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[2014] ZANCHC 11
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Gemcore Sampling (Pty) Ltd v Superkolong (Pty) Ltd and Another (1451/2010) [2014] ZANCHC 11 (30 July 2014)
IN THE HIGH COURT
OF SOUTH AFRICA
NORTHERN CAPE
DIVISION, KIMBERLEY
Case
No: 1451/2010
Heard
on: 19/03/2014
Delivered
on: 30/07/2014
In the matter
between
GEMCORE SAMPLING
(PTY) LTD
..........................................
Plaintiff
And
SUPERKOLONG (PTY)
LTD
...........................................
1st
Defendant
GEMROCK RESOURCES
SA LTD
................................
2nd
Defendant
(in liquidation)
JUDGMENT
PAKATI J
[1] The plaintiff,
Gemcore Sampling (Pty) Ltd, is a registered company with its main
place of business situated at 7 Monridge Office
Park, No 2 Kekewich
drive, Kimberley, Northern Cape. The First Defendant, Superkolong
(Pty) Ltd, is a registered company with its
registered address in
Bloemfontein but has alternative business premises in Kimberley. The
plaintiff is claiming from Superkolong
an amount of R4m allegedly
paid to the Second Defendant, Gemrock Resources (a company in
liquidation), and on-lent to Superkolong
in terms of a tripartite
agreement called a “Memorandum of Understanding” (“MOU”)
dated 03 October 2008.
The signatories to the MOU were the
representatives of the plaintiff, as well as Superkolong and Gemrock
Resources. Superkolong
is one of the many subsidiaries of Kimcor
Diamonds PLC, a company listed on the London Stock Exchange. The
dispute between the
parties is whether the amount of R4m was advanced
as a loan or an investment.
BACKGROUND
[2] It is clear
from the evidence that the whole Kimcor Group was in dire financial
straits. It concluded an agreement, a Memorandum
of Understanding,
with Gemrock Resources on 11 August 2008 (“the 11 August 2008
MOU”). Gemrock Resources was to advance
an amount of R5m to
Kimcor (the South African operating subsidiaries including
Superkolong) as bridging finance in the form of
a non-interest
bearing secured loan. This loan would be repayable when Kimcor’s
financial position was sound. Gemcore Sampling
and Superkolong were
not part of the 11 August 2008 MOU.
[3] On 02 September
2008 Kimcor Diamonds PLC, Superkolong and Gemcore Sampling entered
into another agreement, the Memorandum of
Understanding (“the
02 September 2008 MOU”). In terms of the 02 September 2008 MOU
Gemcore Sampling had to manage the
SMI4 dumps which were treated by
Superkolong on a joint venture basis. Gemcore Sampling had to make a
capital investment of R4m
by no later than 30 September 2008. At that
stage, up to 29 August 2008, the parties accepted that Gemcore
Sampling had already
advanced an amount of R1 250 140-03 as part
payment of the R4m. Mr Bredenkamp, a representative of Superkolong,
did not sign this
MOU. He was not satisfied with its terms amongst
others that there was a pre-emptive right to Superkolong’s
shares which
made it impossible to transfer them to Gemcore Sampling
in terms of the MOU.
[4] On 03 October
2008 another Memorandum of Understanding (“the 03 October 2008
MOU”) was entered into by the parties
(Superkolong (Pty) Ltd,
Gemrock Resources and Gemcore Sampling). The salient features of this
MOU are that Gemcore Sampling loaned
R4m to Gemrock Resources who
on-lent it to Superkolong to distribute amongst its subsidiaries to
continue its operations. This
loan would be in the form of a secured
convertible loan in the amount of R4m which would be increased to
R8m, if necessary, to
achieve a production output of 120 000 tons per
month at SM14 mine dumps: Provided that the loan would be converted
into Kimcor
shares once reverse listing was completed. If reverse
listing did not take place within eight months the amount would be
repayable
on demand on notice of 30 days.
[5] The on-lending
by Gemrock Resources to Superkolong was to be effected on a back to
back basis which would be handled on a shareholders’
loan
account. The parties agreed in para 1.4.9 of this MOU (the 03 October
2008) that “all parties accept that Gemcore has
paid up to 03
October 2008 an amount of R3, 274, 571-19 as part payment of the R4m
to Gemrock [Second Defendant] who on-lent this
amount to Superkolong
[First Defendant].” The agreement included an operational
management agreement of Superkolong’s
SM14 mine dumps by
Gemcore Sampling from 01 September 2008.
[6] Gemcore
Sampling’s case is that it advanced monies directly to or on
behalf of Superkolong on 19 August 2008. The negotiations
between Mr
Lombaard, Gemcore Sampling’s representative, and Mr Buys,
Gemrock Resources’ representative, were already
under way. Mr
Buys intimated to Mr Lombaard that the deal had been communicated to
the Board of Directors of Kimcor. These negotiations
gave rise to
the draft MOU dated 02 September 2008 from which Gemcore Sampling
would receive 40% shares in return for the advances
made in favour of
Superkolong. The payments were made immediately to prevent the
liquidation of Superkolong. However, this MOU
never came into
existence and was not signed. The 03 October 2008 MOU was
subsequently signed.
[7] Gemcore
Sampling’s first Claim is based on rectification of the 03
October 2008 MOU on the following grounds:
7.1 Firstly, that
the sentence in the last paragraph of Clause 3 which reads: “…and
neither party will have any claim
against the other party for any
matter arising from the transactions contemplated by this MOU”
was erroneously recorded as
a result of a bona fide common error
between the parties.
7.2 Secondly, that
the heading of Clause 3 which reads: “Conditions Precedent”
should actually read “Resolutive
Conditions”.
7.3 Alternatively,
Gemcore Sampling requests that a further sentence be inserted in
Clause 3 to read thus:
“…[A]nd
each party shall pay to the other relevant party such amount(s) as it
might have received from such party in
pursuance of or in compliance
with the terms and conditions of the agreement. The aforesaid term
shall survive a nullification
of this agreement by or as a
consequence of the non-fulfilment of the ‘condition
precedent’.”
[8] The second claim
is based on the MOU concluded by the parties as purportedly rectified
and concluded between the parties and
as pleaded in the first claim
as follows:
8.1 That an amount
of R2, 942, 677-48 as amended was advanced by Gemcore Sampling to
Gemrock Resources to on-lend to Superkolong
before 15 October 2008;
8.2 That the
resolutive condition that the R4m should have been advanced by 15
October 2008 was not fulfilled and therefore the
MOU terminated on 15
October 2008; and,
8.3 In terms of the
rectified MOU the aforesaid amount of R2, 942, 677-48 should be
refunded to Gemrock Resources alternatively
directly to Gemcore
Sampling.
[9] The third claim
is based on a condictio indebiti or condictio sine causa. Gemcore
Sampling contends that it advanced a further
amount of R1, 485,164-79
as adjusted after 15 October 2008 in the bona fide but mistaken
belief that the MOU is still in place
whereas in actual fact it
lapsed on 15 October 2008. The MOU lapsed due to the non-compliance
with the postulated suspensive conditions
contained in it. This
includes Clause 8.5 which states that ‘neither party shall be
entitled to cede any of its rights or
obligations in terms of this
MOU to any other person.’
[10] Should
rectification not be granted as claimed and should it be found that
Gemcore Sampling is not entitled to Claim 2, based
on the MOU, in
that event, Gemcore Sampling in the alternative to Claim 1 and 2
plead that the “conditions precedent”
have not been
fulfilled and therefore no valid agreement came into existence
between the parties. Gemcore Sampling states that
in the bona fide
and mistaken belief that the MOU was still valid it advanced an
amount of R2, 942, 677-48 as adjusted to Superkolong.
The amounts (R2
942 677-48 and R1 485 164-79) were paid directly to Superkolong
alternatively this was done in its interest and
to its credit by
paying its employees, creditors and/or suppliers. Superkolong was
therefore unjustifiably enriched which resulted
in Gemcore Sampling
being impoverished, the contention by Gemcore Sampling went.
[11] Gemcore
Sampling claims in its own name, alternatively in terms of a cession
by Gemrock Resources in favour of Gemcore Sampling,
the obligations
of Superkolong to Gemrock Resources in the event of the transaction
being regarded as an on-lending transaction.
The liquidators of
Gemrock Resources signed the aforementioned cession on 23 July 2010.
[12] In its plea
Superkolong denies that the conditions were resolutive and maintains
that they were suspensive. It is its case
further that no cession was
possible between Gemcore Sampling and Gemrock Resources having regard
to Clause 8.5 of the MOU which
prohibits a cession (see para 9
supra). Therefore it was contended that the 03 October 2008 MOU never
came into existence.
[13] The author RH
CHRISTIE, THE LAW OF CONTRACT IN SOUTH AFRICA, 5th Ed, at p139,
comments as follows on “Conditions precedent
and resolutive
conditions:
“The
difference between a condition precedent (also known as a suspensive
condition) and a resolutive condition (also known
as a condition
subsequent) is easy to state. A condition precedent suspends the
operation of all or some of the obligations flowing
from the contract
until the occurrence of a future uncertain event, whereas a
resolutive condition terminates all or some of the
obligations
flowing from the contract upon the occurrence of a future uncertain
event. When the condition governs the whole contract
there is usually
little difficulty in deciding whether it is a condition precedent or
a resolutive condition, but when it governs
only part of the contract
there may be considerable difficulty in classifying it, and correct
classification may be important in
order to decide the rights and
duties of the parties. Thus in a sale with a lex commissoria
attached, the proper classification
of the condition will decide
whether risk and advantage, ownership and the right to fruits lie
with the buyer or seller.
Whether a condition
is precedent or resolutive is a matter of construction, the words
“subject to” being the normal
way of indicating a
suspensive condition, and the mere fact that some terms of the
contract are to be performed immediately upon
conclusion of the
contract does not necessarily make a condition governing other parts
of the contract resolutive rather than precedent.
In such a case it
is obviously arguable that the condition is resolutive in respect of
those terms which were performed before
it was fulfilled, and this
fruitful source of disputes is the inevitable result of our ingrained
habit of describing a contract
as conditional when it is only partly
subject to a future uncertain event.” See Design and Planning
Service v Kruger
1974 (1) SA 689
(T) 695C-F;R v Katz
1959 (3) SA 408
(C) 417G Palm Fifteen (Pty) Ltd v Cotton Tail Homes (Pty) Ltd
1978
(2) SA 872
(A) 884A-885C and Badenhorst v Van Rensburg
1986 (3) SA
769
(A).
See also DE VILLIERS
v VAN ZYL
[2002] 4 ALL SA 262
(NC) 279.
[14] Mr Lourens
Cornelison, a businessman of Cape Town and Lesotho was involved in
the business of a company called Elnino Mining,
a subsidiary of Batla
Minerals, in 2007. He later sold his mining shares in that company
in the same year and informally assisted
Batla Minerals with the
assessment of their projects from time to time.
[15] Mr Cornelison
testified that around April 2008 there were negotiations between the
Batla Group and Superkolong with a view
to mining together at
Rooipoort Mine. Kimcor Diamonds PLC, holding the Superkolong South
Africa Operations, also got involved in
these negotiations. Mr
Bredenkamp approached the Batla Group advising them that Kimcor
Diamonds PLC and its subsidiaries needed
financial assistance for
their various operations. Mr Bredenkamp pointed out that it was an
investment opportunity for Batla Minerals
either as a shareholder or
a contractor. A meeting was held in Stellenbosch where Mr Churchouse,
a director of Kimcor from London,
was present. The purpose of the
meeting was to explain in detail the investment opportunities created
in funding their operations.
A further meeting was held in London on
28 May 2008. The possibility of amalgamating Batla Minerals, a French
listed company,
and Kimcor was explored. Thereafter several meetings
were held in Kimberley around October 2008 with the Kimcor Group.
[16] Batla Minerals
which is operative in South Africa was also willing to award Gemcore
Sampling the management agreement with
25% management fee just to
repay the loan. Mr Cornelison confirmed that Gemrock Resources had an
obligation towards Kimcor to supply
the money. On 19 August 2008
Gemcore Sampling honoured the said obligation on behalf of Gemrock
Resources to avoid the liquidation
of Superkolong by Ekapa Mining.
He further conceded that the R4m advanced by Gemcore Sampling was
initially intended to be an
investment. With the signing of the 03
October 2008 MOU they decided to change it into a convertible loan
account after Mr Bredenkamp
refused to sign the September 2008 MOU.
This was done to ensure that Gemcore Sampling recovered the amount
they had already paid
to Superkolong.
[17] Mr Johan
Francis Buys, a chartered accountant and financial director of
Gemrock Resources, was at the time acting managing
director of Kimcor
Diamonds PLC and Gemrock Resources. According to him Gemrock
Resources was involved in alluvial diamond mining
and was in the
process of attaining a dual listing in South Africa for the South
African shareholders and in London for the UK
shareholders. Things
were going well for their company at the time. Round about the end of
July and the beginning of August 2008
Gemrock Resources was
approached by Mr Bredenkamp, the then managing director of Kimcor’s
Africa Operations which was into
Kimberlite mining. The approach had
to do with the serious financial constraints the Kimcor Group
experienced at the time. The
Kimcor Group could not sustain their
production and profitable levels. They needed capital to sustain
their operations. According
to Mr Buys ‘they were bleeding
money.’ Mr Bredenkamp further told them that a company called
Ekapa Mining which was
involved in the haulage of the mining dumps to
the plants across Kimberley threatened to urgently apply for the
liquidation of
Superkolong. Eskom also threatened to switch off their
electricity. Mr Buys confirmed the position with Messrs John and
Peter Hohne,
owners of Superkolong. This transaction was a very
lucrative operation if run properly. Gemrock Resources had to raise
funds in
the region of about R1million to prevent Superkolong’s
liquidation. Gemrock Resources was not financially viable or capable
to raise such funds.
[18] The 11 August
2008 MOU was signed by Mr Buys in his capacity as financial director
of Gemrock Resources and was so mandated
by the Gemrock Resources
Board. It was also signed by Mr Churchouse in his capacity as chief
executive officer of Kimcor Diamonds
PLC. This MOU made provision for
bridging finance that was to be given to Kimcor Africa Operations in
support of their on-going
operations. Mr Buys approached Gemcore
Sampling for financial assistance. Gemcore Sampling was offered a 40%
equity stake in Superkolong
and Gemrock Resources would have 60 %
ownership in Superkolong. Gemcore Sampling accepted the offer and
pledged an amount of R4m
and its expertise. This would enable the
business to operate on its own and raise its own capital to acquire
the remaining portion
of the Kimcor Africa Operation. That led to the
MOU signed on 02 September 2008 by Mr Buys, as the managing director
of Kimcor’s
Africa Operation, and Mr Lombaard. Mr Bredenkamp
was not present when this MOU was signed but was aware of the
negotiations.
[19] Mr Bredenkamp
approached Mr Lombaard and Mr Buys and advised them that a 40%
shareholding in Superkolong by Gemcore Sampling
was impossible
because other shareholders had a pre-emptive right to buy the shares.
This put Gemcore Sampling at risk in terms
of monies already advanced
as its reversal was problematic. Mr Churchouse and Mr Bredenkamp
requested Gemcore Sampling to continue
making payments to Superkolong
notwithstanding this spanner in the works, which Gemcore Sampling
did. A meeting was held which
led to the signing of the 03 October
2008 MOU. Mr Buys at p161 from line 15 of the record dated 06 August
2013 testified:
“So we had to
entrench ourselves as Gemrock Resources into this transaction and
this was a means of achieving that. But secondly,
in order to give
Gemcore a tradable security and proper security for the investment
and the monies that they have already paid
over, we had to give them
tradable shares.”
[20] Mr Buys further
testified that they used templates compiled by Rand Merchant Bank
when drawing up the 03 October 2008 MOU.
A proper legal agreement was
prepared by Engelsman Magabane Attorneys but was never signed despite
several attempts to get it signed.
Mr Buys resigned in the middle of
October, just after the 03 October 2008 MOU was concluded.
[21] Mr Lourens
Cornelison went on to explain that he first knew about Gemcore
Sampling during late September or early October 2008.
Mr Bredenkamp
reported to him that Superkolong had a loan account of R4m in favour
of Gemcore Sampling. He and Mr Bredenkamp negotiated
the terms upon
which the loan had to be refunded. Around mid-October 2008 Mr
Bredenkamp took them to the offices of Gemcore Sampling
to meet Mr
Lombaard to discuss the 03 October 2008 MOU and the repayment of the
loan account. The agreement reached was that it
was a prerequisite
that whichever company took over Superkolong must repay the R4m. In
all these meetings Mr Bredenkamp was present
and never hinted that
the R4m was not a loan but an investment. In fact the issue involving
the R4m was never in dispute. The terms
of repayment were not
stipulated. The Batla Group was also informed of the management deal
between Gemcore Sampling and Superkolong.
During the negotiations
Gemrock Resources was not in the picture anymore. In November 2008
the Batla Group became aware that Mr
Chris Kimber bought Kimcor
Diamonds PLC which meant that the deal between Batla and Kimcor fell
through. Before the deal fell through
the Batla Group had lent
Superkolong large sums of money. Mr Cornelison advised his company to
perfect the notarial bonds they
had against some of Superkolong’s
assets namely: Deeds to certain mines and some diamonds.
[22] Mr Jan Hendrik
Lombaard, a chartered accountant and financial director of Gemcore
Sampling, testified that Superkolong, represented
by Mr Cedric
Bredenkamp, approached Gemcore Sampling to take over and manage SMI4
mine dumps which were treated by Superkolong
on a management contract
basis, which Gemcore Sampling accepted. The terms of the management
agreement are set out in para 1.3
of the 03 October 2008 MOU.
According to Mr Lombaard the agreement with Mr Bredenkamp was that
Gemcore Sampling would incur expenses
of up to R4m in the running of
the mine dumps. They had to prioritise SMI4 Capex with the loan but
Gemcore Sampling had to foot
the huge bill for Superkolong’s
creditors and or employees that were outstanding. The money was also
used for the benefit
of Superkolong’s subsidiaries. Mr Lombaard
dealt with the individual payments made as shown in (Bundle “B”)
and
how they were reflected in Superkolong’s books of account.
Upon the requisition of Mr Bredenkamp some equipment were also
installed on site to increase the mine production. Invoices for the
account of Superkolong were issued for all these expenses.
[23] Mr Lombaard
received an email (item number 17 of Exhibit “B”) from Ms
Ronel Meyer, Superkolong’s accountant/financial
manager,
requesting payment for the security personnel in different
subsidiaries of Superkolong as retrenchment packages as arranged
with
Mr Bredenkamp. The amount was paid into Supermix’s bank account
(one of the many Kimcor’s subsidiaries). After
15 October 2008
further payments were made by Gemcore Sampling totalling R1, 485,
164-79m, as adjusted. According to Mr Lombaard
the 03 October 2008
MOU was still binding on the parties after 15 October 2008 even
though the “conditions precedent”
were not fulfilled. An
amount of R850, 000-00 over and above the R4m paid by Gemcore
Sampling in favour of Superkolong’s
subsidiaries was dealt with
as a loan in Superkolong’s books of account.
[24] According to Mr
Lombaard when they drafted the 03 October 2008 MOU he did not know
what “conditions precedent”
meant. He explained that when
the agreement was entered into he understood it to mean that ‘the
conditions were supposed
to be met at some point in time.’ He
corroborated the evidence of Mr Buys that they used templates when
drafting the agreement.
He reiterated that there was no agreement
stating that Gemcore Sampling would lend money to Superkolong.
[25] The stipulation
in para 3.3 of the 03 October 2008 MOU which states “neither
party will have any claim against the other
party for any matter
arising from the transactions contemplated by this MOU” was
never intended by the parties to the MOU
to bar action against each
other when it was necessary, so says Mr Lombaard. To him the said
stipulation had nothing to do with
the loan but the expenses in
connection with the negotiations and documentation, which position Mr
Buys also adopted. The loan
was dealt with in para 1.4.4 of the MOU
as follows:
“1.4.4 The
capital of the loan will be convertible to shares in the reverse
listed company at the same price as what the two
entities who [are]
merging determined. This conversion will be in the name of Gemcore.
If the reverse listing does not take place
within 8 months after
signature of this MOU, the loan will be repayable on demand after
notice of 30 days has been given.”
[26] Mr Lombaard
testified that the 11 August 2008 MOU was an agreement between Kimcor
Diamonds PLC and Gemrock Resources and therefore
a separate
agreement. Kimcor Diamonds PLC was under financial pressure at the
time and sought assistance from Gemrock Resources.
The latter could
not provide the R5m needed by Kimcor as an investment opportunity.
Gemrock Resources was in the process of raising
funds but was
nevertheless liquidated on 20 March 2009. Gemrock Resources borrowed
money from Gemcore Sampling with the intention
of on-lending it to
Superkolong. Gemcore Sampling had the money, Gemrock assets and
Superkolong tailings. It was not in dispute
that this was a good
investment opportunity for Gemcore Sampling. Mr Lombaard insisted
that the central word was “loan”
and not “investment”.
Mr Buys approached Gemcore Sampling to buy out Superkolong for R10m.
However, Gemcore Sampling
made a counter offer of an equity
investment of 40% for the R4m. This led to the 02 September 2008 MOU
which was concluded between
Gemcore Sampling, Superkolong and Kimcor
Diamonds PLC. Mr Bredenkamp did not sign this MOU on behalf of
Superkolong and Mr Buys
had replaced Mr Bredenkamp as managing
director of Kimcor Diamonds PLC at that stage. In this agreement the
parties agreed to convert
the 40% profit share basis to a 40%
shareholding in SMI4. However, if the conversion was not possible the
agreement would continue
on a profit sharing basis (management
agreement).
[27] Mr Lombaard
further testified that subsequent to the said negotiations the 03
October 2008 MOU was concluded between the parties
to this action.
When it was put to him by Mr Danzfuss that the investment that
Gemcore Sampling intended making was in the region
of R170m at the
end for only R4m, he stated:
“Well, at that
point in time we were looking at an equity investment in Superkolong
and then we would – and that didn’t
happen. So afterwards
we were looking at a loan of R4 million and that loan, the capital of
that loan we would have taken to buy
shares in the reverse listed
entity. So that is two separate transactions. And we had no control
over the reverse listing.”
[28] Mr Guillaume
Johannes Oberholster, a practising auditor in Bloemfontein, was
appointed as an auditor for Superkolong after
the shares of the
company were taken over by Mr Corns and Mr Patrick Mason towards the
end of 2009. Mr Oberholster and his team
approached Superkolong’s
previous auditors, Price Waterhouse Coopers, to glean more
information from the records. This they
did to determine how up to
date their financial statements were. They discovered that the
financial statements for the year-end
30 June 2009 were incomplete.
Superkolong requested Mr Chris Kimber, the previous owner, to
complete the statements. However, due
to the failed negotiations and
discussions with Price Waterhouse Coopers Mr Oberholster was
requested to do so instead even though
this happened before Mr Mason
and Mr Corns took over the company. They prepared a compilation
agreement and financial statements
but did not complete the audit. Mr
Oberholster used the information received from Ms Emile Barnard from
Price Waterhouse Coopers
and Ms Ronel Meyer in Superkolong’s
offices.
[29] Mr Oberholster
was referred to p242 (loan account) and p243 (creditors’
account) of Bundle “A”, a printout
of the general ledger
account in the accounting system used by Superkolong called Pastel.
This documentation is ordinarily furnished
by the company but in this
case he and his team compiled it themselves. They loaded it onto
their system and finalised the financial
statements from it. It
covered the period 01 July 2008 to 30 June 2009 financial year. It
contained Gemcore Sampling’s account
and transactions with
Superkolong over the said period. Superkolong’s books showed a
loan account of R4m due in favour of
Gemcore Sampling. In the normal
trade creditors’ account Gemcore Sampling is one of
Superkolong’s creditors and the
total due to it is R824,
239-50. When Mr Oberholster and his team made enquiries concerning
the R4m they were informed by Superkolong’s
directors: Messrs
Corns, Mason and Kimber, the previous owners that the money was not
due to Gemcore Sampling but to Gemrock Resources
which was at that
stage liquidated. Mr Oberholster and his team therefore entered the
money in Superkolong’s books as a capital
gain because
according to the explanation they did not regard it as a liability
anymore as it was not repayable. This position
was not verified by
the audit. They acted on the instruction of Corns and Kimber. They
later verified and confirmed that Gemrock
Resources was indeed
liquidated. They had in their possession the 03 October 2008 MOU.
That concluded the
case for the plaintiff.
[30] At this stage
Mr Danzfuss, on behalf of Superkolong, applied for absolution from
the instance on the grounds that Gemcore Sampling
failed to make out
a proper case for rectification. He argued further, amongst others,
that Gemcore Sampling had no right to act
either as a cessionary or
in its own name against Superkolong. The 03 October 2008 MOU relied
upon by Gemcore Sampling was not
a loan but an investment, the
argument proceeded. Mr Zietsman, on behalf of Gemcore Sampling,
opposed the application. He submitted
that it is common cause that
Gemcore Sampling advanced payments in favour of Superkolong to its
employees, suppliers and/or its
creditors.
[31] HOFFMAN AND
ZEFFERTT IN THE SOUTH AFRICAN LAW OF EVIDENCE, 4th Ed p508, lays down
the test for absolution from the instance
as follows:
“If at the end
of the plaintiff’s case there is not sufficient evidence upon
which a reasonable man could find for him,
the defendant is entitled
to absolution. Or, as it has been expressed on more than one occasion
by the Appellate Division, “the
only question” is
“whether, at the close of the plaintiff’s case, there was
such evidence before it upon which
a reasonable court might, not
should, give judgment against the defendant.”
See CLAUDE NEON
LIGHTS (S.A.) LTD v DANIEL
1976 (4) SA 403
(A) at 409G and OOSTHUIZEN
v STANDARD GENERAL VERSEKERINGSMAATSKAPPY BPK
1981 (1) SA 1032
(A) at
1035H-36A.
With this principle
in mind, I dismissed the application for absolution because in my
view Gemcore Sampling had made out a prima
facie case to find for it.
[32] Mr Danzfuss
called Mr Cedric John Bredenkamp to testify. He is a non-executive
director of Superkolong. During August 2008
he was a director of
Kimcor Diamonds PLC in the South African Operations and its
subsidiaries. He was also operations manager for
all the subsidiaries
of Kimcor Diamonds PLC. Mr Bredenkamp confirmed that Superkolong
experienced financial problems at the time.
Kimcor Diamonds PLC had a
two-tier strategy in London for fundraising. The first half of the
funds was raised in order to start
with their projects. The market
was not good and it was impossible to raise funds in London. He acted
on instructions he received
from the London Board and did not himself
give instructions, except to his managers on operations but not on
corporate matters.
A Chief Financial Officer in London worked with Ms
Ronel Meyer in the South African Operations. The accounting
department was a
different component in the structure and had its own
operations. During August to October 2008 the finance department was
run by
Mr Buys of Gemrock Resources in terms of an agreement between
Kimcor Diamonds PLC and Gemrock Resources. Mr Buys dealt with the
creditors and debtors of Kimcor SA branch. Mr Bredenkamp was not
certain for which period were they supposed to send all accounting
information to Mr Lombaard.
[33] Mr Bredenkamp
was instructed by Ms Melissa Sturgess Smith and Mr Churchouse of the
London Board to find a partner in South
Africa willing and able to
give bridging finance or enter into a joint venture or do a joint
listing. He approached Mr Buys, amongst
others, who showed an
interest in listing in London. The discussions and negotiations
between Mr Buys, Ms Smith and Mr Churchouse
resulted in the signed 11
August 2008 MOU. The plan was that Kimcor would service its creditors
in all its subsidiaries. Mr Buys
informed them that a list of
creditors and debtors that was prepared by Ms Meyer should be
presented to Ms Anne-Marie (surname
not supplied), Mr Buys’
secretary, for payment. Superkolong’s creditors and other
subsidiaries were included in this
list. Ms Meyer never gave
instructions for payments. Mr Buys made such decisions.
[34] Mr Bredenkamp
had nothing to do with the 02 September 2008 MOU. He did not sign it
though it was presented to him. He was not
comfortable with the fact
that 40% of Kimcor Diamonds PLC subsidiary would be given away for
R4m without passing the requisite
resolution approving such measure.
[35] Mr Churchouse
who was London based instructed Mr Bredenkamp to negotiate a deal
with Mr Buys and Mr Lombaard. These negotiations
resulted in the 03
October 2008 MOU. According to Mr Bredenkamp the R4m would have been
lent to Kimcor Diamonds PLC by Gemrock
Resources for the benefit of
Kimcor Diamonds PLC’s subsidiaries, including the benefit of
Superkolong. He could not tell
when Gemcore Sampling started
advancing payments. He also could not remember who requested him to
send the list of creditors to
Superkolong and not Gemrock Resources.
He testified that he requested payments from Mr Lombaard who at the
time was in control
of the finances of Superkolong. He intimated that
the payment of an amount of R126, 832-12 by Gemcore Sampling for
security purposes
had nothing to do with Superkolong because the
latter did not have security personnel of their own. The amount could
only have
been paid for the benefit of Supermix. He could not tell
why this was included in the list of payments on behalf of and/or to
the
benefit of Superkolong.
[36] Mr Bredenkamp
stated that he never thought that the 03 October 2008 MOU had lapsed
at any stage. The parties were concerned
about rectifying the
situation, namely the repayment of Gemcore Sampling’s R4m. He
did not make Mr Cornelison aware that
Gemcore Sampling was of the
view that there were monies due to them. He said he did not mention
it because it was not his place
to tell Mr Cornelison, as the new
investor. He only reported to him that Mr Cornelison needed to
negotiate with Gemcore Sampling
what could be put in place to repay
Gemcore Sampling’s money. He tried to help Gemcore Sampling
recover ‘the money
that they potentially could have lost.’
When asked why he would do that when the “conditions precedent”
were
not met and ‘no party will have any claim against the
other party for any matter arising from the transaction contemplated
by this MOU’ he said this did not mean that he felt no regrets
towards people or instances that put money into an investment
or
venture that went wrong. He insisted that
Gemcore Sampling
advanced monies as per 11 August 2008 MOU. He conceded that Gemcore
Sampling made payments directly to creditors
and/or Superkolong.
[37] Meetings were
held on 01 October 2008 and 21 October 2008 but Mr Bredenkamp
attended only the latter. He stated that it was
clear at that stage
that Gemrock Resources was completely out of the picture. When it
was put to him by Mr Zietsman why he did
not inform the meeting that
it was an investment and not repayable he insisted that ‘it was
not my money to say anything.’
He referred Mr Chris Kimber, the
new owner of Kimcor Diamonds PLC, Mr Albert Michau, his bookkeeper or
auditor and Mr Cornelison
to the MOUs and to the fact that Gemcore
Sampling had invested money which he assisted it to recover. He only
advised them to make
payment arrangements with Gemcore Sampling.
According to Mr Bredenkamp the agreement did come into existence but
did not know when
it terminated.
[38] It is
undisputed that Gemcore Sampling advanced amounts of R2, 949, 677.48
and R1, 486, 164.79, suitably adjusted, on behalf
of Kimcor Diamonds
PLC and/or its subsidiaries which include Superkolong’s
employees, creditors and/or suppliers. According
to Superkolong’s
version Gemcore Sampling paid the monies to Gemrock Resources in
terms of the MOU dated 11 August 2008 concluded
between Gemrock
Resources and Kimcor Diamonds PLC. Mr Bredenkamp disputes that the
payment was made in terms of the 03 October
2008 MOU. Consequently
Kimcor PLC owes Gemrock Resources who, in turn, owes Gemcore
Sampling, it was argued. The monies were advanced
as an investment
rather than a loan in Kimcor Diamonds PLC with specific reference to
Superkolong. In the premises and in an attempt
to save Gemcore
Sampling’s investment the parties to the action tried to
convert it into a loan by signing the 03 October
2008 MOU. Mr
Danzfuss on behalf of Superkolong submitted that this 03 October 2008
MOU had lapsed irrespective of whether this
MOU contained conditions
precedent or resolutive conditions and therefore no legal
consequences could flow from this purported
agreement.
[39] Mr Danzfuss
sought to persuade me that the 03 October 2008 MOU draws three
distinctions:
39.1 Firstly, that
the capital of the loan would be convertible to shares in the reverse
listed company;
39.2 Secondly, that
if the reverse listing does not take place within eight months after
signature of this MOU the loan would be
repayable on demand upon
notice of 30 days having been given; and,
39.3 Thirdly, that
the MOU would terminate and each party would bear its own expenses in
connection with all negotiations and documentation
and neither party
shall have any claim against the other party for any matter arising
from the transactions contemplated by the
MOU.
Mr Danzfuss argued
in the upshot that the fulfilment of the conditions was within
Gemcore Sampling’s power by advancing further
amounts of money.
It was the sole manager responsible for the operations of Superkolong
and therefore the non-fulfilment of the
conditions was its
responsibility. The money was not repayable, the submission went.
[40] Mr Zietsman, on
behalf of Gemcore Sampling, argued that in its further and better
particulars Superkolong stated that only
paragraphs 4.1, 4.2 and 4.3
of the 03 October 2008 MOU were to be “conditions precedent”;
inasmuch as they were not
fulfilled they would have lapsed but the
balance of the MOU came into existence. He argued further that the
anomaly is the balance
of Clause 3 under the heading: “Conditions
Precedent”; which determined that:
‘If the date
for the satisfaction of the conditions precedent is not extended in
writing by the parties and the conditions
are not satisfied or waived
by the relevant date or the transaction does not proceed; then this
MOU shall terminate, each party
will bear its own expenses in
connection with all negotiations and documentation, and neither Party
will have any claim against
the other Party for any matter arising
from the transactions contemplated by this MOU.’
[41] Gemcore
Sampling acts in its capacity as a cessionary in terms of the cession
signed by Gemrock Resources on 23 July 2010.
Alternatively it acts in
its own name.
The issue that falls
for determination is whether there is an agreement in terms whereof
monies were advanced to Superkolong, its
creditors, employees and
suppliers which was concluded on 03 October 2008 and whether it was
an investment or a loan.
[42] The parties to
this agreement are Gemcore Sampling (the plaintiff), Superkolong (the
First Defendant) and Gemrock Resources
(the Second Defendant). Kimcor
Diamonds PLC was never a party. Superkolong argues that the money was
paid by Gemcore Sampling on
behalf of Gemrock Resources to enable the
latter to honour its obligation towards Superkolong which has its
genesis in the 11 August
2008 MOU. This means that the legal
obligation was between the defendants (Superkolong and Gemrock
Resources). The logic consequently
goes that Superkolong owes Gemrock
Resources and that Gemrock Resources in turn owes Gemcore Sampling.
Gemcore Sampling denies
that it was party to the 11 August 2008 MOU.
Gemcore Sampling states that that agreement was signed by Gemrock
Resources and Kimcor
Diamonds PLC, who is not a party to these
proceedings. Gemcore Sampling acknowledges though that it was a party
to the 03 October
2008 MOU or agreement.
[43] It is clear
from the 11 August 2008 MOU that Superkolong and Gemcore Sampling
were not parties to it. Mr Buys, the financial
director of Gemrock
Resources, testified that when his company (Gemrock Resources) could
not assist the Kimcor Group he approached
Mr Lombaard’s company
(Gemcore Sampling) for financial assistance and its expertise to
manage the Kimcor Group’s plant.
At no stage did Mr Buys say
that he informed Mr Lombaard that he would be assisting on the basis
of the 11 August 2008 MOU. This
also did not come out during
cross-examination. Mr Buys specifically stated that Gemcore Sampling
was not a party to that agreement.
He did not disclose what date he
approached Mr Lombaard for assistance. However, it was after their
discussions that Gemcore Sampling
started advancing payments directly
to Superkolong’s creditors. This took place before the 02
September 2008 MOU was signed.
[44] Mr Lombaard
stated in no uncertain terms that Gemcore Sampling was not party to
the 11 August 2008 MOU. This was not disputed.
Mr Buys testified that
the purpose of the 03 October 2008 agreement was:
“…[R]emember
now the transaction has been implemented already and monies have been
paid over. There is no way of getting
back those monies. So it’s
been – the transaction has already been implemented to a large
degree. So now we had to
get our heads around, getting a new
structure in place to facilitate this transaction.”
Mr Lombaard
testified that they started paying in August 2008 already because
negotiations were already in place. Mr Buys corroborated
his version
and added that there was a threat by Ekapa Mining to urgently
liquidate Superkolong. This led to the September 2008
MOU which Mr
Bredenkamp did not sign and thereafter the 03 October 2008 MOU.
[45] Superkolong is
the one who discovered the 03 October 2008 MOU and not Gemcore
Sampling. Mr Danzfuss put to Mr Buys the following
statements:
“Ques: But
Gemrock had the obligation towards Kimcor to supply the money, not
Gemcore?---At that – My Lady at that point
in time yes, that
was certainly the case.
Ques: And to honour
that obligation Gemcore on the 19th of August, a few days after that
agreement, made payments, inter alia, to
Escom and in favour of
Supermix, to Superstone and that was to honour the obligation of
Gemrock towards Kimcor?---My Lady that’s
correct and it’s
also through that intervention that we saved Superkolong from that
application for liquidation. And that’s
why it’s so
quickly, it was done so quickly after this MOU was signed.
Ques: Mr Buys, the
question was simple, was this – were these payments made by
Gemcore on behalf of Gemrock to honour its
obligation towards Kimcor?
---Yes My Lady, yes.”
[46] From the
aforegoing it is clear that Gemrock Resources approached Gemcore
Sampling and borrowed some money from it to on-lend
it to
Superkolong. The question is whether at that stage Gemcore Sampling
knew of the agreement between Gemrock Resources and Kimcor
that was
signed on 11 August 2008, since it was not party to it. In my view it
cannot be said that when Gemcore Sampling started
paying the monies
on 19 August 2008 to Superkolong it was aware of the 11 August 2008
MOU. It can therefore not be construed that
Gemcore Sampling honoured
Gemrock Resources’s obligation on that basis. The evidence is
that those payments were followed
by the 02 September 2008 MOU and
subsequently the 03 October 2008 MOU. In both of these Memoranda of
Understanding Gemrock Resources
borrowed money from Gemcore Sampling
to on-lend to Superkolong. In actual fact the August 2008 MOU has
nothing to do with Gemrock
Resources borrowing money from Gemcore
Sampling to on-lend to Superkolong. This MOU was about Gemrock
Resources assisting Kimcor
with bridging finance and a reverse
take-over of Kimcor by Gemrock Resources. It is far-fetched to
suggest that Gemcore Sampling
was aware of this as this is not
supported by the evidence.
CLAIM 1
RECTIFICATION
[47] Gemcore
Sampling prays for rectification. Firstly, of the sentence in Clause
3 of the 03 October 2008 MOU quoted in para 7
above and secondly,
that the words in the heading of Clause 3 which reads as follows:
“Conditions Precedent” should
read “Resolutive
conditions”.
The onus is on
Gemcore Sampling to show that when the parties entered into the
agreement they did not intend the two clauses to
form part of their
agreement. Mr Danzfuss on behalf of Superkolong argued that it does
not matter whether the conditions were resolutive
or suspensive, the
fact of the matter is that the 03 October 2008 MOU never came into
existence because of the non-fulfilment of
the said conditions.
[48] Mr Buys
testified that he, Mr Lombaard and Mr Bredenkamp had the October 2008
MOU typed on a big screen using the September
2008 MOU as a basis for
it. They discussed it whilst it was on the screen and suggested some
amendments. They went through it paragraph
by paragraph to make sure
everyone was satisfied. They then signed it. According to Mr Buys the
meaning of Clause 3 which says
‘neither party will have any
claim against the other for any matter arising from the transactions
contemplated by this MOU’
was known to everyone and everyone
was satisfied with it. However, it did not relate to the loan. He
said referring to the impugned
paragraph:
…[I]t should
have been taken out. It was a template that we used and incorrectly
so, but in hindsight that paragraph shouldn’t
have been there.
There was no intention whatsoever that [that] paragraph should ever
be related back to that loan account.”
[49] Mr Buys
explained further that they made a mistake because that pro-forma
paragraph should have been deleted. When it was put
to him that he
deliberately signed the agreement knowing that the stipulation was
there he said in reply: “Obviously I read
that My Lady, but
clearly I didn’t understand the implications of what I was
signing there.” He later said that he
did not know why they
kept it in the agreement.
[50] Mr Lombaard on
the other hand stated that the said stipulation was hidden away after
a comma that related to the first part
of the sentence. According to
him it was taken out of context by Mr Kimber for the first time on 20
January 2009. Otherwise it
was never the intention of the parties to
have it there. When asked whether he agreed that all the parties
present agreed that
that should not have been part of the contract he
said: “I don’t know whether all parties agreed at that
point in time.”
[51] Mr Bredenkamp
in turn testified that this stipulation was inserted in the agreement
by design. He intimated that he knew what
“precedent”
meant and knew that even though the agreement had lapsed that some of
the clauses were still in place or
extant. He denied that there was
an error common to all the parties who were involved in the
negotiations and/or were signatories
to the 03 October 2008 MOU.
[52] When Mr Buys
was asked by Mr Danzfuss what he understood by “conditions
precedent”. He responded that his understanding
was that the
contract will only come into effect once all the conditions are
complied with. When Mr Danzfuss asked Mr Lombaard
whether or not the
conditions were resolutive, his response was: “I didn’t
know what the difference was at that stage.”
52.1 In UNION
GOVERNMENT v VIANINI FERRO-CONCRETE PIPES (PTY) LTD 1941 (AD) 43 at
47 WATERMEYER JA held:
“…this
Court has accepted the rule that when a contract has been reduced to
writing, the writing is, in general, regarded
as an exclusive
memorial of the transaction and in a suit between the parties no
evidence to prove its terms may be given save
the document or
secondary evidence of its contents, nor may the contents of such
document be contradicted, altered, added to or
varied by parol
evidence.”
52.2 In BARDOPOULOS
& MACRIDES v MILTIADOUS
1947 (4) SA 860
(W) at 863 -864 Clayde J
held:
“A party
seeking to obtain rectification must show the facts entitling him to
obtain that relief “in the clearest and
most satisfactory
manner”…where the common intention is to be shown not by
any writing but by verbal evidence, the
Courts have a great
difficulty in determining whether there was a mistake in the written
contract. These cases do not, I consider,
require more than a balance
of probability in favour of the party seeking rectification but
indicate that such a claim is in fact
difficult to prove.”
52.3 In LEVIN v
ZOUTENDIJK
1979 (3) SA 1145
(W) 1147-1148 Coetzee J had this to say:
“The purpose
of an action for rectification is to reform a written document in a
specific fashion and a wholesome practice
has developed over the
years to draft the actual wording of the term omitted and to pray
that that be inserted at a suitable place
in the writing. An example
can be found in MUNNIK and MUNNIK v SYDNEY CLOW & COMPANY CO LTD
1965 (4) SA 312
(T) at 314. It is essential for any party to a
written contract to know what the other party contends regarding the
actual wording
of the contract. …The very cause of action for
rectification postulates that the parties’ agreement or common
intention
was clear and unmistakeable on those aspects in respect
whereof the writing is to be reformed.”
52.4 In SOIL
FUMIGATION SERVICES LOWVELD CC v CHEMFIT TECHNICAL PRODUCTS
2004 (6)
SA 29
(SCA) at 38J-39C Brand JA held:
“It is a
settled principle that a party who seeks rectification must show
facts entitling him to that relief ‘in the
clearest and most
satisfactory manner’ (per Bristowe J in Bushby v Guardian
Assurance Co
1915 WLD 65
at 71; see also Bardopoulos and Macrides v
Miltiadous
1947 (4) SA 860
(W) at 863 and Levin v Zoutendijk
1979 (3)
SA 1145
(W) at 1147H-1148A). In essence, a claimant for
rectification must prove that the written agreement does not
correctly express
what the parties had intended to set out therein.
(See Meyer v Merchants’ Trust Ltd
1942 AD 244
at 253.)”
[53] Mr Lombaard
testified that the conditions were supposed to be resolutive but in
trying to define what this concept meant he
was clearly at a loss. On
the contrary Mr Bredenkamp intimated that the conditions were
correctly recorded. Consequently there
was no consensus between the
parties on whether the conditions should be resolutive or suspensive
(“conditions precedent”).
The evidence of Mr Lombaard and
Mr Buys did not support the contention that Superkolong also intended
that the relevant paragraph
be deleted. What is fairly apparent is
that the affected parties did not know what “conditions
precedent” meant and
could therefore not have intended to have
resolutive conditions in the agreement not knowing what they meant or
involved. Mr Lombaard
and Mr Buys are Chartered Accountants and very
experienced businessmen. The evidence shows that they had all the
opportunity to
study the document before signing it. A lot of money
was at stake. The probabilities are that the parties intended the
last paragraph
of
Clause 3 in para 48
supra to be part of the agreement. The evidence also did not support
the insertion of a further sentence. A
claim for rectification cannot
succeed because in doing so in the mentioned circumstances would
amount to a construction of a new
contract being crafted for the
parties.
The application for
rectification stands to be dismissed with costs.
CLAIM 2
[54] Since the
rectification application has failed the agreement will therefore be
dealt with as it stands. Clause 1.2 of the contract
between the
parties (the 03 October 2008 MOU) firstly deals with R4m lent to
Gemrock Resources who would on-lend same to Superkolong.
The
agreement clearly refers to it as a loan. It is then explained as a
secured convertible loan to be converted into shares in
the Kimcor
entity once reverse listing has been done. Clause 1.3 deals with the
management agreement and Clause 1.4 with the transfer
of the R4m by
Gemcore Sampling to Gemrock Resources by no later than 15 October
2008. Clause 1.4.4 stipulates that if the reverse
listing does not
take place in eight months after signature of the 03 October 2008 MOU
the loan will be repayable on demand after
30 days’ notice has
been given. Clause 1.4.9 stipulates that all parties accept that
Gemcore Sampling has paid up to 03 October
2008 an amount of R3 274,
571-19 as part payment of the R4m to Gemrock Resources who on-lent
this amount to Superkolong. All these
mentioned clauses refer to a
loan and not an investment.
[55] Clause 3 deals
with “conditions precedent”. These conditions made
provision for three different happenings:
55.1 Clause 3.1
deals with the approval by the boards of all the parties and the
acceptance by them of the rights and obligations
created by the 03
October 2008 MOU within a week;
55.2 Clause 3.2 with
the payment of the R4m referred to in Clause 1.4.1.
55.3 Clause 3.3
stipulates that the parties confirm that the envisaged transaction
will be re-negotiated in good faith in the event
of any material
adverse change in the budgeted capital outlay and forecast
operational capabilities. It states further that the
parties agreed
to use their utmost good faith to ensure the fulfilment of the
conditions alluded to in Clauses 3.1 to 3.3 (above
of the MOU) as
soon as is practically possible.
[56] The ultimate
sentence of Clause 3.3 states:
“ …[T]he
parties agree that if :
(a) the date for the
satisfaction of the conditions precedent is not extended by agreement
in writing by the parties; and
(b) the conditions
precedent are not satisfied or waived by the relevant date, or the
transaction does not proceed;
Then this MOU shall
terminate, each party will bear its own expenses in connection with
all negotiations and documentation, and
neither party will have any
claim against the other party for any matter arising from the
transactions contemplated by this MOU.”
Clause 8.5 prohibits
any party to cede any of its rights or obligations in terms of this
MOU to any other person.
[57] The contract
(in the modern sense, now that all contracts are consensual) is
binding immediately upon its conclusion. What
may be suspended by a
condition is the resultant obligation or its exigible content. See
ODENDAALSRUST MUNICIPALITY v NEW NIGEL
ESTATE GOLD MINING CO. LTD
1948 (2) SA 656
(OPD) at 666-667. It is common cause between the
parties that the “conditions precedent” were never
fulfilled. It
is not clear what happens to Clause 1.4.4 which says
the loan will be repayable taking into account Clause 3.3 referred to
in para
56 above. In any event the fact that the “conditions
precedent” were not fulfilled resulted in the obligations not
coming into existence from 03 October 2008, when the MOU was signed.
In fact whether the conditions were resolutive or suspensive
it makes
no difference because the conditions were never fulfilled by 15
October 2008, which means that the contract lapsed retrospectively
to
03 October 2008. The effect thereof is that no agreement became
operative as at 03 October 2008 and therefore no obligations
were
created. In AMORETI v TUCKER’S LAND AND DEVELOPMENT CORPORATION
(PTY) LTD 1980 (2) 330 (WLD) at 332H Coetzee J had this
to say:
“I think that
Mr Pincus’s argument ignores the legal result of a resolutive
condition which is fulfilled. This is fully
dealt with by Wessels
(supra 1409 - 1411). The learned author states, inter alia:
“If a
resolutive condition is fulfilled, the law regards the whole
transaction inter partes as if the absolute contract had
never
existed and the parties must therefore be restored to their formal
position. Obligatio resolvitur nunc ex tunc. Thus, in
the case of a
sale subject to a resolutive condition, the Romans said that, when
the condition was fulfilled, the subject-matter
of the sale was to be
regarded as if it had never been bought or sold. The resolutive
condition has a retrospective effect.”
The ultimate result
is that there was no cession because the 03 October 2008 MOU never
came into existence.
CLAIM 3 BASED ON
ENRICHMENT: CONDICTION INDEBITI OR CONDICTIO SINE CAUSA
[58] Mr Danzfuss, on
behalf of Superkolong, argued that enrichment must be unjustified or
without cause. If there is a cause or
legal obligation for the
payment then no reliance can be placed on the condictio indebiti. He
argued further that in order to claim
due to an invalid contract
Gemcore Sampling must tender to restore all the benefits received
under the contract.
[59] Mr Zietsman,
for the plaintiff, submitted that it was never the case of
Superkolong from the beginning that Gemcore Sampling
received any
benefits of whatever nature under the loan agreement which Gemcore
Sampling should have tendered to restore. This
also did not come out
during cross-examination of Gemcore Sampling’s witnesses. It
was clear from the evidence tendered by
Gemcore Sampling’s
witnesses that it did not receive any benefits in terms of the
invalid loan agreement. Mr Bredenkamp also
did not testify that
Gemcore Sampling received any benefits of whatsoever kind. Mr
Danzfuss did not press this point any further.
[60] AMLER’S
PRECEDENTS OF PLEADINGS, 7th Ed, p101 states:
“If the claim
arises from performance in terms of an invalid contract, the
performance is not indebite because there is a
cause, albeit an
illegal one. The claim then lies under the condictio ob turpem vel
iniustam causam.
AFRISURE v WATSON
[2009] 2 ALL SA 1
(SCA) para 51 LEGATOR McKENNA INC v SHEA
[2009] 2
ALL SA 45
(SCA).
In such event the
plaintiff must tender to restore all benefits received under that
contract and must allege that the defendant
is unwilling or unable to
perform his or her part of the invalid bargain.”
See CARLIS v
McCUSKER
1904 TS 917
BOTES v TOTI DEVELOPMENT CO. LTD
[1978] 1 ALL SA
465
(A),
1978 (1) SA 205
(T).
[61] At p100 AMLER’S
PRECEDENTS OF PLEADINGS (supra) sets out the essential elements of
enrichment as follows:
“(a) The
defendant must be enriched;
(b) The plaintiff
must be impoverished;
(c) The defendant’s
enrichment must be at the expense of the plaintiff; and
(d) The enrichment
must be unjustified or sine causa.
McCARTHY RETAIL LTD
v SHORTDISTANCE CARRIERS CC
[2001] 3 ALL SA 236
(A),
2001 (3) SA 482
(SCA).”
[62] Gemcore
Sampling’s claim and evidence that Superkolong had been
enriched at its expense and that it (Gemcore Sampling)
has been
impoverished as a result in the amounts of R 1,485,164-79 and R 2,
942, 677-48 (as amended) was met with a bare denial.
The evidence
showed that this amount was paid to or on behalf of Superkolong.
Superkolong’s books of account exhibited that
Gemcore Sampling
was its creditor and that monies have been advanced by it and paid
into its account for its benefit. That is common
cause between the
parties. SIELBERGERG AND SCHOEMAN’S THE LAW OF PROPERTY 5th ed
at 267 para 11.2.1.6 comment as follows:
“The
requirements are that the defendant must be enriched, the plaintiff
must be impoverished, the defendant’s enrichment
must be at the
expense of the plaintiff and the enrichment must be unjustified.”
See McCARTHY RETAIL
LTD and BESSELAAR v REGISTRAR, DURBAN AND COASTAL DIVISION
2002 (1)
SA 191
(D) at 197I-J.
[63] The defence
raised by Superkolong that there was a causa namely the 11 August MOU
2008 cannot be sustained because Gemcore
Sampling and Superkolong
were not party to that agreement dealt with in para 46 above.
I consequently come
to the conclusion that the claim for enrichment has been established
and should succeed.
In the result the
following order is made:
1. The application
for rectification by the plaintiff (Gemcore Sampling (PTY) Ltd is
dismissed with costs.
2. The First
Defendant, Superkolong (Pty) Ltd, is ordered to pay to the plaintiff,
Gemcore Sampling (Pty) Ltd, an amount of R2,
942, 677-48 with
interest thereon a tempora morae, to date of payment .
3. The First
Defendant, Superkolong (Pty) Ltd, is ordered to pay to the plaintiff,
Gemcore Sampling (Pty) Ltd, an amount of R1,
486, 164-79 with
interest thereon a tempora morae, to date of payment.
4. The First
Defendant, Superkolong (Pty) Ltd, is ordered to pay the
BM PAKATI
JUDGE
On behalf of the
Plaintiff: ADV P. ZIETMAN (SC)
Instructed
by: ENGELSMAN MAGABANE ING
On behalf of the
Defendant: ADV A. DANZFUSS (SC)
Instructed
by: VAN DER WALL & VENNOTE