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[2012] ZAFSHC 168
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Liberty Group Ltd v Jordaan (A289/11) [2012] ZAFSHC 168 (13 September 2012)
FREE STATE HIGH
COURT, BLOEMFONTEIN
REPUBLIC OF SOUTH
AFRICA
Appeal No. : A289/11
In
the appeal between:-
LIBERTY
GROUP LIMITED
......................................................
Appellant
and
COERT
RETIEF JORDAAN
.................................................
Respondent
_____________________________________________________
CORAM:
KRUGER, MOCUMIE
et
DAFFUE, JJ
_____________________________________________________
HEARD ON:
6
AUGUST 2012
_____________________________________________________
JUDGMENT BY:
KRUGER
et
DAFFUE, JJ
_____________________________________________________
DELIVERED ON:
13 SEPTEMBER 2012
_____________________________________________________
INTRODUCTION
[1] This is an appeal,
with the leave of the trial court, against orders dismissing the
defendant’s special plea and granting
judgment in favour of
plaintiff in the amount of R2 251 017,00 together with interest
thereon calculated from 31 December 2005
with costs. For the sake of
convenience the parties are referred to as they were cited in the
court
a quo
. The appellant, Liberty Group Limited, is referred
to as the defendant and the respondent, Coert Retief Jordaan, as the
plaintiff.
As in the court
a quo
Advocate P U Fischer SC
appeared for the plaintiff while Advocate J R Gautschi SC with
Advocate T I Boyce appeared for defendant.
Plaintiff’s case was
that he was the owner and beneficiary under a life policy.
Defendant’s case was that plaintiff
ceded his rights under the
policy to the deceased, Matthysen. Plaintiff denied such cession.
Plaintiff’s case was that the
policy existed to secure his
liability as a surety towards their supplier, whereas defendant’s
case was that the policy was
taken out to ensure that plaintiff would
be able to buy Matthysen’s shares should Matthysen die. The
court
a quo
found in plaintiff’s favour.
THE ISSUES AS
DEFINED IN THE PLEADINGS
[2] Plaintiff instituted
action against defendant for payment of the amount of R2 251 017,00,
being the proceeds of an insurance
policy (the policy) issued by
defendant to plaintiff as owner on the life of plaintiff’s
former business partner, Mr J H
Matthysen (Matthysen) who passed away
on 31 December 2005.
[3] In its special plea
defendant pleaded that plaintiff had no
locus standi
to
institute action in that he ceded his rights in terms of the policy
to Matthysen in terms of a written cession which was registered
by
defendant on 11 March 2005 (the first cession). Alternatively,
defendant pleaded that plaintiff lacked
locus standi
by virtue
of an alleged second cession in terms whereof plaintiff ceded all his
rights in the policy to one Ryno Opperman (Opperman)
in October 2003.
[4] In his replication
plaintiff pleaded that the primary purpose of the policy was to
secure his exposure as surety for and on
behalf of Bloemfontein
Minolta (Pty) Ltd (Minolta). He pleaded that an oral agreement was
entered into between him and Opperman
in terms whereof he undertook
to cede his rights, title and interest in the policy to Opperman. The
agreement was however “subject
to a suspensive condition that
plaintiff had been released as a surety” and that the cession
“would be of no force
and/or effect if such release had not
already been effected” and “plaintiff would be entitled
to cancel and/or annul
any such cession subsequently signed by him in
the event of him not having been released as surety”.
[5] Plaintiff also
alleged that thereafter, and once Opperman confirmed that plaintiff
had in fact been released as surety, he signed
the second cession in
good faith only to establish later that Opperman had misrepresented
that he was released as surety whereupon
he tore up the signed
cession. Plaintiff was released as surety after the death of
Matthysen only and he pleaded that at the date
of Matthysen’s
death he was still the holder of all rights, title and interest in
the policy as owner and beneficiary.
THE KEY ISSUES
[6] Upon the death of
Matthysen defendant paid the proceeds of the policy to the executrix
of his estate. This was done on the basis
of the first cession, an
absolute cession of the policy in favour of Matthysen which cession
was on 11 March 2005 submitted to
defendant by Matthysen for
registration.
Ex facie
the first cession plaintiff as cedent
and Matthysen as cessionary signed it on 23 April 2001.
[7] The main issue to be
decided by the court
a quo
was whether plaintiff ceded his
rights in terms of the policy to Matthysen and if not, whether
plaintiff ceded his rights in terms
of the policy to Opperman in
October 2003. During the hearing it became clear that it was
plaintiff’s case that he never
signed the first cession and
that the signature appended to that document constituted a forgery.
Regarding the second cession it
was plaintiff’s case that he
was entitled to destroy the document because of Opperman’s
misrepresentation.
THE FINDINGS OF THE
COURT
A QUO
[8] The court
a quo
found:
8.1 that the policy was
not an out-and-out “buy and sell” policy - the case that
defendant tried to make out - but that
it was also to secure
obligations other than the purchasing of shares.
8.2 that “there is
no conclusive evidence that the deceased (Matthysen) and the
plaintiff had reciprocal policies or that
they had cross-nominated
each other as beneficiaries”;
8.3 that plaintiff had
reason to retain the policy, it being to provide security for his
obligations as surety as “creditors
could, at any stage, choose
to sue him and not Matthysen if Minolta was unable to discharge its
indebtedness to Minolco”;
8.4 that the evidence of
plaintiff’s expert, Mr Bester, was more acceptable and
persuasive than defendant’s expert,
Mr Snyman, and that there
were three significant differences between plaintiff’s specimen
signatures and the disputed signature
on the first cession, confirmed
by the court
a quo
to be obvious based on its own empirical
observations;
8.5 that plaintiff’s
testimony that he destroyed the second cession out of anger upon
discovery that Opperman lied to him,
is very plausible;
8.6 that plaintiff was an
honest and credible witness and that he did not contradict himself in
any material respect and furthermore,
that the probabilities were
overwhelmingly in favour of plaintiff’s case;
8.7 consequently the
defendant failed to prove that plaintiff signed the first cession.
SALIENT FACTS
PRESENTED IN DEFENDANT’S CASE IN CHRONOLOGICAL ORDER
[9] Prior to evaluating
the judgment of the court
a quo
it is apposite to state the
salient facts in chronological order.
Early 1990’s
:
9.1 Plaintiff’s
former business ran into financial difficulties. It was rescued by
Matthysen and the two formed a close corporation
as a vehicle to
conduct their future business activities. This close corporation was
later converted into a private company, Bloemfontein
Minolta (Pty)
Ltd (Minolta). Matthysen was at all relevant times the majority
shareholder in this company.
Middle 1990’s
:
In 1995 Peet le Grange,
who had been a 15% shareholder in Minolta, passed away. His widow
as heir of the estate and transferee
of his shares became part of
the board of directors of Minolta for a limited period of time.
This caused friction. Eventually
Matthysen bought the 15%
shareholding of Le Grange and thereafter he held 70% of the shares.
Plaintiff held the remaining 30%.
19 September 1997
:
9.3 Matthysen and
plaintiff signed a deed of suretyship in terms whereof they bound
themselves jointly and severally as sureties
and co-principal debtors
in favour of their supplier, Minolco (Pty) Ltd for all sums of monies
owed by Minolta from time to time.
Latter part of 1999
:
At the year end
function of Minolta Matthysen announced that Opperman, Scholtz and
Potgieter, at that time employees of Minolta,
had been appointed as
directors of the company and in addition each of them were to be
issued with 5% of the shareholding in
Minolta. Soon after this
announcement Louwrens Smith (Smith), an insurance broker of Optimum
Financial Services and a neighbour
and friend of Opperman, made a
presentation to Matthysen, plaintiff, Opperman, Scholtz and
Potgieter, the directors and shareholders
of Minolta, regarding
“buy and sell” (koop en verkoop) life insurance
policies, explaining that these policies
were intended to provide
funds to the owners of the policies in order to allow them to
purchase the shares of a shareholder
who might die. Everyone
accepted Smith’s advice regarding the necessity of obtaining
such insurance.
3 November 1999
:
9.5 Matthysen and
plaintiff did not make use of Smith as insurance broker, but elected
to employ their own broker and friend, one
Charl Terblanche of Pro
Spes, who applied on their behalf to defendant for insurance policies
on their lives. Matthysen was the
owner of the policy issued on
plaintiff’s life and
vice versa
. It is evident from the
completed application form and plaintiff’s admission that these
two shareholders took out policies
on the lives of each other and
that they provided for “koop en verkoop” or “buy
and sell” life insurance
policies in their capacities as
shareholders of Minolta in order to ensure that the surviving
shareholder has cash available to
buy the shares of the predeceased.
Early 2000
:
Smith arranged for “buy
and sell” life insurance policies to be issued by Old Mutual
for Opperman, Scholtz and Potgieter
on the life of Matthysen and
the policies were intended to provide funds for these three
gentlemen to purchase on a
pro rata
basis Matthysen’s
shares in Minolta in the event of his death.
March 2000
:
On 3 March 2000, with
commencement date 1 March 2000, defendant issued the policy which
is known as a Lifestyle Penta Plus Policy
and which was the subject
matter at the trial. Matthysen was the insured life and plaintiff
the owner and beneficiary.
2 September 2000
:
9.8 JPJ Beleggings CC
(JPJ) the property investment vehicle of Matthysen and plaintiff,
concluded a lease agreement with Minolta
in terms of which JPJ leased
business premises to Minolta.
February 2001
:
Plaintiff resigned as
director and employee of Minolta when it was discovered that he had
acted dishonestly and contrary to
the interests of Minolta. He was,
however, given a sub-distributor’s agreement by Minolta in
terms of which he was allowed
to market and sell only Minolta
products.
23 April 2001
:
9.10 Matthysen and
plaintiff approached Terblanche at the offices of Pro Spes and
requested a deed of cession in order for plaintiff
to cede his rights
in the policy to Matthysen. Terblanche, on 23 April 2001, recorded
the date and place of signature on the deed
of cession (the first
cession), but same was not signed by Matthysen and plaintiff at that
stage.
21 May 2001
:
9.11 At a director’s
meeting of Minolta it was resolved that the company would sever all
ties with plaintiff as a result of
his further dishonesty and breach
of contract.
30 – 31 July
2002 & August 2002
:
9.12 Plaintiff (acting on
behalf of the Discovery Trust) sold his 30% shareholding in Minolta
to Opperman (acting on behalf of the
HakonTrust).
During August 2002
plaintiff sold his 30% members’ interest in JPJ to Matthysen.
Following the signing of the JPJ agreement,
various documents,
including the original policy, were handed over by plaintiff to
Matthysen.
17 October 2003 and
shortly thereafter
:
On 17 October 2003
Matthysen and Opperman signed a deed of cession in terms whereof
Matthysen ceded his rights in the policy
to Opperman.
A few days later
Opperman, Matthysen, Scholtz and Potgieter attended an informal
board meeting at Minolta during which meeting
various matters were
discussed including registration of the 5% shareholdings in the
names of Opperman, Scholtz and Potgieter
and the fact that Opperman
could not register the cession dated 17 October 2003 with
defendant, since Matthysen had not yet
registered the first cession
with defendant, which company still regarded plaintiff as the owner
of the policy. After this
board meeting Matthysen took Opperman to
his office and showed him the original policy document and the
original first cession.
On Friday, 24 October
2003, Opperman phoned plaintiff and advised him that he required
him to sign a deed of cession in respect
whereof plaintiff would
cede his rights in the policy to Opperman, failing which plaintiff
had to repay the premiums in respect
of the policy which Minolta
had been paying until then and which premiums were being debited to
Opperman’s loan account.
An appointment was made for the next
day whereupon plaintiff agreed to sign the cession document at the
Free State Rugby Stadium.
The document so signed was defendant’s
standard cession document and in terms of this cession (the second
cession) plaintiff
ceded his rights in the policy to Opperman.
Shortly after 25 October 2003 Opperman took the second cession to
the offices of
Smith to have it registered with defendant but,
however, plaintiff obtained the second cession from an employee of
Smith’s
offices and tore it up.
10 March 2004
:
9.17 Plaintiff faxed a
letter to Minolco requesting cancellation of his suretyship in favour
of Minolco since he had ceased to be
a director of Minolta during
January 2001.
27 October 2004
:
9.18 Plaintiff made a
declaration to defendant in which he declared that the policy had
been lost whereupon defendant issued a duplicate
copy of the policy
to plaintiff.
10 March 2005
:
9.19 Matthysen
(representing the John Heinrich Matthysen Family Trust) eventually
sold 5% of the Minolta shares to each of Opperman,
Scholtz and
Potgieter in line with the undertaking to sell having been
communicated as long ago as the end of 1999. According to
the notes
and testimony of attorney Gerber Matthysen confirmed that he would
arrange for cession of the policy to Opperman on that
day.
11 March 2005
:
9.20 Matthysen approached
Paula Smith at defendant’s Bloemfontein offices with the
original policy document and the original
signed cession on flimsy
paper (the first cession). He required Smith to register the first
cession with defendant. Matthysen was
directed to the offices of his
insurance broker to comply with certain FICA requirements before the
first cession could be registered.
Eventually the cession was
registered by defendant.
14 March 2005
:
9.21 Defendant sent
letters to Matthysen and plaintiff confirming that the policy had
been ceded by plaintiff to Matthysen. The
confirmation letter was
also sent to plaintiff’s insurance broker at the time, one
Willem Groenewald.
16 June 2005
:
9.22 Matthysen and
Opperman signed a further deed of cession in terms of which
Matthysen’s rights in the policy were ceded
to Opperman. This
cession was never registered at Liberty.
31 December 2005
:
9.23 31 December 2005
Matthysen died.
January 2006
:
9.24 Opperman, Scholtz,
attorney Gerber and Matthysen’s former wife found the original
policy in a file in Matthysen’s
office at Minolta. Later Gerber
handed the original policy to Smith which policy document was
subsequently handed in to the trial
court by Smith.
12 January 2006:
9.25 Plaintiff’s
attorneys, Messrs Lovius Block, sent a letter to defendant claiming
that plaintiff’s signature on the
first cession was a forgery.
23 January 2006
:
9.26 Defendant issued a
certificate confirming that the proceeds of the policy were payable
to Matthysen’s estate.
10 April 2006
:
9.27 Opperman, Scholtz
and Potgieter, in their capacities as shareholders and directors of
Minolta, signed a deed of suretyship
in favour of Minolca for the
debts of Minolta.
11 May 2006
:
9.28 Minolco cancelled
plaintiff’s suretyship in favour of Minolco.
GROUNDS OF APPEAL
[10] Numerous grounds of
appeal were raised, but the following is an appropriate summary:
10.1 The court
a quo
erred in finding that the policy was not an out-and-out “buy
and sell” policy, but was also intended to cover plaintiff’s
exposure as surety, whilst it should have found that on the evidence
and the overwhelming probabilities the policy was indeed a
“buy
and sell” policy and not also to cover plaintiff’s
exposure as surety.
10.2 The court
a quo
erred in finding that the evidence of the plaintiff’s
handwriting expert, Mr Bester, was more probable than that of
defendant’s
expert, Mr Snyman.
10.3 The court
a quo
erred in finding that plaintiff was an honest and credible
witness in spite of extensive unchallenged evidence that his
deceitfulness
precipitated the demise of his business relationship
with Matthysen and his employment with Minolta.
10.4 The court
a quo
should have found that it was far more probable that the plaintiff
signed the first cession and thereby ceded his rights in the
policy
to Matthysen during August 2002.
10.5 The court
a quo
erred in finding that plaintiff’s tearing up of the second
cession was not inconsistent with the existence of a suspensive
condition and it should have found that on the evidence and the
overwhelming probabilities, plaintiff signed the second cession
while
on his own version he contradicted the existence of a suspensive
condition as pleaded on his behalf in the replication.
10.6 The court
a quo
should have found that the discussion at the rugby stadium when
plaintiff signed the second cession, was limited to an undertaking
by
Opperman that he would request Minolco to cancel plaintiff’s
suretyship.
THE RATIONALE FOR
TAKING OUT THE POLICY ON THE LIFE OF MATTHYSEN, THE CONSEQUENCES AND
WHETHER OR NOT THE POLICY’S SUBSTRATUM
HAS FALLEN AWAY
[11] The starting point
of the discussion in this regard should be plaintiff’s case as
pleaded in his replication:
“
1.3
The
primary purpose of the relevant policy
was to
secure
plaintiff’s exposure
,
in his capacity as shareholder,
as
a surety
for and on behalf of Bloemfontein Minolta (Pty) Ltd.” (emphasis
added)
[12] The difficulties
experienced by plaintiff and Matthysen caused by the death of the
former director and shareholder of Minolta,
Peet le Grange, ran like
a golden thread through the evidence of all the witnesses that
testified during the trial, who were personally
involved in the
affairs of Minolta. Le Grange’s death triggered plaintiff,
Matthysen, Opperman, Scholtz and Potgieter to
take out insurance
policies as advised by the broker, Smith. Opperman, Scholtz and
Potgieter opted to take out Old Mutual policies
on the life of
Matthysen through their broker, Smith, while plaintiff and Matthysen
preferred to take out life insurance policies
on each other’s
lives through their friend and broker, Charl Terblanche of Pro Spes.
The purpose of these policies, commonly
described by the witnesses as
“buy and sell” policies was explained by various
witnesses, but most surprisingly in
clear and simple words by
plaintiff in particular in his examination in chief, as follows:
“
That was
subsequently issued in your favour, is that correct? ... That is
correct.
And a similar one for the exact same
amount was issued in favour of Mr Matthysen, is that correct? ...
That is correct.”
(This relates to policies
taken out by plaintiff and Mr Matthysen on each other’s lives.)
“
What was the
arrangement between you and Mr Matthysen as to what you would do with
these policies and how would they be utilised?
... The arrangement at
the time was, it was
basically
a buy and sell
.
If one of us should die, the other
one
has sufficient funds to pay the widower
(sic) or if ...
we’ll
have sufficient funds to settle each other as far as the amount of
the shares are concerned and to buy those shares
.
(underlining
added)
[13] Mr Fischer’s
cross-examination and in particular his endeavour to show that prior
to March 2005 the shareholders and
directors of Minolta did not have
a
written
buy and sell agreement pertaining to their
respective shares, could not take the matter any further. Writing is
not a legal requirement
and if Minolta’s articles of
association, which are in line with the standard document applicable
to all private companies,
are taken into consideration, a shareholder
could not sell his shares to third parties unless such shares had
first been offered
to the remaining shareholders. Plaintiff’s
averment that Matthysen could do with his shares whatever he wished
and even thereby
ignoring the pre-emptive rights of his
co-shareholders, is incorrect in the light of his own evidence that
life insurance was taken
out to obtain sufficient funds to buy the
shares of a deceased shareholder. Mr Scholtz, Minolta’s
financial director, in
his uncontested testimony, explained the pro
rata basis on which the surviving shareholders would be entitled to
buy the shares
of a deceased shareholder. Mr Fischer continuously
tried to show in cross-examination that no written buy and sell
agreement existed
at the stage when the three Old Mutual policies and
the two Liberty Life policies were taken out, but there cannot be any
doubt
that the five relevant role-players knew that the only purpose
for taking out the life insurance policies was to place them in funds
to ensure that they would be in a financial position to pro rata pay
for the shares of a deceased shareholder.
[14] Smith’s
evidence stands uncontested insofar as he properly explained the
difference between life insurance policies in
general and “buy
and sell” life policies in particular on the one hand and
indemnity insurance on the other. Life insurance
is generally
regarded as a form of capital insurance and it is regulated by the
Long Term Insurance Act 52 of 1998
. Disability benefits are usually
added to life insurance, but it does not make the policy anything
else. See Reynecke
et al,
GENERAL
PRINCIPLES OF INSURANCE LAW
2002 ed, par
588 and further. A life insurance policy cannot be taken out on the
life of another unless the applicant has an insurable
interest in the
life of the life insured. As Reynecke mentions in par 95,
“(i)t is conceivable that one partner may have a pecuniary
interest in the life of a fellow partner, for instance, where
partners are obliged to buy each other out on the death of one of
them.”
Exactly the same principle applies in the
event of shareholders in a private company or members in a close
corporation and even
where there is no obligation, but merely a right
to buy.
[15] The Short Term
Insurance Act 53 of 1998 applies to short term insurance business.
Several kinds of policies can be taken out
in terms hereof,
inter
alia
, a liability or indemnity policy. Liability or indemnity
insurance is insurance against a legal liability such as, for
example,
someone’s uncertain future liability to settle the
claim of a creditor insofar as such person has stood surety for and
on
behalf of the principal debtor in favour of the creditor. The
liability insured against must be described in the policy, for
example,
the institution of legal action by the creditor against the
surety for payment of the amount due in terms of the deed of
suretyship.
The insured event is thus not the life of a person, but
the institution of action by the creditor. See Reynecke,
loc cit
,
at par 531 and further and par 582 in particular.
[16] No written buy and
sell agreements are required by law and there is no evidence that
insurance companies require the existence
of written buy and sell
agreements. There must be an insurable interest and this appears to
be clearly the case when the plaintiff’s
application for
insurance is considered, read with the evidence of all relevant
witnesses, as well as Minolta’s articles
of association. Smith
was called to testify about his presentation and the taking out of
the “buy and sell” policies.
His evidence was that the
policy was a “buy and sell” life policy and not a
liability policy. The insured event of
the policy was the death of
Matthysen and not the institution of action against anyone of the
sureties. Smith testified about the
tax implications in the event of
the policy being ceded from plaintiff to Matthysen and from Matthysen
to Opperman as Matthysen
and Opperman intended to do. In such a case
the policy would be regarded as a second-hand policy with clear tax
implications, being
a liability for the payment of capital gains tax.
His evidence in this regard was not contested at all and his version
that it
might be better for tax purposes that Opperman applied for a
new policy on Matthysen’s life instead of obtaining cession of
the policy remains uncontested.
[17] It is clear from the
evidence that if Matthysen passed away when plaintiff was still a
shareholder of Minolta, he would be
entitled to utilise the proceeds
to pay for the
pro rata
portion of Matthysen’s shares.
Simultaneously Opperman, Scholtz and Potgieter would receive the
proceeds on their Old Mutual
policies on the life of Matthysen to
enable them to, on a pro rata basis, pay for such of the shares of
Matthysen in Minolta as
they were entitled to. Matthysen did not pass
away when plaintiff was still involved with Minolta.
[18] The substratum of
the policy fell away in 2001 when plaintiff’s employment
relationship with Minolta was terminated and
he resigned as director.
If not in 2001, at best for plaintiff the substratum of the policy
fell away when he sold his 30% shareholding
in Minolta to Opperman at
the end of July 2002 and his membership in JPJ to Matthysen in August
2002. As a non-shareholder he would
not be entitled to buy any shares
of Matthysen at that stage. Insofar as it might be argued that prior
to that he would still be
entitled, notwithstanding the severance of
ties, to buy a pro rata shareholding of Matthysen, he has now
forfeited all and any
rights to buy any shares in Minolta in future.
The agreement pertaining to the sale of the members’ interest
in JPJ and the
sale of shares agreement between plaintiff and
Opperman were interlinked and the one could not go through without
the other. Therefore
it makes commercial sense that plaintiff handed
over the policy to Matthysen in August 2002 and at the stage when
they signed the
agreement in respect of the members’ interest
in JPJ. It also makes commercial sense and appears to be in line with
the objective
facts that the deed of cession, partially completed by
Terblanche on 23 April 2001, was signed by plaintiff and Matthysen in
August
2002. Opperman and plaintiff are
ad idem
that the
policy was handed over in August 2002.
[19] Opperman’s
concession in cross-examination that he needed finality pertaining to
the cession of the policy in order to
cover his risks pertaining to
the creditors of Minolta, cannot be seen as an indication that
Opperman considered the policy in
the same light as plaintiff, i.e.
that the primary purpose of the policy was to secure plaintiff’s
exposure (or then Opperman’s
exposure) as a surety for and on
behalf of Minolta. This cannot possibly be so as Opperman was at that
stage not a surety of Minolta.
It is clear from his evidence, read in
context, that if the majority shareholder in a private company passes
away and no provision
was made by the others to have sufficient funds
to buy the shares of such majority shareholder, the very existence of
the business
entity might be jeopardised. Serious cash flow problems
are foreseeable insofar as the estate of the deceased shareholder
might
claim immediate payment of the value of the shares which might
be considerable, while creditors might not be prepared to extend
further credit well-knowing that the majority shareholder has passed
away and his estate is claiming an enormous amount in respect
of his
shareholding.
[20] The fact that there
are no restrictions in the policy pertaining to the nomination of
beneficiaries or the cession of the policy
is irrelevant. If the
owner of the policy would be so unwise to cede the policy to a third
party when still a shareholder or partner
and his co-shareholder or
co-partner passes away, he would be left without funds to pay for the
shares of the deceased shareholder.
There cannot be any reason why
any owner of such policy would act accordingly. However, once the
substratum of the policy has fallen
away, because of the severance of
the business relationship between the former shareholders or
partners, such owner would be fully
entitled to cede the policy to
the life insured who would then have to accept liability for paying
the premiums or to any third
party who would then have to accept
liability for the payment of premiums.
[21] It is perhaps
strange that the five shareholders of Minolta did not take out
policies on each other’s lives and that
the three minority
shareholders took out policies only on Matthysen’s life whilst
Matthysen and plaintiff took out policies
on each other’s
lives. This very fact may be attributed to several considerations,
but this was never taken up with any of
the witnesses in
cross-examination. It might be argued that there was no reason, i.e.
for Opperman to take out a life insurance
policy on the life of
either Potgieter, or Scholtz insofar as the amount that Opperman
would have to pay in the event of the death
of either, bearing in
mind the huge shareholdings of plaintiff and Matthysen, would be
minimal. Neither Matthysen, nor plaintiff
took out insurance policies
on the lives of the three minority shareholders, but this is
immaterial. In 1999/2000 these three minority
shareholders were not
shareholders as no sale of share agreements had been concluded. This
took place in March 2005 when agreements
were reached in respect of
the purchase price and other terms and conditions.
[22] The evidence, as set
out above, shows that the policy was a “buy and sell”
life policy and that it would place
plaintiff in funds to pay for the
shares of Matthysen to which he would be entitled
pro rata
with
Opperman, Scholtz and Potgieter, should he die before plaintiff, in
accordance with their pre-emptive rights.
[23] Plaintiff directly
contradicted the version pleaded on his behalf pertaining to the
primary purpose of the policy. Plaintiff
tried to label the policy as
a short-term indemnity policy in which case the insured event would
be the taking of legal action
by the creditor against him as surety.
As indicated the policy was nothing but an out-and-out “buy and
sell” life policy.
The amount of R2 251 017,00 for which
Matthysen’s life was insured is much more in line with the
value of Matthysen’s
shareholding in Minolta at the stage when
the policy was taken out than the exposure of plaintiff as surety to
Minolco which was
only about R500 000,00. The amount of R2 251 017,00
is also more in line with the amounts for which Opperman, Scholtz and
Potgieter
took out insurance on the life of Matthysen, i.e. R600
000,00 respectively with a 10% annual increase.
SECOND CESSION
[24] The telephonic
conversation and the meeting at the Free State Rugby Stadium, which
took place on 24 and 25 October 2003 respectively,
should also be
considered to establish whether the credibility finding is in order.
In his replication plaintiff pleaded that the
oral agreement between
him and Opperman pertaining to the cession of the policy was subject
to a suspensive condition. Such a condition,
also known as a
condition precedent, is described as a condition suspending the
operation of all or some of the obligations flowing
from the contract
until the occurrence of a future uncertain event. See Christie RH,
THE LAW OF CONTRACT IN SOUTH AFRICA
, 6
th
ed,
p 145. When the replication is properly considered and read with
plaintiff’s reply in terms of Rule 37(4), no suspensive
condition applied. It has always been plaintiff’s case on the
pleadings and in his evidence that Opperman misrepresented
to him
that he had been released as surety by Minolco. Opperman’s
evidence is directly in contrast with that of plaintiff.
He testified
that pursuant to plaintiff having signed the cession he was asked to
give plaintiff his word that he would help him
with the cancellation
of his suretyship. Opperman agreed to “make work” of the
request.
[25] Plaintiff testified
in his evidence in chief about the telephone conversation with
Opperman on 24 October 2003. Plaintiff did
not deny, nor was it
denied during Opperman’s cross-examination that Opperman
informed plaintiff that plaintiff had “signed
the cession to
Matthysen.” This omission is irreconcilable with any inference
other than that plaintiff did indeed sign the
cession.
NON-CALLING OF
TERBLANCHE BY PLAINTIFF
[26] Notwithstanding the
fact that it was made clear during cross-examination of defendant’s
witnesses that Terblanche, the
insurance broker and friend of
plaintiff, would be called upon to testify, particularly pertaining
to the purpose of the policy
taken out on the life of Matthysen,
plaintiff failed to call him as a witness notwithstanding the fact
that he was available. The
only logical deduction to be made from the
failure to call Terblanche is that he would not have supported
plaintiff’s case
as pleaded, and/or as suggested by Mr Fischer
in cross-examination of defendant’s witnesses and/or as faintly
testified to
by plaintiff.
[27] The court
a quo
found that:
“
there is no
conclusive evidence that the deceased and the plaintiff had
reciprocal policies or that they had cross-nominated each
other as
beneficiaries.”
[28] Both Scholtz and
plaintiff confirmed that Matthysen and plaintiff took out policies on
each other’s names. Consequently
it follows necessarily that
the policy was an out-and-out “buy and sell” life policy
taken out by plaintiff with the
consent of Matthysen on Matthysen’s
life in order to provide plaintiff with sufficient cash to pay for
Matthysen’s
shareholding on a pro rata basis upon his death.
Matthysen took out a similar policy on plaintiff’s life for the
very same
reason. The rationale for the policy lapsed at the very
best for plaintiff when the two transactions referred to above were
concluded
in July and August 2002 respectively.
NON-CALLING OF MS
NEL BY PLAINTIFF
[29] Notwithstanding the
fact that plaintiff’s secretary, Ms Tessa Nel, was a witness to
the oral agreement and available
to testify, she was not called by
plaintiff in support of his case. She was plaintiff’s secretary
at Minolta. She was dismissed
as she allegedly assisted plaintiff in
his alleged devious methods in undermining Minolta’s business.
[30] Plaintiff neglected
to call at least two vital witnesses that could shed light on his
case and/or enable him to corroborate
his version, i.e. Terblanche
and Nel. An unfavourable inference should be drawn for his failure to
call them. See
SAMPSON v PIM
1918 AD 657
at 662 and
MUNSTER ESTATES (PTY) LTD v KILLARNEY HILLS (PTY) LTD
1979 (1) SA 621
(AD) at 624 C.
PLAINTIFF’S
SILENCE
[31] It is difficult to
understand why plaintiff did nothing from being informed by defendant
in its letter of 14 March 2005 that
a cession from plaintiff to
Matthysen in respect of the policy had been effected. The telephonic
conversation between Ms Smith
of defendant and the secretary of
plaintiff’s new broker, Mr Groenewald, does not support
plaintiff’s case that no
cession took place. Plaintiff himself
was vague as to whether he received defendant’s letter of 14
March 2005 and/or whether
Mr Groenewald communicated with him about
the cession. The following dictum is pertinently relevant:
“
But
in general, when according to ordinary commercial practice and human
expectation firm repudiation of such an assertion would
be the norm
if it was not accepted as correct, such party's silence and
inaction, unless satisfactorily explained, may be
taken to constitute
an admission by him of the truth of the assertion, or at least will
be an important factor telling against
him in the assessment of the
probabilities and in the final determination of the dispute. And an
adverse inference will the more
readily be drawn when the
unchallenged assertion had been preceded by correspondence or
negotiations between the parties relative
to the subject-matter of
the assertion.”
See
McWILLIAMS v
FIRST CONSOLIDATED HOLDINGS (PTY) LTD
1982 (2) SA 1
(AD) at
10 E – G.
His vagueness is material
especially insofar as what he feared might happen (on his version),
i.e. the cession of the policy to
either Matthysen or Opperman, has
now materialised. Bearing in mind Matthysen’s ill-health at
that stage, the policy should
have been considered to be a valuable
asset, but plaintiff did not regard it as such when his evidence is
considered. The more
plausible inference to be drawn from this is
that he knew that he had ceded the policy to Matthysen long ago. The
same reasoning
applies to his silence when Opperman told plaintiff
that plaintiff had ceded the policy to Matthysen telephonically on
the 24
th
October 2003. Plaintiff testified that he
requested Matthysen numerous times to hand back the policy to him,
but that Matthysen
eventually told him that the policy had been lost.
At that stage plaintiff had no right to the policy which he
voluntarily handed
to Matthysen two years earlier and he hasn’t
been paying the required premiums. On his own version and bearing in
mind the
various statements made by Mr Fischer to defendant’s
witnesses, Matthysen and plaintiff did not speak to each other at all
from about 2001 up to Matthysen’s death. The more plausible
inference to be drawn from plaintiff’s application for
a
duplicate copy was his newly acquired knowledge that the cession to
Matthysen had not been registered as Opperman told him in
October
2003.
[32] Plaintiff waited for
nine months until after the only other signatory and witness to the
cession passed away before he claimed
to be the owner of the policy.
His behaviour relating to the policy and the cession thereof at all
times prior to the death of
Matthysen is inconsistent with what a
reasonable man under the circumstances would have done.
[33] The evidence shows
that plaintiff made himself guilty of improper conduct when he was
still in the employ of Minolta and a
director thereof. This conduct
was perpetuated during the two months that he was allowed a
sub-distributor’s contract by
Minolta. It is also clear that
although he signed the cession given to him by Opperman at the rugby
match in October 2003, he got
hold of the cession again at the office
of Smith under false pretences whereafter the signed cession was
destroyed. The reasonable
person in plaintiff’s shoes would
have confronted Opperman first if it was his case that Opperman lied
to him about the release
of his suretyship, and/or to use legitimate
means to prevent the cession from being registered under the
circumstances.
AN EVALUATION OF
THE EVIDENCE OF THE TWO EXPERT WITNESSES
[34] It is clear that
both witnesses would prefer to conduct their investigations based on
the original first cession. The documents
with the disputed signature
subjected to investigation were either second, third or fourth
generation documents. Mr Bester (Bester),
on behalf of the plaintiff,
initially found seven fundamental differences between the specimen
signatures of plaintiff and the
disputed signature. Eventually he
conceded four of these differences to be incorrect conclusions, but
maintained that three fundamental
differences existed and that the
disputed signature on the first cession was not that of plaintiff.
The defendant’s expert,
Mr Snyman (Snyman), dealt in detail
with the three fundamental differences relied upon by Bester and came
to the conclusion that
there were no significant differences, but
merely variations, between the specimen signatures and the disputed
signature. The court
a quo
favoured Bester’s version and
went so far to state that
“
the
impression I obtained from my own comparison of the signature on this
document and the specimen signatures was that the signatures
had
obvious dissimilarities”.
[35] The defendant made
use of cession documents printed on flimsy paper during 2001. The
nature of the paper was such that Ms Paula
Smith of defendant’s
Bloemfontein office could not fax the original cession which was
handed over to her by Matthysen to
the office of his broker. She had
to make a copy first and faxed the copy to Terblanche’s office.
The original cession document
– the flimsy – was
completed partially by Terblanche in the presence of plaintiff and
Matthysen. He inserted the words
“Bloemfontein” (twice)
and the date “21 April 2001” (twice). His two friends and
clients did not sign the
document at that stage, but left his offices
with the document. There is no doubt that the word “Bloemfontein”
and
the date was in Terblanche’s handwriting. Therefore one has
to accept that if someone wanted to forge the plaintiff’s
signature on this document, he would have to train on other documents
as he would only have one chance to forge plaintiff’s
signature
on the flimsy.
[36] It is clear from the
expert evidence that plaintiff has a complex signature with a range
of variations. This necessitated Snyman
to find that the
dissimilarities were within plaintiff’s range of variations and
that no fundamental or significant differences
existed between the
specimen signatures and the disputed signature.
[37] Opperman was asked
about the signature and he confirmed that he had seen numerous
cheques over the years signed by both Matthysen
and plaintiff and he
had no doubt that the disputed signature was that of plaintiff.
[38] The handwriting
experts worked with third or fourth generation copies, not with the
original of the document alleged to be
forged. The evidence was that
the photo coping techniques used at the time the copies were made,
caused distortions which were
relevant to the analysis. Plaintiff’s
signature is a complex signature with many variations. In these
circumstances the value
attached to the findings of the handwriting
experts is limited. The evidence of the handwriting experts, as in
many cases where
their evidence features, can often only be used to
bolster or detract from other evidence which is on a more solid
footing. The
handwriting expert evidence in this case is insufficient
to establish a forged signature, especially seen in the light of the
evidence
as to the conduct of the parties as appears from the
chronology.
CHRONOLOGY OF
IMPORTANT DATES
[39] The chronology
highlights the inherent probability regarding the ownership of the
policy:
3 March 2000:
The life policy on
Matthysen’s life is taken out with plaintiff as owner and
beneficiary.
23 April 2001:
Matthysen and plaintiff
requested the broker Terblanche to prepare a deed of cession of the
policy from plaintiff to Matthysen.
Terblanche wrote in the date on
the cession, but plaintiff and Matthysen did not sign at that stage.
Plaintiff was at that stage
still a 30% shareholder in Minolta.
July – August
2002:
Plaintiff sold his 30%
interest in Minolta and his 30% interest in JPJ, which CC leased the
business premises to Minolta, to Matthysen.
At this stage Matthysen
and plaintiff probably signed the cession.
October 2003:
Matthysen showed Opperman
the original cession in terms whereof plaintiff ceded his rights in
the policy to Matthysen.
11 March 2005:
Matthysen took cession to
Paula Smith and she registered the cession.
14 March 2005:
Defendant notified
plaintiff and plaintiff’s insurance broker that the policy had
been ceded to Matthysen.
31 December 2005:
Matthysen died.
12 January 2006:
Plaintiff told defendant
that his signature on the cession was forged.
CONCLUSION
[40] It was never put to
any of defendant’s witnesses, especially the financial
director, Scholtz that Matthysen was a fraudster
and/or that he
committed fraud or acted illegally in any manner whatsoever, even
accepting that Matthysen was shown to be a careless
person and an
alcoholic who probably manipulated situations and/or people in order
to achieve his goals. The failure to file tax
returns timeously, the
failure to finalise the sale transactions pertaining to the 5% shares
to each of Opperman, Scholtz and Potgieter
which took him over five
years to finalise, the failure to have the share certificates signed
and his failure to go for medical
examinations for insurance purposes
and finally, the failure to register the cession of the policy in his
name immediately and
only doing so after an undertaking in attorney
Gerber’s office on 10 March 2005 are all indicative of his
carelessness, but
not fraudulent behaviour.
[41] Plaintiff’s
credibility was considered without assessing the credibility (or lack
thereof) of the other witnesses. We
are at liberty to consider the
finding afresh based on the reasons advanced. In the light of what
has been stated above, the finding
of the court
a quo
cannot
be supported.
[42] The court
a quo
did not consider the inherent probabilities in the case, as they
appeared from the known facts. The chronology of events shows that
defendant’s version, as to why and when the policy was taken
out and ceded, fits in with what happened.
[43] Having considered
several aspects of the case and the evidence pertaining thereto, it
is necessary to stand back, look at the
mosaic and to consider the
evidence in its totality with specific reference to credibility and
the probabilities. The evidence
of Opperman, Scholtz and Smith led on
behalf of defendant pertaining to the rationale for taking out the
policy and the circumstances
prior to that, during the time and
thereafter, are much more probable than the version of plaintiff. In
fact, plaintiff was clearly
dishonest as to the rationale for taking
out the policy.
[44] Several factors show
that the special plea should have been upheld:
(i) Plaintiff was not a
satisfactory witness, the main reason being that already in chief his
evidence showed that he understood
the policy to be a “buy and
sel”l policy, not one to cover his suretyship liability.
(ii) Opperman’s
evidence was consistent with the probabilities and his evidence that
he saw the cession from plaintiff to
Matthysen can only be rejected
if Opperman is found to be a liar, which cannot be done on the
evidence.
(iii) A life policy would
not have secured plaintiff’s liability as a surety. If
plaintiff wanted to insure his liability
as a surety, he should have
taken out indemnity insurance where the insured event is the
institution of action by the creditor,
not as with the present life
policy the life of a person who has nothing to do with plaintiff’s
liability as a surety.
(iv) The fact that the
cession was probably signed at a time when plaintiff no longer had
any involvement with Minolta fits in with
the probabilities.
(v) The fact that
Matthysen delayed in having the cession registered, is in conformity
with his general careless conduct.
(vi) The non-calling of
the broker Terblanche, who had firsthand dealings with plaintiff and
Matthysen regarding the preparation
and signing of the cession,
weighs against plaintiff’s case. The inference must be drawn
that Terblanche would not have supported
plaintiff’s version.
(vii) The expert
evidence, given that the experts worked with second or third
generation copies, which distorted the already complex
signature, is
inconclusive.
(viii) Defendant’s
version fits in with the chronology of events and the signing of the
cession was the probable event to
have happened at the time it did.
[45] Having considered
all the issues, the evidence as events unfolded from time to time,
including the documentary evidence, comprehensively,
defendant has
proven its defence on a balance of probability. The special plea
should have been upheld with costs and the plaintiff’s
claim
dismissed with costs.
COSTS
[46] Defendant employed
two counsel and asks for the costs to include the costs of two
counsel. This trial was conducted over several
days and over a period
of two years. The record is voluminous and the disputed signature was
fiercely contested by the parties
through the evidence of the two
expert witnesses. The issues are complex. There is no reason why the
costs of two counsel should
not be allowed.
ORDER
[47]
The
appeal is upheld with costs, including the costs of two counsel and
the order of the court
a quo
is
substituted by the following order:
“
The
defendant’s special plea is upheld and plaintiff’s claim
is dismissed with costs, including the costs of two counsel.”
____________
______________
KRUGER, J J.P.
DAFFUE, J
I concur.
_______________
B.C. MOCUMIE, J
On behalf of appellant:
Adv JR Gautschi SC with Adv TI Boyce
Instructed
by:
Cloete
Boyce
c/o
Webbers
BLOEMFONTEIN
On
behalf of respondent: Adv PU Fischer SC
Instructed
by:
Lovius
Block
BLOEMFONTEIN
/sp