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[2012] ZAGPPHC 97
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Suliman v Suliman and Others (A 1333/04) [2012] ZAGPPHC 97 (8 June 2012)
NOT REPORTABLE
IN THE HIGH COURT OF SOUTH AFRICA
(NORTH GAUTENG, PRETORIA)
Case No.: A 1333/04
Case heard: 2012-03-07
Date of Judgment: 2012-06-08
In
the matter between:
ESSACK
ISMAIL
SULIMAN
...................................................................................
APPELLANT
and
MOHAMED
HANIF
SULIMAN
.................................................................
FIRST
RESPONDENT
SAMIRA
SULIMAN
.............................................................................
SECOND
RESPONDENT
HANISH
INVESTMENTS
CC
..................................................................
THIRD
RESPONDENT
REGISTRAR
OF CLOSE CORPORATIONS
......................................
FOURTH
RESPONDENT
JUDGMENT
HIEMSTRA
AJ
[1]
The appellant sought orders in the court a quo declaring the
appellant to be a 50% member of Hanish Investments CC (the third
respondent) and directing the fourth respondent to register the
appellant's membership interest in the third respondent in its
records, together with a cost order. This application was dismissed
by Ginsberg AJ in a judgment dated 1 June 2004. The appellant
was
granted leave to appeal to the full bench of this division.
[2]
For the sake of brevity, I shall refer to the first and second
respondents as the "respondents" and to the third
respondent as the "third respondent". Where I refer to the
first or second respondent individually, I shall refer to them
as
such.
[3]
The appellant and the respondents have been in dispute with each
other for many years over the ownership of various assets and
interests in several close corporations. The litigation that ensued
culminated in a settlement agreement, concluded on 27 November
2001.
Clause 11 of the agreement records that "the terms contained in
this agreement are in full and final settlement of all
and any claims
that either party may have against the other" This agreement was
made an order of court. The present case concerns
the membership
interest in the third respondent, Hanish Investments CC. The
settlement agreement specifically distributes various
assets between
the parties. The third respondent is not mentioned in the agreement.
[4]
Ginsberg AJ set out the facts and history of the matter
comprehensively in his judgment and it will serve no purpose to
repeat
them here.
[5]
The appellant alleged that he and the first respondent, his brother,
had conducted business in partnership over many years.
The third
respondent is a property venture which was initially known as Hanish
Investments (Pty) Ltd. It was later converted to
a close corporation
in which the appellant and the first respondent each held 50%
membership. According to the appellant he had
been a 50% owner of the
business from its inception. This is, however, not borne out by the
documentation. The third respondent
was initially a private company
and because of the Group Areas Act, the sole shareholder was a
certain Arthur Resnick, as nominee
for the first appellant. Mr M.S.
Ebrahim, the third respondent's auditor, wrote a letter to Hanish
Investments (Pty) Ltd on 10
August 1992, which reads as follows:
"As
auditors of the above company we confirm the following:
(1)
The total issued share capital of the company was registered in the
name ofArther Resnick in his capacity as nominee for Mohamed
Hanif
Suliman. These shares were transferred to M.H. Suliman during Dec.
1991.
(2)
We have today lodged a CM2 reflecting Mohamed Hanif Suliman as sole
director of the company with effect from 21.05.8T'.
[6]
The respondents' case is that the appellant was an employee of the
third respondent and not a member.
[7]
After the conversion of the company to a close corporation, the first
respondent was reflected as the sole member in the Founding
Statement. At some stage the second respondent also became a member.
The appellant became a 50% member duing November 1993 for
reasons
that are not clear. However, an Amended Founding Statement, dated 1
February 1995, reflects the first respondent as a 60%
member and the
second respondent as a 40% member. Under the heading "PERSONS
WHO CEASE TO BE MEMBERS" appears the name
of the appellant
together with his signature. When confronted with these documents,
the appellant said that they did not reflect
the true state of
affairs. He said that the first respondent had always done the paper
work and that he had trusted him.
[8]
The appellant's case is that the first respondent had defrauded him
into transferring his 50% interest in the third respondent
to the
respondents. The respondents denied that they had defrauded the
appellant as alleged. In the alternative, they contended
that the
dispute regarding the third respondent had been settled as part of
the settlement agreement mentioned above.
[9]
According to the appellant, the second respondent had perpetrated the
fraud in the following manner: The first respondent had
induced him
to sign several CK2 forms in blank. These are statutory forms that
are used for the purpose of transferring the membership
interest of a
member in a close corporation to another person. According to the
appellant, the respondents presented these blank
forms to the
chartered accountant, Mr Ebrahim, to be used to transfer the
appellant's 50% membership interest in the third respondent
to the
respondents.
[10]
According to the appellant, he had signed a blank CK2 form for the
purpose of transferring 10% of his membership interest in
another
close corporation, NSR Motors CC, to the first respondent. He said
that the next day, the first respondent told him that
his children
had spoiled the form by spilling water on it and asked him to sign
two more forms. In his evidence-in-chief, the appellant
said that he
had accepted the first respondent's explanation about the spoiled
forms. His verbatim evidence on this score was the
following:
"The
form that I signed, the CK2 form got spoiled in water. He says 'you
know how is the children,' so I said 'yes, I know
how is your
children, I know what happens at home' His in his house he has a
courtyard which they used to eat there in the kitchen
and the kids
were running around and could understand and I believed him."
Under
cross-examination the appellant admitted that the above could not be
true because the first respondent had only one child
who at the time
was six months old.
[11]
The appellant said that he had discovered during December 2001 that
the first respondent had caused his 50% interest in the
third
respondent to be transferred to himself and his wife, presumably by
means of the blank CK2 forms bearing his signature. This
date cannot
be correct. It appears from correspondence with which I deal later in
this judgment, that the appellant must have known
at the latest
during November 2000 that he was not reflected as a member.
[12]
The court a quo rejected the appellant's claim that he had been
defrauded. It further found that the dispute regarding the
membership
interest in the third respondent had been settled between the parties
by virtue of clause 11 of the agreement, quoted
above.
[13]
The reasons of the court a quo for rejecting the appellant's
allegations of fraud are unassailable. Apart from the glaring
untruth
as to what happened with the CK2 form, it appears overwhelmingly
clear from the documentary evidence that, apart from the
period
between November 1993 and January 1995, the appellant had not been a
member of the third respondent. Furthermore, the appellant's
former
attorney, Mr Mahmood Mia, who represented him at the time of the
litigation and settlement negotiations referred to above,
contradicted the appellant's version in most material respects. In
addition, the appellant called Mr Ebrahim to testify on his
behalf.
Mr Ebrahim denied that he had received blank CK2 forms, signed by the
appellant, in order to effect the transfer. He testified
that he had
completed the CK2 forms himself and had handed them to the first
respondent to have them signed by the parties to the
transfer. The
first respondent brought them back with the signatures of the
appellant and the second respondent. He denied that
he had ever
filled in CK2 forms that had already been signed by any party.
[14]
The documentary evidence contradicting the appellant's version
includes the following:
[15]
The first respondent's attorney, Mr Dollie, wrote a letter to the
appellant's former attorney, Mr Mia, on 7 November 2000 in
which he
inter alia said the following:
11
As your client is aware my client and his wife are the registered
members of various close corporations. For a short period of
time,
i.e. from November 1993 up until January 1995 your client was
reflected as being the beneficial holder of 50% of the members'
interest of Resfam Investments CC, Hanish Investments CC (the third
respondent) and NSR Motors CC. I am advised by my client that
your
client was registered as a member of the close corporation on the
advice of the accountant handling my client's affairs, a
certain Mr
MS Ebrahim. Upon my client realising that there was no underlying
causa for your client having become a member of the
various close
corporations, your client was requested to transfer those interests,
which were erroneously transferred to him, back
to my client, which
he had done."
(I
must interpose here to mention for the sake of completeness that Mr
Ebrahim denied in his testimony that he had given any advice
regarding the transfer of the membership interest, as alleged in the
letter. However, as I set out below, it is not relevant whether
Mr
Ebrahim had given such advice, since the appellant never challenged
the allegations in the letter when he had the opportunity
to do so.)
[16]
This letter is entirely inconsistent with the appellant's version. Mr
Mia responded, as the appellant's attorney, to this letter
on 16
November 2000. It is a detailed letter in which he made certain
settlement proposals. Significantly he did not dispute the
allegations in Mr Dollie's letter. Instead, he made it clear that he
did not wish to respond to them. When confronted with the
fact that
his attorney had not disputed these contentions, the appellant said
that he had told Mr Mia that he was a 50% owner of
the third
respondent and that he had instructed Mr Mia to dispute the contents
of the letter and to inform the first respondent's
attorney of the
correct position. Mr Mia denied this and said that he had discussed
Mr Dollie's letter with the appellant and that
he had written his
letter on the appellant's instructions. He also said that he and the
appellant had seen documentary evidence
which showed that the
appellant did not own a 50% interest in the third respondent.
[17]
The appellant was confronted during cross-examination with a number
of draft settlement agreements in the larger dispute between
the
parties relating to the redistribution of assets between them. These
drafts were prepared during the latter part of 2000 and
it is common
cause that Mr Mia had drafted them. The draft agreements recorded
that the first respondent would "retain ownership"
of, or
"retain as his sole and exclusive property", the third
respondent. The appellant sought to distance himself from
these
drafts and testified that he had not seen them and that his attorney
had drafted them without his instructions. It is simply
not credible
that the appellant's attorney would have conjured up in his own mind
that the second respondent would "retain"
the third
respondent as his sole and exclusive property if that had not been
his instructions.
[18]
Further documents that contradict the version of the appellant are
the Founding Statement of the third respondent and subsequent
Amended
Founding Statements. The Founding Statement bears the date stamp of
the Registrar of Close Corporations with the date 25
October 1993.
The appellant is reflected therein as a 50% member. An Amended
Founding Statement, dated 1 February 1995, reflects
the first and
second respondents as the only members. On the last page, under the
heading "PERSONS WHO CEASE TO BE MEMBERS",
appears the name
of the appellant together with his signature. This confirms the
statement in Mr Dollie's letter of 7 November
2000 to the effect that
the appellant had only been a member from November 1993 to January
1995. The appellant's signature as a
"person who ceases to be a
member", bears out the contention that the appellant had
voluntarily disposed of his membership
interest. As stated
previously, when confronted with these documents the appellant said
that his brother had always done the paper
work and that he had
trusted him. His brother often brought him documents to sign and he
had signed without reading them.
[19]
Finally, there is a "Request to open or to continue the
operation of a Close Corporation Account", dated 25 October
1996. This request was made by the third respondent to Standard Bank.
The form lists the first and second respondents as "Present
members of the Close Corporation". Under the heading "Full
names of Persons other than Members authorised to sign"
appears
the name and signature of the appellant. This bears out the
respondents' version that the appellant had merely been an
employee
of the third respondent.
[20]
The conclusion of the court a quo that the appellant had failed to
discharge his onus to prove that he had been defrauded,
is therefore
clearly correct.
Settlement
of the dispute
[21]
This brings me to the Respondents' alternative defence, namely that
the dispute between the parties had been settled. As I
have
mentioned, clause 11 records that the agreement is in full and final
settlement of all and any claims that either party may
have against
the other. The parties had been in dispute with each other for many
years regarding the ownership of various assets
and membership of
close corporations. The third respondent is one of those assets. It
is a property investment company of considerable
value.
[22]
The settlement agreement is in respect of another action instituted
by the appellant against the respondents relating to various
properties and assets. Several assets are specifically mentioned in
the settlement agreement, whereas the third respondent is not
mentioned at all. The literal meaning of this clause is that the
agreement settles all claims of whatsoever nature which the parties
may have against each other. There is no restriction. The fact that
certain disputes are specifically mentioned does not mean that
it
excludes any other disputes.
[23]
Mr Omar argued on behalf of the appellant that the agreement
constitutes the whole agreement between the parties and that it
contains a non-variation clause. He submitted that in order to
include the settlement of the dispute concerning the third
respondent,
the respondents would have to apply for rectification of
the agreement. This is a circuitous argument. The golden rule of
interpretation
is that the words must be given their ordinary
grammatical meaning. The ordinary grammatical meaning of the clause
is that all,
and not only some, of the claims between the parties are
settled. This must naturally include the claim relating to the third
respondent.
If there is any party that required rectification of the
contract, it is the appellant. If it had been the intention of the
parties
to exclude the third respondent from the agreement, they
would have mentioned that specifically.
[24]
The learned judge in the court a quo referred to the well-known
authority on the interpretation of contracts, namely Coopers
&
Lybrand and Others v Bryan? in which Joubert JA dealt with the
correct approach to interpretation of contracts. He said:
"The
correct approach to the application of the 'golden rule' of
interpretation after having ascertained the literal meaning
of the
word or phrase in question is, broadly speaking, to have regard:
(1)
to the context in which the word or phrase is used with its
interrelation to the contract as a whole, including the nature and
purpose of the contract;
(2)
to the background circumstances which explain the genesis and purpose
of the contract, i.e. to matters probably present to the
minds of the
parties when they contracted;
(3)
to apply extrinsic evidence regarding the surrounding circumstances
when the language of the document is on the face of it ambiguous,
by
considering previous negotiations and correspondence between the
parties, subsequent conduct of the parties showing the sense
in which
they acted on the document, save direct evidence of their own
intentions.11
[25]
Applying this approach to the facts, Ginsberg AJ found that both
parties had always been aware that the third respondent had
been a
major cause of disagreement between them. It was an important
income-generating asset and the jewel in the crown of the
assets in
dispute. He found that against this background, the parties must have
been mindful of this asset when they agreed to
settle all and any
dispute between them.
[26]
This reasoning is unassailable. No contract can be viewed
hermetically. It must always be interpreted within the context of
the
surrounding circumstances. Rumpff CJ said in Swart en ln Ander v Cape
Fabrix (Pty) Ltd2:
11
Wat natuurlik aanvaar moet word, is dat, wanneer die betekenis van
woorde in 'n kontrak bepaal moet word, die woorde onmoontlik
uitgeknip en op 'n skoon stuk papier geplak kan word en dan beoordeel
moet word om die betekenis daarvan te bepaal. Dit is vir
my
vanselfsprekend dat 'n mens na die betrokke woorde moet kyk met
inagneming van die aard en opset van die kontrak, en ook na
die
samehang van die woorde in die kontrak as geheel.11
[27]
This does not mean that extrinsic evidence is introduced to add to or
to vary the contents of the agreement. It is only used
for the
purpose of determining the context of the agreement in order to
establish what was probably present in the minds of the
parties when
they contracted. Without that knowledge, interpretation of contracts
could lead to absurd conclusions devoid of reality.
[28]
In his Heads of Argument, Mr Omar, for the appellant, referred to the
judgment granting leave to appeal in which the learned
judge a quo
identified five issues that require scrutiny by the court of appeal.
These are the following:
1.The
effect of the failure of the first respondent to testify;
2.
The effect of the finding of the court a quo that the Respondents had
failed to prove an 'oral agreement' as it had pleaded;
3.
The effect of the respondent's attorney, Mr Dollie perjuring himself
during the trial;
4.The
effect of the appellant's former attorney, Mr Mia, testifying in
breach of attorney and client privilege;
5.
The effect of the fact that the third respondent is not mentioned in
the settlement agreement.
I
shall deal with these issues seriatim.
The
failure of the first defendant (respondent) to testify
[29]
It is correct that the first respondent did not testify. The
Respondents can be criticised for the failure of the first respondent
to testify if an adverse inference can be drawn from that fact.
However, if a dispute can be determined without the evidence of
a
party, there is no need for such a party to testify. As I have shown
above, the appellant's version is so improbable and replete
with
inconsistencies with indisputable documentary evidence, that the
evidence of the first respondent would have made no meaningful
contribution.
Failure
to prove an oral agreement, as pleaded
[30]
The oral agreement referred to in the respondents' plea was allegedly
concluded during or about January 1995. It was alleged
that the
parties had agreed that the appellant would transfer 40% of his
member's interest to the first respondent and 10% to the
second
respondent (the first respondent's wife). The court a quo found that
this oral agreement had not been established in evidence
and that the
respondents had in any event not pursued it during the trial. It is
important to note that the court a quo did not
reject the
Respondents' evidence on that score as false. To my mind, nothing
turns on this. It had been demonstrated conclusively
that the
appellant had been refleeted as a 50% member since November 1993 and
that he ceased to be a member in November 1995. As
Mr Dollie said in
his letter of 7 November 2000, the appellant had transferred his
membership interest voluntarily at the request
of the second
respondent. Whether this was in terms of an oral agreement or not,
does not matter. The Court rejected the appellant's
evidence as to
how the respondents came to own 100% of the third respondent, on
convincing grounds.
Alleged
perjury by Mr Dollie
[31]
The alleged perjury concerns an alleged contradiction between the
oral evidence of Mr Dollie and an affidavit deposed to by
the
appellant in summary judgment proceedings. Mr Dollie had confirmed
the contents of the affidavit under oath. The first respondent
said
the following in his affidavit:
"Notwithstanding
the fact that no mention is made of the Applicant's alleged interest
in the Third Respondent, it was always
within the contemplation of
myself, the Second Respondent and the Applicant that the settlement
agreement encompassed a settlement
of that matter as well, i.e. the
issue relating to the Third Respondent (my underlining).
In
his testimony in court, Mr Dollie said that his client, the first
respondent, never had the intention that the third respondent
be
included in the agreement of 26 November 2001.
[32]
Mr Omar, switching to Afrikaans, argued that "dit staan soos {n
paal bo water"1 that the aforegoing two statements
contradict
each other and that the implication is that Mr Dollie had perjured
himself. There is an apparent contradiction between
these two
statements, but I do not agree that it is indisputably so, as Mr Omar
argued. The question was not whether the third
respondent was
intended to be covered by the settlement or not, but whether it was
necessary to make specific reference to it in
the settlement
agreement. Mr Dollie explained that the agreement concerned ex gratia
payments (or conferments) to the appellant.
It had nothing to do with
assets that belonged to the respondents. It is clear from a perusal
of the agreement that it only deals
with assets that would be
conferred to the appellant. There is no mention of any assets that
would by virtue of the agreement be
awarded to the respondents. It
was argued on behalf of the respondents that the issue around the
third respondent is covered by
clause 11, which says that the terms
of the agreement are in full and final settlement of all and any
claims that either party
may have against the other. Therefore, if
the appellant had any claim to an interest in the third respondent,
he has waived it
by agreeing to clause 11. The agreement therefore
"encompassed" a settlement of the issue around the third
respondent
as deposed to by the first respondent, and confirmed under
oath by Mr Dollie. Mr Dollie's statement in his testimony only
concerned
whether it was intended that reference to the third
respondent had to be "included" in the agreement.
Breach
of privilege
[33]
Mr Mia came close at times during his testimony to breaching the
confidentiality of discussions between himself and the appellant
as
his former client. However, counsel for the appellant was alert to
these possible breaches and objected invariably. Some of
the
objections were upheld by the Court a quo and others dismissed. On a
reading of the testimony of Mr Mia, it does not seem that
there had
been any serious breach of confidentiality. Mr Mia testified
regarding letters that he had written and agreements that
he had
drafted. It was the case of the appellant that Mr Mia had drafted
these agreements and in particular his letter of 7 November
2000
contrary to his instructions. The appellant therefore introduced
matters that are subject to attorney/client privilege himself.
He
cannot complain if Mr Dollie responded thereto.
The
effect of the omission of mention of the third respondent in the
settlement agreement
[34]
This is the subject matter of the respondents' alternative plea, and
has been dealt with.
For
all the aforegoing reasons I find that the judgment of the court a
quo is patently correct. I propose that the appeal be dismissed
with
costs.
J. HIEMSTRA
ACTING
JUDGE OF THE HIGH COURT I agree
J.
KRUGER
ACTING
JUDGE OF THE HIGH COURT
I
agree, and it is so ordered.
....
.................................................
H.SALDULKER
JUDGE
OF THE HIGH COURT
Date
heard:2012-03-07
Date
of judgment:2012-06-08
Counsel
for the Appellant:Attorney Zehir Omar
Attorney
for the Appellant:Zehir Omar Attorneys
Counsel
for the Respondents:Adv A. Bam SC
Attorney
for the Respondents:Shaheed Dollie Attorney