S A Sogem NV v Banro Resource Corporation and Another (A 105/2000) [2002] ZAWCHC 31 (11 June 2002)

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[2002] ZAWCHC 31
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S A Sogem NV v Banro Resource Corporation and Another (A 105/2000) [2002] ZAWCHC 31 (11 June 2002)

IN THE HIGH COURT
OF SOUTH AFRICA
(CAPE OF GOOD HOPE PROVINCIAL DIVISION)
Case No: A 105/2000
In the matter between:
S A SOGEM NV
Appellant
and
BANRO RESOURCE CORPORATION
First Respondent
SOCIÉTÉ AURIFÈRE DU KIVU ET DU MANIEMA SARL
Second Respondent
------------------------------------------------------------------------------------------------------------
JUDGMENT: 11 JUNE 2002
------------------------------------------------------------------------------------------------------------
VAN ZYL J:
INTRODUCTION
[1] This case has had a long and somewhat complicated
history. It started when the respondents, the Banro Resource
Corporation ("Banro")
and the
Société Aurifère du
Kivu et du Maniema SARL
("Sakima SARL") brought an
urgent application for the attachment of a cargo of ninety-nine tons
of a mineral known as cassiterite
(a form of tin oxide) on board a
ship in the Cape Town harbour. The first respondent in that
application was the
Société Minière du Congo SARL
("Somico").
The appellant in the present matter, namely the
Société de
gestion de l'energie de Manantali
("Sogem"), was cited
as fourth respondent. The second and third respondents were the
respective Masters of the Ships MV
Uranium
MV
Congo
. On
12 February 1999 Traverso J issued an order authorising the
attachment of the cassiterite pending an application to determine
its
ownership.
[2] The matter subsequently came before Davis J, who
held, in a declaratory order dated 15 June 1999, that Banro was the
owner of
the cassiterite and was entitled to possession of it. Somico
and Sogem were ordered to pay the costs of the application. Only
Sogem
noted an appeal against this judgment and order.
[3] With the leave of the Supreme Court of Appeal, the
matter came on appeal before this court as presently constituted. On
20 June
2000 an order by consent was issued referring the matter to
evidence on a number of defined issues and granting certain ancillary
relief. The appeal on the merits was postponed
sine die
subject
thereto that either party could arrange for a hearing of the appeal,
"including an appeal against any finding or order
of the Judge
hearing the evidence, either on the merits thereof and/or on any
relevant question of costs".
[4] The matter thereupon came before Griesel J for the
hearing of evidence. Despite expressing certain reservations as to
whether
he had the power to determine the disputed issues, the
learned judge held, in a judgment handed down on 29 September 2000,
that Banro
had lawfully acquired ownership of the cassiterite from
Sakima SARL and that Sogem was liable to pay the costs. He hence
concurred,
in substance, with Davis J's finding and order.
[5] At the commencement of the hearing of the present
appeal, the appellant brought an application for leave to adduce
further evidence
in terms of section 22 of the
Supreme Court Act
59
of 1959. In the alternative it sought to adduce such evidence by way
of affidavit in terms of section 38(2) of the Uniform Rules
of this
court. The application was dismissed on the basis that reasons would
be furnished later. The costs thereof stood over for
consideration in
the main appeal. This court ruled, however, that the issue on which
the appellant was seeking to adduce further
evidence, namely the
interpretation of Zaïrian decree 0035 of 6 May 1997, has become an
issue on appeal. It was extensively traversed
in evidence and
argument, and comprehensively dealt with in the judgment of Griesel
J. I shall address this matter later (par 76-84
below).
[6] I now return to the appeal before us. At the outset
Mr Pincus, for Sogem, suggested that the effect of this court's
referral of
the matter for the hearing of oral evidence was that the
appeal against the decision of Davis J had been upheld and that his
judgment
and order had been set aside. This suggestion loses sight of
the fact that the order of this court was by agreement between the
parties
and expressly provided that the appeal on the merits would be
postponed
sine die
. It provided in addition that the parties
would be entitled to appeal against any finding or order of the
judge,
in casu
Griesel J, on the issues referred to evidence,
be it on the merits or on questions of costs. This court is,
therefore, required to
consider the findings and orders of both Davis
J and Griesel J. In truth, as Mr Badenhorst, for Banro and Sakima
SARL, quite correctly
submitted, the effect of the order of this
court referring the matter for the hearing of oral evidence on
certain issues, was to
suspend the operation of Davis J's judgment.
The judgment of Griesel J can, and I believe must, be regarded as
supplementing and
augmenting that of Davis J, in that Griesel J had
the benefit of a considerable body of evidence and documentation that
were not
available to Davis J when he was initially seized of the
matter.
[7] We have also been called upon by the appellant to
consider a number of further issues arising from the hearing before
Griesel
J. They include whether or not: (a) the appellant received a
fair hearing; (b) an application to compel further discovery in terms
of rule 35(3) of the Rules of this Court should have been granted;
(c) an application that Griesel J should recuse himself from hearing
the matter was properly dismissed; and (d) a commission
de bene
esse
should have been ordered. These issues, it would appear, all
relate to whether or not, generally speaking, the appellant received
a fair hearing. I shall return to them later.
BACKGROUND
[8] The first respondent, Banro, is a public company
incorporated in Toronto, Canada, and registered as an external
company in South
Africa in terms of section 322 of the
Companies
Act
67 of 1973. It is traded on the Dealer Network of the Toronto
Stock Exchange and engages in the acquisition, exploitation and
development
of natural resource properties. Many of its activities
have been conducted in the Democratic Republic of the Congo ("DRC"),
formerly known as the Republic of Zaïre. Mr Bernard Renier van
Rooyen ("Van Rooyen") is its chairperson and chief
executive
officer.
[9] Banro owns all the issued shares of Banro American
Resources Inc ("Banro American"), a company with its
principal place
of business in Denver, Colorado, USA. With a view to
becoming involved in mining activities in Zaïre it sought, during
1995, to
acquire control of a Zaïrian company formed in 1974 and
known as the
Société Minière et Industrielle du Kivu
SARL
("Sominki"). Sominki had, pursuant to a mining
convention concluded with the government of Zaïre, which held a 28%
share
in it, been mining in that country for decades. The convention,
however, was due to expire during 1999. This prompted Banro, after
acquiring 72% of Sominki's shares, to negotiate a new mining
convention with the Zaïrian government and to establish a new
private
limited liability company, Sakima SPRL, to develop certain
mining rights and concessions. Banro held 999 of the 1000 shares in
Sakima
SPRL, which was registered in Kinshasa during August 1996. The
remaining share was held by a nominee shareholder employed by Banro's
Kinshasa lawyers.
[10] It was, Banro avers, at all relevant times the
intention of the parties to transform Sakima SPRL from a private
limited liability
company into a public ("joint-stock")
limited liability company, Sakima SARL, which would acquire Sominki's
mining rights
and concessions. SPRL is the abbreviation for
société
privée à responsabilité limitée
("private company with
limited liability")
SARL for
société par actions Ã
responsabilité limitée
("joint-stock company with limited
liability"). This was approved, it would appear, by a
unanimously adopted resolution
of the shareholders of Sakima SPRL at
an extraordinary general meeting held on 21 October 1996. It was
similarly approved in a mining
convention, concluded on 13 February
1997 between Banro, Sominki and the Government of Zaïre. The mining
convention was subsequently
approved by ministerial decree 0021 of 17
March 1997, and the formation of Sakima SARL was authorised by
ministerial decree 0035
of 6 May 1997. I shall return to these
decrees, and other relevant documentation, at a later stage in this
judgment, when consideration
is given to the various issues between
the parties.
[11] Suffice it to say that, in terms of the said mining
convention, it was agreed that the mining rights and concessions held
by
Sominki would be transferred to Sakima SARL. Like its predecessor,
Sakima SPRL, it was to engage in the acquisition, exploitation
and
development of natural resources in Zaïre. Banro American would own
93% and the Zaïrian government the remaining 7% of its
shares. Van
Rooyen would be its executive president.
[12] Sakima SARL is said to have been the holder of some
forty-seven mining concessions issued by the Zaïrian government and
directed
at the exploitation and development of mineral and mining
rights in Zaïre. They entitled Sakima SARL,
inter alia
, to
mine a metal substance identified as a tin oxide and known as
cassiterite. This would then be transported to Kindu, where Banro
would purchase it for approximately $2 500 per ton. Since August 1997
Banro has bought every consignment of cassiterite produced
by Sakima
SARL and resold it to the Malaysian Smelting Corporation Berhad in
Butterworth, Malaysia ("Malaysian Smelting Corporation")
in
terms of a written agreement.
[13] On 7 May 1998 Banro purchased 99 tons of
cassiterite, packed into 132 drums and valued at approximately US$400
000, from Sakima
SARL. According to Van Rooyen he negotiated the
transaction from Johannesburg in his dual capacity as chief executive
officer of
both companies. The purchase price was duly paid to Sakima
SARL whereupon, Van Rooyen avers, ownership of the cassiterite passed
to Banro which in turn sold it to the Malaysian Smelting Corporation.
The cassiterite, however, remained in the possession of Sakima
SARL,
in its Kindu warehouse, pending the issue of a government declaration
of export to Malaysia.
[14] Before shipment of the cassiterite could be
effected, a political upheaval took place in Zaïre. Towards the end
of May 1998
the Zaïrian government of President Mobutu Sese Seko was
overthrown and replaced by the DRC regime of President Laurent Désiré
Kabila who, on 29 July 1998, issued a number of presidential decrees
that had a devastating effect on Sakima SARL and its activities.
Thus
decree 101 abrogated ministerial decree 0035, which had authorised
the formation of Sakima SARL, while decree 102 abrogated
ministerial
decree 0021 in terms of which the mining convention of 13 February
1997 had been approved. Decree 103 provided for the
incorporation of
a new company, the
Société Minière du Congo
("Somico"),
to replace Sakima SARL. In terms of decrees 104 and 105 one
Naluhwindja Makuba and one Maketa Mbaki Makanda
were appointed as
president and director general respectively of Somico.
[15] On 31 July 1998, by virtue of an order issued by
the Minister for the Strategic Zones of Development, the president of
Somico
and one Ndume Nzogu, an adviser to the Ministry of Mines, took
physical control of Sakima SARL's office in Kinshasa. They forthwith
appropriated substantial assets of both Sakima SARL and Banro.
[16] During the course of September 1998 Somico removed
the aforesaid cassiterite (par 13 above) from the warehouse in Kindu
to a
warehouse in Kinshasa. It thereupon purported to sell the
cassiterite to a company known as W.E.M.I. SPRL, which in turn
purported
to sell it to Sogem. Sogem then arranged for it to be
loaded onto a motor vessel, the MV
Congo
, bound for Cape Town.
In Cape Town it was to be transferred to the MV
Uranium
for
shipment to Singapore. On its arrival in Cape Town, however, Banro
and Sakima SARL obtained an order for its attachment, as pointed
out
earlier in this judgment (par 1 above).
THE ISSUES
[17] The issues to be determined were agreed on by the
parties and incorporated in the order of this court dated 20 June
2000. They
may be paraphrased as follows:
whether or not Sakima SPRL was properly incorporated
and registered as a private company with limited liability in
accordance with
the laws of the DRC, and the legal consequences
thereof (par 3.1 of the order);
whether or not Sakima SARL was properly incorporated
and registered as a joint stock limited liability company in
accordance with
the laws of the DRC, and the legal consequences
thereof (par 3.2);
whether or not a private company with limited liability
(SPRL) may be transformed into a joint stock limited liability
company (SARL)
in accordance with the laws of the DRC, and if so:
what the prerequisites are for such transformation;
what the effect in law is of such transformation on the
SPRL (par 3.3);
whether or not, if Sakima SARL was not so incorporated
and registered:
it nevertheless acquired ownership in the cassiterite
pursuant to the mining convention dated 13 February 1997; and
it was entitled, as a matter of law, to transfer
ownership in the cassiterite to Banro on or about 7 May 1998 (par
3.4);
whether or not ownership of the cassiterite was
lawfully acquired:
by Sakima SARL from Sominki in terms of the mining
convention dated 13 February 1997; and
by Banro from Sakima SARL on or about 7 May 1998 (par
3.5);
whether or not Sakima SARL had
locus standi in
iudicio
to launch these proceedings, should this question become
relevant (par 3.6);
whether or not the removal of the cassiterite by Somico
from the possession of Sakima SARL, and its subsequent sale thereof
to Sogem,
was lawful (par 3.7);
whether or not Sogem had
locus standi in iudicio
in
view of certain allegations in the papers (par 4).
Where reference is made to the laws of the DRC it
includes, where relevant, the laws of Zaïre. For the sake of
convenience I shall
henceforth speak of the DRC. As mentioned
previously (par 10 above) ministerial decree 0035 is of special
relevance in this regard
inasmuch as its interpretation, meaning,
ambit and effect have become an issue on appeal. Likewise relevant
are ministerial decree
0021 and presidential decrees 101 to 103. They
will be discussed in due course.
THE EVIDENCE
[18] What started off as an appeal record of five
volumes (approximately 500 pages), consisting of affidavits,
annexures, the judgment
of Davis J and certain formal documentation,
grew into forty volumes (some 3 700 pages). This included a plethora
of documents in
French, with English translations thereof, and
wide-ranging oral evidence on the aforesaid issues. Griesel J was
called upon to consider
all this documentation and evidence.
[19] At the outset the learned judge expressed certain
reservations as to whether or not he had the power to determine the
issues
referred to him. He was nevertheless prepared "to
exercise the power ostensibly conferred" upon him. In doing so,
it is
clear from his comprehensive and informative judgment that he
applied his mind to the aforesaid documentation and evidence
meticulously
and carefully, giving full reasons for his various
findings on such issues and on the various applications with which he
was confronted
from time to time.
[20] Three witnesses testified on behalf of Banro and
Sakima SARL, namely Van Rooyen, Professor André Thomashausen
("Thomashausen"),
Professor of International and
Comparative Law and Director of the Institute of Comparative and
International Law at the University
of South Africa in Pretoria, and
Mr Lambert Shango Djunga ("Djunga"), Banro's lawyer in
Kinshasa. Only one witness, Ms
(referred to in the record of
proceedings as
Maître
or
Madame
) Genevieve Decamp
("Decamp"), a lawyer practising in Kinshasa, testified on
behalf of Sogem.
[21] Van Rooyen testified that he had been the CEO of
Banro and the president of Sakima SARL at the relevant stage. He
confirmed the
contents of the various affidavits to which he had
deposed. He set forth the history of his involvement, in the
aforesaid capacities,
in the mining activities of Banro and Sakima in
the DRC. He explained why it had been necessary for Sakima to acquire
the mining
rights of Sominki and to convert from an SPRL to an SARL.
In this regard he made extensive reference to the relevant
documentation
submitted as exhibits.
[22] Van Rooyen confirmed that Banro had, on 7 May 1998,
purchased the cassiterite in issue from Sakima SARL and accordingly
acquired
ownership thereof. He had acted on behalf of both companies
in concluding and executing the agreement of purchase and sale. He
thereupon
accepted delivery of the cassiterite on behalf of Banro,
but agreed that it remain in the possession of Sakima SARL pending
its removal
and onward transmission to the Malaysian Smelting
Corporation. The government of the newly formed DRC subsequently
"expropriated"
the cassiterite illegally by purporting to
dissolve Sakima SARL and to abrogate the mining convention of 13
February 1997. For purposes
of acquiring the cassiterite, it
"created" a new company, Somico, which purportedly stepped
into the shoes of Sakima SARL
and illegally removed the cassiterite
from the warehouse in Kindu where it was being stored. Sogem then
purportedly purchased the
cassiterite and still claims to be its
rightful owner.
[23] Van Rooyen impressed Griesel J as "an astute
international businessman of experience and integrity" who
wished at all
times to conduct his business "in a meticulously
correct manner and 'by the book' as far as reasonably possible".
His testimony
was presented calmly and confidently. There was,
according to the learned judge, no reason to reject it.
[24] By way of introduction Thomashausen explained, with
reference to the principles emanating from the conflict of laws, that
the
applicable law in the present case was that of the DRC, being the
domicile and place of incorporation of the companies in question.
This court may, in terms of section 1(1) of the South African
Law
of Evidence Amendment Act
45 of 1988
, take judicial notice of such
foreign law in so far as it "can be ascertained readily and with
sufficient certainty".
[25] The gist of Thomashausen's evidence, which was
supported by a substantial number of documentary and legal
references, was to
the effect that Sakima had, during August 1996,
been duly incorporated and registered as a private company with
limited liability
(SPRL) in accordance with the law of the DRC. It
was subsequently, during 1997, transformed into a public
("joint-stock")
company with limited liability (SARL). This
was permissible in the DRC after the 1960 legal reforms which made
provision for the
transformation of an SPRL into an SARL, or into any
other form of company, without the SPRL losing its legal personality
in the process.
On his view of the facts, Sakima SARL had lawfully
acquired ownership of the cassiterite in issue from Sominki, and had
thereupon
lawfully sold it to Banro. The attempt by the new DRC
government to expropriate it by allowing Somico to wrest possession
thereof
from Sakima SARL, and subsequently selling it to Sogem, was
wrongful and unlawful.
[26] Thomashausen was described by Griesel J as
"obviously an eminent and well-qualified expert" and,
indeed, "by far
the most impressive" of the legal experts
called to testify before him. The learned judge found his views to be
"well-motivated
and expressed in a clear and logical manner".
This was clearly no exaggeration, as may be gleaned from the record
of his testimony
and even from the most cursory survey of the summary
of his expert evidence, which he confirmed at the outset of his
testimony. I
shall return to his views on the salient issues later on
in this judgment.
[27] Far less impressive as a witness was Djunga, who
was perceived by Griesel J as being partisan, and hence unreliable,
in that
he "allowed his loyalty to his client to overshadow his
professional judgment in a few instances by propounding views that
were
… clearly untenable". Despite his expertise in the field
of Congolese corporate law and practice, he was seldom able to give
succinct and direct answers to questions, but, rather, tended to
verbosity and long, rambling responses. This criticism appears to
be
eminently justified by a perusal of the record of his testimony, with
which I shall deal briefly in what follows.
[28] In general terms Djunga confirmed the evidence of
Thomashausen regarding the requirements for the establishment and
transformation
of companies with limited liability. He was likewise
satisfied that Sakima SPRL had been properly incorporated and
registered. The
subsequent transformation of Sakima SPRL into Sakima
SARL, supervised by Djunga, similarly complied with the relevant
requirements
in terms of
sections 6
and
42
(as amended) of the 1887
decree. The SARL retained the file number (AS number - see par 31
below) administratively allocated to the
SPRL on its incorporation
and registration, and also retained the legal personality the SPRL
had acquired on registration.
[29] The fact that mining concessions had
been transferred to Sakima before its conversion from an SPRL to an
SARL did not invalidate
the transfer of such concessions. The reason
was that Sakima, at all relevant times from its registration as an
SPRL until its registration
as an SARL, was a legal person capable of
taking cession of rights. The purported abrogation of decree 0035
hence did not affect
the transfer. Inasmuch as the mining concessions
must be regarded as having been legally transferred from Sominki to
Sakima SARL,
the latter was entitled to sell the cassiterite in issue
to Banro. Transfer of ownership took place immediately on agreement
being
reached on the thing being sold and the price. At no stage
could this ownership be terminated by any attempted expropriation of
the
cassiterite by means of a presidential decree. At no stage was it
possible for Somico to acquire any rights in respect of the
cassiterite.
Its purported appropriation thereof was indeed unlawful
and constituted theft. At no stage could Sogem hence have acquired
any rights
therein from Somico. Any purported sale thereof by Somico
to Sogem would hence be null and void.
[30] Griesel J had similar problems with the evidence of
Decamp as he had with that of Djunga. Although she was "more
articulate
and ostensibly better qualified from a professional point
of view" than Djunga, she was clearly biased in favour of Sogem.
This
resulted in her putting forward certain indefensible opinions
and in failing to make certain obvious concessions. When confronted
by Banro's counsel in this regard, she adopted an evasive stance,
which tended to colour her evidence as unreliable in so far as
it
differed from that of Thomashausen or Djunga. Despite these
unsatisfactory aspects of her testimony, however, Decamp provided
some important insights and interesting debating points in her
evidence.
[31] Decamp emphasised the need to file, by means of a
filing certificate or "deed of deposit" (
acte de depôt
),
a copy of the by-laws of the company to be formed. The registrar of
companies would then allocate a filing number or "company
deed"
(
acte de société
- abbreviated AS) number to it, thereby
confirming its incorporation and registration. Only then would it
acquire corporate and legal
personality. In this regard she was
initially of the view that Sakima SPRL had never been properly
formed, incorporated or registered,
in that she could find no AS
number or
acte de depôt
in its file. When later confronted
with the relevant documentation, she retracted her opinion and
conceded that Sakima SPRL had indeed
been duly incorporated and
registered.
[32] With reference to decree 0035 aforesaid, Decamp
opined that the government of the DRC had not authorised the
transformation
(
transformation
) of Sakima from an SPRL
to an SARL, but had in fact authorised the
creation
(
création
)
of a new joint-stock limited liability company. Inasmuch as Sakima
SARL had not complied with the requirements for the creation
of a new
company, it was never properly constituted, incorporated or
registered. This means that it could not acquire ownership of
the
cassiterite and could not, in turn, sell it to Banro. By the same
token it could not receive cession of mining rights from Sakima
SPRL.
In any event, inasmuch as the purported cession took place on 13
February 1997, prior to approval being granted in terms of
decree
0021 on 17 March 1997, the cession was invalid.
[33] As for the presidential decrees purporting to
abrogate decrees 0021 and 0035, and the other decrees promulgated at
the same time,
Decamp was of the view that they were valid and
binding. If Sakima SARL had come into existence, it was dissolved by
decree 101 and
clearly had no
locus standi
to institute the
present proceedings.
DID SOGEM RECEIVE A FAIR HEARING?
[34] Mr Pincus submitted that Sogem did not receive a
fair hearing and that, at times, the hearing "resembled a
farce".
He relied in this regard on the provisions relating to
access to courts as set forth in section 34 of the Constitution (Act
108 of
1996), namely that "[e]veryone has the right to have any
dispute that can be resolved by the application of law decided in a
fair public hearing before a court or, where appropriate, another
independent and impartial tribunal or forum".
[35] In the present matter, Mr Pincus argued, Griesel J
failed: (a) to apply the principles of natural justice; (b) to give
both parties
a right of audience; (c) to admit all admissible and
relevant evidence; (d) to avoid "a trial by ambush"; (e) to
ensure
that the parties were not taken by surprise; and (f) to ensure
that the disputes were fully and properly ventilated. In addition
the
refusal by Griesel J of the various applications brought by Sogem
were, according to Mr Pincus, strong indications of the unfairness
of
the hearing as far as Sogem was concerned. He referred specifically
in this regard to the application for further discovery, the
application for Griesel J's recusal and the application to appoint a
commission
de bene esse
.
[36] The gist of Mr Pincus's argument was that Griesel J
had a "preconceived notion" that Sogem was adopting
dilatory tactics
and raising new points as the hearing proceeded. He
was bent on finalising the hearing as soon as possible, even at the
expense of
justice and fairness. In the process he made "flawed
rulings" prejudicial to Sogem and exhibited such "obvious
bias"
and "antagonism" towards Sogem that he should
have recused himself when called upon to do so.
[37] It would appear, Mr Pincus suggested, that counsel
for Banro and Sakima SARL, Mr Badenhorst, succeeded in "poisoning
the
Judge's mind" by making emotive submissions and indulging in
"mud slinging" against Sogem. This resulted in the parties
not receiving even-handed treatment. An example of this was the
court's treatment of Decamp, who was not given the opportunity to
complete her evidence relating to the steps required to achieve
transformation. She was "stopped in her tracks" while
presenting
vital and material testimony. Djunga, however, was allowed
to testify on this score. In any event the credibility finding
against
Decamp, an eminent DRC lawyer, was totally unjustified.
[38] Another alleged irregularity highlighted by Mr
Pincus was the use of Thomashausen as an interpreter during the
leading of Djunga's
evidence. The hearing became "farcical"
when Djunga was asked whether there was any aspect of Thomashausen's
evidence with
which he disagreed. The situation was aggravated when
Thomashausen was recalled to give further evidence on various issues
that had
arisen after he had first testified.
[39] It may be convenient first to deal with Griesel J's
refusal of the applications for further discovery, to recuse himself
and
to appoint a commission
de bene esse
, before considering
the various arguments raised by Mr Pincus in regard to whether or not
Sogem received a fair hearing. I do so
because the refusal of such
applications is regarded by Sogem as part and parcel of the allegedly
unfair hearing it has received
(see par 35 above).
The Discovery
Application
[40] The discovery application rejected by Griesel J was
brought in terms of rule 35(3) of the rules of this court. It called
upon
the respondents to make further discovery of "documents
relevant to the matters in issue". In this regard Sogem
required,
inter alia
, documentary proof that Banro had become
owner of the cassiterite in question and that it had paid Sakima SARL
for it. In addition
it called for documentation relating to an
arbitration in Washington DC between Banro American and the DRC.
[41] In his affidavit opposing the application Van
Rooyen averred that all the relevant documentation relating to
ownership of the
cassiterite and payment therefor had already been
made available to Sogem. The documents relating to the arbitration
proceedings
in Washington DC were not, however, relevant to the
issues in the present matter and Banro had justifiably refused to
produce them.
[42] In his argument on behalf of Sogem, Mr Pincus
suggested that Banro was being selective as to which documents it was
prepared
to discover. The documents required by Sogem were not only
relevant but, indeed, essential for establishing the issue of
ownership
of the cassiterite. In refusing the application, Mr Pincus
submitted, Griesel J "applied fallacious reasoning" and did
not exercise his discretion judicially. His attitude appears to have
been that the books and records of Banro would tend to advance
only
Banro's case, in which event they need not be discovered. He in fact
"baldly accepted that the books and records of First
Respondent
[Banro] correctly reflect the necessary accounting entries".
[43] Griesel J gave reasons for his dismissal of the
application for further discovery in his main judgment. His point of
departure
was that this court had defined the issues, which should be
narrowly interpreted. Referral of such issues for the hearing of
evidence
did not justify their being extended in the sense of
creating a "roving commission" by means of which a party
could place
before the court any facts which the party believes
should be brought to the attention of the court. See
Wepener v
Norton
49 (1) SA 657
(W) at 658-659;
Drummond v Drummond
(1)
SA 161 (A) at 170H.
[44] In the present case, Griesel J opined, Sogem had a
new legal team that was intent on "sweeping clean". The
further
discovery, however, had little to do with the issues before
the court and was aimed at obtaining "ammunition with which to
shoot
new holes into the case for Banro/Sakima". With reference
to
Cullinan Holdings Ltd v Mamelodi Stadsraad
1992 (1) SA 645
(T) at 648F, Griesel J was of the view that the application was being
used by Sogem as a net to fish for vaguely familiar documents
("'n
net … waarmee vir halfbekende dokumente gevis kan word").
[45] Inasmuch as Sogem had failed to persuade him that a
probability existed that Van Rooyen was "either mistaken or
false in
his assertions", Griesel J was not prepared to go
beyond the discovery affidavit. In any event, as held in
Moulded
Components and Rotomoulding South Africa (Pty) Ltd v Coucourakis and
Another
1979 (2) SA 457
(W) at 470D-E, "discovery is a very,
very rare and unusual procedure" in application proceedings and
should be ordered
"only in exceptional circumstances". In
the exercise of his discretion whether or not to grant an application
for further
discovery, Griesel J was of the view that discovery
should, in motion proceedings, be "restricted to a narrow ambit,
having
regard to the nature of the dispute(s) between the parties".
This approach was
a fortiori
applicable where a court of
appeal, and not the trial court, had ordered oral evidence and
discovery.
[46] In the present matter, Griesel J held, the
probative value of certain of the documents sought by way of an
application for further
discovery was, at best for Sogem,
questionable, having regard to the true issues before the court.
Should the order be granted, however,
"the potential
inconvenience and prejudice" that Banro might suffer could be
vast, in that some of the documents in question
were scattered
throughout a vast area, including Toronto, Kinshasa and Johannesburg.
The case would certainly be disrupted, if not
postponed for some
time. In any event documents relating to the arbitration proceedings
in Washington DC were clearly irrelevant.
[47] Griesel J was further of the view that Sogem had
lost sight of a well-established general principle relating to
discovery. A
party to litigation is obliged to make discovery of
documents that
may
- not
must
- either directly or
indirectly enable the opposing party to advance its own case or to
damage the case of its adversary. Documents
that tend to advance only
the case of the party that discovers need not be disclosed, unless
they are to be used by such party in
the trial. This principle is
discussed in H J Erasmus (ed)
Superior Court Practice
B1-250/1
and the authorities cited there. For these reasons the application
was dismissed with costs, including the costs of two counsel.
[48] After careful consideration of the affidavits and
other documents underlying the application for further discovery, I
am in respectful
agreement with the reasons tendered by Griesel J for
refusing such application. I likewise concur with the learned judge's
understanding
and application of the relevant legal principles in the
present case. With the full record of proceedings and relevant
documentation
now before us, it is eminently clear, if not
unquestionable, that no further documentation was required for
establishing the ownership
of the cassiterite in question at any
relevant stage. As will appear below, the documentation and
supporting evidence placed before
Griesel J were more than sufficient
to assist in resolving the disputed issues. Documentation relating to
the Washington arbitration
proceedings was undoubtedly irrelevant and
I respectfully agree with Griesel J that Sogem appears to have been
indulging in a fishing
expedition in the hope that it might uncover
some or other document, or scrap of evidence, that might conceivably
support its case.
[49] In view of these considerations I have some
difficulty in understanding the submission that Griesel J adopted
"fallacious
reasoning" and failed to exercise his
discretion judicially in refusing the application. In my view the
learned judge considered
the facts and the applicable legal
principles carefully before coming to his fully justified conclusion.
There was no question of
selective discovery on the part of Banro and
likewise no question of any likelihood that Van Rooyen was making
mistaken or false
assertions in his discovery affidavit. This does
not equate with a bald acceptance of the correctness of Banro's books
and records.
On the issue of ownership of the cassiterite, there was
no suggestion on the papers or in evidence that some or other
undisclosed
document, under the control or in the possession of Banro
would, or could, if produced, cast a new light on such issue.
[50] It follows that there is no merit in the attack on
Griesel J's refusal of the application for further discovery. There
is likewise
not the slightest indication that such refusal in any way
constituted unfairness or injustice to Sogem in the hearing of the
matter.
The Application for Recusal
[51] The application by Sogem that Griesel J recuse
himself from further presiding in the present matter was based
largely on the
perceptions of one Guy Verhaegen, who described
himself as the company secretary and internal law adviser of Sogem.
He is a qualified
lawyer from Belgium who has been handling the
present case on behalf of Sogem and was present in court during
almost all the proceedings.
He was at all times in communication with
Sogem's counsel and spent a considerable time deliberating and
consulting with them.
[52] In his affidavit supporting the recusal
application, Verhaegen commented on the attack by Mr Badenhorst on
Sogem and the DRC
government during what he described as an opening
address. Much of the attack was directed at the possible involvement
of Sogem in
the decision of the DRC government to deny Professor
Lukombe Nghenda, one of Banro's witnesses, leave to depart from the
DRC. This
had prompted Banro to apply for a letter of request to be
made to the government of the DRC with a view to securing the
attendance
of Nghenda to testify in the present matter. Griesel J
made no comment throughout this address and took no steps to curtail
it. He
likewise gave no indication that he was not being influenced
by the "unsubstantiated allegations" against Sogem. Only
when
Mr Pincus objected, did Griesel J ask Mr Badenhorst what the
meaning and purpose of the address was. When the costs of the
application
for a letter of request were reserved, Verhaegen saw it
as an indication that Griesel J shared the view that Sogem might have
had
something to do with Nghenda's predicament.
[53] Another incident raised by Verhaegen was the attack
by Mr Badenhorst on the honesty of one Kalamba, a legal practitioner
from
the DRC. Griesel J made no comment and allowed the accusation of
dishonesty to remain in the record. This created the impression
that
the learned judge agreed that Kalamba was dishonest. Similarly, when
the application for further discovery was refused, Griesel
J,
according to Verhaegen's perception, "passively accepted"
Mr Badenhorst's suggestion that the application was simply
a delaying
tactic. On the other hand, when Banro sought to introduce
documentation that had not been properly discovered, Griesel
J had no
problem with it.
[54] Verhaegen suggested in this regard that Griesel J
was biased against Sogem. He also treated Mr Pincus badly,
interrupting him
rudely from time to time and not allowing him to
place his objections to inadmissible evidence fully before the court.
In this way
hearsay evidence found its way into the record. In
addition the refusal of the application for further discovery had the
effect of
curtailing cross-examination of Van Rooyen in regard to the
sale of the cassiterite by Sakima to Banro, where he acted on behalf
of both parties. This created the impression that Griesel J had
prejudged the issue of ownership of the cassiterite in Banro's
favour.
[55] In his opposing affidavit on behalf of Banro, Mr R
N Wakefield, Banro's attorney, denied that Sogem had proved any
actionable
bias on the part of Griesel J. On the basis put forward
by Sogem, no reasonable person would apprehend that the learned judge
was
biased and unable to bring an impartial mind to bear on the
adjudication of the case. Wakefield described the accusations of
Verhaegen
as disgraceful, scandalous, scurrilous and contemptuous.
They were untrue, unsubstantiated and unjustified, constituting a
reckless
attack on the integrity of the court and demonstrating
merely that the recusal application was spurious.
[56] In his judgment Griesel J referred to the test for
bias in recusal cases as laid down by the Constitutional Court in
President of the Republic of South Africa v SARFU
[1999] ZACC 9
;
1999 (4) SA
147
(CC) and
SACCAWU and Others v Irvin and Johnson
(8) BCLR
886. In par 48 of the former judgment, the court stated in this
regard:
It follows from the aforegoing that the correct approach
to this application for the recusal of members of this court is
objective
and the
onus
of establishing it rests upon the
applicant. The question is whether a reasonable, objective and
informed person would, on the correct
facts, reasonably apprehend
that the judge has not or will not bring an impartial mind to bear on
the adjudication of the case. That
is a mind open to persuasion by
the evidence and the submissions of counsel. The reasonableness of
the apprehension must be assessed
in the light of the oath of office
taken by the judges to administer justice without fear or favour and
their ability to carry out
that oath by reason of their training and
experience. It must be assumed that they can disabuse their minds of
any irrelevant, personal
beliefs or predispositions.
Griesel J added a gloss to this test, namely that:
"it
must also be assumed that judges have the integrity and intellectual
honesty to disabuse their minds of
prima
facie
views held or even expressed at some stage of a trial or an
argument in the light of subsequent developments or more mature
reflection".
[57] On the
criticism that he had not intervened during Mr Badenhorst's attacks
on Sogem and Kalamba, Griesel J pointed out that Sogem
had been
represented at all times by senior and experienced legal
representatives. They were expected to be vigilant in the protection
of their clients' interests and were free to object to any untoward,
overly robust or questionable terminology employed by opposing
counsel during cross-examination or argument. If they should choose
not to do so, they should not expect the court to take over their
function. On the occasions when the court did intervene, no rudeness
was ever intended and certainly it could not be expected that
experienced counsel would be in the least intimidated by it. On none
of the grounds raised by Sogem was the court hence satisfied
that any
reasonable apprehension of bias had been made out. The application
was accordingly refused with costs, including the costs
of two
counsel.
[58] In his argument on behalf of Sogem Mr Pincus
submitted that there had been a perception of bias in that justice
was not seen
to be done as a result of Griesel J's failure to
intervene when appropriate. Mr Pincus went even further in his
suggestion that Griesel
J appeared to have "wholeheartedly
embraced the repeated attempts on the part of Respondents to besmirch
Sogem". His conduct
after dismissing the recusal application, Mr
Pincus argued, demonstrated with even more clarity why he should have
recused himself.
In this regard he gave "flawed rulings"
and failed to ensure that justice was done.
[59] There is not the slightest merit in any of these
submissions. I have read the application carefully and considered
every point
of criticism raised by Verhaegen and relied on in
argument by Mr Pincus. I am inclined to agree with the strongly
worded response
of Wakefield in his opposing affidavit aforesaid. The
accusations and criticism levelled at Griesel J were, in my view,
quite unfounded
and cast in totally unacceptable, if not abusive,
terms. There was no basis at all for a perception of bias or lack of
impartiality,
let alone a reasonable perception. My impression, on
the contrary, is that the learned judge conducted himself with
remarkable patience
and restraint. I need add nothing, with respect,
to his impeccable reasoning and justification for dismissing the
application. As
in the case of his dismissal of the application for
further discovery, his dismissal of the recusal application cannot be
regarded
as constituting in the least an unfair hearing to the
prejudice of Sogem.
The Application for a Commission
De
Bene Esse
[60] Sogem next brought an application for the
appointment of a commission
de bene esse
to take evidence on
commission in Brussels, Belgium, of one Ms Hélène Ndombe Sita. She
is described as the DRC Minister of National
Economy, Industries and
Small and Medium Size Enterprises at the time decree 0035 was issued
on 6 May 1997. In the alternative Sogem
sought that her affidavit
relating to the issue and to the interpretation of such decree be
admitted as evidence in terms of rule
38(2) of the rules of this
court. According to Attorney Verhaegen's supporting affidavit, Ms
Sita had refused, quite reasonably,
to leave Brussels, where she was
living, to attend the hearing, because she was in fear of her life
after the
coup
deposing President Mobutu Sese Seko and bringing
President Laurent Kabila to power in May 1998. Her evidence regarding
decree 0035,
however, was "highly material and relevant" to
the issues in dispute, particularly the issue of whether or not
Sakima SARL
was properly incorporated. Ms Sita had been present at
the time the said decree was issued and was in fact a co-signatory
thereto.
It was hence in the interests of justice and fairness that
her evidence be placed before the court.
[61] In his opposing affidavit on behalf of Banro,
Attorney Wakefield averred that the application was yet another
attempt by Sogem
to delay proceedings. It concerned the
interpretation of decree 0035, which had not been raised on the
papers placed before this
court at the time the matter was referred
to evidence and was hence not one of the issues requiring
determination in terms of the
order of this court. In any event the
interpretation of statutory or similar enactments lay within the
function of the court, and
was not a matter of opinion, however well
qualified the person giving the opinion might be. Any such evidence
would be irrelevant,
inadmissible or immaterial.
[62] In his affidavit supporting the opposition to
Sogem's application, Professor Thomashausen described decree 0035 as
a "legal
norm" and not an administrative act or contractual
disposition. It should hence be interpreted in accordance with the
relevant
rules of statutory interpretation, and not as if it were a
private convention between two or more parties. In this regard the
principles
of interpretation in the law of the DRC are the same as
those subsisting in Belgian law and other civil law systems in
Europe. This
means that the literal meaning of the norm must be
established within its proper context and with due regard to the
objectively determinable
intention of the legislator. The subjective
aim or motive of the legislator is, therefore, neither admissible nor
relevant. For these
reasons Ms Sita's evidence would of necessity
fall to be rejected. In any event, Thomashausen added, he was of the
view that the
wording of decree 0035 was clear and unambiguous and
that Ms Sita's interpretation thereof was incorrect.
[63] In his replying affidavit Verhaegen rejected
Thomashausen's description of decree 0035 as a "legal norm",
averring
that it was in fact an administrative act as opined by
Professor Nghenda in his work on company law in the DRC. He
questioned Thomashausen's
expertise and suggested that his approach
demonstrated that he had "lost his impartiality".
[64] In his judgment on the application Griesel J
accepted that he had a discretionary power to grant or refuse the
relief sought.
He pointed out that rule 38(3) of the rules of this
court afford the court a discretion to grant the relief sought
provided it is
"convenient or necessary for the purposes of
justice". In the present matter the taking of evidence on
commission in Belgium
was clearly inconvenient. In addition the
proposed evidence of Ms Sita did not pass the test of materiality,
while its evidentiary
value was "dubious at best". It would
appear that she was passing off her personal opinion as the
"collective view
of the ministerial council". This might
prompt Banro to acquire the services of the Prime Minister or other
members of the ministerial
council for purposes of presenting a
contrary collective opinion. Ms Sita's evidence might then, Griesel J
observed, "turn out
to be tantamount to opening a can of worms,
figuratively speaking". In any event the costs of the litigation
up to that stage
of the proceedings far exceeded the value of the
cassiterite in dispute. Granting the application would inevitably
increase such
costs considerably and protract the hearing even more.
Apart from the obvious inconvenience this would cause to Banro, it
could not
be in the interests of justice to grant such application.
Equally unjust would be an order granting the alternative relief
sought,
namely to allow Ms Sita's evidence on affidavit, since her
evidence could not then be tested by cross-examination. The
application
was accordingly refused with costs.
[65] In his argument on behalf of Sogem, Mr Pincus
submitted that decree 0035 should be regarded as an administrative
act akin to
a licence or permit. It should furthermore be interpreted
in accordance with South African, and not DRC, law. The reason is
that
evidentiary matters constitute procedural law and must hence be
determined according to the
lex fori
. The wording of the
decree was, Mr Pincus suggested, clear and unambiguous in that it
authorised the "creation" (
fondation
) of a new SARL,
separate and distinct from the SPRL. In this regard extrinsic
evidence, such as that Ms Sita proposed to present,
was admissible,
relevant and material. The cost of taking evidence on commission
should not be a factor in considering whether or
not the application
should be granted, since the parties were "obviously litigating
on a luxurious scale".
[66] It is significant that it was nowhere suggested
that the refusal of the application for a commission
de bene
esse
was the result of partiality or bias on the part of Griesel
J. If that was the intention in raising this issue, it can patently
not
succeed. There was not the slightest indication of impropriety in
the form of partiality or bias or, for that matter, any other form
of
irregularity, in the record of proceedings relating to this
application. Once again I am of the respectful view that the learned
judge considered the application and argument carefully and in an
exemplary fashion.
[67] The reasons given by Griesel J for dismissing the
application cannot, in my view, be faulted. It is the function of the
court
to interpret legislation or documentary evidence, such as the
decree in question. The subjective opinion of any person involved in
the issue of the decree, on the ambit and meaning thereof, be it a
legal norm or an administrative act, cannot be relevant or material.
And if that person was only one of a number, it is clear that his or
her opinion cannot represent that of all the persons involved.
In any
event the interpretation of the decree would become relevant only
when consideration is given to the issue as to whether or
not Sakima
SPRL was transformed into Sakima SARL.
[68] In exercising his discretion whether or not to
grant the relief sought, the learned judge was, with respect, clearly
justified
in holding that such relief was neither convenient nor
necessary for purposes of justice, as required by the provisions of
rule 38(3).
It would clearly have been a time-consuming and
unjustifiably expensive exercise (even if the parties had hitherto
litigated "luxuriously"),
with little hope of anything of
substance being exposed.
A Fair Hearing in Other Respects?
[69] It follows from these considerations that the
dismissal by Griesel J of the three applications in question cannot
be regarded
as demonstrating any partiality or bias on the part of
the learned judge. It can likewise not be regarded as constituting an
unjust,
unfair or otherwise prejudicial hearing from Sogem's point of
view. The only question remaining in this regard is whether or not
Sogem received a fair hearing in other respects.
[70] Because of the gravity of this averment, I perused
the complete record of proceedings with great care, giving particular
attention
to objections raised by Mr Pincus, debates between him and
Mr Badenhorst, and observations made from the bench. I also listened
carefully
to the arguments raised by Mr Pincus in this regard, both
in his heads of argument and from the bar. Having done so, I am at a
loss
to discover any failure by Griesel J to apply the principles of
natural justice or to give both parties a right of audience and the
opportunity to ventilate all disputes fully and properly.
[71] What exactly should be understood by the learned
judge's alleged failure (par 35 above) to avoid "a trial by
ambush"
or to ensure that the parties were not taken by
surprise, was not elucidated in the papers or in argument. Certainly
if any party
should feel prejudiced by unexpected tactics employed by
another party, the court would not be averse to granting a
postponement
to enable the allegedly prejudiced party to consider
his, her or its position. On the occasions that Griesel J refused a
postponement
or refused to admit evidence, it was only after he had
heard full argument from both sides and only on eminently reasonable
grounds.
[72] There is no merit in the suggestion by Mr Pincus
that Griesel J had a "preconceived notion" that Sogem was
adopting
dilatory tactics and raising new points as the hearing
proceeded (par 36 above). The learned judge was quite justified, in
my respectful
view, to regard the plethora of interlocutory
applications raised by Sogem as causing unnecessary delays and
protracting the hearing
far beyond the time period allotted for it.
On reconsideration and in retrospect, that is exactly what their
effect was.
[73] As mentioned
before, Griesel J, in my view, exhibited exemplary restraint and
patience throughout the hearing, despite his being
taxed to the limit
by seemingly interminable interruptions. His conduct of the trial was
certainly not characterised by undue haste
to finalise the
proceedings. To suggest that the rulings he made against Sogem were
"flawed", unfair and unjust, if not
indicative of bias and
antagonism against Sogem, is abusive and devoid of substance. Even
more abusive is the accusation that Mr
Badenhorst succeeded in
"poisoning the Judge's mind" with emotive submissions and
mudslinging at Sogem (par 37 above).
[74] I agree with Mr Pincus (par 38 above) that it was
not wise to request Professor Thomashausen to act as an interpreter
when the
regular interpreter was not available. It is quite
unjustified, however, to describe that portion of the hearing as
"farcical".
Such criticism smacks of unwarranted
exaggeration.
[75] It follows from the above that I am quite satisfied
that Sogem did indeed receive a fair hearing.
THE APPLICATION TO ADDUCE FURTHER EVIDENCE ON APPEAL
[76] As mentioned earlier in this judgment (par 5
above), Sogem brought an application at the commencement of the
appeal for leave
to adduce further evidence in terms of the
provisions of section 22 of the
Supreme Court Act
59 of 1959.
In the alternative it sought to place such evidence before the court
by way of affidavit in terms of rule 38(2) of the
rules of this
court. This application was dismissed, subject thereto that costs
would stand over for consideration in the main appeal,
and that
reasons for this decision would be furnished later. It may be
appropriate to deal with this now.
[77] The application was directed at acquiring leave to
adduce the evidence of one General Likulia Bolonga Lingbangi
(hereinafter
referred to as "Likulia"), who was the Prime
Minister of the DRC at the time decree 0035 of 6 May 1997 was issued.
As appears
from the supporting affidavit of Verhaegen, he was in fact
"the grantor and signatory" of such decree. After the
accession
to power of former President Laurent Kabila, Likulia was
apparently placed under house arrest and was therefore unable to
testify
in this matter or even to depose to an affidavit. Once
President Joseph Kabila came to power, however, the situation relaxed
somewhat
and Likulia, a qualified lawyer and professor of criminal
law at the University of Kinshasa, was able to furnish Verhaegen with
an
affidavit. He also indicated his willingness to testify in this
matter should he be called upon to do so.
[78] The gist of Likulia's testimony was to be that he
had presided at a meeting of the Council of Ministers on 2 May 1997.
At that
meeting Ms Sita, the Minister of National Economy, Industry
and Small and Medium Size Enterprises, tabled a request by Sakima
SPRL
for the necessary authorisation to transform it from an SPRL to
an SARL. After discussion, and with reference to the file and
documents
submitted by Sakima SPRL (in particular the by-laws of
Sakima SARL), the Council of Ministers recommended that authorisation
be granted
for the creation of a new and quite distinct joint-stock
limited liability company to be known as Sakima SARL. The reason for
this
decision was that the said file contained no reference, detail
or particularity regarding the pre-existing SPRL. This means that
the
Council did not recommend the
transformation
of Sakima SPRL,
but, indeed, that a new legal entity be
created
(
bien qu'une
nouvelle entité juridique soit créée
). The decree subsequently
signed and issued by Likulia on 6 May 1997, namely decree 0035, hence
authorised the creation (
la création
) of a new and quite
distinct SARL in accordance with the said recommendation. In
Likulia's view, the decree did not give rise to
any ambiguity (
ne
soulève aucune ambiguïté
).
[79] In his argument on behalf of Sogem, Mr Pincus
submitted that Likulia's evidence was of a factual, rather than
legal, nature.
In addition it was admissible and so material to the
adjudication of the dispute in issue that, if adduced, it would be
practically
conclusive. In this regard Mr Pincus suggested that
decree 0035 was not in the nature of a statute, but was, rather, an
administrative
act akin to a licence or permit.
[80] Mr Badenhorst, for Banro and Sakima SARL, opposed
the application on the basis that it was clearly inadmissible. It
was, he argued,
an overt attempt to introduce evidence relating to
the interpretation of decree 0035. As testified by Professor
Thomashausen, decree
0035 was not an administrative act but a "legal
norm" which must be interpreted in accordance with the rules of
statutory
interpretation. Inquiries into the motives and reasoning of
the legislator are generally forbidden for purposes of such
interpretation.
[81] This court has already ruled (par 5 above) that the
issue of interpretation of decree 0035 has become an issue in that it
was
extensively traversed in evidence and argument, and
comprehensively dealt with by Griesel J in his judgment. The parties
were hence
free to address us on this issue. This does not, of
course, mean that either party would be entitled, as of right, to
adduce further
evidence on the interpretation of such decree. A court
of appeal has the power, in terms of section 22 of the
Supreme
Court Act
59 of 1959, to allow further evidence on appeal, but it
is a power that is exercised sparingly and only in exceptional
circumstances.
The court must be satisfied that the further evidence
will not unduly prejudice the opposing party and will in fact be
necessary
for purposes of doing justice between the parties. In
addition the evidence sought to be adduced must be admissible,
credible, relevant
and of such significance that, if adduced, it
would be practically conclusive. See
Colman v Dunbar
1933 AD
141
at 160-161;
Staatspresident en 'n Ander v Lefuo
[1990] ZASCA 6
;
1990 (2) SA
679
(A) at 692A-C;
Simpson v Selfmed Medical Scheme and
Another
1995 (3) SA 816
(A) at 825B-E; Herbstein and Van Winsen
The Civil Practice of the Supreme Court of South Africa
(4
th
edition
1997) 909-911.
[82] To a large extent the present application accords
with that brought by Sogem for the appointment of a commission
de
bene esse
to solicit the evidence of the said Ms Sita (par 60-68
above). This is not surprising, since Ms Sita was also present at the
meeting
of the Council of Ministers and was in fact a co-signatory to
the decree approved and issued by Likulia. The suggestion by Mr
Pincus
that Likulia's evidence relating to the decree would be
factual rather than legal cannot be correct. Just as Ms Sita's
evidence would
have turned upon the interpretation of the decree,
just so Likulia's evidence would of necessity turn upon its
interpretation. It
is patently absurd for Likulia to describe the
decree as unambiguous, if he felt the need to tender an explanation
as to why the
Council of Ministers recommended the creation of a new
SARL instead of a simple transformation from an SPRL to an SARL. The
motivation
and reasoning of the Council of Ministers in making this
recommendation, with reference to the alleged paucity of information
relating
to the SPRL, can certainly not be admissible for purposes of
establishing the meaning of the decree.
[83] In any event the issue of the creation of Sakima
SARL, as opposed to its transformation from the pre-existing Sakima
SPRL, was
fully canvassed in the evidence of Thomashausen and Decamp
and comprehensively argued by counsel on both sides. Thereafter
Griesel
J dealt with it in some detail in his judgment. Likulia's
evidence would, in essence, amount to the confirmation of Decamp's
opinion
regarding the interpretation of the decree.
[84] It follows that the further evidence Sogem is
seeking to place before this court is not such that it would, if
adduced, be practically
conclusive. It certainly cannot be regarded
as necessary for purposes of doing justice between the parties and it
is highly debatable,
in my view, whether it can stand up to the test
of admissibility and relevance or materiality. It is for these
reasons that the application
was dismissed. As for the costs, I am of
the view that the costs should follow the event, including the costs
of two counsel.
CONSIDERATION OF
THE ISSUES REFERRED FOR FURTHER HEARING
[85] I turn now to the
issues referred by this court for the hearing of further evidence
(par 17 above). The first issue, namely
whether or not Sakima SPRL
was properly incorporated and registered as a private company with
limited liability in accordance with
the laws of the DRC, was
conceded by Sogem and does not require further consideration except
for the costs relating thereto. Similarly
Banro and Sakima conceded
that Sogem had the required
locus standi in iudicio
act in
these proceedings. It is hence not necessary to deal with the eighth
issue.
[86] The seventh issue, namely whether or not the
removal of the cassiterite by Somico from the possession of Sakima
SARL, and its
subsequent sale to Sogem, was lawful, would appear to
have become academic, except for the costs relating thereto. In
regard to this
issue Griesel J declined, on the basis of the
principle of judicial restraint, to make any determination. He found
support for this
approach in, amongst other authorities, the case of
Swissborough Diamond Mines (Pty) Ltd and Others v Government of
the Republic of South Africa
1999 (2) SA 279
(T). In any event the
learned judge questioned the relevance of this issue in that Banro
had, in his view, acquired ownership of
the cassiterite some time
before the issue of decree 101 on 29 July 1998.
[87] To some extent the sixth issue, whether or not
Sakima SARL had, or has,
locus standi
, is tied up with the
seventh. It arose by virtue of the provisions of decree 101 of 29
July 1998, which purported to abrogate decree
0035. According to
Sogem, Sakima SARL ceased to exist from that date and was hence
deprived of the necessary
locus standi
to become involved in
the present proceedings. On the other hand, Griesel J held that
Sakima SARL was properly incorporated and registered
and that it
lawfully acquired ownership of the cassiterite from Sominki,
whereafter it lawfully sold it to Banro on 7 May 1998, some
time
before the purported abrogation of the decree on 29 July 1998. If
these findings are upheld, then the
locus standi
of Sakima SARL
is, for purposes of determining the ownership of the cassiterite, no
longer relevant. It may well be relevant, however,
for purposes of
establishing whether or not Sakima SARL has the required
locus
standi
to participate in the present proceedings. If it is
assumed, as I am prepared to do, that decree 101 indeed terminated
its existence,
then certain costs implications may arise. I shall
return to this later (par 141 below).
[88] The remaining issues may, I believe, be reduced to
two. Firstly (incorporating the second and third issues and also the
issue
relating to the interpretation of decree 0035): was Sakima SPRL
properly transformed into Sakima SARL and subsequently registered
in
accordance with the laws of the DRC? Secondly (incorporating the
fifth issue): did Sakima SARL lawfully acquire ownership of the
cassiterite from Sominki and thereafter lawfully transfer such
ownership to Banro? The fourth issue was not considered by Griesel
J
since he was satisfied that Sakima SARL had been properly registered.
If this finding is upheld, it will likewise not be necessary
for this
court to deal with such issue.
TRANSFORMATION AND REGISTRATION OF SAKIMA SARL
[89] The transformation of Sakima from an SPRL to an
SARL became the central issue in the proceedings before Griesel J. To
a large
extent it turned upon the interpretation of decree 0035 of 6
May 1997, but also related to a number of other legal documents and
proceedings. The issue was obfuscated by conflicting views and
opinions, all of which Griesel J considered carefully. The learned
judge likewise gave full consideration to the various arguments, as
amended from time to time, raised by Sogem. Of some significance
in
this regard was that Sogem originally denied that an SPRL could be
transformed into an SARL in terms of the relevant provisions
of the
law of the DRC. By the time the matter came before Griesel J,
however, it was common cause among the experts that such
transformation
could take place. The only real issue was whether or
not transformation had in fact taken place; in other words, firstly,
whether
decree 0035 had transformed the existing SPRL into an SARL or
simply created a new SARL and, secondly, whether the process had been
perfected by the registration of the new SARL.
[90] The learned judge dealt in detail with the various
steps taken to effect the transformation of Sakima SPRL into Sakima
SARL.
It was common cause, he held, that the clear intention of all
concerned was to transform the SPRL into an SARL. During the course
of Ms Decamp's evidence, however, the issue of interpretation arose
and the question was asked whether decree 0035 had sanctioned
a
transformation as such, or had authorised the creation of a new SARL.
This issue was linked to the distinction between so-called
"classic"
and "non-classic" transformation. The former ensured that
the legal personality of the SARL would simply
be a continuation of
the existing legal personality of the SPRL, while the latter had the
effect that the SARL would acquire its
own, distinct, legal
personality after that of the SPRL had been extinguished.
[91] According to Ms Decamp the use of the word
fondation
in decree 0035 indicated the creation of a new SARL
rather than the transformation of an SPRL into an SARL. She found
support for
this opinion in the fact that the by-laws of the SARL did
not refer to the intention to transform the SPRL into an SARL.
Professor
Thomashausen, however, opined that
fondation
did not
bear this restricted meaning and was, indeed, equally consonant with
a classic transformation. This was supported by the wording
of the
preamble of the decree and by the content of the mining convention,
which recorded that Banro and the Government of Zaïre
had agreed to
transform the SPRL into an SARL.
[92] Having had regard to decree 0035 against the
background of the surrounding circumstances, Griesel J concluded that
Sogem's argument
on the interpretation issue was "nothing other
than an exercise in semantics". In view of the expressed
intention of the
parties, including the Government of Zaïre, to
effect a transformation of the existing SPRL into a new SARL, it
would have been
absurd for that same government to refuse
transformation and to grant the creation of a new SARL instead. The
learned judge hence
determined this issue in favour of Banro and
Sakima.
[93] On the question whether or not the new SARL had
been properly registered after such transformation, Griesel J was
satisfied that
it had. He found support for this finding in the fact
that a copy of the by-laws of the SARL had been attached to the
minutes of
the extraordinary general meeting of shareholders of the
SPRL approving the transformation. Those by-laws were duly received
by the
Registrar and were forwarded for publication in the Government
Gazette. The learned judge rejected as "utterly devoid of merit"
Sogem's argument that, because the filing deed or certificate of
registration (
acte de depôt
) issued by the Registrar did not
refer to such by-laws, Sakima SARL was never duly registered and
hence never came into existence
as a legal entity. In this regard he
once again held in favour of Banro and Sakima SARL.
[94] Mr Pincus argued, on behalf of Sogem, that decree
0035 was unambiguous. The use of the word
fondation
, he
submitted, indicated that authorisation had been given for the
creation of a new SARL, and not for the transformation of the
SPRL
into an SARL. This appeared from the general context of the decree as
a whole and from the ordinary grammatical use of the words
used
therein. He referred to various other DRC decrees in which
transformation
, and not
fondation
, had been used.
[95] In the alternative Mr Pincus argued that, if decree
0035 should be regarded as ambiguous, consideration should be given
to the
factual background and "contextual setting" pursuant
to which the decree was granted. In this regard the by-laws of Sakima
SARL made no reference to transformation in the sense of continuation
of the legal personality of Sakima SPRL. On the contrary, they
contained a number of provisions supporting Sogem's interpretation of
decree 0035.
[96] Further support for this approach appeared, Mr
Pincus argued, from Ms Decamp's evidence on the lack of "symmetry"
between
the articles of association of the SPRL and those of the
SARL. It also appeared from the fact that the resolution of the
shareholders
of Sakima SARL, dated 21 October 1996, made no reference
to article 42 of the decree of 1887, which provided for
transformation with
continuation of legal personality. Similarly the
mining convention of 13 February 1997 contained provisions that
conflicted with
the interpretation of Banro and Sakima. More
specifically section 51 thereof made provision for a suspensive
condition which, if
not fulfilled within six months, would nullify
Sakima SARL. If this happened, the transfer of mining titles and
assets and liabilities
from Sominki to Sakima would have been
similarly nullified.
[97] Mr Pincus submitted further that, even if decree
0035 authorised transformation of Sakima SPRL into an SARL, its
shareholders
failed to take the necessary steps to implement and give
effect to such authorisation. He submitted in this regard that it was
a
fatal defect in the registration process that the
acte de
depôt
recorded that the relevant minutes had been filed but did
not make reference to the SARL by-laws. It was not sufficient, he
argued,
that there was evidence that the by-laws were in fact present
in the relevant file. For purposes of acquiring a valid incorporation
and registration of the SARL, there had to be formal proof, in the
form of an
acte de depôt
, that its by-laws had been lodged
with the registrar. This could be recorded in the same
acte de
depôt
as that recording the filing of the minutes, or it could be
recorded in a separate
acte de depôt.
In the absence thereof,
however, Sakima SARL was never validly incorporated and registered.
[98] In order to determine whether or not there was a
proper transformation of Sakima SPRL into Sakima SARL, reference must
be had
to the relevant documentation supplemented, in so far as it
may be necessary, by the evidence of the respective expert witnesses.
The starting point must needs be to establish the procedure required
to be followed in transforming an SPRL into an SARL. This dates
back,
it would appear, to section 42 of the decree of 27 February 1887, as
amended by a decree of 23 June 1960. Such section provides
that an
SPRL may be transformed into any other form of company without
creating a new legal person. It reads:
La société privée à responsabilité limitée peut
en tout temps, moyennant l'adhésion unanime des associés, se
transforme en
une société d'un autre type, sans que cette
transformation donne naissance à une personne morale nouvelle et
sous réserve des
droits des tiers.
It may be rendered as:
The private company with limited responsibility may at
any time, with the unanimous approval of its members and subject to
the rights
of third persons, be transformed into a company of another
kind, without such transformation creating a new "moral"
[ie
legal] person.
In his text book on Congolese company law (
Droit
Congolais des Sociétés
(1999) at 944), Professor Lukombe Nghenda
sees this as the acceptance, by the Congolese colonial legislature,
of the continuation
of the legal personality of an SPRL when it is
transformed into another kind of company. The learned author does not
thereupon embark
on a discussion of the concept of transformation,
the reason being, I would suggest, that it does not require any
elucidation. The
words,
se transformer
and
transformation
,
are, in the context of the cited provision, indicative merely of a
change of form - a metamorphosis as it were - from one kind of
company to another. In the relevant Congolese law it meant, in
addition, that the change of form would not alter the essential
character,
or legal personality, of the company being transformed.
[99] Shortly after its incorporation and registration
during August 1996, the shareholders of Sakima SPRL, at an
extraordinary general
meeting (
assembléegénérale
extraordinaire
) held on 21 October 1996, resolved to transform
the SPRL into an SARL, for which purpose it would adopt new by-laws
(
statuts
). This appears from the first resolution (
première
résolution
), which reads:
L'Assemblée décide de transformer la forme de la
société qui devient une société par actions à responsabilité
limitée.
This may be translated as:
The meeting resolves to transform the form of the
company, which becomes a joint-stock company with limited liability.
As prescribed by section 42 of the decree of 1887, the
resolution was directed at changing the form of the company from an
SPRL to
an SARL.
[100] The transformation resolution received the
blessing of the Government of Zaïre, Banro and Sominki in their
mining convention
(
convention minière)
concluded on 13
February 1997. In the preamble the parties recorded their agreement
that Sominki would transfer to Sakima SARL, "a
company to be
formed" (
une société à créer
) certain mining rights,
while Banro would furnish the capital and necessary financial
support. The introductory paragraph of article
7(a) reads, under the
heading
Création de SAKIMA SARL
("Creation of Sakima
SARL"):
Pour l'exercice des droits et obligations qui
découlent de la présente Convention, BANRO et l'ETAT conviennent de
transformer SAKIMA
SARL en une société zaïroise par actions Ã
responsabilité limitée. Cette société prendra la dénomination de
Société Aurifère
du Kivu et du Maniema ("SAKIMA SARL")
et aura son siège social au Zaïre.
This may be rendered as follows:
For purposes of exercising the rights and obligations
that arise from the present Convention, Banro and the State agree to
transform
Sakima SPRL into a joint-stock [the legal rendition of
par
actions
, which would literally be translated as "by
actions"] Zaïrian company with limited liability. This company
will bear the
name
Société Aurifère du Kivu et du
Maniema
("SAKIMA SARL") and will have its registered
office in Zaïre.
It is of some interest, for present purposes, to note
that the passage cited from the preamble uses the verb "to
create"
(
créer
) in relation to a company "to be
formed". It could just as easily have used the verbs
former
("to
form" or "to create"),
établir
("to
establish", "to institute" or "to create"),
fonder
("to found" or "to establish") or
instituer
("to institute" or "to establish").
[101] Article 51 of the mining convention indeed
contains a suspensive condition. After stating that it will have a
life span of twenty-five
years, which may be extended under
appropriate conditions, the convention provides that it will
terminate with immediate effect should
Sakima SARL not be properly
constituted (
régulièrement constituée
) within six months of
coming into operation. Once again a number of synonyms could have
been used instead of "constituted"
(
constituée
),
namely "instituted" (
instituée
), "incorporated"
(
incorporée
) or even "registered" (
enrégistrée
).
[102] Under the heading "Formation and By-laws of
the Company" (
Formation et Statuts de la Société
), the
introductory paragraph records that it has been decided, subject to
approval by ministerial decree, to establish (
fonder
) a
joint-stock Zaïrian company with limited liability, namely Sakima
SARL. Once again any number of synonyms could have been used
in the
place of
fonder
(par 100-101 above). These by-laws were duly
notarised on 20 February 1997 and, as mentioned above, found their
way into the relevant
file, either as an annexure to the minutes of
the extraordinary general meeting of the shareholders of Sakima SARL,
or by simply
being filed there (par 93 above).
[103] The mining convention of 13 February 1997 was duly
approved by ministerial decree 0021 dated 17 March 1997. This was
followed,
on 6 May 1997, by ministerial decree 0035, which authorised
the establishment (
fondation
) of Sakima SARL. In the preamble
specific reference was made to the approval of the mining convention
by decree 0021 and the request
by Sakima SPRL to convert or transform
itself (
se transformer
) into an SARL. Article 01 of the decree
then reads:
Est autorisée la fondation d'une société par
actions à responsabilité limitée dénommée Société Aurifère du
Kivu et du Maniema,
en abrégé "SAKIMA, s.a.r.l.
It may be translated thus:
The establishment of a joint-stock company with limited
liability, and named
Société Aurifère du Kivu et du Maniema
,
is [hereby] authorised.
[104] I
find it astonishing how much time and energy was wasted on attempting
to distinguish between the use of the word "transform"
(
transformer
) in the preamble of the decree, and the word
"foundation" (
fondation
) in the body of the decree.
Sogem preferred to render
fondation
"creation", but
it could just as correctly have been rendered, literally, as
"foundation", or, in the alternative,
as "establishment"
or "institution". My personal preference is for
"establishment", but that does not
mean that any of the
other synonyms may not be quite as appropriate or acceptable.
[105] There is not the slightest indication in decree
0035 or, for that matter, in any of the other relevant documents on
record,
that "
fonder
" has any special meaning in the
context in which it is used. There is likewise no indication that, if
it should mean "to
create", rather than any of the variety
of synonyms that could have been used in its stead, it signifies the
creation of a new
company rather than the transformation of an
existing one. Ms Decamp's suggestions in this regard are artificial,
illogical and in
direct conflict with the most basic rule of
interpretation, namely to establish the ordinary, grammatical meaning
of the words used,
with reference to the decree as a whole and with
due regard to their context. I am in respectful agreement with
Griesel J that she
was engaging in "nothing other than an
exercise in semantics" (par 92 above).
[106] After
careful consideration of the wording of the decree, and with due
regard to its contextual setting, I agree with Mr Pincus
that there
is not the slightest ambiguity to be found in it. I disagree,
however, with the interpretation he has sought to place
on it (par 94
above). When the decree is interpreted in accordance with the
ordinary grammatical meaning of the words occurring therein,
the
intention of the Council of Ministers is crystal clear, namely to
authorise the transformation of Sakima SPRL into Sakima SARL.
They
had the authority and competence to do so in terms of article 42 of
the founding decree of 1887, as amended and supplemented
from time to
time (par 98 above). By issuing the decree they were responding
appropriately to a valid request by the shareholders
of Sakima SPRL,
as recorded in the minutes of their extraordinary general meeting of
21 October 1996 (par 99 above), to effect the
conversion of Sakima
from an SPRL to an SARL. This would also be in accordance with the
express wishes and decisions of the parties
to the mining convention
of 13 February 1997 (par 100 above). Not only was the Government of
Zaïre itself a party to such convention,
but that very Government
saw fit to approve the convention by way of ministerial decree 0021
of 17 March 1997 (par 103 above).
[107] There
is no merit in the submission (par 91 and 95 above) that the by-laws
of Sakima SARL should have referred to the intention
to transform the
SPRL into an SARL in terms of article 42 of the decree of 1887. There
was no evidence of any such requirement, and
even less of the need to
have "symmetry" (par 96 above) between the by-laws of the
SPRL and those of the SARL (whatever
this may mean). It smacks
suspiciously of a last-gasp thumb-sucking exercise. The by-laws of
Sakima SARL were adopted on the basis
of the decision recorded in the
minutes aforesaid and confirmed in the agreement appearing from the
mining convention. Both these
documents refer specifically to
transformation of the SPRL into an SARL. When reference is,
therefore, made in the by-laws to the
decision to establish (
fonder
)
an SARL, it clearly refers to the decision to transform it from the
one to the other. For this very reason the authorisation, in
decree
0035, to establish (
fonder
) an SARL can mean nothing more nor
less than to transform Sakima SPRL into Sakima SARL. This is placed
beyond doubt by the reference,
in the very preamble to the decree, to
the request by Sakima SPRL to "transform itself" (
se
transformer
) into an SARL.
[108] To suggest, as Sogem has done, that the Council of
Ministers considered a request for transformation, but decided
instead,
mero motu
and without any notice to Sakima SPRL or any
other interested party, simply to authorise the creation of a new
SARL, is patently absurd,
if not fatuous. I have no hesitation in
respectfully associating myself with Griesel J's rejection of Sogem's
submissions in this
regard. The learned judge's finding that decree
0035 authorised the transformation of Sakima SPRL into Sakima SARL
cannot, with respect,
be faulted.
[109] The related issue, namely whether or not Sakima
SARL was properly incorporated and registered in accordance with
Congolese law,
may be dealt with briefly. An appropriate starting
point is the official filing, on 12 June 1997, of a copy of the
minutes of the
extraordinary general meeting of the shareholders of
Sakima SPRL, held on 21 October 1996 (par 99 above). It was duly
recorded in
a filing deed or certificate (
acte de depôt
)
bearing the signature and official stamp of the divisional registrar
of the Kinshasa/Gombe High Court (
Greffier Divisionnaire du
Tribunal de Grande Instance de Kishasa/Gombe
). It would appear
that the deed erroneously refers to the minutes of Sakima SARL, which
was, of course, not yet in existence. This
was clearly a
bona
fide
error that did not give rise to any suggestion that the deed
was thereby invalidated or otherwise irregular. Likewise an apparent
error was the fact that the deed did not certify that a copy of the
by-laws of Sakima SARL were also filed, either as an annexure
to the
minutes or separately. That it was indeed received, however, appears
with abundant clarity from a letter, dated 12 July 1997,
from the
Registrar to the Government Printer, requesting that the minutes and
by-laws be published in the next Official Gazette (
Journal
Officiel
).
[110] The suggestion by Mr Pincus (par 97 above) that
the failure by the Registrar to mention the by-laws in the
acte de
depôt
constituted a fatal defect in the registration procedure,
cannot be correct. This would mean, as Griesel J put it in his
judgment,
that a "trivial omission" by the Registrar would
have the effect of inevitably invalidating all legal acts undertaken
by,
or on behalf of, Sakima SARL pending registration. Despite the
fact that it has done everything required of it, it would be at the
mercy of a careless or inexperienced official who could, conceivably,
cause it extreme prejudice.
[111] The fact of the matter is that the by-laws were
properly filed and officially forwarded to the relevant official for
publication
in the Official Gazette. This was done in accordance with
the relevant Congolese law, as discussed fully by Griesel J in his
judgment.
I do not propose to repeat it. And even if it should appear
that there was not strict compliance with the prescribed regulations
in that the
acte de depôt
fails to make reference to the
by-laws in question, justice, fairness and reasonableness dictate
that it must, of necessity, be accepted
as substantial compliance
with such regulations. It follows that I am in respectful agreement
with Griesel J that Sakima SARL was
properly registered in accordance
with Congolese law.
OWNERSHIP
OF THE CASSITERITE
[112] As
mentioned in the introduction to this judgment (par 2 above), Davis J
held that Banro was the owner of the disputed cassiterite
and was
entitled to possession of it. Griesel J subsequently (par 4 above)
concurred in this finding, likewise holding that Banro
became owner
of the cassiterite after acquiring it lawfully from Sakima SARL on 7
May 1998. It will be recalled (par 13 above) that
Van Rooyen averred
that he had acted in his dual capacity as chief executive officer of
both these companies in negotiating the purchase
and sale of the
cassiterite on the said date.
[113] It
is common cause in this regard that, in accordance with Congolese
law, ownership passes as soon as the parties have reached
consensus
on
the thing sold and the price to be paid for it. Performance, in the
sense of delivery on the one hand and payment on the other,
is not
required. This appears from article 264 of the applicable Belgian
Civil Code (article 1583 of the present Code), which applies
identically in the DRC. It reads:
Elle
est parfaite entre les parties, et la propriété est acquise de
droit à l'acheteur à l'égard du vendeur, dès qu'on est convenu
de
la chose et du prix, quoique la chose n'ait pas encore été livrée
ni le prix payé.
It may be translated as:
[The contract of sale] between the parties is perfected,
and the ownership is legally acquired by the purchaser from the
seller, as
soon as agreement has been reached on the thing and the
price, even though the thing has not yet been delivered nor the price
paid.
This
may hence justifiably be regarded as a case of ownership passing by
agreement alone (
nudo consensu
or
solo consensu
).
[114] Sogem
has appealed the concurrent findings of Davis J and Griesel J
regarding the ownership of the cassiterite. It persists
in its
averment that Sakima SARL did not lawfully acquire ownership in the
cassiterite from Sominki, with the result that Sakima
SARL could not
lawfully transfer ownership therein to Banro. Much of its argument,
however, was directed at whether or not payment
had been made by
Banro to Sakima SARL and whether or not there had been delivery of
the cassiterite.
[115] In this regard Mr Pincus accepted that payment or
delivery was not a prerequisite for the passing of ownership. He
submitted,
however, that, inasmuch as Van Rooyen allegedly acted in a
dual capacity in concluding the agreement between Sakima SARL and
Banro,
the facts and surrounding circumstances, including those
relating to payment and delivery, had to be carefully considered.
This was
essential to ensure that there was a meeting of two separate
and distinct wills. In this regard he argued that there were certain
unsatisfactory aspects of Van Rooyen's evidence pertaining to Banro's
"payments in advance" to Sakima SARL and to the "standing
arrangements" he had made, "again with two hats", with
Banro and Sakima SARL. There was, Mr Pincus submitted, a dearth
of
documentation, which had not been discovered or produced, to support
Van Rooyen's evidence on this point. It could hence not be
held that
there had been "a meeting of two separate and distinct wills"
for purposes of proving the contract of sale of
the cassiterite in
question.
[116] In his judgment on the issue of ownership of the
cassiterite, Griesel J held that the mining convention of 13 February
1997
had made provision for the cession of mining rights and for the
cession of assets and liabilities from Sominki to Sakima SARL. On
fulfilment of the suspensive condition contained in article 51
thereof (par 101 above), the cessions became operative and Sakima
SARL duly acquired the rights, assets and liabilities of Sominki. Not
only did Sakima SARL take over the cassiterite production from
Sominki on 17 March 1997, but it in fact mined the cassiterite in
question and became the "original owner" thereof.
[117] On the issue whether or not Sakima SARL
subsequently transferred ownership in the cassiterite to Banro,
Griesel J took note
of the argument raised by Mr Pincus on the effect
of Van Rooyen's acting in a dual capacity when concluding the
agreement between
Sakima SARL and Banro. With reference to Van
Rooyen's evidence, and the relevant documentation, Griesel J held, on
a balance of probabilities,
"that this was indeed an instance of
two wills, expressed simply through one person". He was hence
satisfied that Banro
had lawfully acquired ownership in the
cassiterite on 7 May 1998 (the reference to 1997 is clearly a
typographical error).
[118] The
mining convention of 13 February 1997 expressly contemplated the
transfer of certain mining rights and assets from Sominki
to Sakima
SARL, at that stage still a company to be formed. On the same date,
by virtue of a written contract of cession of mining
rights (
contrat
de cession de titres miniers
), Sominki ceded such mining rights
(
titres miniers
), together with their fixed assets (
leurs
dépendancesimmobilières
) to Sakima SARL. Also on that date the
parties concluded a written contract of cession of assets and
liabilities (
contrat de cession des actifs et du passif
) in
terms of which Sominki ceded to Sakima SARL certain movable and
immovable property, and delegated to it certain debts.
[119] In a letter dated 18 February 1997 from Van
Rooyen, as president of Banro, to Mr Mario Fiocchi, managing director
of Sominki,
Van Rooyen requested confirmation "that all
cassiterite and gold bearing ore that has been mined at the Sominki
concessions
prior to the date of the Convention i.e. February 13
th
has
been transferred to Sakima". In his reply dated 21 February
1997, Fiocchi assured Van Rooyen that all stocks of cassiterite
and
gold "located on the mines" were considered to be "an
integral part of mining rights" and had been transferred
to
Sakima in terms of the relevant cession.
[120] As
mentioned before (par 103 above), the mining convention was approved
by ministerial decree 0021 of 17 March 1997 and the
transfer of
mining concessions from Sominki to Sakima SARL were confirmed in
official documents emanating from the Ministry of Mines.
For present
purposes it is not necessary to discuss such documentation inasmuch
as it is perfectly clear from the above that Sakima
SARL became the
owner of the relevant mining rights and concessions on 17 March 1997.
I am in respectful agreement with Griesel J
(par 116 above) that the
two cessions were subject to the same suspensive condition as that
governing the validity and empowerment
of Sakima SARL. On fulfilment
of the condition, the cessions became operative and the relevant
rights, concessions, assets and liabilities
passed to Sakima SARL. It
accordingly became the owner of the cassiterite forming part of
Sominki's stock holding at the time, and
it is patently obvious that
it became the owner of all cassiterite subsequently mined by it,
including the disputed cassiterite.
[121] On the remaining issue, namely whether or not
ownership in the cassiterite passed from Sakima SARL to Banro, it is
common cause
that Van Rooyen recorded the sale of the cassiterite by
Sakima SARL to Banro in a letter dated 7 May 1998. The letter was
addressed
to Mr A T Kondrat, the co-chairman of Banro, and signed by
Van Rooyen in his capacity as president of Sakima SARL. It bears the
heading
"Sale of Cassiterite - 99 Tons" and gives a
description of seven lots of cassiterite contained in 132 drums with
a total
net weight of 99 000 kilograms. The rest of the letter reads
as follows:
Pursuant
to the standing arrangement between Sakima and Banro I confirm that
Banro has today purchased and assumed ownership of the
lots of
cassiterite described below, which have been delivered to Sakima's
warehouse in Kindu ready to be railed to Lubumbashi for
onward
transmission by road and ocean freight to Malaysian Smelting
Corporation, Banro's smelter in Butterworth, Malaysia…I further
confirm that the price for this material is US$2 500 per ton and that
the amount due, totalling US$247 500, will be set off against
previous advances to Sakima by Banro.
[122] This
ought to have been the end of the matter, since it is abundantly
clear from the letter that
consensus
been reached between
Sakima SARL and Banro on the thing (99 tons of cassiterite) and the
price to be paid for it (US$247 500). There
was nothing to gainsay
Van Rooyen’s testimony (par 22 above) that he represented both
parties, in his capacity as chief executive
officer or president of
each, in concluding the agreement. Griesel J was impressed by his
evidence and demeanour (par 23 above) and
could find no reason to
reject his evidence. Mr Pincus nevertheless questioned the learned
judge’s finding that there had been
a meeting of the minds in this
case, averring that the relevant facts and circumstances did not
support such finding. Inasmuch as
the element of
consensus
is
crucial to the determination of Banro’s claim to ownership of the
cassiterite, I believe that Mr Pincus was perfectly entitled
to raise
this point.
[123] It has been held by this court that a person
cannot, as representative of another, contract with himself. See
Gutman N O v Standard General Insurance Co Ltd
1981 (4) SA 114
(C) at 119A, where Van den Heever J cited Professor J C de Wet’s
contribution on “Agency and Misrepresentation” in the original
edition of
The Law of South Africa
volume 1 (1976) par 107 as
authority for this proposition. In the first reissue of
The Law of
South Africa
volume 1 (1993, revised by A G du Plessis)
(hereinafter referred to as
LAWSA
1), the discussion of
contracts concluded by a representative with himself occurs in par
106.
[124] In
LAWSA
par 107 (par 108 of the original
edition) Professor de Wet goes on to state, under the heading “double
representation”, that a
person “cannot conclude a contract on
behalf of one person with himself as representative of another
person”. In
Joel Melamed and Hurwitz v Cleveland Estates (Pty)
Ltd; Joel Melamed and Hurwitz v Vorner Investments (Pty) Ltd
[1984] ZASCA 4
;
1984
(3) SA 155
(C) at 164 D-F, however, Corbett JA, while taking note of
this “contrary view”, assumed “in favour of Melamed and Hurwitz
that
it was legally competent for Melamed, in his capacity as
managing director of TMC, to make a contract with himself, in his
other
capacity as partner in the firm of Melamed and Hurwitz, in
terms whereof the latter was appointed as conveyancer for all the
erven
in the townships”. A similar assumption, once again with
reference to Professor de Wet’s opinion and noting what was said in
the
Joel Melamed
case (
supra
), was made by Hoexter JA in
Durity Alpha (Pty) Ltd v Vagg
[1991] ZASCA 20
;
1991 (2) SA 840
(A) at 843H-844D.
[125]
In the present matter Mr Pincus referred in
argument to the recent decision of
Samcor Manufacturers v
Berger
2000 (3) SA 454
(T). In that case a certain Mr L R Pitot,
the “group treasurer” of the plaintiff company, Samcor
Manufacturers, and a director
of another company, Samcor Wholesale,
acted in a dual capacity in concluding agreements of cession and
re-cession between these two
companies. This involved claims the
plaintiff company had against a certain motor dealer. At 459A Le Roux
J described Pitot as “the
focal point of the decisions taken by
both the boards of the plaintiff and of SAMCOR Wholesale”. The main
defence raised against
the plaintiff was that the cession and
re-cession were invalid in that Pitot had purported to contract with
himself in implementing
the cession and re-cession. After discussing
the authorities referred to above (par 124), Le Roux J said the
following (at 460H-461B):
The
question now arises whether I should be persuaded by the Cape
judgment [the
Gutman
case
supra
cited in par 123 above]
and the failure of the Appellate Division to decide finally on the
legal validity of the statement of Prof
De Wet
that a
representative cannot contract with himself in another representative
capacity. I can understand the argument that, where a
person has an
unfettered discretion to take a decision on an offer or acceptance of
a contract, albeit in a representative capacity,
he cannot contract
with himself where the acceptance or offer in respect of a contract
is raised. In other words, unless there is
a meeting of two wills,
the statement by Prof
De Wet
must obviously be correct and
there cannot be a contract or a valid agreement unless there is
consensus in that sense. There must
be a separate and distinct
meeting of wills to constitute an agreement. But if the facts show
that there were two wills, but that
they were implemented or
expressed simply through one person, that, in my view, distinguishes
it from the
Gutman
case and from the principle enunciated by
Prof
De Wet
. In such a case you do not have the difficulty
that one man simply decides for both sides whether to accept the
offer or not. You
have a fettered will or a guided instruction
emanating from someone else and the natural person in the middle –
as Mr Pitot here
– was simply the instrument or the focal point
through which the agreement was reached. In my view that would have
been the position
here.
[126] Although, for present purposes, it is not
necessary to respond to the proposition that a person acting in a
representative capacity
cannot contract with himself, that is to say
in his personal capacity, I would like to make the following
observation. This proposition
is probably attributable to the fact
that such person may have difficulty in dissociating himself from
his, subjectively perceived,
personal interests as a contracting
party when he considers, however objectively and dispassionately, the
interests of the other
contracting party. The concept of the meeting
of two separate and distinct wills may, under such circumstances, not
easily be envisaged.
On the other hand the relevant facts and
surrounding circumstances may indeed indicate that he was able to
separate his personal
from his “representative” interests, in
which event there may well be a meeting of two distinct minds.
[127] This is even more so the case where the
person acts in a dual or double representative capacity on behalf of
both contracting
parties. His personal interests would, in such a
case, not be relevant unless the applicable facts and circumstances
demonstrate
that he has allowed personal, subjective, considerations
to play a role in the exercise of his representative function. This
would,
probably, be perceived as a bias or prejudice in favour of, or
against, the one or the other. I do not, however, believe, with great
deference to that eminent scholar, Professor J C de Wet, that this
possibility justifies the proposition that a person cannot act
in a
representative capacity on behalf of both contracting parties. In
this regard I am in respectful agreement with Le Roux J in
the
Samcor
case (par 125 above) that, for purposes of determining whether a
valid agreement has been concluded, there must be “a separate
and
distinct meeting of wills”. Such wills may be “implemented or
expressed simply through one person” who may be regarded
as “the
instrument or focal point” through which the agreement is
concluded. This can be established, however, only by a full
consideration of the relevant facts and surrounding circumstances.
[128] The relevant facts and surrounding
circumstances in the present matter appear from the evidence of Van
Rooyen and from a number
of documents to which he referred therein.
Certainly the most important of these documents is the letter of 7
May 1998 (par 121 above)
confirming Banro's acquisition of the
cassiterite. As mentioned previously (par 13 and 22 above) Van Rooyen
concluded the sale in
a dual capacity. As chief executive officer or
president of both companies, his intention was clearly to act in
their respective
interests, without any preference for the one or the
other. The transaction was directed at a
quid pro quo
, Sakima
SARL selling the cassiterite at a good, competitive price and Banro
purchasing a substantial consignment of a valuable mineral.
It was
never suggested that either of the parties was being benefited at the
expense of the other, nor was there any suggestion of
bias or
prejudice in favour of the one or the other.
[129] As mentioned earlier on in this judgment
(par 23 above), Griesel J was impressed by Van Rooyen as a witness
and had no difficulty
in accepting his version of the sale of the
cassiterite by Sakima SARL to Banro. My own assessment of his
evidence is that he tried,
to the best of his ability, to give a
lucid and truthful account of the events giving rise to the present
litigation. There is, in
my respectful view, no reason to interfere
with the learned judge's perfectly justifiable finding.
[130] Van Rooyen's version of the events preceding
the sale of the cassiterite, as evidenced by a number of relevant
documents, confirm
the content of his letter dated 7 May 1998.
Reference may be made in this regard to Banro's so-called "evergreen"
contract,
dated 8 July 1997, for the sale of cassiterite on an
ongoing basis to the Malaysian Smelting Corporation. Van Rooyen
insured the
cassiterite while it was in transit and from time to time
effected advance payments of the purchase price to Sakima SARL. In
this
regard Van Rooyen testified extensively on the earlier
transactions between Sakima SARL and Banro on the one hand, and those
between
Banro and the Malaysian Smelting Corporation on the other.
None of this evidence was seriously challenged in cross-examination
and
Sogem adduced no evidence to the contrary. As for the sale of 99
tons of cassiterite confirmed in Van Rooyen's letter dated 7 May
1998, Sogem in fact conceded that it was the same cassiterite
presently under attachment, as appears from documentation recording
the sale.
[131] It
follows from these considerations that I must respectfully associate
myself with Griesel J's finding (par 117 above) that,
on a balance of
probabilities, Van Rooyen, in negotiating the sale of the disputed
cassiterite, expressed a separate and distinct
will on behalf of both
Sakima SARL and Banro. As the chief executive officer and/or
president of each, he was duly and properly authorised
to represent
both these companies. Through him they expressed the clear and
unequivocal intention to conclude an agreement of purchase
and sale
in respect of the cassiterite. They achieved
consensus
on the
essential prerequisites for a valid sale, namely the thing and the
price.
[132] In
view of these considerations, I must respectfully associate myself
with Griesel J's finding that Banro lawfully, and irrefutably,
acquired ownership in the disputed cassiterite on 7 May 1998.
CONCLUSION
AND ISSUES RELATING TO COSTS
[133] Inasmuch
as none of the disputed issues has been decided in favour of Sogem,
and the concurrent findings of Davis J and Griesel
J have, in
substance, been upheld, the appeal against both judgments must fail.
Mr Badenhorst, on behalf of Banro and Sakima SARL,
urged that we
consider an order for costs against Sogem on the attorney and client
scale. For the same reasons as those relied on
by Davis J and Griesel
J, I do not believe that a special order as to costs is justified,
however tenuous Sogem's case might have
become during the course of
the proceedings. It cannot, in my view, be said that Sogem acted in
bad faith, maliciously or vexatiously
in opposing the application and
in persisting in the various defences raised by it from time to time.
[134] I have already held (par 84 above) that Sogem
must pay the costs of its unsuccessful application to adduce further
evidence
on appeal, such costs to include those occasioned by the
employment of two counsel.
[135] As for the costs relating to the storage of the
cassiterite from the date on which it was first attached, Griesel J
held that
such costs should be costs in the cause. It goes without
saying that the storage costs have accumulated considerably since the
attachment
of the cassiterite. When this matter originally came
before us on appeal, the suggestion was made that, to curb
expenditure, the
cassiterite should be sold at the best price
possible and that the proceeds be held in an interest bearing account
pending the finalisation
of the proceedings. Van Rooyen testified in
this regard that Sogem's legal advisers had refused to agree to the
sale of the cassiterite
under any circumstances. They likewise
refused to furnish reasons for their attitude. I agree with Mr
Badenhorst that Sogem should
be ordered to pay the full costs arising
from the storage of the cassiterite.
[136] At the commencement of the hearing before Griesel
J, the parties agreed that the costs of the three interlocutory
applications
referred to in paragraphs 1.2, 1.3 and 1.4 of the order
of this court dated 20 June 2000 would be costs in the cause.
[137] Griesel J held that the costs of the first appeal,
namely that against the judgment of Davis J, would likewise be costs
in the
cause. This appears, with respect, to be fair and reasonable,
no substantive argument being tendered by Sogem for any other
appropriate
order.
[138] Mr Badenhorst submitted that Banro and Sakima SARL
were substantially successful in all aspects of the hearing before
Griesel
J. The costs thereof should, therefore, follow the costs of
the appeal.
[139] Griesel J allowed the qualifying expenses of
Professors Thomashausen and Lukombe Nghenda, as well as those of Mr
Djunga, Mr
Mitchell and Mr Gerard Caby. This was to include their
travelling, accommodation and subsistence expenses. It was not
suggested in
argument that this order was unfair or unreasonable.
[140] Mr Pincus submitted that, if the appeal should be
unsuccessful, the costs of the seventh issue (par 17 above) should be
awarded
to Sogem. This issue related to whether or not the removal of
the cassiterite by Somico from the possession of Sakima SARL, and the
subsequent sale thereof to Sogem, was lawful. It will be recalled
that Griesel J declined (par 86 above) to determine this issue
because it had become academic, in view of his finding that Banro had
acquired ownership of the cassiterite. In addition the learned
judge
held that he was not empowered, in accordance with the principle of
judicial restraint, to make a finding on the validity of
presidential
decree 101 of 29 July 1998, which purported to abrogate ministerial
decree 0035, thereby undoing the authorisation for
the formation of
Sakima SARL. I do not agree with Mr Pincus that Sogem should be
awarded the costs relating to this issue. Both parties
agreed to
submit the issue for determination. Griesel J’s refusal to consider
it, on eminently justifiable grounds, cannot be regarded
as a finding
in favour of Sogem, warranting an award of costs to it.
[141] With
reference to the concession by Banro and Sakima SARL that Sogem
indeed had
locus standi
in this matter, thereby making it
unnecessary to decide the eighth issue (par 17 above), Mr Pincus
submitted that Sogem should be
awarded the wasted costs arising from
it. He appears to have lost sight of the similar concession made by
Sogem in regard to the
first issue, namely whether or not Sakima SPRL
was properly incorporated and registered in accordance with the laws
of the DRC. Far
more time was, indeed, spent on this issue than on
the issue of Sogem’s
locus standi
, and it was only after Ms
Decamp was confronted with the relevant
acte de depot
that this
issue was conceded (par 31 above). Concessions of this kind occur
frequently in litigation and it would be highly undesirable
to make
separate cost orders in regard thereto. In any event, inasmuch as
these issues were inextricably interwoven in the evidence,
I do not
believe that it would be appropriate to award wasted costs arising
from individual concessions made in respect thereof.
This would
clearly create nightmares for taxing masters who are burdened with
the taxation of such costs.
[142] Mr Pincus submitted further that Sogem should be
awarded the costs arising from the sixth issue, namely whether or not
Sakima
SARL had
locus standi
. As mentioned previously (par 87
above), this issue has become academic in that Sakima SARL was
properly incorporated and registered
at the time it acquired
ownership in the cassiterite from Sominki and subsequently, on 7 May
1998, transferred such ownership to
Banro. Assuming that presidential
decree 101 indeed terminated the
locus standi
of Sakima SARL,
it might not have been competent for it to be joined as a party to
the present proceedings. In this regard, however,
it would appear
that it was so joined for the sole purpose of assisting Banro to
establish its ownership of the cassiterite. I am
in some doubt as to
whether Banro really needed it as a crutch for such purpose, since
its role in the present proceedings has been
minimal. If it had not
been a party, the result would, in my view, have been the same. In
any event it would be difficult, if not
impossible, to separate the
costs relating to its participation from that attributable to Banro’s
participation. An award of costs
under such circumstances would
clearly be undesirable and inappropriate.
ORDER
[143] In
the event I would make the following order:
The
appeal against the judgment and findings of Griesel J is dismissed
with costs, including the costs of two counsel.
The
appeal against the judgment and findings of Davis J is dismissed
with costs, including the costs of two counsel.
The
application for leave to adduce further evidence is dismissed with
costs, including the costs of two counsel.
The
appellant is ordered to pay the full costs arising from the storage
of the cassiterite.
The
costs of the present appeal include:
the costs of the three interlocutory applications
referred to in paragraphs 1.2, 1.3 and 1.4 of the order of this
court dated
20 June 2000;
the
qualifying expenses, with inclusion of travelling, accommodation
and subsistence expenses, of Professors A Thomashausen and
L
Nghenda, and Messrs Djunga, Mitchell and Caby.
D
H VAN ZYL
Judge
of the High Court of South Africa
I
agree.
G
JOSMAN
Judge
of the High Court of South Africa
I
agree.
M
WIEHAHN
Acting
Judge of the High Court of South Africa