JUDGMENT
SENYATSI J
Introduction
[1] This application concerns the survival of a company which is beset by cash
flow challenges. Redpath Mining South Africa Pty Ltd (“RMSA”) , the
second respondent in this litigation is the subject matter of various litigations
on which I have handed down several judgments. The applications were all
case managed and heard at the same time for several weeks and various
reliefs which are not necessary to repeat in this judgment were ordered
through the various judgments handed down. There are as I recall, two
pending litigations, the application which is the subject of this judgment and
the action proceedings .
[2] The first respondent, is Siyakhula Sonke Empowerment Corporation
Proprietary Limited (“SSC”) and third respondent, Mr. Frederick Sam
Aren dse (“Aren dse”) ,who are a Black Economic Empowerment parties,
resist the application chiefly on the ground that the applicant , Redpath Africa
Mining Ltd (“RAL”) , a Mauritius registered company, has been trying to
force SSC to exit its investment in the second respondent even though it has
been a shareholder since 2006.
[3] This application concerns the application in terms of which the following
relief s are sought:
Declaring that:
2.1 SSC repudiated the sale of shares and shareholders agreement
binding RAL and SSC (“the agreement”) through the following
conduct:
2.1.1 In sending a letter to the applicant on 31 December 2021 in
which the SSC conveyed an intention not to pay the purchase
price envisaged by clause 4.1 of th e agreement;
2.1.2 In failing to pay the purchase price envisaged by clause 4.1
of the agreement on the due date or at all.
2.2 As a consequence of the declaration in paragraph 2.1 above, RAL
validly cancelled the agreement by virtue of its letter dated 10
February 2022.
[3] In the alternative to the relief sought above , so prays RAL:
3.1 It seeks an order declaring that -
3.1.1 SSC is deemed to have offered its entire shareholding ("Sonke
shares") in RMSA for sale to RAL ;
3.1.2 SSC’s offer is deemed to have been made on 16 April 2021;
3.1.3 RAL accepted the offer on 8 October 2021;
3.1.4 The purchase consideration ("purchase price") payable by RAL
to SSC in respect of the offer is R1.
3.2 Ordering that RAL shall pay the purchase price to the SSC within 5 days
of this order.
3.3 Compelling Aren dse or any authorised representative of SSC, within
10 days of this order and against compliance by the applicant with the
provisions of paragraph 3.2 above, to sign and deliver the share transfer
form in respect of the Sonke shares to the applicant.
3.4 Ordering that, failing the signing and delivery of the share transfer form
by Aren dse or any authorised representatives of the first respondent
within the time prescribe d in paragraph 3.3 above, the Sheriff of the
High Court is authorised to sign and deliver to RAL the share transfer
form in respect of the Sonke shares.
3.5 Ordering that SSC (and any other respondent in the event of opposition)
must pay the costs of the application.
[4] The reliefs sought as set out above were as a result of the amendment of the
notice of motion and leave to amend the original notice of motion which
sought only a declaratory order that SSC had been deemed to have offered
its shares to RAL due to various grounds of breaches set forth in this
judgment. However, following the lapse of the 15 years period of payment
for the shares and the alleged failure to SSC to pay the purchase price , the
failure became a trigger event for repudiation which resulted in the applicant
amending its original notice of motion. The leave to amend the original
notice of motion was granted.
[5] SSC and Aren dse, contend that the applicant and the second respondent had
been involved in what the first and second respondent call an unlawful
conduct which caused the third respondent write various letters to different
stakeholders and complained about the conduct of the applicant and the
second respondent. They furthermore argued that they were prepared to pay
the R630 000 as required by the shareholders agreement and that the second
respondent failed to provide the bank details to them. They contend,
furthermore, that on those grounds, the application should b e dismissed with
costs.
[6] SSC and Aren dse also brought a recusal application against the presiding
judge on the basis that he used in his judgment if the 18 November 2024 the
heads of arguments submitted on behalf of the second respondent and the
application was refused. The application for postponement was also re fused
and the matter was argued
Background
[7] The applicant and SSC were shareholders in the second respondent with 74%
and 26 % equity respectively since 1 January 2007. Aren dse is one of the
directors of SSC and was also a director of the second respondent until his
removal by an order of this court. In terms of the shareholders agreement
(“the agreem ent”) , the purchase price of the 26% equity in the second
respondent was in the sum of R630 000 payment of which was deferred for
a period of 15 years from the effective date of the agreement in terms of
clause 4.2.5 of the agreement. Furthermore, the purchase price was also to
be immediately payable if the first respondent breached any provision of the
agreement.
[8] Clause 12 on Deemed Offer states as follows:
“12.1 Sonke shall be deemed to have offered its entire shareholding in the company
(‘the Sonke shares ’) for sale to DHI GmbH (which is the original name of the
applicant prior to the changing its name to the current name) on the happening
of any one of the following events: -
12.1.1 Sonke being placed into liquidation or judicial management, whether
provisionally or finally;
12.1.2 Sonke committing a breach of this agreement and the provisions of 14.2
becoming applicable .
12.2. The offer referred to in 12.1 will be deemed to have been made on the day preceding
the happening of the relevant event and will be subject to the following terms: -
12.2.1 the purchase consideration payable for the Sonke shares shall be the
appropriate percentage of the net asset value of the company as
determined by the auditors on the last day of the month preceding that in
which the deemed offer is made in terms of 12.2 above ;
12.2.2 the purchase price owing by DHI GmbH to Sonke shall be set off against any
amount owing by Sonke to D HI GmbH in respect of the purchase price
of the sale of shares referred to in 4.2. Any balance shall be paid by either
party to the other within 6(s ix) months from the date of acceptance of
the offer .
12.3 DHI GmbH shall be entitled within a period of 30(thirty) days after the purchase
consideration of the Sonke shares has been determined to accept the deemed offer
by notice in writing to Sonke .
12.4 The directors shall use their best endeavours to procure the determination of the
purchase price of the Sonke shares in terms 12.2.1 is made within a period of 60
(sixty) days of the happening pf the relevant event referred to in 12.1.
12.5 The auditors are hereby irrevocably authorised by Sonke to deliver the share certificates
in respect of the Sonke shares together with the share transfer declarations signed by
Sonke to DHI GmbH pursuant to the provisions of 4.3 above.”
Clause 12 shows precisely how the parties agreed to deal with the deemed offer
and the events that could lead to the deemed offer being made.
[9] The breach conditions are regulated by clause 14 of the agreement which
provides as follows: -
“14.1 The parties agree that the cancellation of this agreement in the event of a breach
would be an inappropriate and insufficient reme dy and that irreparable damage
would occur if the provisions of this agreement were not complied with. It is
accordingly agreed that in the event of a breach, the ag grieved party shall be entitled
(without prejudice to any rights which it may have in law, save for the right to cancel
the agreement) to an order for specific performance and to recover any damage
which it may have suffered.
14.2 Should the relevant breach be incapable of being remedied or an order for specific
performance be refused by a court of competent jurisdiction , the provisions of this
clause 14 shall apply in respect of the shareholder in breach .”
[10] At the start of the investment by SSC, the latter was paid what the applicant
calls a monthly stipend by the second respondent, which would increase
from time to time. This was so even though the second respondent was
operating at loss. I must state at this juncture that although in the pending
action SSC and Arense aver that the losses amount to asset s tripping, Arense
as a director of the second respondent, signed off the annual financial
statements of the second respondent diligently as part of the board members.
[11] Following the legal advice given to the second respondent that the stipend
would be regarded as a dividend , the stipend was stopped and SSC and
Arense were upset by the cancellation of the payment. The cancellation
triggered a campaign by SSC and Arense the led to withdrawal of
shareholder funding by the applicant through the main holding company in
Canada. The withdrawal of the funding resulted in operational cash flow
challenge .
Case of RAL
[12] The applicant avers that SSC and Aren dse have breached the agreement
which triggered the cancellation of the agreement in as set out below after
being upsent with the cancellation of payment of stipend .
RMSA letter February 2021
[13] On 15 February 2021 , SSC addressed a letter to RMSA in which it allegedly
wrongf ully advanced false and highly prejudicial allegations concerning ,
amongst others, the alleged unethical business practices, racism, and fraud
on the part of RAL and RMSA. SSC allegedly, threatened to disseminate
the unlawful allegations to all the clients of RMSA and to take appropriate
legal steps, and if required , involving all affected parties, such as the current
clients, auditors, contractors , suppliers, etc. SSC, furthermore, intimated
that it would be request ing all RMSA clients to set aside agreements
concluded with RMSA, which, SSC asserted , were c oncluded unlawfully.
The threat was indeed conducted as shown below in this judgment.
The Dentons/HSBC letter April 2021
[14] On 16 April 2021, SSC addressed a letter to Dentons Canada
LLP( “Dentons ”), attorneys of the international ban HSBC, in which SSC
allegedly wrongfully and inappropriately (notwithstanding its knowledge
at the time that nego tiations between the entities within Redpath
Group(including RMSA) and HSBC were ongoing) objected to a
resolutio n which had been passed by RMSA which pertained to the
obtaining by RMSA, together with other Redpath Group entities, of credit
facility with HSBC .
[15] The conduct complained of was despite SSC’s knowledge that RMSA
stood to benefit under the facility agreement as RMSA would be advanced
credit lines which were critical for RMSA to conduct its business. SSC,
furthermore, so avers RAL, advanced further baseless allegations ,
concerning the alleged unethical business practices, racism and fraud on
the part of, inter alia, RAL and RMSA, to support the unlawful objection
to the resolution . SSC, furthermore, informed Dentons that it urged
Dentons as the legal representative of HSBC , a highly reputable financial
institution and the large st funder to the Redpath Group of companies to
take appropriate action as required by Dentons as legal practitioners.
[16] RAL contends that the conduct by SSC and Arense is designed to con strain
RMSA’s ability to raise funding for it s operations. RAL states that the
conduct is in violation of clause 13.2.5 of the agreement which precludes
the parties from taking steps encourage or entice or incite or persuade or
induce any prescribed supplier or prescribed customer to terminat e its
relationship with the RMSA.
The Deloitte and Touche letter May 2021
[17] RAL avers that on 17 May 2021 , Arendse addre ssed an email to the board
of RMSA and copied in the same email, Mr. A Munitich who is the audit
partner responsible for RMSA’s account employed at Deloitte and Touche
(“Deloitte ”). In the email SSC and Arendse accused Deloitte of being
complicit in an alleged false attempt by RMSA to block Arendse’s right to
information and threatened to report Deloitte to the auditing authority.
[18] On the 16 August 2021, SSC addressed a letter to Deloitte and persisted in
making false and defamatory allegations concerning the unethical business
practices, racism and fraud by RAL and RMSA. SSC informed Deloitte
that it had filed a complaint with the B -BBEE Co mmission and alleged
fronting practices on the part of RMSA. In the letter, SSC stated that it was
considering approaching courts to set aside the intercompany agreements
that were concluded without board approval and contracts that were
awarded based on fraudulent resolutions. SSC, furthermore, stated that it
was considering approaching the Department of Mineral Resources and
Energy with regards to the conduct of RMSA .
[19] RAL states that Deloitte issued a report, which was meant to be presented
at a meeting of the board of directors of RMSA on 24 August 2021, in
which it addressed the issues raised by SSC and Arendse . Notwithstanding
all the Deloitte related complaints raised by SSC and Arendse, Deloitte
issued an unqualified audit opinion on 5 October 2021 on the annual
financial statements of RMSA .
[20] On 23 August 2021, SSC addressed a letter to RAL in which it demanded,
inter alia, that all the intercompany agreements be cancelled forthwith and
that the RMSA executive provide the RMSA board with the alternative
proposals.
The African Rainbow Mineral letter August 2021
[21] As an attempt to induce RMSA customers to terminate their relationship
with RMSA, SSC addressed a letter to African Rainbow Minerals(“ ARM”)
on 26 August 2021 . It cited, again through a letter on 7 September 2021 to
ARM, serious allegations against RMSA and recorded that the allegations
would impact the business relationship with ARM going forward . In the
letter, SSC paddled , so avers RAL, multiple false allegations and
prejudicial allegations of inter alia, unethical business practices , racism and
fraud on the part of, inter alia, RAL and RMSA . RMSA responded to ARM
who had inquired about the allegations and denied the allegations made
against it by SSC and Arendse.
The Northern Zonder einde letter September 2021
[23] RAL avers, furthermore that on 7 September 2021, Northern Zondereinde
(“Northam” ), a customer of RMSA for 30 y ears, addressed a letter to
RMSA in which it recorded that it received a complaint from Arendse
citing inter alia, alleged unethical business practices . RMSA responded to
Northam in terms of which it reco rded that the allegations by SSC and
Arendse started after RMSA legitimately decided in 2021 to stop the
payment of the monthly stipend . RMSA denied any wrongdoing .
The Anglo American South Africa letter October 2021
[24] RAL , furthermore, states that on 21 October 2021, RMSA was contacted
by a key customer, Anglo American South Africa(“Anglo” ). Anglo stated
that it had been contacted by Arendse who provided it with the copy of its
complaint to the B-BBEE Commission. RMSA responded to Anglo and
disputed the allegations by SSC and Arendse. Anglo responded to RMSA
and stated that it appoints an independent SANAS accredited verification
agent namely, Honeycomb to investigate the allegations and complaints by
SSC and Arendse. The letter by SSC and Arendse to Anglo was intended,
so avers RAL, to induce Anglo to terminate its more than 30 years o f
business relationship with RMSA.
The Mpower letter September 2021
[25] RAL also states that SSC and Are ndse sought to undermine the legitimacy
of RMSA’s B-BBEE verification ag ency, which is one of RMSA’s
supplier by urging Mpower Ratings (Pty) Ltd (“ Mpower”) on 6 September
2021 to withdraw RMSA’s B -BBEE certificate. Mpower responded to
SSC’s letter on 15 September 2021 and confirmed the validity of RMSA ’s
B-BBEE certificate . SSC responded on 22 September 2021 and insisted to
Mpower withdraw RMSA’s B -BBEE certificate and threatened to lodge a
complaint against Mpower to the SANAS , a regulatory body for the affairs
of B-BBEE verification agen cies.
Repudiation of the agreement
[26] RAL avers that SSC was notified on 31 December 2021 th rough its
attorneys of record that the purchase price for the 26% equity by SSC in
RMSA had been determined by PricewaterhouseCoopers to be R630 000
and that it was due for payment on 1 January 2022.
[26] In response to the letter, SSC stated that rather than paying the purchase
price to RAL, it has decided to pay the amount into the trust account of its
attorneys of record Cliffe Dekker Hoffmeyer ( “CDH”) . SSC had already
been provided with the bank details of RAL for payment of the purchase
price o f the shares, which information had been given on 24 December
2021. For the payment to be effected, SSC required regulatory approval as
payment was made to a foreign entity and the process was expected to take
several weeks.
[27] It was not until 10 February 2022, that RAL through its attorneys of record,
Werksmans, addressed a letter to SSC through CDH and reminded SSC
that payment for the purchase price of the shares in RMSA which was due
on 1 January 2022, had not been made. The letter recorded that the
unilateral decision by SSC to pay the purchase price into the trust account
of CDH instead of RAL constituted a unilateral amendment of the
agreement and repudiation. The letter furthermore recorded that the fact
that SSC was involved in other court proceedings did not relieve SSC from
its obligations to make payment in accordance with the agreement.
Consequently, so avers RAL, it notified SSC through CDH of RAL to
cancel the agreement.
Case of SSC
[28] SSC opposes the application and issued a counter -application that the
application be stayed pending the final determination of the action
proceedings which it has instituted against the RAL and RMSA. For
completeness, the action by SSC was dismissed on 20 November under a
case number 51107/2021. Consequently, the counter -application in this
application has become mood on the matter of simple summons .
[29] In the alternative, SSC requires the applica tions stands as simple summons
and alternatively that a declaratory order that it is not in breach of clause
13.2 of the agreement referred to in this judgment. SSC further
alternatively requires a declaration that the way RAL enforces clause 13.2
of the agreement is unconstitutional and /or contra -bones mores and
withholding of specific performance from RAL and directing to claim and
prove “id quod” interest . SSC further prays that RAL be ordered to pay the
costs at puniti ve scale between attorney and client.
[30] SSC does not deny that it sent various letters to the various stakeholders
and now bringing this counter -application was due to its legitimate
concerns about the alleged unlawful conduct by RMSA and RAL. It
contends that its own ( SSC) chief operating officer performed the
evaluation of RMSA and raised concerns during April 2019 and May 2019
it was unhappy that RMSA was not declaring dividend and furthermore
that large overheads such as management fees and other o ver heads line
items were of concern to SSC. SSC avers that after the letters were sent to
RMSA, RMSA continued to exclude it from financially benefitting from
its investment in RMSA by not declaring dividend.
[30] The matters came to head, so contends SSC, when it was advised in January
2021 that its monthly payment would be terminated because of the legal
advice that it would be regarded as distribution. SSC did not agree with
this as it felt it was adding value to the business of RMSA as a shareholder .
SSC avers that its letter of 21 February 2021 was an attempt to show that
RMSA sought it to exit its investment in RMSA to shield its alleged
unlawful conduct and not permitting SSC to render services to RMSA.
[31] SSC avers that it reported RMSA to An ton GmbH (“Anton”) , a German
company and RAL ultimate shareholder about the alleged wrongdoing
during July 2019. Anton instructed Bowman Gilfillan to investigate the
allegations. SSC contends that the copy of the report was not shared by
Anton with it. SSC concluded that the refusal to share the content of the
report with it suggested that there could merit in its complaints.
[31] SSC contends that since 2006, RAL had been paid management fees of R83
million whereas SSC had been paid only R17 million for the period. It
contends that it rejected RMSA’s attempt to unilaterally terminate the
management fees in January 2021. SSC contends that its board
representative to RMSA have added value to RMSA. SSC contends that
despite generating a revenue of R11 billion since 2006, it never declared
dividend. SSC states that after its various concerns could not be addressed,
it decided to inform the various third -party stakeholders including the B -
BBEE Commission. It is not clear from the papers as to what the status of
the B -BBEE Commission complaint is.
[32] SSC contends that significant amounts of value were extracted from RMSA
through the Redpath group of companies between 2014 to 2020 to be the
sum of over R 571 million through what SSC refers to as over inflated lease
agreements of equipment to RMSA. SSC admits that it raised various
issues with the third parties identified in the founding affidavit.
Issues for determination
[33] The first issue for determination is whether RAL has established the
repudiation of the agreement and if I find that there was no repudiation of
the agreement by SSC and Arendse to trigger cancellation of the
agreement, whether the deemed offer provision in the agreement should be
triggered.
[34] The second issue for determining relates to the counter -application of SSC
relating to its claim that RM SA had deliberately embarked on a strategy to
force it to exit its investment in RMSA by embarking on the alleged unlawful
conduct.
[35] I will deal with the main relief sought by RAL for cancellation of the
agreement based on repudiation and the related prayers in the alternative.
[36] Thereafter, I will deal with the counter -application’s alternative reliefs
sought by SSC.
The Legal Principles.
Repudiation
[37] Repudiation, a form of anticipatory breach,1 occurs when a party indicates
by words or positive conduct that he does not intend to perform or fully
perform, be bound or be fully bound by the contract .2
1 Or breach of contract in anticipando . The other form is prevention of performance. In Tuckers Land
and Development Corporation v Hovis 1980 1 SA 645 (A), the court identified repudiation as the
most typical but not only form of anticipatory breach: “It should therefore be accepted that in our law
anticipatory breach is constituted by the violation of an obligation ex lege , flowing from t he
requirement of bona fide which underlies our law of contract” (652). See also Christie and Bradfield
Christie’s The Law of Contract 6 ed (2011) 538 ff.
2 Repudiation may occur prior to performance being due but may also take place where performance
is due, for example by insistence on the fulfilment of a term that does not form part of the contract
(Christie and Bradfield (2011) 539). Interestingly, repudiation was a form of breach of contract,
received by South African law through English Law (its locus classicus being the 1853 case of Albert
Holchester v Edward Frederick de la Tour (1853) 2 El and Bl 678) as Roman -Dutch Law did not
recognise it as a form of breach of contract. The creditor would have to rely on remedies for mora or
positive malperforman ce. Accordingly, if the debtor repudiated prior the date for performance, the
creditor had to wait for that date to arrive and either claim performance or cancellation and damages
(Joubert 1987 210). The following from Nash v Golden Dumps (Pty) Ltd 1985 3 SA 1 (A) 22 is an apt
description: “Where one party to a contract, without lawful grounds, indicates to the other party in
words or by conduct a deliberate and unequivocal intention no longer to be bound by the contract, he
is said to ‘repudiate’ the contr act […] Where that happens, the other party to the contract may elect
[38] The fact that repudiation entails positive conduct distinguishes it from
mora .3 Further, o ur courts have held that a requirement for repudiation is
wrongful conduct.4 The test for wrongfulness is objective and the enquiry
would be whether it is reasonable to conclude that performance will not
take place or defective performance will take place in the future. The
courts have repeatedly stated that the test for repudiation is not subjective
but objective.5
[39] Repudiation is demonstrated by a party indicating by words or by
conduct that he or she does not intend to honour all their obligatio ns in
terms of the contract. For example, he or she may deny the existence of
the contract,6 try without justification to withdraw from the contract,7 give
notice that they cannot or will not perform;8 or may indicate that they do
to accept the repudiation and rescind the contract. If he does so, the contract comes to an end
upon communication of his acceptance of repudiation and rescission to the party who has
repudiated”.
3 LAWSA para 322.
4 Culverwell v Brown 1988 2 SA 468 (C) 477A and Van der Merwe et al. 2012 308.
5 In Schlinkman v Van der Walt 1947 2 SA 900 (E), the court held that the debtor must have the intention to
repudiate as the courts have held that the debtor’s real or subjective intention is not relevant to the question of
wrongfulness. Cf also Ponisammy and another v Versailles Estates (Pty) Ltd 1973 1 SA 372 (A) 387, Stewart
Wrightson (Pty) Ltd v Thorpe 1977 2 SA 943 ( A) 953, Van Rooyen v Minster van Openbare Werkeen
Gemeenskapsbou 1978 2 SA 835 (A) 845 -6, Tuckers Land and Development v Hovis 1980 1 SA 645 (A) 653,
OK Bazaars (1929) Ltd v Grosvenor Buildings (Pty) Ltd and another 1993 3 SA 471 (A) 480 -1, Highveld 7
Prop erties (Pty) Ltd and other v Bailes1 1999 4 SA 107 (A) 1315ffn and Metamil (Pty) Ltd v AECI Explosives
and Chemcials Ltd 1994 3 SA 673 (A) 684 -5. Per Nienaber in Datacolour International (Pty) Ltd v Intamarket
(Pty) Ltd 2001 1 ALL SA 581 (A) 591: “Conceiv ably it could therefore happen that one party, in truth intending
to repudiate (as he later confesses), expressed himself so inconclusively that he is afterwards held not to have
done so; conversely, that his conduct may justify the inference that he did n ot propose to perform even though
he can afterwards demonstrate his good faith and his best intention at the time. The emphasis is not on the
repudiating party’s state of mind, on what he subjectively intended, but on what someone in the position of the
innocent party would think he intended to do; repudiation is accordingly not a matter of intention, it is a matter
of perception. The perception is that of a reasonable person placed in the position of the aggrieved party. The
test is whether such a notional reasonable person would conclude that proper performance (in accordance with a
true interpretation of the agreement) will not be forthcoming. The inferred intention accordingly serves as the
criterion for determining the nature of the threatened actual br each.”
6 Wood v Oxendale and Co 1906 23 SC 674, Machanick v Bernstein 1920 CPD 380, Cohen v Orlowski 1930
SWA 125 and Strachan and Co Ltd v Natal Milling Co (Pty) Ltd 1936 NPD 327.
7 Dettmann v Goldfain 1975 3 SA 385 (A) and Walker v Minier and Cie (Pty) L td 1979 2 SA 474 (W).
8Ullman Bros Ltd v Kroonstad Produce Co 1923 AD 449 at 449: “Where a contract for the sale of goods has
been entered into between two parties the seller may, although the sale be on credit, protect himself where
before delivery the bu yer has manifested an inability to pay.” Cf the comments of Lord Esher in Johnstone v
Milling 55 LJQB 162: “ When one party refuses by anticipation to perform the contract, that is equivalent to a
declaration by him, that he thereby rescinds the contract as far as he can. But he cannot rescind it by himself. He
says, I will not perform the contract; but that is not a rescission of the contract. By doing that wrongfully, he
entitles the other party, if he pleases, to agree to its rescission, subject to this t hat at the same time he can bring
not intend to honour all of the obligations, for example by tendering
defective or incomplete performance as proper performance.9
[40] In Discovery Life v Hogan10, the case referred to by both Advocate Blou SC
and Advocate Wickins SC the SCA summed up the law on repudiation as
follows : -
“This Court has consistently said that the test for repudiation is not subjective but
objective.11 The emphasis is not on the repudiating party’s state of mind, on what she
subjectively intended, but on what someone in the position of the innocen t party
would think she intended to do; repudiation is accordingly not a matter of intention, it
is a matter of perception. The perception is that of a reasonable person placed in the
position of the aggrieved party. The test is whether such a notional rea sonable person
would conclude that proper performance (in accordance with a true interpretation of
the agreement) will not be forthcoming. The inferred intention as manifested by
objective external conduct accordingly serves as the criterion for determining the
nature of the threatened actual breach.12
[41] For completeness’s sake, I now consider the submission that because there
are conflicts of facts in the papers, the application should be dismissed. The
an action for the wrongful rescission. The other party may elect to adopt it as a rescission, by acting upon it, and
by treating the contract as at an end, except for the purposes of bringing an action upon it as if it has been
rescinded ”.
9 Cilliers v Papenfus and Rooth 1904 TS 7, Tuckers Land and Development Corporation (Pty) Ltd v Aleco
Investments 1981 1 SA 852 (T), Janowsky v Payne 1989 2 SA 562 (C) and Havenga et al . 1995 114. In
Executors of Alfred Winter Evans v John William Stranack 1890 11 NLR 12, the court held that the attempt to
add conditions to a contract, which had previously not been contemplated by the parties, amounted to
repudiation of the contract: “[When] one party to a contract, endeavour[s] to forc e upon the other party a term
not compromised in the contract. There, I should say, that though the other side may have a right to insist on the
contract’s being performed according to its terms, yet that he has also a right to say to the other side, as yo u
refuse to perform the contract without addition material in its nature, I elect to rescind the contract; I am not
obliged either to submit to your terms, or to bring an action to compel you to submit to mine; and I elect to
break off from the contract, a nd to be done, with you. […] If a party to a contract insists on a new term’s being
added to the contract, the case, is analogous to a repudiating or abandoning by such party of the original
contract, as he will not abide by it.”
10 ZASCA 79; 2021 (5) SA 46 6 (SCA) at para 17
11 See Ponisammy and Another v Versailles Estates (Pty) Ltd 1973 (1) SA 372 A at 387A -
C; [1973] 1 All SA 540 (A)Stewart Wrightson (Pty) Ltd v Thorpe 1977 (2) SA 943 A at
953E -F.
12 See Datacolor International (Pty) Ltd v Intamarket (Pty) Ltd [2001] 1 All SA 581 (A).
law on the approach to dispute of fac ts is also not controversial. In
Wightman t/a JW Construction v Headfour (Pty) Ltd13 , the Supreme Court
of Appeal held that :
“[A]n applicant who seeks final relief on motion must in the event of conflict,
accept the version set up by his opponent unless the latter’s allegations are, in the
opinion of the court, not such as to raise a real, genuine, or bona fide dispute of fact
or are so far -fetched or clearly untenable that the court is justified in rejecting them
merely on the papers.”
[42] The Court will only grant an applicant final relief on motion if the facts
averred in the applicant’s affidavits which have been admitted by the
respondent, together with the facts alleged by the respondent, justify such
an order .14
[43] In my judgment, the issues relating to the letters written by SSC to various
stakeholders, are not controversial and chiefly what the letters related to as
far as the prejudice of RAL is clear for everyone to see. SSC’s contentions
that the dispute arises because the letters were simply an attempt to address
its legitimate concerns on the alleged unlawful conduct of RMSA is not
supported by facts. I say so because once the monthly payment to SSC was
terminated, SSC embarked on a campaign “bare knuckle” bru ising.
[44] In my view, it cannot be in the interest of RMSA to induce its customers to
terminate the business relationship on the false allegation of fraud and
racism by SSC. The allegations have the potential to bring RMSA to is
knees. This not only e mbarrassed it, but it had to fend off the allegations
13 2008 (3) SA 371 (SCA) par 12 referring with approval to
Plascon -Evans Paints Ltd v Van Riebeeck Paints 1984 (3) SA 623 (A) 634E -635C and
Ripoli -Dausa v Middleton 2005 (3) SA 141 (C) 151A -153C
14 Plascon -Evans Paints Ltd v Van Riebeeck Paints 1984 (3) SA 623 (A) 634H
by having to answer to each of its stakeholder. As if that was not enough,
to make similar allegations to the HSBC the facility provider of Redpath
Group of companies of which RMSA was a member, to its auditors
Deloitte and of course to its ultimate shareholder Anton, was in my view
serious enough to as a breach of the agreement. This is so because SSC
had board representative in RMSA. To persist about the alleged legitimacy
of concerns by putting pres sure to bear on Mpower to withdraw its B -
BBEE certificate from RMSA, was clearly designed to harm RMSA and
that was a clear violation of clause 13.2 of the agreement.
[45] I cannot see it any other way. As I see it, there is just no factual basis to
make such allegations, especially that Are ndse had been a board member
of RMSA and has over the years signed off RMSA’s annual financial
statements and as a director, had access to all its records including the lease
of equipment which SSC now contends are sud denly overpriced. I am not
persuaded that by paddling the same false information at various for a make
suddenly turns the allegations into reality, especially without any factual
basis.
[46] It should be noted that that SSC had tried in several ways to bring RMSA
to knees, by inter alia bringing a business rescue application which was
dismissed and all this because of the termination of the monthly payment .
Accordingly, I hold the view that the conduct of SSC and Arendse
evidenced by various letters to t he third parties, were not a legitimate
attempt to address its concerns. The true intentions of all the
communications with the outside world was to twist the arm of RMSA into
submission to reinstate the monthly payment. In its own words, SSC does
say that it received over R17 million over the period of its investment
whereas RAL through management fee agreement was paid over R83
million . It should be remembered that courts cannot and should force
companies to declare dividends . That is the function of the board of
directors to make recommendation to the shareholders in appropriate
circumstances.
[47] I now deal with repudiation . Advocate Wickins SC , submitted on behalf of
SSC, that the letter dated 31 December 2021 was not intended to resile from
the agreement. To contextualise the letter, so he argued , the first two
paragraphs of the letter state as follows:
“1. We refer to the Sale of Shares and Shareholders Agreement in terms of
which inter alia SSC purchased 26% of the entire ordinary issued share
capital in RMSA for a purchase consideration equivalent to 26% of the fair
value of RMSA as at 31 December 2005 (“the Shareholders Agreement”).
2. The purchase consideration for SSC’s shareholding was subsequently
determined to be an amount of R630,000.00 (six hundred and thirty
thousand rand) based on a valuation of RMSA prepared by Pricewaterhouse
Coopers Inc, which according to our calculation is due on 1 January 2022
(“the purchase price”).”
[48] He furthermore submitted that t he letter starts by referring to the Agreement;
records the purchase consideration for SSC’s Twenty -six percent
shareholding was determined by PricewaterhouseCoopers Inc; and records
that according to CDH’s calculation the purchase consideration “ is due on
1 Januar y 2022 ”.
[49] Thus , the opening portions of the letter expressly acknowledge the existence
of the Agreement;
49.1 SSC’s obligation to pay the purchase consideration for its 26%
shareholding; and
49.2 the terms of SSC’s obligation i.e. that the purchase consideration is an
amount of R630,000 and that the purchase consideration is due on 1
January 2022.
[50] The acknowledgment of the Agreement and SSC’s obligations , so the
submission goes, are self-evidently inconsistent with an “ deliberate and
unequivocal intention ” to no longer be bound by the Agreement.
[51] The third paragraph of the letter states as follows: “3 We confirm that our
client has made payment of the purchase consideration into our Trust
Account to be held in trust for, inter alia , the following reasons —
3.1 Our client was only furnished with the official bank confirmation letter
from Redpath on Friday, 24 December 2021;
3.2 Having regard to the fact that the purchase consideration is due to a
foreign entity, our client requires approval from the South African
Reserve Bank which is anticipated to take several weeks especially
when regard is had to the festive period;
3.3 The parties are currently involved in 3 (three) court processes, one of
which your client is seeking to invoke the deemed offer provision
contemplated in clause 12 of the Shareholders Agreement.”
[52] Thus , the leading part of paragraph 3 expressly acknowledges tha t:
52.1 SSC had made payment of the purchase consideration into CDH’s
trust account; and
52.2 The purchase consideration was to be “ held in trust .” According to
the submission made, it is suggested that payment was to be made
once the litigation in pending matters was finalized.
[53] SSC contended that it attempted to make payment of the purchase price to
RAL through its attorneys, Werkmans on 15 February 2022, which was
rejected. SSC contends that RAL had changed its mind on accepting the
payment in February 2022. I do not agree with the proposition. Firstly, the
agreement itself was never amended to cater for what SSC was envisaging
in its letter to RAL of 31 December 2021. This is so because the agreement
itself provides for the standard non -variation clause and secondly, because
RAL through Werkmans had already on the 24 December 2021 reminded
SSC that payment was due on 1 January 2022 . Thirdly, there is no
explanation on what the reasons were for not meeting the deadline.
Fourthly, if the intention were truly to honour the payment deadline why
was there not proposal prior to the 10 February 2022 that payment should
be made to Werkmans ’trust account for the benefit of RAL.
[54] The suggestion in the 31 December 2021 from CHD that because it was a
foreign entity that was going to be the recipient of R630 000 and that
Reserve Bank approval might take time, is illogical because the amount
could have simply been paid into Werkmans account and they would on
behalf of RAL deal with the regulatory side of the funds for final
disbursement to RAL. Consequently, in my view, RAL was entitled to
accept the repudiation on 10 February 2022 and communic ate its decision
to cancel the agreement which was appropriate under the circumstances.
The submission on the convoluted interpretation of the letter by SSC
through CDH dated 31 December 2021 is therefore without merit. This is
so because there is no sugge stion that RAL waived its right to cancel the
agreement. This has not been SSC’s case in its opposition to the application
and its heads of arguments .
[55] The counter -application was not pursued because the main action related to
the similar issues raised by SSC had been dismissed during November
2024. In my view, RAL has succeeded to make out a case for cancellation
of the agreement based on repudiation by SSC.
Order
[56] Having considered the papers and the submissions made on behalf of the
parties the following order is made:
56. 1 It is declared that :
56.1.1 The first respondent repudiated the sale of shares and
shareholders agreement binding the applicant and first
respondent (“the agreement”) through the following conduct:
56.1.1.1 In sending a letter to the applicant on 31 December 2021
in which the first respondent conveyed an intention not to
pay to the applicant the purchase price envisaged by clause
4.1 of the agreement;
56. 1.1.2 In failing to pay the purchase price envisaged by clause
4.1 of the agreement on the due date or at all.
Counsel for the Second Respondent: Adv J Blou SC Adv A Friedman
Instructed by: Werksmans Attorneys