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[2026] ZAGPJHC 180
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Sunstone Capital Limited and Another v Black Mountain Investment Management (Pty) and Others (94421/2024) [2026] ZAGPJHC 180 (25 February 2026)
REPUBLIC
OF SOUTH AFRICA
IN
THE HIGH COURT OF SOUTH AFRICA
GAUTENG
DIVISION, JOHANNESBURG
Case Number: 94421/2024
(1)
REPORTABLE: No
(2)
OF INTEREST TO OTHER JUDGES: No
(3)
NOT REVISED
In
the matter between:
SUNSTONE
CAPITAL LIMITED
First
Applicant
SUNSTONE
MANAGEMENT COMPANY (PTY) LTD
Second
Applicant
and
BLACK
MOUNTAIN INVESTMENT MANAGEMENT (PTY) LTD
First
Respondent
MOHAMED
SHAZIM ISMAIL DHORAT
Second
Respondent
BLACK
MOUNTAIN IM (PTY) LTD
Third
Respondent
Heard:
18 November 2025
Delivered:
25 February 2026
JUDGMENT
Yacoob, J:
[1]
The applicants (collectively “Sunstone”)
seek the payment of money by the respondents on the basis of a Put
Option Agreement
that Sunstone concluded with the first and second
respondents (“Black Mountain” and “Dhorat”
respectively,
and “the Consortium” collectively) on 12
May 2023 in pursuance of a shariah-compliant financing arrangement.
The third
respondent (“BMIM”) is the nominee of Black
Mountain for purposes of the Put Option agreement. Dhorat is the
director
of both Black Mountain and BMIM, and his email address is
the email address of both entities.
[2]
The essence of the arrangement, which is
not encapsulated in the Put Option Agreement, but rather emerges from
the Answering Affidavit
read with the Replying Affidavit, is that
Sunstone would provide a cash injection of R2 million, to an entity
known as Everland,
which is one of Dhorat’s companies. The
business of Everland was to trade in stock held by another of
Dhorat’s companies,
Sunstone Stationery Company (Pty) Ltd
(“Stationery”), which Everland traded in on an “on
consignment” basis.
Sunstone would cause the R2 million to be
paid through another entity, Workspace Wares (Pty) Ltd, the shares of
which were held
and controlled by the Sunstone entities in different
proportions, relative to the proportion of the R2 million each
fronted. On
the provision of the injection, Dhorat would cause the
transfer of ownership of the trading stock from Stationery to WW.
Despite
the transfer of ownership of the trading stock, it would
remain under control of Everland to trade on consignment. Sunstone
would
then exercise the Put Option within 90 days of 12 May 2023 for
the Consortium to purchase the shares of WW for a predetermined price
of R2 million plus 20% (a total of R2 400 000, divided
proportionally between the two Sunstone entities), within 5 days
of
notice being given of the exercise of the Option. The ownership of
the trading stock would then revert to Dhorat, through WW,
and
Sunstone would, through the payment for the shares, receive the cash
injection back together with a return on investment. The
Consortium
would have to pay a penalty of R4 500 for each day that the
payment was late.
[3]
This methodology had been successfully
followed by the parties in the past using Stationery as a vehicle for
the transaction.
[4]
In accordance with the arrangement, WW paid
R2 million to Everland on 12 May 2023. On Dhorat’s own version,
WW then became
the owner of the trading stock as provided for in the
Sale and Purchase Agreement entered into between Everland and WW on
the same
date. It must be noted that, at the time of the sale to WW,
Everland had the power to sell the trading stock on consignment in
the same way as it did after the sale to WW, but was not the owner of
the stock.
[5]
On 11 July 2023, after Everland had
received the R2 million and had sold the trading stock to WW, but
before the Put Option had
been exercised, two other entities who are
not parties to this application obtained a court order allowing them
to execute and
register a notarial bond over all movable assets
belonging to Everland, and to simultaneously perfect the bond.
[6]
According to Dhorat, the trading stock was
attached even though it was not owned by Everland and he was advised
to bring interpleader
proceedings. Dhorat contends that at that late
date, even though the R2 million had been paid almost two months
before, he had
“not been able” to pass ownership to WW.
It is unclear why he contends that it did not happen in accordance
with the
Sale and Purchase Agreement on 12 May 2023, what he needed
to do in order to pass the ownership in terms of the agreement, or
why
something that happened two months later prevented the transfer
of ownership. Dhorat also makes the contradictory allegation in
his
affidavit that the agreement provided that ownership would pass to WW
on payment of the R2 million (rather than him having
to do something
to pass ownership to WW), which was paid on 12 May 2023. At the
hearing it was properly conceded on the respondents’
behalf
that ownership had already passed to WW.
[7]
Sunstone notified Dhorat and the third
respondent on 2 August 2023 that they exercised the Put Option. The
R2 400 000
had to be paid within five days, on 7 August
2023. It was not paid, and Dhorat sent a number of emails and
whatsapp messages to
Sunstone promising payment and saying that he
was awaiting incoming payments. The only payment that had been made
by the time this
application was instituted a year later was an
amount of R750 000 paid on 18 August 2023.
[8]
Dhorat contends that the Put Option
agreement is a sham and that by exercising the Put Option after the
trading stock was attached
Sunstone is showing its
mala
fides
. He contends that WW was and is a
shell company of no value and that Sunstone are being opportunistic
by trying to make him pay
for the trading stock which he will not get
back.
[9]
On the respondents’ own version,
there is no merit in those contentions. In terms of the Sale and
Purchase Agreement, ownership
should have been passed to WW on 12 May
2023. Even if it did not, the court order applied to movable property
of Everland. Before
ownership was passed to WW, the trading stock was
still not the property of Everland. Even if the property was attached
because
it was in the possession of Everland, the actual owner,
whether WW or Stationery, would have recourse. In any event, it is
clear
that WW is the owner of the trading stock, and is therefore not
without assets.
[10]
Secondly, there is no dispute that Everland
received the R2 million and did not pay it back. Even if the trading
stock was no longer
owned by WW, there is no basis on which Dhorat
can contend that there is no obligation to repay the money plus the
20%. He asks
the court to look at all the surrounding circumstances
and the various agreements between entities not before the court,
but, in
doing that, the court must still take into account that
Everland received the benefit that the Put Option agreement was
designed
to allow it to receive, and that the Consortium must then do
its part. In addition, had ownership of the trading stock not been
transferred to WW, then it would still be an asset of Stationery, and
Dhorat would not be able to claim that the only reason for
the
payment in terms of the Put Option is to regain ownership that he
already had through a different entity.
11]
Dhorat makes allegations that Sunstone was
in league with the parties who attached the trading stock. Even if
that is the case,
it is irrelevant, as, looking at the arrangements
put in place by the various agreements, the attachment changes
nothing. It was
open to WW to challenge the attachment, or, if Dhorat
had not caused the transfer of the trading stock as required, for
Stationery
to do so. It is true that Dhorat alleges that WW did not
co-operate with him in dealing with the attachment of the trading
stock,
but he simultaneously alleges that WW was not the owner, so it
is unclear what he expected WW to do. He cannot have it both ways.
[12]
All this is evident from the respondents’
version. The respondents’ submission that there is a dispute of
fact which
cannot be determined on the papers therefore has no merit.
[13]
It is clear that the Put Option was
properly exercised and that Sunstone is entitled to an order that the
Consortium, whether in
the person of Black Mountain and Dhorat, or
Dhorat and BMIM (which appears to have been the nominee only of Black
Mountain) or
just BMIM (if the intention was that BMIM become the
nominee of both parties to the Consortium) make the required payment,
of R2 400 000
less the R750 000 that has already been
paid. Sunstone claims the amount as R1 571 129 due to the
first applicant,
and R78 871 due to the second applicant, a
total of R1 650 000.
[14]
The respondents also raised as part of
their defence that Sunstone sent notices to remedy the breach not to
BMIM, the nominee, but
to Black Mountain. In my view nothing turns on
this. Notices to both BMIM and Black Mountain were required to be
sent to the same
email address, which is Dhorat’s. The fact
that the notices were addressed to the incorrect entity does not take
away the
fact that they came to the attention of Dhorat, the person
who had to take action on behalf of both BMIM and Black Mountain.
Nothing
would have changed had the notices had BMIM’s name on
them rather than Black Mountain’s. In any event, Dhorat clearly
considered that he had the obligation to pay, through whichever
entity. Dhorat’s affidavit also makes clear that all the
entities were used as alter egos for him, for example where he says
that he had ownership of the trading stock through Stationery,
and
that he would regain that ownership through WW once he repurchased
the shares, even though when Sunstone exercised the Put
Option Dhorat
asked Sunstone to transfer the shares to BMIM.
[15]
The second issue that needs to be dealt
with is whether and to what extent the two Sunstone entities are
entitled to the claimed
penalty amount, of R4500, per entity, per
day. In addition to the penalty amounts, Sunstone claims interest
a
tempore morae
on the main amount. As at
28 February 2025, Sunstone calculates the penalty amount as R2.574
million per applicant, over R5 million
in total. The respondents
contend that the penalty was intended to be only a single penalty
amount.
[16]
Sunstone submitted that on a proper
interpretation of the Put Option agreement, there were two separate
parties on the Sunstone
side, and it was clear that the penalty
clause gave the right to each party separately to levy the penalty.
The respondents, on
the other hand, contend that Sunstone was a
consortium, the agreement dealt with a single transaction, and that
only one penalty
could be levied by the one consortium against the
other.
[17]
Sunstone
relied on the basic principle set out in
Endumeni
[1]
as
articulated in
Betterbridge
(Pty) Ltd v Masilo & Others
,
[2]
that interpretation “is a unitary endeavour requiring the
consideration of text, context and purpose”.
[3]
[18]
This
is of course correct, as is the contention that the plain meaning of
the actual language used in the text is the departure
point.
[4]
The penalty clause provides:
Should
any payment under or arising from this Agreement fail to be made on
the due date thereof then, without prejudice to such
other rights as
may accrue to the payee consequent upon such failure, a fee of R4 500
(four thousand five hundred rand) per day
shall be levied
.
[19]
The word “payee” is not defined
in the Put Option agreement. Sunstone contends that it obviously
means “any payee”
and therefore entitles each to levy the
penalty separately and independently. This is not obvious to me. The
language in the clause
clearly contemplates a single “payee”.
If it was intended that multiple penalties could be levied,
separately by each
payee, it would have been very easy for the clause
to simply say so.
[20]
Sunstone refers me to the fact that each
member of the Sunstone consortium is referred to separately in the
Put Option agreement,
and has a different Option price defined, and
different Option shares defined. Also, according to Sunstone, there
is no obligation
in terms of the agreement for the Sunstone entities
to exercise their Options simultaneously. This, Sunstone contends,
means that
each entity has its own right to levy the penalty.
[21]
In my view, this does not take into account
that, although there is no definition of “payee”, there
is a definition
of “parties” in the Put Option agreement:
…
collectively,
the Black Mountain Consortium and the Sunstone Consortium; and
“
Party
”
means either of them, as the context may require
…
[22]
This clearly means that, unless the
entities are specifically separated and referred to, the intention
was that for purposes of
the Put Option agreement, the Sunstone
entities were to be considered as one party and the Consortium as one
party.
[23]
It is also not clear to me that the
agreement contemplates separate exercise of the Put Option by the
Sunstone entities. This is
because the relevant clause speaks of the
exercise of the Option by “the Sunstone consortium”. Even
if Sunstone disposes
of the Option shares to an “affiliate”
(as defined) the exercise of the Option by the Sunstone consortium
applies also
to shares held by any affiliates. It is a single right,
granted to the two Sunstone entities individually, but as a single
right
and option. The exercise of it is to be done by “the
Sunstone consortium”. Clause 2.5.2 provides that the Put Option
may be exercised on only one occasion and Clause 2.5.3 that it
(singular) operates in respect of all of the Option Shares, which
are
defined as the Option Shares held by both Sunstone entities.
The Sunstone entities may not, therefore, exercise the Option
separately.
[24]
Sunstone contends that Clause 5 of the Put
Option agreement supports its interpretation. The Clause provides
that nothing in the
agreement means that “there is an agency,
joint venture or partnership relationship between the Parties”,
or authorises
one party to bind the other party. Reference to the
definition of “Parties” demonstrates that this refers to
the relationship
between the Sunstone entities on the one hand and
the Consortium on the other. It does not refer in any way to the
relationship
between the Sunstone entities.
[25]
In the context of the agreement itself, the
textual interpretation leads ineluctably to the conclusion that “the
payee”
is the Sunstone consortium, or the “Party”
which receives payment on the exercise of the Put Option. This is
consistent,
in my view, with the overall context set out above and
with the purpose of the agreement. The purpose was to ensure that
Sunstone
was paid back its R2 million plus 20%. The division between
the Sunstone entities was merely an acknowledgement of an internal
arrangement between them, and not relevant to the Consortium. This is
also borne out by Sunstone’s own calculations attached
to the
demand made on 9 November 2023.
[26]
It is clear to me that only one penalty may
be levied in terms of the penalty clause.
[27]
In their heads of argument, the respondents
also raised the question of whether the penalty, on either
interpretation, was appropriate,
citing the Conventional Penalties
Act, 15 of 1962 (“the Act”).
[28]
The Act provides in s 3:
If upon the hearing of
a claim for a penalty, it appears to the court that such penalty is
out of proportion to the prejudice suffered
by the creditor by reason
of the act or omission in respect of which the penalty was
stipulated, the court may reduce the penalty
to such extent as it may
consider equitable in the circumstances: Provided that in determining
the extent of such prejudice the
court shall take into consideration
not only the creditor’s proprietary interest, but every other
rightful interest which
may be affected by the act or omission in
question.
[29]
The respondents submit that the penalty
should only apply until the day when final demand was made,
whereafter
mora
interest
should apply. Alternatively, the respondents submit that the penalty
should be capped at 100% of the original amount.
[30]
Sunstone did not choose to make
supplementary written submissions to deal with the issue of the
reduction of the penalty. However,
the matter was fully canvassed at
the hearing. It was submitted for Sunstone that the reduction of
penalty was not pleaded, but
it was also conceded that there was
enough before the court for the court’s discretion to be
engaged.
[31]
The
court has to consider the creditor’s prejudice and whether the
penalty is in proportion to that prejudice. This is an
exercise of
the court’s equitable jurisdiction. Sunstone referred me to a
judgment of a Full Bench of the erstwhile Natal
Provincial Division,
Maiden
v David Jones (Pty) Ltd
,
[5]
in which the court held that it was for the debtor to establish, on a
balance of probabilities, that the penalty is disproportionate.
There
was no obligation on the creditor to prove its prejudice.
[32]
It seems to me that, where there is a
penalty clause such as the one in this case, which part of an
agreement with a short duration,
contemplating a relationship between
the parties of a mere 90 days, or, at a maximum 95 days (since
payment must be made within
five days of the exercise of the Option
which is within 90 days of the agreement coming into existence), and
levying a penalty
for each day that payment is delayed, the obvious
prejudice to a creditor is that it loses access to liquidity which it
was entitled
to expect to regain on a specific date. The penalty is a
deterrent to the debtor, as well as a restitutionary measure to the
creditor
who entered into an agreement which was to have resulted in
a predictable payment to it.
[33]
However, the penalty should not result in a
bumper payment to the creditor. Taking into account the relatively
low amount of the
main debt, the penalty amount as calculated by
Sunstone, even for a single penalty, is shockingly high. Adding
mora
interest to this increases the amount
even more.
[34]
Despite no payment being made in response
to the demand in November 2023, Sunstone only instituted proceedings
in August 2024. It
is unclear what the reason was for the delay, but
that is another reason why the period for which the penalty may be
awarded should
be truncated. Where instituting proceedings was within
Sunstone’s power, it delayed doing so and continued
accumulating R4
500 per day in the interim. As an illustration, at
the current
mora
interest rate of 10.5% per annum, on the full R2.4 million, a simple
calculation (based on the interest being capitalised annually
rather
than daily) amounts to approximately R700 per day. Naturally the true
calculation would be slightly more, but still fall
far short of the
R4 500. Over the period of a year, taken as 365 days, the penalty
amount is R1 642 500, whereas the
mora
interest on the R2.4 million would have been R252 000.
Mora
interest on the amount claimed in this
application (R1.65 million) would have been R173 250 per year, again
on a simple calculation.
[35]
Sunstone seeks an order that
mora
interest be calculated from the date on
which the payment was due, 7 August 2023. In my view that is not
appropriate, as it amounts
to a double penalty for the non-payment.
[36]
In my view it would be appropriate to
permit the penalty claim until a reasonable date for the institution
of this application for
the following reasons:
a.
While Sunstone should be permitted to claim
its penalty, it should not benefit from the unexplained delay in
instituting proceedings.
b.
It is appropriate that from a date on which
it would have been reasonable to expect legal proceedings to have
been instituted that
mora
interest
applies and not a penalty.
[37]
The Founding Affidavit includes a
calculation for the penalty amount up to the end of June 2024. This
tends to suggest that the
application could have been instituted by
that date at the latest. Sunstone does not have the justification
that it needed to get
legal advice, since it seemed already to have
obtained that advice by November 2023. However, some leeway must be
given for the
vagaries of other obligations and commitments. Since
the Founding Affidavit refers to the amount as at end of June 2024, I
will
take that as the defining date, whereafter
mora
interest will apply.
[38]
In terms of the Put Option agreement, the
first applicant held and was to sell to the Consortium 69% of the
shares in WW, while
the second applicant held and would sell 31% of
the shares. The penalty can conveniently be divided in those
proportions.
[39]
It was argued for the respondents that BMIM
should be ordered to pay the relevant amounts to the applicants, as
it was the nominee.
However, it is not clear from the papers that
BMIM was the nominee of both Black Mountain and Dhorat, nor is it
clear that it was
intended by the Consortium that BMIM was to make
the payment as well receive the shares. The only evidence annexed to
the papers
suggests that the shares were to be transferred to BMIM
once the money was paid. Dhorat does not disclose which of his
entities
paid the R750 000, and in the scheme described in the
answering affidavit, it appears that it does not matter. Dhorat
causes payment
to be made, from wherever or whichever entity he is
able to. An order that the respondents pay jointly and severally will
allow
Dhorat to make that payment from the most suitable vehicle.
[40]
There is no reason why costs should not
follow the result.
[41]
I make the following order:
1.
The Respondents, jointly and severally, the
one paying the others to be absolved, are to pay:
1.1
to the First Applicant:
1.1.1
R1 571 129 together with interest thereon
at the prescribed rate of interest
a
tempore morae
, calculated from 1 July
2024 to the date of final payment, and
1.1.2
69% of the accrued penalty amount (as at
end June 2024) of R1 480 500, and
1.2
to the Second Applicant:
1.2.1
R78 871 together with interest thereon at
the prescribed rate of interest
a
tempore morae
, calculated from 1 July
2024 to the date of final payment, and
1.2.2
31% of the accrued penalty amount (as at
end June 2024) of R1 480 500.
2
The Respondents shall pay the costs of the
application jointly and severally, the one paying the other to be
absolved, including
counsel’s fees taxed on scale B.
S YACOOB
JUDGE OF THE HIGH
COURT
GAUTENG DIVISION,
JOHANNESBURG
Delivered: This
judgment was prepared and authored by the Judge whose name is
reflected and is handed down electronically
by circulation to the
Parties/their legal representatives by email and by uploading it to
the electronic file of this matter on
CaseLines/ Courtonline.
The date for hand-down is deemed to be 25 February 2026.
For
the Applicants:
M Cooke
Instructed
by:
Darryl Ackerman Attorneys
For
the Respondents: S Freese
Instructed
by:
Smiedt & Associates
[1]
Natal
Joint Municipal Pension Fund v Endumeni Municipality
2012
(4) SA 593
(SCA)
[2]
2015
(2) SA 396 (GP)
[3]
Betterbridge
above,
at para 8.
[4]
Betterbridge
at para 12.
[5]
1969
(1) SA 59
(N)