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[2012] ZAFSHC 246
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Oberholster NO and Others v Zephan Properties (Pty) Ltd (2762/2012) [2012] ZAFSHC 246 (20 December 2012)
FREE STATE HIGH
COURT, BLOEMFONTEIN
REPUBLIC OF SOUTH
AFRICA
Case No.: 2762/2012
In the matter between:
GUILLAUME JOHANNES
OBERHOLSTER N.O.
..............
1
st
Applicant
ANDRE JOHAN
POSTHUMUS N.O.
..................................
2
nd
Applicant
ANTOINETTE
POSTHUMUS N.O.
......................................
3
rd
Applicant
and
ZEPHAN PROPERTIES
(PTY) LTD
.....................................
Respondent
JUDGEMENT:
EBRAHIM, J
_____________________________________________________
HEARD ON:
29 NOVEMBER 2012
_____________________________________________________
DELIVERED ON:
20 DECEMBER 2012
_____________________________________________________
[1] The applicant, a
family trust applies by way of motion proceedings for payment of the
sum of R30 million, interest and costs
which it claims is due to it
by the respondent on the grounds of the latter’s non
performance of alleged share sale agreements
entered into by them.
The shares were issued by two companies, Highveld Syndication No 21
Limited, Registration No 2005/027601/06
(“Highveld 21”)
and Highveld Syndication No 22 Limited, Registration No
2005/027390/06 (“Highveld 22”).
[2] The 2 companies,
described in their respective prospectuses as loan stock investment
holding companies, sought to raise funds
through share subscriptions
in order to purchase immovable properties. Investors were interested
to invest in commercial property,
their capital being secured by a
guaranteed buy-back agreement it being provided in the prospectuses
that the shares would be bought
back at the purchase per share price,
5 years from the date of the investment.
[3] The original issue of
the share allotment in these two companies was done in terms of
prospectuses registered under the Old
Companies Act (Act 61/1973) in
the Companies Registration Office. The marketing of shares was done
by the promoter of the companies,
PIC Syndications (Pty) Ltd,
(“Pickvest”). When, after the final closing date of the
offer for sale of the shares to
the public had expired on 10 August
2009 the companies were not fully subscribed, the respondent, at the
time known as Zelpy 2095
(Pty) Ltd, took up the remaining shares in
Highveld 21 and Highveld 22. Respondent changed its name to Zephan
Properties (Pty)
Ltd on 8 June 2010. On the 20 October 2009, the
respondent entered into two written agreements to sell its shares in
Highveld 21
and Highveld 22. The parties to these agreements were
Highveld 21 and Highveld 22, Besain & Visser (Pty) Ltd, PIC
Syndications
(Pty) Ltd and Zelphy 2095 (Pty) Ltd. In respect of
Highveld 21, Zelpy undertook to take up the full outstanding number
of shares
to the value of R529 964 000,00 (clause 1 of the
agreement).
In respect of Highveld
22, Zelpy undertook to take up the full outstanding number of shares
to the value of R460 321 000,00 (clause
1 of the agreement).
These two agreements were
annexed to respondent’s answering affidavit as annexures 5 &
6 thereto.
[4] In terms of these two
agreements Pickvest was authorised by respondent (“Zelpy”)
to market those shares which the
respondent held in the 2 companies
on the same terms and conditions as set out in the old (initial)
prospectuses. Pending the sale,
the share certificates of the
respondent would be held in escrow (trust safekeeping) by a firm of
attorneys called Eugene Kruger
& Co Incorporated (“Eugene
Kruger”) and would be released to the relevant purchaser on
payment of the purchase
price. It was also agreed that, on the
instructions of Pickvest, Eugene Kruger would pay the nett proceeds
of the sale to the respondent.
This application concerns four
tranches of shares owned by the respondent in these two companies
which were sold by Pickvest to
the applicant’s trust. They form
claims 1 – 4 in the notice of motion.
[5] 5.1 J P Mynhardt
(“Mynhardt”) and J E Kritzinger (“Kritzinger”)
were part of
Pickvest’s network of sub-agents
whom
Pickvest instructed to market the respondent’s shares. Mynhardt
and Kruger approached the trust. On 29 September 2010,
the 1
st
applicant, in his capacity as trustee, purchased 5 000 shares in
Highveld 21 for R5 million which was paid into the trust account
of
Eugene Kruger on 30 September 2010 – a written quotation was
issued by Mynhardt and an application form completed by them
–
both Mynhardt and the 1
st
applicant signed the quotation.
Eugene Kruger paid the
money he received to Highveld 21. On 30 September 2010, the 1
st
applicant purchased for Kritzinger a further 15 000 shares in
Highveld 21 for R15 million and 5 000 shares in Highveld 22 for
R5
million. Once again written quotations were issued and signed by
Kritzinger and the 1
st
applicant and two accompanying
application forms were completed. The purchase price was paid into
the trust account of Eugene
Kruger on the same day. Eugene Kruger
subsequently paid the amount received to Highveld 21 and Highveld
22.
On 7 October 2010,
Kritzinger and the 1
st
applicant signed a further
quotation and completed a corresponding application form for the
purchase by the trust of 5 000
shares in Highveld 22 for R5 million
which was paid on 8 October 2010 into the trust account of Eugene
Kruger who thereafter
paid it over to Highveld 22.
[6] From the prospectuses
issued, it is clear that there was a substantive difference between
the nature of and conditions applicable
to an investment in Highveld
21 on the one hand and Highveld 22 on the other hand. In the case of
Highveld 21, investors would
earn interest from the date of the
investment for a period of 5 years. An investment of R100 000,00 (one
hundred thousand rand)
would buy shares of 100 cents each and an
interest earning loan account of R99 900,00. Investors in Highveld 22
would not earn
interest but would buy shares with a view to achieving
capital growth. An investment of R100 000,00 would buy 100 unit
shares of
R1,00 each and a share premium of R999,00 per share.
[7] It is common cause
that the trust received interest payments in respect of its R20
million investment in Highveld 21 on a monthly
basis from November
2010 until June 2012. In total, interest payments of R853 312,50 was
received on the R5 million investment
and R2 559 937,50 was received
on the R15 million investment. It is the respondent’s case that
the monies received from the
Trust were paid on Pickvests
instructions to Highveld 21 and Highveld 22 and that the share
certificates in respect of the trust’s
R5 million investment in
Highveld 22 was sent by post to the trust’s postal address on 3
January 2011 and received by the
trust. According to the applicants
the share certificates were received on 12 January 2011.
[8] On 7 September 2011,
Highveld 21 and Highveld 22 were placed under business rescue
proceedings in terms of section 129 of the
Companies Act, no 71 of
2008 (“the new Act”). A business rescue plan was prepared
by the business rescue practitioner
and adopted at a general meeting
of shareholders and creditors on 14 December 2011, and has thus
became binding on all shareholders
and creditors of Highveld 21 and
Highveld 22. According to the plan the trust is reflected as a
creditor of Highveld 21 and a shareholder
of Highveld 22. It is the
trust’s case that having filled in the application forms for
the purchase of the shares in Highveld
21 and Highveld 22, it
received no notification nor any communication from respondent
whereby the trust’s offers to purchase
shares were accepted
and/or that a reasonable time for acceptance of the four offers had
lapsed. Consequently no contracts for
the sale of those shares had
come into existence. Accordingly it was entitled to its money back.
[9] The applicant basis
its claim for repayment on 3 broad bases. In the first instance, the
applicant relies on contract, in urging
that it was a
tacit
alternatively an
implied
term of the agreement with Pickvest
that, should the trust’s offers not be accepted or not be
accepted within a reasonable
time that the offers would lapse and the
moneys would have to be repaid. In addition, the applicant contends
that since the respondent
had placed the control of the entire
process of the marketing and sale of the shares into the hands of
Pickvest, who had been represented
by Mynhardt and Kritzinger in the
negotiations and dealings with the trust, it followed that Mynhardt
and Kritzinger were the sub-agents
of Pickvest who represented and
were the agents of the respondent. Since the respondent had
authorised and instructed Pickvest
to conclude the agreements with
the trust, on its behalf, it must follow that the respondent was
liable to refund the trusts money,
irrespective of any agreement
which it may have had with Pickvest to pay the monies received for
the shares directly to the two
companies, Highveld 21 and Highveld
22. The applicants thus rely on actual authority. In the second
instance, the applicants rely
on ostensible authority, that in the
event of this court coming to the conclusion that the respondent had
not authorised Pickvest
and its sub-agents to conclude the share sale
agreements on its behalf. Respondent is estopped from denying its
authority because
respondent’s conduct was such as to lead the
applicants into the belief that Pickvest, Mynhardt and Kritzinger had
the necessary
authority to conclude these agreements on respondent’s
behalf resulting in the payment of the money by the trust to its
detriment
and prejudice. The last leg of the applicant’s claim
rests on the doctrine of Unjust Enrichment; in the event a finding
that
there was no tacit
alternatively
implied agreement to
refund the money paid by the trust, the latter is entitled to
repayment on the basis of the
condictio causa data causa non
secuta
alternatively
the
condictio sine causa
. (
B
& H ENGINEERING v FIRST NATIONAL BANK OF SA LTD
[1994] ZASCA 152
;
1995 (2)
SA 279
A at 284J and 285A;
KUDU GRANITE OPERATIONS (PTY) LTD v
CATERNA LTD
2003 (5) SA 193
SCA at 201H-J and 202F –
G.)
[10] The respondent’
case as presented in its answering affidavits is that it wanted to
sell all the shares which it had taken
up in Highveld 21 and Highveld
22, and to that end it had authorised Pickvest to market those shares
and to take full control and
management of the entire process via the
latter’s network of agents on the same terms and conditions
under which it had acquired
those shares under the old prospectus.
The only act in the entire marketing operation and disposal of its
shares which it had reserved
to be done by itself was the signature
of the sale transfer forms following conclusion of the sale
agreements. Respondent accordingly
denies liability for repayment to
the trust of the R30 million share price paid to Pickvest’s
agent on the ground chiefly
that it did not personally contract with
the trust, but that Pickvest had done so, that it personally had not
received payment
of the purchase price from the trust, but that
Eugene Kruger had done so on behalf of Pickvest and had paid those
funds to Highveld
21 and Highveld 22 on Pickvest Instructions.
Respondent consequently denies Pickvest was acting as its agent
and/or that it was
Pickvest’s principal in regard to the
conclusion of the share sale agreements with the trust and denies
that it received
any money for the shares sold by Pickvest to the
trust.
[11]
Alternatively
,
the respondent contends that concerning the R20 million worth of
shares sold in Highveld 21, if this court finds in the applicant’s
favour that respondent was indeed acting as principal and that the
sales were conducted on its behalf by Pickvest, then and only
in that
event, respondent relies on a letter dated 12 April 2012 addressed by
Eugene Kruger to the applicants and annexed as annexure
“GOB6.1”
to the founding affidavit to the effect that:
“
Die verkoper
het meer aandele verkoop as wat hy besit het. Die beswaarmakers se
remedie lê dus by die verkoper.”
as being the crux of its
defence viz that Pickvest had exceeded its authority and was liable
to refund payment to the applicant.
In plain language respondent’s
case is that it did not sell more shares than the number it actually
possessed but that Pickvest,
without respondent’s knowledge and
without authority, proceeded to solicit and obtain investments in
excess of the number
of shares available and because of this shares
could not be issued to the trust in Highveld 21. Respondent submits
accordingly
that Pickvest was mandated and authorised only to sell
shares actually possessed or owned by the respondent and that in
selling
the shares in Highveld 21 to the trust, it exceeded its
mandate, thus clearing the respondent of all or any liability to the
trust,
as the contract concluded for the purchase of the shares by
the trust fell outside the scope of the agents (Pickvest’s)
mandate.
For that reason no contract between the trust and the
respondent came into being. In the case of the Highveld 22 shares,
respondent
referred to the share certificates issued to the trust and
received by an employee of the applicant on 12 January 2010 as proof
of its performance in terms of the contract and as
prima facie
evidence of the trust’s title as shareholder.
[12] The first issue
which I must consider in the resolution of this dispute is whether
Pickvest and its agents Mynhardt and Kritzinger
had authority to act
on respondent’s behalf. In argument, Advocate Joubert, on
behalf of the applicant, contended that it
had been expressly agreed
between Zephan and Pickvest in terms of their agreements dated 20
October 2009 (clause 6.2 of annexures
5 and 6 to the answering
affidavit) that upon receipt of the purchase price for Zelpy’s
shares by Eugene Kruger, the nett
proceeds of the sale, that is
excluding agents commission, were to be paid to Zelpy (the
respondent) and it was irrelevant to the
issue of authority that the
funds had been paid directly to the 2 companies on Pickvest’s
instructions. I agree and I proceed
to consider the matter on the
basis of the factual finding which I now make that it was the
respondent’s money, representing
the proceeds from the sale of
shares owned by it which Eugene Kruger paid into the bank accounts of
Highveld 21 and Highveld 22.
That puts paid to the respondent’s
submission that it never received the purchase price of R30 million
from the trust. I
find as a fact that the electronic money transfer
made by 1
st
applicant in respect of the shares purchased
in Highveld 21 and Highveld 22 to Eugene Kruger was made on behalf of
the respondent.
Why would Pickvest instruct Eugene Kruger to pay the
money to Highveld 21 and Highveld 22 and not to the respondent? Any
attempt
to answer that would immerse this court in pure speculation
and the answer is in any event not relevant to the issue before me
save that it points undeniably to the fact that Pickvest, in flagrant
disregard of a material term and condition of its agreement
with
respondent on 20 October decided to embark on a course of
unauthorised conduct by instructing Eugene Kruger to pay the proceeds
of the sale into the coffers of Highveld 21 and Highveld 22. Be that
as it may, that is a private arrangement as Mr Joubert put
is between
principal and agent.
[13] It is not correct,
as contended for by Mr Rossouw for the respondent, that there is an
absence of evidence that a contract
was concluded between the trust
and the respondent merely because the application forms indicated
that the parties identified therein
were the trust and Mynhardt
and/or Kritzinger (Pickvest) and not the respondent. The respondent
had
expressly
mandated Pickvest in terms of clause 6.2 of its
agreement with Pickvest dated 20 October 2009, to market its shares
in Highveld
21 and Highveld 22 and accordingly Pickvest acting as its
duly authorised representative conducted the negotiations with the
trust
and filled out the documentation in its name on behalf of its
principal, the respondent. That is why its name and not the
respondents
appear on the documentation. It is difficult to see how
this process could have eventuated without such a mandate. The
respondent
conceded that it was shares owned by it which Pickvest had
been authorised to sell. It has also conceded that the authority it
granted to Pickvest was wide, including every act which was deemed
necessary to find buyers like for example the appointment of
a
network of sub-agents. But whether a contract of sale was concluded
between the parties is another enquiry altogether which I
shall
address as a different aspect of the case before me in a moment. It
matters not the slightest jot deciding the issue of Pickvest’s
authority, therefore that the respondent was not actually paid the
proceeds of the shares it sold in the sum of R30 million, that
is a
quarrel between the respondent and its agent, Pickvest privately. It
does not detract from the fundamental fact that Pickvest
sold
respondent’s shares on full authority from the respondent. This
is conceded by the respondent. In these circumstances
it is
inconceivable that either the respondent or Pickvest or its agents
Mynhardt and Kritzinger could have or would have agreed
that, in the
event of non-acceptance of the trust’s offers to purchase, or
non-performance of the agreement of sale, were
such an agreement have
been concluded, that the funds paid by the trust could and would be
retained by the respondent as seller
of the shares or its nominated
and authorised agents (Pickvest). Business efficacy dictates against
this occurrence. I find that
a tacit agreement that the money would
be repaid in such circumstances must have and did come into existence
at the time the parties
negotiated the sale of the shares to the
trust.
Alternatively
that such a term was implied into the
contract by law. (
TECHNI-PAK SALES (PTY) LTD v HALL
1968 (2) SA 231
(W) at 236 to 237;
VAN DEN BERG v TENNER
1975 (2) SA 268A
at 277D.) I conclude this issue with the finding
therefore that Pickvest and its agents Mynhardt and Kritzinger had
actual authority
from the respondent to sell its shares in Highveld
21 and Highveld 22. That however is not the end of the enquiry.
[14] The next question to
be answered is whether a contract of purchase and sale of the
respondent’s shares in Highveld 21
and Highveld 22 was actually
concluded between the respondent and the trust or did Pickvest as
contended for by the respondent,
exceed the scope of its express
mandate as conferred by clause 6.2 of the 2 agreements dated 20
October 2009. English authority
in the form of
KEEN v MEAR
(1920) 2 CH 574
at 579 has often been relied upon in support of the
proposition that an agent cannot validly bind his principal to any
terms which
are not expressly stated or stated by necessary
implication in his mandate’ even if such terms be more to his
advantage as
principal than the terms authorised. The contract
concluded by the agent must be the contract he was authorised to
make. Should
he exceed his authority by entering into a contract
other than the one authorised for any reason, his principal cannot be
bound
by its terms as no enforceable contract can be said to have
come into existence; its provisions being unauthorised by the
principal.
(
BALZUN v O’HARA AND OTHERS
1964 (3)
SA 1
WLD.)
[15] Mr Rossouw argued
that the respondent disavows liability to the trust because no
contract with respondent for the sale of its
shares to the trust was
concluded since Pickvest went beyond the scope of the express
authority conferred by clause 6.2 of the
two agreements of 20 October
2009 and canvassed the sale to the trust of investments not owned by
the respondent. Put plainly,
Mynhardt and Kritzinger sold shares to
the trust in excess of the number of shares respondent owned in
Highveld 21 and Highveld
22. Because they exceeded their authority,
their principal (respondent) is not bound by any juristic acts
concluded by them on
its behalf. Mr Joubert sought to counter this
argument by pointing to the fact that the failure by the promoters to
ensure that
the respondent’s shares in the two companies were
not oversubscribed could not be blamed on nor the consequences of
that
failure be placed on the applicant. This off-course is so and
that the respondent itself was of a similar view is borne out by its
attempt to contain the effects of its agents over enthusiasm in
marketing its shares by minimising the damage. This is evident
from
its entry into a further contract on 10 December 2010 with Pickvest
that any offers for the sale of shares in excess of the
number held
by it and available for sale, would be accepted by the issuing of
preferential shares in a company called Growealth,
a public company
established and listed on the Stock Exchange by the respondent. So it
is clear that as at December 2010 the respondent
and Pickvest were
already aware that the trust could not be provided with the shares in
Highveld 21. But the moot point is whether
it can be said that
respondent was aware at the time when the trust made the application
to purchase its shares in Highveld 21
and made payment to Eugene
Kruger of the purchase price (between 29 September 2010 and 30
September 2010) that, its agent was acting
in excess of the authority
conferred upon it? I do not think so.
[16] But that does not
assist the respondent in my view because the sale of its shares was
authorised – Pickvest had been
given express authority to sell
respondent’s shares. The fact that Pickvest chose to appoint a
whole network of agents all
of whom were tasked with selling the same
shares and who did not ensure that oversubscription was avoided is
not the applicants
problem – while it is true that the
authorities favour the principal in instances where the agent exceeds
the bounds of his
authority (
NEL v S A RAILWAYS AND HARBOURS
1924 AD 30
AT 36 – 37), it is only to terms which are not
expressly stated or cannot be necessarily implied from the mandate
itself
that the invalidity attaches. I do not agree that the mandate
in this case (clause 6.2) necessarily implied that Pickvest should
only sell shares owned by the respondent and not sell shares not
owned by the respondent, which is the case pleaded on behalf of
respondent – it conferred a simple instruction to sell all the
shares taken up by Zelpy in the two companies for the price
they were
originally issued for in terms of the old prospectuses, nothing more
and Pickvest’s agents did just that. The fact
that each agent
got the bit between the teeth and sold the same shares to a number of
investors cannot necessarily translate into
an excess of authority on
the part of Pickvest. That would be absurd for it would mean that in
every case where a mandate is conferred
to perform some juristic act
described therein, it must necessarily follow that it is implied
therein that to do otherwise amounts
to exceeding the authority
granted by the principal. Obviously such a general proposition cannot
be countenanced or invoked to
support the validity/invalidity of all
transactions conducted by an agent on authority granted by his
principal. The validity in
each case will depend on the particular
facts of that case and each case will have to be decided and assessed
on its own merits,
according to the natural meaning to be assigned to
the words incorporating the authority conferred. I find that
Pickvest’s
conduct showed a determination to sell the
respondent’s shares and obtain investments in the two companies
which resulted
in more than 1 buyer for the same investment. There
was no indication at all in the clear and express instructions in the
mandate
that implied that to sell more shares than the number
actually owned by the respondent was prohibited. That being the case,
it
follows that it cannot be said that Pickvest and its agents
Mynhardt and Kritzinger acted in excess of the authority conferred by
the respondent in selling the shares in Highveld 21 to the trust.
[17] The respondent
sought to correct the position by issuing shares in its public
company, Growealth but as far as the applicant
is concerned, the
respondent had no reservations that a contract for the sale of its
shares in Highveld 21 had in fact been concluded
with the trust. This
is clear from the fact that interest payments were paid to the trust.
The investments were made and the contract
concluded, why then could
the share certificates not be issued, in respect of the R20 million
investments in Highveld 21? There
is no evidence in this regard save
that all the indications are that a contract for the sale of 20 000
shares in Highveld 21 was
concluded by Pickvest on behalf of the
respondent and the purchase price of R20 million paid to Eugene
Kruger by the trust. In
these circumstances, the respondent’s
allegations that Pickvest acted in excess of its authority and sold
shares not owned
by the respondent is clearly untenable and is
rejected as far-fetched and false. (
PLASCON-EVANS PAINTS LTD v
VAN RIEBEECK PAINTS (PTY) LTD
1984 (3) SA 623A
at 634E-C;
NATIONAL SCRAP METAL (CAPE TOWN) (PTY) LTD AND ANOTHER v MURRAY
AND ROBERTS LTD AND OTHERS
2012 (5) SA 300
(SCA).)
The fact that the
applicants kept the interest payments and raised no concerns
regarding their repayment to Highveld 21 at any stage
between
November 2010 and June 2012 is also indicative of the fact that as
far as they were concerned, a contract for the purchase
and sale of
the shares by the trust had been concluded with the respondent.
[18] On being informed by
Kritzinger in October 2011, that the shares in Highveld 21 had been
oversubscribed, that the trust’s
application for the purchase
of 15 000 shares would not be met (by Kritzinger) and that the R15
million paid would be refunded,
the applicants took no action and
this inertia continued until June 2012, notwithstanding that share
certificates for the investments
it had made in Highveld 22 had been
received by the trust on 12 January 2011. Not once during the period
between 30 September 2010
(when the first payments were made) 8
October 2010 (when the last payment was made by the trust) and
October 2011, did any of the
applicants raise the alarm, either that
as far as the trust was concerned its offers had not been accepted
alternatively
that a reasonable time for their acceptance had
elapsed that consequently no contract for the purchase of R30 million
worth of
shares in Highveld 21 and Highveld 22 had been concluded
with respondent. The exact opposite is in fact clear, that the
applicants
continued to operate having received and kept the share
certificates in respect of the R10 million investment in Highveld 22
and
the monthly interest payments in respect of the R20 million
investment in Highveld 21. Accordingly in regard to Highveld 22, on
the respondent’s version, there
was
performance of the
contract for the purchase of 10 000 shares for R10 million paid by
the trust by the issue of the requisite share
certificates to the
trust by the respondent. The point raised by Mr Joubert of proper
service at the trust’s chosen domicilium
by registered post is
without merit for it is the applicant’s own version that the
share certificates were actually received
by an employee of the
trust. I shall refrain from pronouncing upon the soundness of the
applicants submissions regard to the respondent’s
non-compliance of the formalistic statutory requirements in terms of
section 135 and section 95 of the Companies Act, no 61 of
1973. In
the final analysis then deciding the question of the conclusion of
the four contracts on the respondent’s version,
I conclude that
the applicants have discharged the onus of proving on a balance of
probabilities that Pickvest and its sub-agents
Mynhardt and
Kritzinger were authorised by the respondent (a) to conclude
contracts on its behalf for the sale of its shares; (b)
that in
accordance with that authority, contracts came into existence between
the applicant’s trust and the respondent in
performance of
which contracts the trust made payment of the amount of R30 million
in respect of the purchase of the shares to
Eugene Kruger on behalf
of the respondent; (c) the respondent made interest payments from
Highveld 21 to the trust and signed and
delivered share certificates
pertaining to Highveld 22 shares to the trust. Accordingly I find no
merit in the applicant’s
contentions that their offers to
purchase were not accepted
alternatively
not accepted with a
reasonable time or in the respondent’s contention that no
contracts were concluded for the purchase of
its shares in Highveld
21 with the applicant due to its agents exceeding the scope of their
authority.
[19] In light of this, it
is not necessary for me to consider the issue of estoppel and
Pickvest’s ostensible authority to
bind the respondent. I shall
accordingly move on to the doctrine of Unjust enrichment; public
policy, ubuntu and section 39 (2)
of the Constitution of the Republic
of South Africa, Act no 108 of 1996 which are all aspects argued by
Mr Joubert as a basis for
the applicant’s claim to a refund of
its money on the grounds of fairness equity and good faith.
In
POTGIETER v
POTGIETER NO
2012 (1) SA 637
(SCA), Brand JA had occasion to
pronounce upon the validity of the variation of a trust deed and in
the course of doing so considered
the dictum of Ngcobo J in
BARKHUIZEN v NAPIER
[2007] ZACC 5
;
2007 (5) SA 323
(CC) that under our
new Constitutional dispensation it is part of our contract law that,
as a matter of public policy, courts are
entitled to refuse to give
effect to the implementation of contractual action provisions which
it regards as unreasonable and unfair.
[20] The learned Judge
disagreed with this challenge to contractual privity as being at odds
with the principle of the law of contract
of the law of contract in
this country because reasonableness and fairness are not freestanding
requirements for the exercise of
a contractual right. I agree and Mr
Rossouw’s argument echoes this stance by questioning the
elements which are to be placed
into the scale to test if they meet
the required standards of the remedy. In support he relies on the
judgment of Moseneke DCJ
in
EVERFRESH MARKET VIRGINIA (PTY) LTD
v SHOPRITE CHECKERS (PTY) LTD
2012 (1) SA 256
where it was
held that a case for the development of common law principles by the
infusion of constitutional values has to be properly
pleaded in order
to be properly considered. Whilst refraining from definitively
deciding the issue in regard to contractual obligations
he held that
contracting parties need to relate to each other in good faith. What
does this all means for the parties in the present
proceedings for,
as Mr Rossouw put it, does it mean that the respondent is obliged out
of kindness and fairness to pay back R30
million to the applicants? I
agree that this would place an emotional context upon a contractual
obligation which is not called
for and wholly inappropriate. Without
certainty as to the precise elements of such a remedy, I shall wisely
refrain from pronouncing
upon it in the context of section 39(2),
pubic policy and the concept of ubuntu and apply my mind to the
common law concept of
enrichment.
[21] The respondent
argues that because it never received the money, it can’t pay
it back, the money was paid to Highveld
21 and Highveld 22. Mr
Jouberts submission is that that has nothing to do with the
applicants, it was a private arrangement between
respondent, Pickvest
and Eugene Kruger. For reasons best known to the respondent, monies
belonging to it were paid to the two companies
contrary to the share
sale agreements (annexures 5 and 6 to the answering papers).
Consequently respondent has been unjustly enriched
at applicant’s
expense because applicants did not receive value for money paid. No
share certificates in Highveld 21 and
no returns on their capital
investment in Highveld 22, were received. Mr Joubert contends that I
should ignore the interest payments
made to applicants because they
are of no consequence to the present case between the parties as they
were paid by a third party
(Highveld 21). The fact that the two
companies have been placed under the supervision of a Business Rescue
practitioner also has
no effect, he argues, on the issue of
respondent’s enrichment at applicants expense, because the two
companies are third
parties in the context of the present litigation
and the fact that applicant’s money was paid by Kruger to the
two companies
is irrelevant. The applicant’s quarrel is with
the respondent who has been unjustifiably enriched
sine causa (
B
& H ENGINEERING v FIRST NATIONAL BANK OF SA LTD
supra)
because the monies that were paid to the attorney was the
respondent’s money, supposedly given for value to be received
which never materialised.
[22] What weighs strongly
with me is that for each of the four batches of shares, the quotation
spelt out specifically:
“
Herverkoop
kwotasie:
Highveld Syndication No 21 Bpk h/a
Tyger Manor Syndication vir aandele wat gekoop word van Zelpy.”
(in the case of Highveld
21) and
“
Herverkoop
kwotasie:
Highveld Syndication No 22 Bpk h/a
Charles Crescent Syndication vir aandele gekoop van Zelpy.”
(in the case of Highveld
22).
So there could be no
possible mistake that it was respondent’s shares, for the sale
of which he was entitled to the proceeds.
The fact that those
proceeds were paid into the bank accounts of the two companies must
have been done with respondent’s
knowledge and consent and does
not detract from the inescapable fact that it was his money paid to
him by the applicant’s
trust. But that in and of itself does
not amount to respondent having been unjustly enriched. The crucial
issue here is, as I see
the case, the reason(s) why the trust made
the investments, of what consequence were the shares, what end was
intended to be achieved
by both the applicants and respondent in
regard to the purchase and sale of the investments, and the
applicants attitude to the
interest bearing loan account in Highveld
21, all of which cannot simply be ignored. What the real reason was
for investing R30
million in these two companies and what was
intended to be gained by the respective parties is the real issue in
these proceedings
and will impact on the broader question of whether
the respondent was unjustly enriched at the applicant’s expense
sine causa
or not.
[23] But this is not an
issue which can be resolved on the papers before me nor on
probabilities (
ADMINISTRATOR, TRANSVAAL & OTHERS v
THELETSANE & OTHERS
[1990] ZASCA 156
;
1991 (2) SA 192
A at 196I – J
and 197A – B). Neither party has made any reference in their
respective affidavits to the historical
background to the share sale
agreements concluded between them. Mr Joubert chooses to deal with
this aspect in a dismissive fashion
arguing that this court should
regard the interim interest payments received by the trust as
payments which need not be explained
or rather which
are
unexplained, as they have nothing to do with the four claims sued
upon. Mr Rossouw has taken issue with this on the grounds that
the
payments ought to have raised significant doubt in the minds of the
applicants that something was not quite right about the
investment
which the trust had made in Highveld 21 especially because no share
certificates had been issued to the trust. This
was a warning light,
he argues, that a dispute was to follow, yet the applicants persisted
in bringing proceedings on motion for
the recovery of the purchase
price of their investment and he has boldly pressed for a dismissal
of the entire application with
costs. But I am not so inclined in
view of the particular circumstances of this matter which impels me
to adopt a robust and common
sense approach (
SOFFIANTINI v
MOULD
1956 (4) SA 150
at 154E) to the disputes of fact raised
on the affidavits. In my view it is desirable that the whole issue
concerning the alleged
enrichment of and the alleged unjustified
gains made by the respondent in selling its shares (on the applicants
version), be referred
for the hearing of oral evidence. This will
finally determine whether the issuing of share certificates were of
any real consequence
to the parties and the question of the interest
bearing loan account will fully be ventilated and placed in its
proper perspective
as between the contracting parties.
[24] Accordingly the
order I make is the following:
24.1 This matter is
referred for the hearing of oral evidence on a date to be arranged
with the Registrar, on the question of whether
or not the respondent
has been unjustly enriched at the expense of the applicants’
trust to the extent of R30 million in
consequence of the conclusion
between them of contracts of purchase and sell in respect of shares
owned by the respondent in Highveld
21 and Highveld 22;
24.2 Each party is
entitled to call any/or such witnesses as it may consider necessary
in order to effectively conduct its case
at such hearing;
24.3 Neither party shall
be entitled to call any witness unless it has served notice thereof
on the other party at least 14 days
before the date appointed for the
hearing (in the case of the applicant) and at least 10 days before
such date (in the case of
the respondent) as well as a statement
wherein the evidence to be given in chief by such person is set out;
24.4 Each party shall
make such discovery as it considers necessary for the conduct of its
case in accordance with and within the
time limits prescribed by
Rules 35(1)(8) and (10) of the Uniform Court Rules.
24.5 The costs of this
application to date shall be determined at the hearing of oral
evidence.
_____________
S. EBRAHIM, J
On behalf of the
Plaintiff: Adv. A. P. Joubert SC
with Adv. C. J. Nel
Instructed by:
Symington & De Kok
BLOEMFONTEIN
On behalf of the
respondent: Adv. P. F. Rossouw SC
with Adv. N. Snellenburg
Instructed by:
Honey Attorneys
BLOEMFONTEIN
/eb