt without any extraneous
evidence.
[17] It is clear from the
reading of
Twee
Jonge Gezellen (Pty) Ltd and Another v Land and Agricultural
Development Bank of South Africa t/a The Land Bank and Another
[6]
that the plaintiff
is obliged to establish on a balance of probabilities that the
defendant unconditionally acknowledges liability
for the amount
claimed. Equally, the court states that ‘
where
the outcome is dependent on resolving a dispute of fact, the
defendants in provisional sentence proceedings will often through
documentary evidence be able to prove a balance of eventual success
in their favour.’
[7]
[18] In simpler terms,
the onus rest on the defendant to prove on the balance of
probabilities that they are not liable
for the debt once they
acknowledge having signed the acknowledgment of debt.
[8]
[19] The evidence of both Badenhorst and
Stricker is that Lutzkie mentioned at the meeting that R80 million,
for which
a guarantee was issued, would be made available by the
plaintiff via Risk Reduction International (RRI). It is further
common
cause that R40 million was never lent and or advanced to
Fantasy. It is further common cause that R10million was as well
never lent or advanced to Fantasy or anyone else on behalf of
Fantasy.
[20] Badenhorst testified that he never
received R10 million facilitation fee he was promised. He
further testified
that as at the date of trial, no such money has
been advanced to him.
[21] In my view, the
causa
set out in
the AOD is incorrect as R130 million was never lent and advanced as
alleged. There is no merit in the plaintiff’s
submission
that the evidence that led to the signing of AOD is admissible to
identify the
causa
is clear. It stipulates that Fantasy
acknowledge to be indebted to SCI in respect of R130, 000,000-00 (ONE
HUNDRED AND THIRTY
MILLION RAND) in respect of MONIES LENT AND
ADVANCED.
[22] On the evidence led, the plaintiff
failed to prove that it
lent and advanced
R130 million rand to
Smith and or Fantasy. Spies, as consultant and former attorney,
testified that he is the drafter of
the AOD and suretyship Smith
signed. He testified that the drafted documents were signed prior to
Monday the 09 October 2006.
Stricker testified that no
documents were signed prior to the meeting in Ballito on the 09
October 2006. At the time of the
drawing of AOD, no such monies
were lent and or advanced. The parties were still in
negotiation of the transactions.
Consent to judgment
[23] The plaintiff authorised Lutzkie to be
its representative in its dealings. Lutzkie instructed an
attorney
to issue summons against Fantasy. Lutzkie was a major
shareholder of Fantasy when such summons was issued. He
instructed
the same attorneys to represent Fantasy. The same
firm of attorney placed the matter on the roll for Fantasy to consent
to
judgment in the amount of R130, 000,000-00.
[24] What surprises me is that the said
attorneys did not bring to the court’s attention that he
represents both
parties. The plaintiff now relies on the said
judgment to claim against Smith as surety to the judgment debt
against Fantasy.
[25] Stricker, the only witness who
testified for the defence, testified that there was a settlement
agreement that
was made an order of court in Durban on the 17 July
2007. Fantasy was a party to the agreement. Neither the
plaintiff
nor Smith was cited as a party thereto. He, however,
contends that the settlement was in full and final on all and any
claims
that may exist between the parties including Fantasy and RRI
to the settlement agreement. The evidence remained uncontested.
[26] A surety cannot be
held liable if the principal debt is extinct. The debt against
the principle debtor was
settled as between the parties relating to
the same debt. It follows that Smith’s obligation as
surety ceased to exist
as at the date of settlement of the debt in
full and finally.
[9]
[27] In my view, costs follow the event.
Smith succeeds with his defence and is thus entitled to his costs.
I in the result, make the following order:
Order:
The plaintiff’s claim is dismissed with costs.
A.M.L. Phatudi
Judge of the High Court
On Behalf of the Plaintiff:
Stroh Coetzee
Attorneys
C/O Serfontein Viljoen Swart
165 Allexander Street
Brooklyn
Pretoria
Adv. M. Van der Merwe SC
Adv. B. Blom
On Behalf of the 2
nd
Defendant:
England Davidson Inc
C/O Dayson Inc
134 Muckleneuk Street
Muckleneuk
Pretoria
Adv. Pietersen
On Behalf of the 3
rd
Defendant:
Van Quickelberger
C/O Wiese & Wiese
Attorneys
311 Eastwood Street
Pretoria
Adv. J.G. Cilliers SC
Adv. J. De Klerk
[1]
Particulars of claim – Pleadings bundle – Vol 1 page 4
para 1.1
[2]
Particulars of claim – Pleadings bundle –
Vol 1 page 6 - 9
[3]
Adv. M. Van Der Merwe SC assisted by Adv. B. Blom
[4]
Letter addressed to Mr A. Shepherd – Vol 2 of 7 page 97
[5]
Pleadings Bundle A – Vol 1 pages 15 and 16
[6]
2011 (3) SA 1 (CC)
[7]
Twee Jonge Gezellen v Land Bank and Another 2011 (3) SA (1) CC at
headnote.
[8]
See: Inglestone v Pereira
1939 WLD 55
at 71; De Klerk and Assosiates
v Eggerschwiler and Another. Case Number 2674/2011 – Namibian
High Court (unreported)
[9]
See: Moti and CO v Cassim’s Trustee –
1924 AD 720