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[2009] ZAGPJHC 74
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Aloecap (Pty) Limited v Nthwese Investment Holdings (Pty) Limited (30722/08) [2009] ZAGPJHC 74 (30 October 2009)

IN THE SOUTH GAUTENG HIGH COURT
JOHANNESBURG
CASE NO
: 30722/08
2009-10-30
In
the matter between
ALOECAP
(PTY) LIMITED Plaintiff
And
NTHWESE
INVESTMENT HOLDINGS (PTY) LIMITED Defendant
_________________________________________________________
J U D G M E N T
_________________________________________________________
WILLIS, J
:
[1] The plaintiff, in its amended particulars of claim, claims as
follows:-
Payment of the sum of R890 000;
Interest on the aforesaid sum at the rate of 15,5% per annum
a tempore morae
:
On R890 000, from 27 November 2007 to date of payment;
On R250 000 from 27 November 2007 to date of payment, namely 2
June 2008;
Costs of suit.
[2] The claim arises from a written agreement which, it is common
cause, was entered into between the parties on or about 30 July 2007.

In May 2005, the defendant had borrowed some R250 Million,
repayable with interest at prime plus 2 percent, to acquire an

interest in a private company known as the Blue Label Investment
Holdings (Pty) Limited (“Blue Label”). The
defendant had borrowed the money from an entity known as Public
Investment Corporation Limited. This entity was referred to by
the
witnesses for both sides as PIC (“PIC”). PIC is a
State-backed or State-owned corporation.
[3] Essentially, the business of Blue Label was the sale of pre paid
airtime for cellular telephones. In view of the phenomenal
growth in
the use of cellular telephones in South Africa, it was anticipated
that this would be lucrative business. When PIC had
lent the money
to the defendant, it had been anticipated that the loan would be
repaid from dividends declared by Blue Label.
By the time of
the entering into the agreement between the plaintiff and the
defendant, Blue Label had not declared any dividends
and no portion
of the loan by PIC to the defendant had been redeemed. Not
surprisingly, PIC were becoming restless.
[4] The plaintiff owned shares in the defendant as well as Blue
Label. At the time of the entering into the agreement between
the
plaintiff and the defendant, Mr Johannes (known to his friends as
“Joe”) Mthimunye, a qualified chartered accountant,
who
later became a corporate finance specialist, was the executive
chairman of the plaintiff, chairman of Blue Label and a
member
of the board of the defendant.
[5] In and or around March or April 2007, the idea was mooted that
Blue Label would seek a listing on the Johannesburg Securities

Exchange as a public company. The listed company would be known as
Blue Label and Telecom Limited. Among the other advantages
of
the listing would be the opportunity to redeem all or part of the
loan which PIC had made to the defendant. It was these opportunities

and the possibility of redeeming the loan which PIC had made to the
defendant, which gave rise to the agreement between the plaintiff
and
the defendant. At the time of entering into the agreement, both
Mr Mthimunye for the plaintiff and Mr Theledi for the
defendant
stood to benefit from the listing. Essentially what was envisaged is
that there would be what is known in the claim
as “refinancing”
of the loan from PCI, taking advantage of the listing.
[6] The relevant clauses of the agreement concluded between the
parties are the following:-
“1. INTRODUCTION AND PURPOSE OF THE ENGAGEMENT:
The client (i.e. Mthwene Investment Consortium (Pty) Ltd) and the
defendant hereby appoint AloeCap (the plaintiff) who hereby
accepts
the appointment to act as transaction advisor to the client as
detailed in this letter.
This engagement letter sets out the terms of which AloeCap has been
engaged by the client for the purposes of assisting the
client in
restructuring its funding for the Blue Label Investments interest.
This engagement letter outlines AloeCap’s responsibilities as
well as the fees in respect thereof.
SCOPE OF THE ENGAGEMENT:
The client has requested AloeCap, and AloeCap undertakes to render
the following financial and transaction services to the
client, to
the extent necessary for the achievement of the purpose of the
engagement;
Advising the client of a strategy;
structure and implementation process of the funding structure;
Review current funding agreement;
Design a funding structure for refinancing, taking into account
opportunities of listing;
Draft the refinancing proposal to current financier;
Tax considerations.
Fund raising
Funding a risk management;
Preparing funding proposal for the funding;
Engaging potential financiers;
Negotiating the funding agreement.
Assisting with any documentation required for the implementation
of the funding process.
Coordinating the implementation process.
The client will simultaneously furnish AloeCap with all relevant
data information. The client will also make all decisions
and
appointments, which are necessary for AloeCap to fulfil the
prescribed services under this appointment timeously.”
“3.4 If the client determinates the refinancing process prior
to its completion for any reason whatsoever, other than a
material
breach by AloeCap, or AloeCap’s failure to raise the third
party funding, a termination fee shall be payable by
the client to
AloeCap.
3.5 The termination fee will be equal to an amount calculated at
the rate of R250 000 (excluding VAT), for every month
or a
portion thereof that AloeCap was engaged in the mandate.” and
“10.1 This engagement letter constitutes the sole record of the
agreement between the parties and relations to the appointment
of
AloeCap as the client’s financial advisor. Neither party shall
be bound by any expressed, tacit or implied term, representation,

warranty, promise or the like, not recorded in the engagement letter.
This engagement letter supersedes and replaces all prior
commitment,
undertaking to representations, whether oral or written, between the
parties in respect of the subject matter hereof.
No addition to variation, novation or agreed cancellation of any
provision of the engagement letter, shall be binding upon
the
parties unless reduced to writing and signed by or on behalf of the
parties; provided that any amendments which may be
required in
order to give affect to change the law or the regulatory repine to
which AloeCap is subject, will become effective
immediately upon
such change becoming effective. AloeCap shall give written notice
of such amendments to the client.”
“9.1 Notwithstanding any other term of this engagement letter,
the client will be entitled to cancel the engagement summarily
in the
event of a material breach by AloeCap of any of the provisions of
this engagement letter, which goes to the roots of the
engagement and
which is not remedied and within 14 days, or such longer period as
may be reasonably required in the circumstances,
after a receipt by
AloeCap for a written demand from the client for the remedy of such
breach, in which instance AloeCap will not
be entitled to payments of
the completion fee.”
[7] Mr Mthimunye, who was the only witness for the plaintiff, signed
the agreement on behalf of the plaintiff. He was the author
of the
document. Mr Theledi, signed the agreement on behalf of the
defendant, he was the only witness to testify on behalf of
the
defendant. Mr Theledi is also a director of the defendant and
Blue Label. He has a B.Com degree. He describes himself
as an
“entrepreneur and a risk taker”. It seems that he has
made his fortune in property development, vehicle dealerships
and
pharmaceuticals.
[8] In the plaintiff’s amended particulars of claim, it makes
the following allegations:-
“6. As a direct result thereof (i.e. the sourcing of funding
from third party by the defendant, namely Investec), the
defendant
was placed in a position of being able to enter into and conclude a
third party funding agreement with Investec Bank
Limited which, but
for defendant’s conduct, set forth in paragraph 7 hereunder,
would have been consistent with the fulfilment
of the plaintiff’s
mandate as provided for in annexure E1 hereto (E1 is the
agreement which is common cause was entered
into between the
plaintiff and the defendant).
7. In breach, alternatively in repudiation of the agreement, (which
repudiation the plaintiff has set);
7.1 The defendant after for the conclusion of the agreement
constituting annexure “PCI” hereto, concluded a funding

agreement with Investec Bank Limited on its own, without disclosing
same to the plaintiff (thereby precluding the plaintiff from

concluding the raising of the third party funding, as contemplated in
terms of clause 3.2 of the agreement); and
7.2 The defendant, in so doing, expressly, alternatively implied
further alternatively, tacitly, terminated the refinancing
process,
prior to its conclusion, as contemplated in terms of clause 3.4 of
the agreement.
[9] The defendant pleads as follows to these allegations:-
“Ad paragraph 7.1 and 7.2:
7.1 The defendant admits that it concluded a “funding
agreement” with Investec Bank on 14 November 2007;
7.2 Same as aforesaid, the defendant denies each and every
allegation contained in this paragraph as if specifically traversed.
7.3 In amplification of its denial and without derogating from the
generality thereof, the defendant states that:-
7.3.1 Time was of the essence of the agreement;
7.3.2 The plaintiff failed timeously to raise the required funding.”
[10] Significantly, the plea does not expressly aver that the reason
for the defendant’s non-liability is that the plaintiff
failed
to raise required funding on or before the date of listing of Blue
Label, namely 14 November 2007. I shall deal
with this
aspect in more detail later.
[11] It is common cause that the defendant effected a payment of
R250 000 to the plaintiff on 2 June 2008. The plaintiff’s

claim is for the four months of August, September, October and
November in 2007, being R250 000 per month plus VAT, less this

payment of R250 000. The defendant alleges that this payment of
R250 000 was made in full and final settlement of the

plaintiff’s entire claim.
[12] As I have already indicated, there may have been advantages in
the listing of Blue Label as public company, apart from
the
general advantage of raising capital to expand business operations to
increase profitability. These would have included the
opportunity to
redeem the loan which defendant had taken from PIC. It is common
cause that Mr Mthimunye prepared documents relating
to a presentation
to back his proposals of the refinancing envisaged which would arise
out of the proposed listing. It is also
common cause that
Mr Mthimunye sets up meetings with Absa Bank and Standard Bank
and City Bank. City Bank declined to take
any interest in the
proposal. The other banks, not unsurprisingly, referred the proposal
“down the line”, or perhaps
more accurately, “up
the ladder”. A large sum of money was involved, running into
several R100 million, if interest
is taken into account. There were
also obviously attendant risks.
[13] At the time of the signing of the agreement between the
plaintiff and the defendant, the date of the listing was uncertain.

The reason for this was that approval first had to be obtained for
the listing from the Competition Tribunal. This approval was

ultimately obtained but the listing date was set at 14 November 2007.
[14] A “pre listing statement” relating to the
listing of Blue Label on the JSC was published on 26 October 2007.

It was common cause that it was intended that both the plaintiff and
the defendant would also approach the Investec Bank. It
is also
common cause that Mr Theledi had good contacts with Investec Bank
arising from his past dealings with them. There
is a dispute between
the parties as to whether who exactly had made the initial approaches
to Investec Bank and whether Mr Mthimunye
and Mr Theledi agreed
that Mr Mthimunye would himself contact the contacts of Mr Theledi to
set up an appointment or whether
Mr Theledi would himself do so.
Nothing, in my view, really turns on which version is correct in this
regard.
[15] Be that as it may, it is common cause that Mr Theledi went
himself to see Investec Bank without taking Mr Mthimunye to accompany

him. This occurred at the end of October and the beginning of
November 2007.
[16] An agreement was signed by Mr Theledi acting on behalf of the
defendant on 12 November 2007 and by Investec Bank on
14 November 2007
the date of the listing. It is common
cause that the terms of the deal between the defendant and Investec
Bank were, to say the
least, “expensive”. Mr Mthimunye
became angry that the deal had been brokered without his
participation and without
his sanctioning of the terms thereof.
Mr Mthimunye battled to get hold of Mr Theledi. Eventually he
succeeded. Mr Theledi
confirmed that the deal had indeed been struck
between the defendant and Investec Bank. Mr Theledi said that it was
merely an
interim agreement. He gave the documents to Mr Mthimunye
to read and Mr Mthimunye came to the conclusion that this was far

from an interim agreement and that for the defendant to extricate
itself from this the agreement would be very costly indeed.
Mr
Mthimunye then resigned his directorship of the defendant.
[17] It is common cause that the defendant never put the plaintiff on
terms to raise the finance on or before 14 November 2007.

It is also common cause that the defendant never gave the plaintiff
notice of the intended termination of the agreement, whether
in
writing or otherwise. There is a dispute, as I have already
indicated, between the parties as to whether the payment of the

R250 000 made by the defendant by the plaintiff was in full and
final settlement. It is common cause that the parties did
meet
shortly before the payment was made. Mr Mthimunye’s
version of events was that this was a part payment and that,
at the
time, Mr Theledi indicated that he would “sort out”
the plaintiff in respect of the balance.
[18] Mr Theledi’s version is that after the meeting he spoke to
Mr Mthimunye and told him that it was a payment in full
and
final settlement and requested a letter from Mr Mthimunye accepting
this payment in full and final settlement. He said Mr
Mthimunye
undertook to send such a letter. On the strength of that assurance,
the payment was made but no such letter was ever
received. There is
no correspondence whatsoever from the defendant or on behalf of the
defendant by its attorneys indicating a
proposal to settle the claim
at R250 000 as a full and final settlement.
[19] There is a resolution that appears to reflect the decision of
the board of directors of the defendant that payment be made
a full
and final settlement but, as I have said, there is no correspondence
at all exchanged between the parties indicating this.
[20] I should point out that the plea that time was of the essence,
arose for the first time on the morning that the trial began.
In
determining the factual disputes in this case, I shall have regard to
the principles set out in the well known case of
Stellenbosch
Farmers’ Winery Group Ltd and Another v Martell et Cie and
Others
2003 (1) SA 11
(SCA) at para [5]:
“The technique generally employed by courts in resolving
factual disputes of this nature, may conveniently be summarised
as
follows. To come to a conclusion on dispute of issues, a court must
make findings on:
The credibility of the various factual witnesses;
Their reliability; and
The probabilities;
As to (a), the court’s finding on the credibility of a
particular witness will depend on its impression about the veracity

of the witness, that in turn will depend on a variety of subsidiary
factors, not necessary in orderly importance such as:-
The witness’ candour and demeanour in the witness-box,
His bias, latent and blatant;
Internal contradictions in his evidence,
External contradictions with what was pleaded or put on his behalf,
with established fact or with his own extracurial statements
or
actions,
The probability or improbability of particular aspects of his
version,
The calibre and cogency of his performance compared to that of other
witnesses testifying about the same incident or events.
As to (b), a witness’ reliability will depend apart from the
factors mentioned under (a), (ii), (iv) and (v) above, on (i),
the
opportunities he had to experience or observe the event in question
and (ii) the quality, integrity and independence of his
recall
thereof.
As to (c), this necessitates an analysis and evaluation of the
probability or improbability of each party’s version on each
of
the disputed issues. In the light of its assessments of (a), (b) and
(c), the court will then, as a final step, determine whether
the
party burdened with the
onus
on proof has succeeded in
discharging it.
The hard case, which will doubtless be the rare one, occurs when a
court’s credibility finding compel it in one direction
and its
evaluation of the general probabilities on the another. The more
convincing the former, the less convincing will leave
the latter.
But when all factors are equipoised probabilities will prevail.”
[21] I have also had regard to
African Eagle Life Assurance Co Ltd
v Cainer
1980 (2) SA 234
(W) at 237. The reasoning of Coetzee J,
as he then was, was approved and developed slightly in
National
Employers’ General Insurance v Jagers
1984 (4) SA 432
(ECD)
by Eksteen AJP at 440E-441A. This passage by Eksteen AJP was
unanimously approved by the Supreme Court of appeal in
Baring
Eiendomme Bpk v Roux
[2001] 1 All SA 399
(A) at para [7] .See
also
Koster Koöperatiewe Landboumaatskappy Bpk v
Suid-Afrikaanse Spoorweë en Hawens
1974 (4) SA 420
(W) at
425;
National Employers Mutual General Insurance Association v
Gany
1931 AD 187
at 199. As has been said in the oft-quoted case
of
AA Onderlinge Assuransie Assosiasie v De Beer
1982 (2) SA
603
(A) at 614H
1
:
“Dit is, na my oordeel, nie nodig dat ’n eiser wat hom op
omstandigheidsgetuienis in ‘n siviele saak beroep,
moet bewys
dat die afleiding wat hy die Hof vra om te maak die enigste redelike
afleiding moet wees nie. Hy sal die bewyslas wat
op hom rus kwyt
indien hy die Hof kan oortuig dat die afleiding wat hy voorstaan die
mees voor-die-hand liggende en aanvaarbare
afleiding is van ’n
aantal moontlike afleidings.”
This passage has been referred to with approval in
numerous cases. See, for example, the judgment of Zulman JA in
Cooper
& Another NNO v Merchant Trade Finance Ltd
2000 (3) SA 1009
(SCA) at para [7];
Minister
of Safety and Security v Jordaan t/a Andre Jordaan Transport
2000 (4) SA 21
(SCA) at para [9].
[22] In
Ocean Accident and Guarantee Corporation Ltd v Koch
1963 (4) SA 147
(A) at 159C
Holmes JA said:
“As to the balancing of probabilities, I agree with the remarks
of Selke J, in
Govan v Skidmore
1952 (1) SA 732
(N) at 734,
namely
“… in finding facts or making inferences in a civil
case, it seems to me, that one may, as Wigmore conveys in his
work on
Evidence,
3
rd
ed., para 32, by balancing
probabilities select a conclusion which seems to be the more natural
or plausible, conclusion from amongst
several conceivable ones, even
though that conclusion is not the only reasonable one.”
I need hardly add that “plausible” is not here used in
its bad sense of specious, but in the connotation which is conveyed

by words such as acceptable, credible, suitable. (
Oxford
Dictionary
, and Webster’s
International Dictionary
).”
This
dictum
has been referred to with approval in innumerable
cases.
[23] I should record that Mr Mthimunye was an impressive, calm and
confident witness who gave his evidence without any contradiction.

Mr Theledi, on the other hand, often had difficulty in answering
questions from Mr
Nowitz
, counsel for the plaintiff, and
questions seeking clarification from the court. It must be
remembered that in regard to the seeking
of refinancing, there would
in the initial stages have been a very fluid situation. Interim
arrangements would have to be agreed,
as also with the period of
repayment. There would be questions relating to finance raising
fees, the provision of security (nowadays
we tend, more often than
not, to refer to the American term, “collateral”) and
then related issues such as the provision
of incentives
et cetera
.
[24] In my view, Mr Mthimunye was unfairly criticised for the way in
which he had approached the banks as he did. Not much more
could
reasonably have been expected of him in the circumstances. Clearly
he had first to see whether there was interest in the
matter, then
whether there could be agreement into principle and, after that,
obviously there would be a narrowing down of the
issues so as to come
up with a concrete agreement. Mr Mthimunye clearly had a relaxed
approach as to whether or not the refinancing
had to have been
effected before or some time after the listing. Mr Theledi, on the
other hand, seems to have been very anxious
that the refinancing
should have been put in place and effected (in the sense that PIC
would have been repaid) before the listing.
[25] It has not been absolutely clear why Mr Theledi was so anxious
to have the refinancing effected before the listing. It appears
that
this may well have to do with certain options which a company known
as ITJE Leswika Investment Holdings (Pty) Limited would
have been
able to exercise on the listing, Mr Theledi himself had a personal
interest in this company ITJE Leswika. It should
be borne in mind
that the question of whether or not ITHE Leswika was to exercise
options, is collateral to the agreement that
had been concluded
between the parties.
[26] There was some debate and indeed cross examination on the
question of whether PIC had not been prepared to support the listing

unless its loan had been repaid. It is clear from the evidence as a
whole that PIC did express the view that the repayment of
the loan
was critical to it insofar as it would have been willing to support
the listing concerned. The dispute is in fact a narrow
but a very
important one, namely:-
Did PIC actually require that it should have been repaid its loan
in full
before
the listing took place; or
Must it have been
agreed
prior to the listing that the loan
would be repaid from the sell down of shares at the listing?
[27] The apple-cart was very nearly upset late yesterday afternoon
when Mr
Limberis
, moments before the court was about to
adjourn, sought to reopen his case to hand in the prelisting
statement issued in relation
to a listing dated 26 October 2007.
Mr
Nowitz
, who is an old warrior in this court, was
charm incarnate. He graciously agreed to the handing in of the
prelisting statement.
This gesture avoided my having to give a ruling
on this very issue. Having received the prelisting statement, I can
now understand
why Mr
Nowitz
adopted the generous stance
that he did. Replete in the documents are references to the loan
which PIC had given to the defendant
and the following words appear
therein:-
“The proceeds from the sale (the sale of Blue Label Telecom
shares owned by Nthwese, the defendant) will go towards the
settlement of a portion of the outstanding funding from the PIC”.
[28] It is obvious that this prelisting statement could not have been
issued with the approval of the JSE unless the PIC was agreeable
to
the listing in the terms stated. It is true that the prelisting
statement refers to the fact that “the listing of Blue
Label
Telecom shares on the JSE is conditional upon the raising of a
minimum amount of capital of R700 Million before listing

expenses in terms of the offer/subscription and a minimum amount of
capital of R200 million before listing expenses in terms of
an offer
is made.” This raising of a minimum amount of capital of R700
million is not to be confused with the issues of the
refinancing of
the loan. It therefore seems to me that, if one has regard to this
prelisting statement, not only insofar as it
contents are concerned
but also the fact that it was issued on 26 October 2007,
before there was any refinancing in place,
that PIC must have been
content that the repayment of the loan was effected
after
the
listing rather than
before
. Furthermore, I should point out
that it would have made no sense for PIC to adopt a dog-in-the-manger
attitude towards the listing,
as Mr
Limberis
seems to argue,
was its position. PIC was anxious to have its loan repaid and, in
all the circumstances of the matter, there was
no foreseeable way in
which this loan would be repaid other than by proceeding with this
listing. Indeed, it made good sense to
approve of the listing
provided, however, that of course, arising from the listing, there
would be a sale of shares sufficient
to repay the loan.
[29] But the significance of PIC’s attitude goes further. It
shows that Mr Mthimunye was sensible not to have adopted a desperate

attitude with regard to refinancing. In other words, he was sensible
not to panic and not to take a view that the refinancing
should be
effected before the listing. Of course, there is always a risk that
a listing would be undersubscribed, but entrepreneurs
take risks and
it seems fair to assume that in discussions about the listing and in
determining the listing price, all these factors
would have been
taken into account in order to minimise the risk. It also seems fair
to assume that the listing would have been
designed to ensure that,
as far as it is reasonably possible to do so, that the listing would
have been oversubscribed. It so
happened that the price rose from a
listing price of R6,75 on the date of listing to some R8,50. Had Mr
Mthimunye’s advice
been heeded, it is clear that in the
circumstances of this particular case, the loan it could have been
repaid on terms very much
more favourable to the defendants than has
actually been the case.
[30] I shall now consider the question of the alleged settlement.
Mr Theledi, in his own account of himself as a business

consultant, can hardly be described as a babe-in-the-woods. I think
it must be accepted that, as a matter of probability, only
a fool
would make a payment in full and final settlement without first
securing a clear, unequivocal agreement to accept that payment
in
full and final settlement. As I have said, it is common cause that
no such letter, as Mr Theledi says was promised to him,
was ever
received and, furthermore, the probabilities are strengthened by the
fact that there was no letter sent, as I have already
indicated,
either by the defendant or the defendant’s attorneys to the
plaintiff offering to settle the claim at R250 000
as a full and
final settlement. I therefore satisfied that the defendant’s
defence, that the matter has been settled in
full, cannot be
sustained on a balance of probabilities.
[31] I turn now to deal with questions of the interpretation of the
actual agreement. It seems to me that the plain, ordinary,
literal
and grammatical reading of the contract does not stipulate that the
refinancing or repayments of the loan had to have been
effected
before the listing. Mr
Limberis
, on the other hand,
sought valiantly to persuade me that this should be read into the
agreement. In particular, he referred me
to clause 2.2 where there
is a reference to the fact that the plaintiff would perform its
prescribed services in terms of this
appointment “timeously”.
He also referred to clause 2.1.1 where there is a reference to, into
“designing”
a funding structure for refinancing, taking
into account, “opportunities at listing”.
[32] It seems to me that the words “opportunities at listing”
cannot simply be interpreted to mean “in order
to refinance
before the listing”. Unsurprisingly, Mr
Limberis
, for
the defendant, said that I must interpret this agreement
“contextually” as well as taking into account the
background
and circumstances. He referred me to a number of cases,
in particular the well known case of
Coopers Lybrand v Bryant
,
1995 (3) SA 761 (A) 767E 768E, which
refers to background circumstances. He also referred me to
the
judgments of Seven Eleven
Corporation of South Africa v
Cancun Grading 150 CC
,
2005 (5) SA 186
(SCA) 24, where Lewis
JA, delivering the anonymous judgment of the court, referred to the
importance of context and
Van Rensburg v City Credit (Natal) (Pty)
Limited
,
1980 (4) SA 500
(N) where Kriek J referred to the well
known
Delmas Milling Co Limited v Du Plessis
case
(1955 (3) SA 447 (A)) which also refers to
background.
[32] I hope it is clear from my analysis of the evidence, where if
one has regard to context, it shows that, objectively, it was
NOT
necessary in order to effectively financing of the loan for it to
have been completed before the listing.
[33] The last point that I need to consider is the question of time
being of the essence. Mr
Limberis
referred to the fact that
clause 3.4 allows the defendant to terminate the agreement in the
event of the plaintiff’s “failure
to raise the third
party funding”. In the case of
Alfred McAlpine & Son
(Pty) Limited v Transvaal Provincial Administration
,
1974 (3) SA
506
(SCA) the court dealt with the concept of time being of the
essence and pointed out that this relates to the consequences of a
breach and not the breach itself and if no time is fixed then there
can be no breach by non performance, whether or not time is
of the
essence, until the creditor has informed the debtor when he maintains
performance is due. When a time for performance is
fixed however,
the debtor’s failure to perform by that time is a breach and no
demand is necessary to place the debtor in
mora
. There is no
date stipulated in the agreement by when the financing was to be
raised and as I have already indicated, the defendant
at no time
called upon the plaintiff to have raised the financing and to have
effected before the date of the listing (or any other
date).
[34] It is also useful to refer to the case of
Breytenbach v Van
Wijk
,
1923 AD 541
and 549 where the following was said:
“Immediate performance having been impossible and not
contemplated, and no date of transfer having being fixed by the
contract,
the respondent, if he considered that sufficient time had
elapsed to enable him, on that ground, to procure his own release,
should
have taken steps – as the civilians express it –
to place the appellant
in mora
by demanding that transfer
should be passed on or before a specified date, reasonable under the
circumstances.
Mora autem committitur quoties debitor opportune
tempore et loco interpellatus non solvit
.”
[35] It is also instructive to refer to the old case of
McKay v
Naylor
1917 TPD 533
at 537 538, where the court refers to
the old authorities and states that “the general rule of law”
had obligations
for the performance of which no definite time is
specified, are enforceable or with, that the rule is subject to the
qualification
that performance cannot be demanded unreasonably so as
to defeat the object of the contract or to allow insufficient time
for compliance.
As Christie in the 5
th
edition,
Law of
Contract in South Africa
Lexis Nexis 503 observes:
“No demand is necessary in cases where immediate performance is
contemplated, so we are concerned here with the cases that,
although
strictly classified as exceptions to the general rule stated by Mason
J, are in fact very common and they have been described
as cases in
which immediate performance not been contemplated, performance must
be within a reasonable time.”
It is quite obvious that there could not have been immediate
performance in the present case. It could never have been
contemplated
by the parties. One simply cannot obtain an agreement to
refinance, to the extent of several hundred million, within the
matter
of a day or two. Therefore, it must have been within the
contemplation of the parties and at least implicit, that the
plaintiff
would be allowed a reasonable time in order to perform his
mandate in terms of the agreement. If the defendant believed that a

reasonable time had elapsed, he should have put the plaintiff on
terms to comply, in other words to secure the refinancing and
perhaps
more importantly, to have ensured that the actual loan from PIC to
the defendant had been repaid. I should also add that
the question of
the “time is of the essence defence” is hardly credible
when it is raised for the first time on the
morning of the trial.
[36] In my view, the plaintiff accordingly is entitled to the relief
which it seeks and an order is granted in terms of prayers
1, 2 and 3
of the plaintiff’s amended particulars of claim.
---oOo---
Date
of hearing: 27/28/29 & 30 October 2009
Date
of judgment: 30 October 2009
Counsel
for the plaintiff: M Nowitz
Counsel
for the defendant: E A Limberis SC
Attorneys
for the plaintiff: Nowitz Attorneys
Attorneys
for the defendants: Fluxmans Incorporated
1