SAFLII Note: Certain personal/private details of parties or witnesses have been redacted from this document
in compliance with the law and SAFLII Policy
IN THE HIGH COURT OF SOUTH AFRICA
(WESTERN CAPE DIVISION, CAPE TOWN)
Case no: 7287/24
In the matter between:
ARTHUR FREDERICK MERKEL Plaintiff
And
CONSTANTINE GODFREY VARLEY First Defendant
BASIC BLUE TRADING Second Defendant
Coram : Nziweni, J
Heard : 15 May 2025
Delivered : 10 November 2025 (electronically)
Summary : Mis joinder- a dormant Close Corporation remains a legal entity
with its own legal personality, which ceases only upon formal deregistration. - If
evidence shows an agreement involved a particular entity, that entity is properly
included in legal proceedings, irrespective of its operational status at the time.
Summary judgment – summary judgment applications have a specific timeframe
after the defendant files their plea. A procedural rule setting a timeframe for filing a
replication does not force a plaintiff to choose between filing the replication or
applying for summary judgment - both actions can be taken.
Summary judgment - while efficient, is only appropriate when no genuine issue of
material fact exists or the defence is deemed a "sham" lacking a triable issue -
genuine factual disputes requiring oral evidence necessitate a conventional trial. In
this case, the plaintiff claims a written "sales agreement" (POC1) while the
defendants assert an oral "joint venture" agreement, presenting conflicting versions
of the contract and its nature. The court must determine if the evidence is sufficient to
ascertain the true agreement or if a trial is required to resolve these disputes - A bare
allegation in a plea does not constitute evidence and it must be substantiat ed with
supporting proof, especially when countered by actual evidence presented by the
opposing party.
ORDER
The Defendants are liable jointly and severally, the one paying the other to be
absolved for:
(a) Payment of the sum of R1 318 390.00.
(b) Interest on the aforesaid sum a tempore morae;
(c) Costs of suit.
JUDGMENT DELIVERED ELECTRONICALLY
Nziweni, J
Introduction and background
[1] The plaintiff lodged this application for summary judgment against both
defendants. Before the issuance of this application, t he plaintiff instituted an action,
with which he seeks to recover an amount of R1 318 390, 00 from the defendants. In
the particulars of claim , the plaintiff alleges that the parties enter ed a partly written,
partly oral agreement [“the investment agreement”]. According to the plaintiff, the
investment agreement was concluded in May 2020.
[2] The plaintiff also alleges that in January 2021, he entered into an oral loan
agreement with the defendants. The loan amount was R150 000.00. Basically, for
his claim the plaintiff is relying on two documents and verbal agreement, in respect of
the loan. The first document is POC1 [what th e plaintiff refers to as the investment
agreement], and the second one is what the plaintiff terms the defendant’s
undertaking to repay [“POC 2”].
[3] The plaintiff contends that in POC2, the defendants undertook to repay all the
amounts due, including the p urchase price for the fifty percent members’ interest in
the second and the loan amount.
[4] According to the plaintiff, the material terms of the “investment agreement ”
were:
a. the plaintiff would pay an amount of R1 218 389.00 [the purchase price] into a
bank account nominated by the first defendant;
b. upon payment of the purchase price and in his capacity as sole member of
second defendant, first defendant would sell fifty percent of his member’s
interest in second defendant to Plaintiff for a stipulated purchase consideration
of R1.00.
c. the fifty members’ interest in second defendant would thereafter be transferred
to Plaintiff as soon as reasonably possible;
d. and when the payment of the purchase price, the farm, Zwartberg View
Mountain Lodge, would be registered in the second defendant’s name.
[5] The plaintiff contends that he complied with his obligation, and the farm was
registered in the second defendant’s name . The plaintiff further alleges that on the
other hand, the first and second defe ndant failed to comply with their obligations, in
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terms of the investment agreement by failing and / or refusing to transfer 50 % of the
members’ interest in second defendant to plaintiff.
[6] The plaintiff further asserts that during November 2020, the parties
terminated the investment agreement and the defendants agreed to repay the
purchase price to the plaintiff.
[7] Pursuant to the plaintiff’s delivery of summons, the first and the second
defendant filed a special plea together with a plea. In the special plea , the
defendants allege that the joining of the second defendant in these proceedings is a
misjoinder as the second defendant was dormant at the time of concluding what the
defendant terms to be an ‘alleged investment agreement’.
[8] On 14 August 2024, the plaintiff fi led a replication to the defendants’ plea. On
20 August 2024, the plaintiff filed the application for summary judgment.
[9] The defendant opposes the application on various grounds. Inter alia, the
defendants raise the defence that the parties entered into a joint venture agreement
and in so doing ; the plaintiff accepted the risk of potentially losing his capital
investment(s). The defendants asserts that the defence constitutes a bona fide
defence for purposes of summary judgment.
[10] Furthermore, the def endants contend that a joint venture agreement was
concluded with the following terms:
a. the plaintiff would make available an amount of R 1 000 000,00 towards
the venture capital in respect of the joint venture;
b. in turn the plaintiff would be allocated a 5 0% membership interest in
second defendant.
c. that as part of the joint venture , second defendant would purchase a fixed
property commonly known as Portion 9 of the Farm Scuinspad No 83,
Western Cape Province and Portion 28 of the Farm Scuinspad No 81,
Western Cape Province and also the business known as Zwartberg
Mountain View Lodge as a going concern.
d. that the plaintiff and the first defendant would equally be responsible for
the expenses in the running of the aforementioned business and the costs
of its improvement.
[11] At the same time , the defendants aver that this case is not an appropriate
case for summary judgment. The defendants take the position that there are genuine
issues that require a trial. The defendants further asserts that the fact that there is a
dispute of facts in this matter, justify dismissal of the summary judgment.
[12] The defendant also rai sed a point of law that the fact that the plaintiff filed
replication to the defendants’ plea, waived his right to apply for summary judgment.
Evaluation
(a) Misjoinder of the second defendant
[13] The second defendant claims that it was dormant when the alleged agreement
was made. The second defendant asserts that it only became relevant later as a
vehicle for a joint venture involving just the plaintiff and the first defendant. Therefore,
it is asserted that; any claim should be directed solely on the first defendant.
[14] First and foremost, t he claim that the second defendant was dormant is a
mere allegation in the special plea and there is n o evidence support ing the
defendants’ assertion. In this regard, the defendants are simply making a conclusory
statement. As such, the conclusory statement does not constitute evidence.
[15] For that matter, in this case it is not disputed that the agreement that was
reached between the parties pertained to the shares of the Close Corporation (“CC”).
Moreover, in contrast, the plaintiff has provided evidence (POC1) showing that on
May 14, 2020, he was sold a member's interest in the second defendant. Thus, the
evidence is inconsistent with any such assertion, because it is clear that POC1
indicates that the CC was active at that time.
[16] Even if we were to assume for purposes of argument the correctness of this
assertion, in terms of South African Law, a "dormant" CC remains a legal entity. The
argument postulated by the defendants , however, overlooks the fa ct that the legal
personality of a CC only ceases to exist once it is deregistered. Furthermore, this
contention of a misjoinder conflates deregistration and dormancy. It does not follow
that a CC loses its status as a legal entity when it stops active trading or business
operations [i.e. when it becomes dormant] . This special plea is a spurious argument
and entirely without foundation.
[17] Thus, I am unable to accept the submission made regarding the misjoinder
assertion; I am satisfied that the sec ond defendant is properly join ed in these
proceedings.
[18] It follows from all these considerations that t his special plea is without any
merit. And stands to be dismissed.
(b) Rule 32
[19] Rule 32 has multiple purposes. It is well established that inter alia , the
purpose for summary judgment mechanism is aimed at weeding out meritless
defences or unnecessary trials, early in litigation and before they reach trial.
[20] Rule 32(1) to (4) reads as follows:
(1) The plaintiff may, after the defendant has delivered a plea , apply to court
for summary judgment on each of such claims in the summons as is only-
(a) on a liquid document;
(b) for a liquidated amount in money;
(c) for delivery of specified movable property; or
(d) for ejectment;
together with any claim for interest and costs.
(2)(a) Within 15 days after the date of delivery of the plea, the plaintiff shall
deliver a notice of application for summary judgment, together with an affidavit
made by the plaintiff or by any ot her person who can swear positively to the
facts.
(b) The plaintiff shall, in the affidavit referred to in subrule (2)(a). verify the
cause of action and the amount, if any, claimed, and identify any point of law
relied upon and the facts upon which the pl aintiff’s claim is based, and explain
briefly why the defence as pleaded does not raise any issue for trial.
(c) If the claim is founded on a liquid document a copy of the document shall
be annexed to such affidavit and the notice of application for summary
judgment shall state that the application will be set down for hearing on a
stated day not being less than 15 days from the date of the delivery thereof.
(3) The defendant may–
(a) give security to the plaintiff to the satisfaction of the court for any
judgment including costs which may be given; or
(b) satisfy the court by affidavit (which shall be del ivered five days before
the day on which the application is to be heard), or with the leave of the court
by oral evidence of such defendant or of any other person who can swear
positively to the fact that the defendant has a bona fide defence to the action ;
such affidavit or evidence shall disclose fully the nature and grounds of the
defence and the material facts relied upon therefor.
(4) No evidence may be adduced by the plaintiff otherwise than by the affidavit
referred to in subrule (2), nor may either party cross-examine any person who
gives evidence orally or on affidavit: Provided that the court may put to any
person who gives oral evidence such questions as it considers may elucidate
the matter.
[21] The question which then arises is whether there is any force in the
defendants’ contention that the plaintiff waived his right to bring summary judgment.
(a) Has the plaintiff waived the right to bring summary judgment after taking
a procedural step of filing a replication to the defendant’s plea.
[22] I am very much mindful to the fact that this Court cannot change or create new
laws while pretending to interpret existing ones. There is no difficulty in
laws while pretending to interpret existing ones. There is no difficulty in
understanding what is meant by Rule 32. Rule 32 states explicitly that summary
judgment may be applied for after a defendant has delivered a plea. Thus, summary
judgment shall only be applied for upon the occurrence of a specified event. This
means that there is a window period t o bring summary judgment. The window for
summary judgment is after the filing of the defendant’s plea.
[23] Rule 25 states the following:
“(1) Within fifteen days after the service upon him of a plea and subject to
subrule (2) hereof, the plaintiff shall where necessarily deliver a rep lication to
the plea . . .
[24] Rule 25 sets forth a peremptory timeframe for filing a replication.
[25] Therefore, in this case, the plaintiff filed its replication in accordance with Rule
25, to ensure compliance with the rule. In so doing, he fully complied with Rule 25.
Proper construction of Rule 25 shows that its purpose is not to hinder the process of
obtaining a speedy summary judgment. Rule 25 does not force a party to choose
between filing a replication or filing an application for summary judgment; both
options remain open.
[26] In so finding, this Court is mindful of the decision of this division in Ingenuity
Property Investments (Pty) Ltd v Ignite Fitness (Pty) Ltd (9845/2022) [2023]
ZAWCHC 129; [2023] 3 All SA 458 (WCC); 2023 (5) SA 439 (WCC) (29 May 2023) ,
that buttress this court’s finding, where Van Zyl AJ, stated the following at
paragraphs 50,52,95 and 101:
“50. A replication also serves as a response to the defences raised in the plea and
explains why they do not raise triable issues. It does not serve as amplification of the
cause of action. In this sense a replication and the summary judgment affidavit under
the amended Rule 32 effectively perform similar functions. There is no reason why a
plaintiff should be precluded from delivering its replication simultaneously with its
application for summary judgment and inc orporating by reference the allegations in
the replication.
52. I am of the view that the answer to the defendant’s argument is that “it depends
on the issues raised in the plea”. A Court dealing with a summary judgment
application will have regard to the nature of the response in a replication, if delivered,
application will have regard to the nature of the response in a replication, if delivered,
in relation to the plea. Obviously, if anything in the replication (considered with the
plea) indicates that there are issues that should be dealt with at trial, then summary
judgment cannot be grant ed. The matter is then, in the words of the Task Team, “ill -
----
suited” for summary judgment proceedings. That does not mean, however, that a
plaintiff who delivers a replication simultaneously with its application for summary
judgment takes an irregular step as contemplated in Rule 30.
95.In determining whether the delivery of a replication constitutes a waiver, this Court
would have to find that the plaintiff intended to waive its right to apply for summary
judgment. In the absence of an express waiver, waiver of a right can be inferred from
a plaintiff choosing to exercise a right that is inconsistent with another right.
101. As a final remark on this issue, Rule 32, prior to its amendment, did not permit
the plaintiff to adduce evidence other th an to confirm the cause of action and the
amount stated in the summons. The plaintiff could also not deliver a replying affidavit
in response to the defendant's affidavit. The amended Rule 32(2)(b) now not only
permits but requires the plaintiff in its af fidavit to "explain ... why the defence as
pleaded does not raise any issue for trial”. Given this obligation, a replication
delivered simultaneously with an application for summary judgment cannot be
regarded as a waiver by the plaintiff of its summary ju dgment remedy. On the
contrary, in delivering a replication, the plaintiff amplifies the reasons why the
defence raised in the plea does not raise triable issues. It does not amplify the
plaintiff’s cause of action.”
[27] While several legal authorities were cited by the parties, I won't list them all
here, except to note that the Ignite decision is sound and cannot be faulted . For that
matter, as far as the filing of the replication is concerned, there are parallels between
Ignite case and the present one. It does not matter that the replication and the
summary judgment application were filed at different times in this case. The timing
itself is not a decisive issue. In my view, this complaint by the defendants is rather
itself is not a decisive issue. In my view, this complaint by the defendants is rather
technical in nature than substantive. In the light of what I have set out above it is
axiomatic that there is no merit in this issue.
(b) Is this case amenable to be finally disposed by means of summary
judgment procedure?
[28] Although summary judgment proceedings are well known for affording litigants
an effective, efficient and affordable procedure compared to a conventional trial, the
procedure should never compromise fairness on the altar of expeditious and cost -
effective way of resolving disputes. It is settled that summary judgment is appropriate
when there is no genuine issue of material fact.
According to the defendants , the plaintiff is not entitled to summary judgment
because this court is faced with conflicting version s. The defendants strongly assert
that a conventional trial is best suited to make a determination about the issues
between the parties.
[29] The central issue is whether the evidence presented by the parties is sufficient
for the court to reach a fair and proper decision using motion proceedings. Put
differently, whether a trial is necessary in order to fully comprehend the issues
between the parties and the evidence.
[30] At this juncture, I find it convenient to recite the two documents, namely POC
1 and POC 2 in their entirety. The documents contained the following text:
‘POC1’
“Sales agreement Of Member’s Interest in Basic Blue Trading 458 CC
I, Constantine Godfrey Varley (ID no 6[...]) hereby sell 50% Member’s Interest in
Basic Blue Trading 458 CC (registration no: 2006/037804/23) to Arthur Frederick
Merkle (ID no …) for R1-00 (one rand) with immediate effect.
Signed at Somerset West on 14 May 2020”
‘POC 2’
“On Wednesday, March 30, 2022, 9:16PM, Constantine Varley v[...] wrote:
Hi Arthur
Ek weet nie waar jy die idee kry dat ek jou nie ernstig opneem nie. My magtig ek
slaap nie eers meer in die aand soos ek dink aan planne om jou geld bymekaar te
maak nie. En ek deur al die mense in die steek gelaat raak.
Ons is hard besig om die boeke ag ter mekaar te kry sodat ons die aansoeke kan in
die by die bank vir ‘n verband. Aangesien ek ook vir Jenny -hulle teen 15 Mei hulle
geld moet gee.
Ek verstaan dat almal se omstandighede verander het sedert die koop . En niemand
van ons gedink het dat dit so gaan uit draai nie.
Wat ek nie kan verstaan nie. IS wat het verkeerd gegaan met ons oorspronkilike plan
daarvan is vir “life” toe ons die transaksie bespreek het, het in ons sitkamer en toe ek
jou 20% aandele aangebied het en jy se toe nee jy wil 50% hê. Ek en Hannalize het
jou daardie tyd gesê onthou ons koop om nie weer te verkoop nie. So jou voorstel
“Ek voorstel om te verkoop.” Is nie ‘n opsie nie en dit was so van dag een af.
Die kontrak wat ek die slag op gestel het was die mees regverdigste kontrak wat ons
albei beskerm het.
Ek het om daardie stadium ook my somme gemaak o m ‘n vernnoot hê wat die helfte
van die kostes sou dra was dit baie maklik haalbaar gewees. NOOIT het gedink ek
gaan al die kostes moet dra nie. EN wat ek dalk verkeerd gedoen het was om alles
wat ek het te investeer in die plaas om al die upgrades te doen . Maar ek moes dit
doen met die hoop dat ek voete kan kry dat die plaas net weer by die punt kom waar
dit vir homself kan betaal en dan dalk ook genoeg geld gemaak het om van die skuld
ook te betaal. Wel Covid het ons goed almal deur die ore gewerk.
Wat my wel seermaak is dat jy my oor dieselfde kam skeer as Mario. Die plaas sou
jou in geen moelikheid laat beland het nie en a s jy met enige iemand wat iets
verstaan van belegging, sal vir jou toe oe se die plaas se koop was ‘n goeie
transaksie en jou doel was suiwer en ongeag jou gesondheid of enige ander situasie
en ons bly by oorspronklike redes hoekom ons dit gekoop het – vertsaan ek glad nie
jou stelling van “ Ek is woedend met myself dat Ek myself in die situasie bevind.
Self created (I know) deur te goedhartig te gewees het en te veel mense te
help... – uiteindelik op my koste ”, want tot hede het niks aan ons kant verander
nie. Nog nooit het ek van jou enige iets verwag nie of hoef jy ons vriendskap te
gekoop het nie. Jy is en sal altyd een van ons wees ongeag.
Ons is nie Mario vir wie jy moet onderhou of moet gelukkig hou nie en jou in die
situasie laat beland het waar jy jou nou bevind nie. En waarvoor ons nou die druk en
die prys moet betaal nie. Maar dit daar gelaat.
Ek hoop om op die laat ste 15 April al die aansoek in te hê vir ‘n verband of vir ‘n
fasiliteit sodate ek vir jou en Jenny kan uitbetaal . Ek is steeds besig om my aandele
in die aftree oord los te kry sodate ek daardie fondse kan uit kry. So ook is ek
heeltyd besig om die ou w at vir my geld skuld te kry dat hy my terugbetaal, Want
tussen daardie twee behoort ek genoeg te hê om jou geld terug te gee.
Ek ter selfde tyd besig om my fondse uit ‘n ander ontwikkeling los te maak, maar dit
gaan dalk met ‘n moerse premie wees dat ek net my kapitaal met heersende rente
koers gaan terus kry vs. ‘n opbrengs van 1:8000, maar as dit gaan om ons
vriendskap nie skade te laat lei nie, doen ek dit.
So ek wil jou die versekering gee dat ek jou nie ignoreer nie of dat ek jou nie ernstig
op neem nie. En dat ek regtig alles probeer doen om die situasie op te los ASAP. En
al is die laaste ding wat ek moet doen sal ek jou elke sent terug gee . Al verstaan ek
tot vandag toe nie wie vir jou of wat jou van ons oorspronklike plan laat verander het
nie. Maar dit hoef jy ook nie aan my te verduidelik nie. Jy wil uit en dit respekteer ek
en daar doen ek alles om dit moontlik te maak. Maar asb verstaan ook date ek oor
‘n klomp balle in die lug moet hou en die plaas soek sy pond vleis ook. EK is oortuig
date die skip is besig om te draai en daar om is ek bereid om my nek baie ver uit te
steek om dit wat nodig is te gaan leen om vir jou te betaal.
So om op te som:
• Ons is besig om boeke asap af te handel sodate die state afgeteken kan raak
• Ons wil v oor 15 April al ons aansoeke ingedien he by die volgende banke
ABSA, FNB, Standard Bank en Investec. Om die nodige verband of fasiliteit te
kry om plaas te finansier.
kry om plaas te finansier.
• Dan wag ons net vir die regstrasie van die fasiliteite of die verband en betaal
almal se geld voor of op 15 Mei terug.
Ek hoop jy sal verstaan.
Vriendelike groete
Mnr Constatine G Varley”
[31] The defendants claim that the plaintiff provided R1,000,000 as venture capital
for a joint business venture. The defendants further contend that the POC1
document does not constitute an investment agreement, as evidenced by its failure
to even contain the word 'investment'. The defendants' plea essentially denies the
formation of any investment agreement.
[32] In addition, the defendant s deny that the plaintiff complied with his obligations
in terms of the joint venture agreement.
[33] The defendants submitted in their plea that the plaintiff had expressed an
intention to terminate his participation in the joint venture.
[34] The defendants do not deny that POC2 was authored by the first defendant.
However, the defendants deny that POC2 constitutes an undertaking as alleged by
the plaintiff. The defendant submits that POC2 constitutes non-binding negotiations
aimed at exploring potential methods of reimbursing the plaintiff's venture capital and
does not establish any legal obligation or admission of liability.
[35] According to the defendants, payments made to the plaintiff by them were
friendly gestures aimed at repairing their relationship.
[36] The defendants admit that 50% interest was not transferred to the plaintiff.
The defendants further aver that the reason why the first defendant’s 50%
membership interest was not transferred to the plaintiff was because it was going to
complicate the plaintiff’s Tax matters in Switzerland. The defendants dispute that in
November 2020, they ended ‘the investment agreement’ with the plaintiff and agreed
to refund the purchase price.
(c) Is there a genuine dispute of material facts that raise a genuine triable
issue.
[37] Factual controversies and disagreements are typical in action proceedings.
This explains precisely why action proceedings involve the presentation of oral
evidence and cross-examination. Thus, trials are best suited and equipped to handle
factual disputes . Trials have the most appropriate mechanis ms to resolve them
[factual disputes.
[38] It is now settled by many well known decisions that summary judgment is only
appropriate for resolving factual disputes if the court determines the defence is not
genuine and lacks a triable issue (i.e., is a "sham" defense). See FirstRand Bank
Limited v Badenhorst NO and Others (2022/5936) [2023] ZAGPJHC 779 at para 34
(10 July 2023)
[39] In the present case, to determine if there is a genuine dispute over the facts of
the case, I must first consider whether this court can accurately establish exactly
what kind of agreement the parties reached.
(d) what agreement did the parties reach
[40] This case is not about whether the agreement between the parties is
ambiguous or legally sound. It is clear therefore that t he real and the obvious
question that arises is, whether the evidence presented is sufficient to precisely
identify the specific agreement that was made. In this summary judgment application,
there are opposing contentions as to the agreements entered by the parties.
[41] Although the specifics of each cas e vary , even at the summary judgment
stage, this Court should be satisfied that the evidence presented by the parties
demonstrates objective manifestation of mutual assent to establish that the parties
agreed to POC1. At the same time, the courts generally aim to resolve disputes
based on the actual agreement between the parties, not on a technical mislabelling.
[42] I should also mention that , for a plaintiff to be successful in a claim involving
breach of contract, the plaintiff must demonstrate that; there was an agreement, the
breach of contract, the plaintiff must demonstrate that; there was an agreement, the
defendant failed to meet their contractual obligations, and that the plaintiff performed
their part of the contract. Thus, it is critical at th ese proceedings that it should be
ascertainable as to what agreement the parties agreed upon. The case of the plaintiff
asserts that POC1 is the written version of the parties’ agreement that was
concluded in May 2020.
[43] As far as POC1 is concerned, this case really turns on the question of whether
this written instrument constitutes part of the true agreement the parties agreed
upon. The evidence in this matter shows that the parties had indeed entered into
some form of an agreement, but as previously mentioned, they sharply disagree as
to the nature of the contract.
[44] With the foregoing framework in mind, I am well alive to the fact that t he
character of the contract is determined by the intentions of the parties, which in turn
[intentions of the parties] are evidenced or manifested by the terms of the contract.
[45] As is clear from the case -law; in determining the meaning of a contract, the
court must give effect to the clear intentions of the parties as set forth in the express
terms of the written instrument. Thus, a mere difference of opinion between
contracting parties concerning the agreement's purport or character does not
establish ambiguity . The true meaning is to be derived from an analysis of the
surrounding circumstances and the clear, unambiguous language of the instrument.
With these guiding principles in mind, I turn to the facts of the present case.
[46] Starting with the document itself [POC1]. It is abundantly clear from the
evidence [more specifically, the particulars of claim ], that the plaintiff's case largely
hinges on the document POC1. It should be noted that the document POC1 is clearly
titled "sales agreement of member’s interest."
[47] POC1 provides for the sale of 50% of the first defendant’s member’s interests
in the second defendant to the plaintiff. I find that POC1 on its face purports to be a
sale transferring ownership and possession to the purcha ser for a stipulated cash
sale transferring ownership and possession to the purcha ser for a stipulated cash
price. The pertinently stipulated terms in POC1 provide that the parties agreed that
the first defendant, as the owner of 50% member’s interest in the second defendant,
sells the plaintiff the 50% member’s interest in the second d efendant for R1.00, with
immediate effect.
[48] The defendants’ version does not cater for the existence of POC1. Likewise,
the assertion by the defendants merely suggests that they do not bear knowledge of
the character or essential terms of POC1.
[49] In their p lea, the defendants simply deny the plaintiff's allegations regarding
the main terms of the investment agreement, and they also deny that the attached
document, labelled "POC1," is a copy of that agreement.
[50] Notably, the defendants are silent regarding the signature on POC1 that
purportedly belongs to the first defendant; they do not address its authenticity in their
plea. The defendants only argue that POC1 is not an investment agreement because
the word "investment" is absent from the documen t. This, they argue, supports their
assertion that the parties had formed a joint venture agreement.
[51] The defendants simply assert that the parties entered into an oral joint venture
agreement. Given the circumstances of this case, it is quite strange that the
defendants have not taken a firm or clear position regarding the document POC1.
Fundamentally, the defendants do not pertinently state that the plaintiff is attempting
to hold them to an agreement they never consented to. Instead, the defendants
merely insists that POC1 does not constitute an investment agreement.
[52] In this case, t he plaintiff has presented documentary evidence to show that
the parties entered into a partly written agreement. The documentary evidence
presented by the plaintiff also contains a signature purported to be that of the first
defendant. Thus, the plaintiff presented evidence to back up his case. In the
circumstances, the defendants ought to have presented evidentiary material to back
up their assertions.
[53] While a defendant seeking to avoid summary judgment is not expected to
present oral witness account, they cannot rely only on simple denials or general
present oral witness account, they cannot rely only on simple denials or general
claims made in their pleadings.
[54] Instead, their response must clearly present specific facts demonstrating that
a real dispute exists which requires a full trial. Obviously, there is evidentiary
standards that need to be met when the court is assessing as to whether the factual
dispute ra ised is genuine enough to warrant a full hearing. In court there is a
standard of proof. A party cannot simply allege a fact without proving it. It is not
enough to make bald assertions. Assertions must be substantiated with evidence;
otherwise, they carry no probative weight.
[55] Indeed, it was in this vein that, as I have previously observed, the primary
purpose of the summary judgment process is to resolve the case quickly by
identifying defences that lack factual evidence.
[56] According to the defendants, the plaintiff is misstating the terms of the actual
agreement between the parties [which the defendants call a joint venture
agreement]. The defendants allege that as part of the joint venture, the plaintiff will
be allocated a 50% interest in the second defendant. The defendants deny that the
50% interest was not transferred to the plaintiff because they failed or refused to
comply with their obligations. The defendants also plead that the plaintiff informed
them that he did not wish to continue with the joint venture any further.
[57] These as sertions by the defendants ignore the fact that i f the plaintiff had
genuinely agreed to a joint venture, he could not simply back out of his obligations.
By refusing to follow the terms of that agreement [joint venture], the plaintiff would
essentially be making himself liable for a breach of contract. As correctly stated by Mr
Steyn, plaintiff’s counsel that had the plaintiff entered into a joint venture agreement,
he would have accepted the risk of potentially losing his capital investment. There is
absolutely no force in the joint venture argument. As such, the defendants have not
absolutely no force in the joint venture argument. As such, the defendants have not
set forth facts sufficient to support a finding in their favour that the plaintiff is relying
on a wrong contract for his claim.
[58] In the particulars of claim POC1 is referred to as an "investment agreement".
As noted earlier, it was never averred in the defendants’ pleadings that the signature
on POC1 does not belong to the first defendant, but it has been consistently pleaded
that the parties entered into a joint venture agreement. What is more is that the
defendants do not even contend that they entered into a sale agreement.
[59] In this matter, it is quite evident that there are certain allegations in the
defendants’ version that do not accord with the evidence.
[60] Even though the defendants refuse to formally acknowledge POC1, it remains
an undisputed fact that the first defendant sold a 50% member's interest to the
plaintiff on May 14, 2020. It is undisputed that the plaintiff paid the purchase price for
the membership interest. If o ne has regard to the defendants’ plea, it becomes
obvious that it is also common cause that the plaintiff subsequently cancelled the
agreement [regardless of what type of agreement it was]. This demonstrates the
defendants' concession that the plaintiff wa s entitled to the return of his 'venture
capital.' Joint venture entails losing of capital contribution due to assumed risk. Thus,
if things do not go as planned the investor is not automatically entitled to the return of
their investment.
[61] While the act of paying funds is a significant indicator in establishing a “joint
venture”, it is not the sole or definitive factor that establishes a contract as a "joint
adventure". Surprisingly, for a joint business venture agreement, t he details of the
joint venture agreement alleged by the defendants are unclear and quite lacking. The
averments made by the defendants in his plea as far as this aspect is concerned, are
quite sketch and inadequate to sustain a triable issue. This renders the assertion of a
joint venture potentially vague. An assertion of a joint venture business agreement
necessitates further, specific factual averments on the specific terms and conditions.
[62] The term "joint venture" is notably absent throughout the entire [POC1]
document. For that matter, POC1 does not incorporate by reference or implication
any “joint venture ” terms. POC1 does not state that the mem ber’s interests
any “joint venture ” terms. POC1 does not state that the mem ber’s interests
purchased by the plaintiff from the first defendant were part of a joint venture . Of
importance is the fact that the signatories to POC1 are described as the first
defendant and the plaintiff.
[63] On the other ha nd, while the word "investment" is absent from POC1, the
terms of the agreement establish a relationship that is, in effect, an investment. This
is true, not only because the transaction [contemplated by POC1] itself most readily
lends itself to that construction, but also because while it's true the agreement never
mentions the word "investment ;" however, buying an ownership stake in a close
corporation is a way of investing money.
[64] Notably, paragraph 5 of the particulars of claim firstly outlines the agreement's
terms and then makes the following statement:
“A copy of the written portion of the investment agreement is annexed marked
“POC1”.
[65] I have already mentioned , for all that appears in the evidence, POC1, is the
document the plaintiff is relying on as the cause of action . The particulars of claim do
not contain any evidence inconsistent with the terms of the POC1, and its oral
components as alleged by the plainti ff. For that matter, there is no indication in the
particulars of claim or in the plaintiff’s replication that the parties created a separate
investment agreement besides the one outlined in POC1. As such , t he case
presented by the plaintiff cannot be regarded as one based on an inve stment
agreement.
[66] The important principle at play in this regard is that c ontractual consent
requires objective evidence . Private uncommunicated thoughts are irrelevant to
forming a binding agreement.
[67] From the above, it is evident that the plaintiff considers "POC1" and the
"investment agreement" to be one and the same document or concept. After
examining POC1’s text and considering the meaning of such text , I am satisfied that
the text of POC1 is clear and straightforward. Its meaning is no t absurd, unworkable,
or open to multiple interpretations. In accordance with the plain language of the
POC1, despite being called an "investment agreement" by the plaintiff, POC1 is
clearly a sales agreement.
[68] It is also significant to note that the first defendant wrote to the plaintiff on 13
June 2020. A key consideration in this aspect is that t his was barely a month after
the contract between the parties was concluded. The email reads as follows:
“Hi Arthur
Hier is solank verkoop ooreenskoms dat jy nou 50% van BK besit waain jou
lening lê en waar in die plaas geregistreer gaan raak
S dra die BTW dranklisensie uitgesorteer het sal ek die CK vorm by CIPRO
laat update met hierdie brief.
Jy moet dit dus net teken en terug stuur.” Emphasis added.
[69] This email is relevant to the case because it supports the argument that the
parties reached a sale agreement. This is true, not only because the wording itself
most readily lends itself to that construction, but also bec ause the first respondent
corroborates [POC1’s] the description of the agreement between the parties as a
sales agreement.
[70] Fundamentally, the actual content and meaning of POC1 effectively override
any general, inconsistent assertions made elsewhere, and this fact is sufficient to
support the plaintiff's case.
[71] It is evident from the defendant’s plea that the defendants are denying that
they entered into a loan agreement with t he plaintiff. In support of this denial, the
defendants’ plea reveals the following:
“the Defendants repeat their Plea as contained in Paragraph 1 – 11 of the First and
Second Defendants Plea above, as if it is specifically pleaded here as well.”
[72] It is plain in this regard that the defendants deny the existence of the loan
agreement based on the same averments used to deny POC 1.
[73] It is appropriate at this stage to say something about POC2. In my mind, the
most significant feature of the POC2, is that it reveals numerous admissions made by
the first defendant.
[74] To me POC2 also reveals how aware the defendants were about their
obligation to repay the plaintiff. Indeed, it was in this vein that, as I have previously
observed, that it is common cause that the plaintiff cancelled whatever agreement he
had with the defendants. The defendants' willingness to acknowledge a debt makes
no sense in the context of a joint venture agreement. Instead, the admission of debt
is, however, completely consistent with a loan agreement that was breached.
[75] The sequence of events leading up to the first defendant writing the POC2 are
highly significant. The particulars of claim reveal that the plaintiff on 23 March 2022,
demanded repayment of the R150 000.00. Around the same time, the defendants on
30 March 2022, drafted POC2.
[76] In AMR3, on 10 December 2023, the first defendant wrote the following to the
plaintiff:
“. . . Ek sal van Februarie vi rook begin betaal saam met sy R10 k, dat on hierdie
lening so vining kan klaar maak betaal . . .
. . . Jy sal ongeag die terugbetaling van jou len ing is altyd ‘n plek h ier hê en altyd
welkom wees by ons.”
[77] I fully align myself with the sentiments as expressed in the plaintiff’s heads of
argument that the stark reality in this case is that the pleaded version of the
defendants is not borne out by documentary evidence. There is no genuine dispute
as to any material fact in this matter.
[78] The defendants’ defence that the parties entered into a joint venture
agreement making the plaintiff vulnerable to the potential of losing his investment
capital, does not constitute a bona fide defence that raises a triable issue. It is a
spurious assertion and entirely without foundation. Hence, I do not accept that
argument. This is the common thread that is running through the entire defendants’
defence against this summary judgment . The defences raised by the defendants
have common denominator of being spurious, technical and having no foundation.
[79] I am thus satisfied that the plaintiff has established his claim against the
defendant as prayed for in the notice of motion.
[80] In the result, I make the following order :
80.1 the Defendants are liable jointly and severally, the one paying the other to be
absolved for:
(a) Payment of the sum of R1 318 390.00.
(b) Interest on the aforesaid sum a tempore morae;
(c) Costs of suit.
_____________
NZIWENI, J
Appearance:
Counsel for the Plaintiff : Advocate Roelof Steyn
Attorneys : Pfister Attorneys
Counsel for the Defendants: Advocate Tobie Benade
Attorneys : Gerhard Marè & Associates