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JUDGMENT
JOHNSON AJ
Introduction
[1] This is an opposed application for the variation of a settlement agreement
(“Settlement Agreement”) handed down by Wilson J on 6 September 2023. The
first applicant and first respondent agreed in terms of the settlement agreement
that the fair value of the first respondents shares and loan account in the third
and fourth applicants as on 6 September 2023, would be valued by the second
respondent, failing agreement between the parties.
[2] The parties could not agree, and the second respondent was appointed, who in
turn, appointed the third respondent. The second respondent was appointed
based on their reputation as a major international auditing firm. The third
respondent subsequently failed to prepare a provisional or final valuation and
insisted that the parties agree on the financial information which was not
possible.
[3] This application seeks a variation of the settlement agreement for the second
respondent “BDO” (BDO Advisory Services (Pty) Ltd) to be replaced by
PricewaterhouseCoopers (“PwC”).
Background
[4] On 23 May 2023, the first and fourth respondents brought an oppression
application in which it was alleged that the first applicant (“Frank”) and Route 59
had breached section 163 of the Companies Act 71 of 2008 (“the ACT”) by
misappropriating at least R16 200 000.00 of monies from M&S and Makaya. The
full amount allegedly appropriated was never fully determined by the JK
respondents. An interim ex parte order was granted by Wepener J in favour of
the first and fourth respondents on 5 June 2023.
[5] The applicant filed a reconsideration application on 15 June 2023 in terms of
Rule 6(12)(c). Holland -Muter J dismissed the application for reconsideration on
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18 July 2023. On 24 July 2023 the Rule Nisi was extended by Strydom J. On 6
September 2023 a settlement agreement was made an order of court by Wilson
J.
[6] BDO was appointed on 6 December 2023 to determine the fair value of the
shares and requested written submissions on 12 February 2024. The first and
fourth respondents provided detailed submissions to BDO. On 20 May 2024 BDO
was requested to comply with the court order and conduct the valuation.
[7] The first and fourth respondents rejected requests by the applicants that the
parties’ respective financial advisers convene in an attempt to reach an
agreement in respect of the quantum of the loan accounts to be determined. This
variation application was instituted on 23 June 2025. The respondents filed their
answering affidavit and counter application on 22 July 2025.
[8] On 5 August 2025 the applicants filed their replying affidavit and answer to the
counter application of the first and fourth respondents. The second and third
respondents filed their notice to abide and explanatory affidavit. On 30
September the first and fourth respondents filed their reply in the counter
application.
[9] On 11 December the first and fourth respondent filed their heads of argument
and on 27 January 2026 they filed launched an application to compel the
applicants’ heads of argument. The applicants filed their heads of argument on
6 February 2026.
Submissions of Mr De Villiers
[10] Mr De Villiers, on behalf of t he applicants submitted that the following facts are
common cause facts. The second respondent did not act in accordance with the
settlement agreement, and a new valuer should be appointed. The first and fourth
respondents oppose the application on the basis that there is a dispute regarding
the interpretation of the settlement agreement and seek a forensic audit which
the applicant contends is not contained in the settlement agreement.
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[11] Mr De Villiers submitted that the settlement agreement renders the dispute res
judicata. He referred to Eke v Parsons1 where it was held:
“Once a settlement agreement is made an order of court it becomes an order of
court like all other court orders and is to be interpreted on the well -established
test on the interpretation of court orders:
‘The starting point is to determine the manifest purpose of the order. In interpreting
a judgment or order, the court’s intention is to be ascertained primarily from the
language of the judgment or order in accordance with the well-known rules relating
to the interpretation of documents. As in the case of a document, the judgment or
order and the courts reasons for giving it must be read as a whole to ascertain its
intention.’
This is equally true of court orders following settlement agreements, of course with
a slant that is specific to orders of this nature:
‘The Court order in this case records an agreement of settlement and the basic
principles of the interpretation of contracts need therefore be applied to ascertain
the meaning of the agreement.
The intention of the parties is ascertained from the language used in its contextual
setting and in the light of admissible evidence. There are three classes of admissible
evidence. Evidence of background facts is always admissible. These facts, matters
probably present in the mind of the parties when they contracted, are part of the
context and explain the ‘genesis of the transaction’ or its ‘factual matrix’. Its aim is
to put the court ‘in the armchair of the author(s)” of the document. Evidence of the
‘surrounding circumstances’ is admissible only if a contextual interpretation fails to
clear up an ambiguity or uncertainty. Evidence of what passed between the parties
during the negotiations that preceded the conclusion of the agreement is admissible
only in the case where evidence of the surrounding circumstances does not provide
‘sufficient certainty’.’
‘sufficient certainty’.’
The effect of a settlement order is to change the status of the rights and obligations
between the parties. Save for litigation that may be consequent upon the nature
of the particular order, the order brings finality between the parties; the lis becomes
res judicata (“literally a matter judged”). It changes the terms of a settlement
agreement to an enforceable court order. The type of enforcement may be
execution or contempt proceedings. Or it may take any other form permitted by
1 2016 (3) SA 37 (CC) at para 29-32
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the nature of the order. That form may possibly be some litigation the nature of
which will be one step removed from seeking committal for contempt; an example
being a madamus.
Litigation antecedent to enforcement is not necessarily objectionable. That is so
because ordinarily a settlement agreement and the resultant settlement order will
have disposed of the underlying dispute. Generally, litigation preceding
enforcement will relate to non -compliance with the settlement order, and not the
merits of the original underlying dispute. That means the court will have been
spared the need to determine that dispute, which- depending on the nature of the
litigation- might have entailed many days of contested hearing.”
[12] It was argued that the valuer per the settlement shall decide on the valuation
method in terms of para 4.3 of the settlement agreement. The further issue
regarding the suggested new valuer by the applicant as
PricewaterhouseCoopers (“PwC”) was conceded by the respondent during oral
arguments.
[13] Mr De Viliers contended further that the relief sought by the first respondent for
a forensic valuation does not accord with the settlement agreement which
provides for any recognised valuation method to be determined by the valuer.
[14] It was argued that the matter is res judicata and the first respondent is asking the
Court to ‘make’ a contract between the parties and courts do not make
agreements between parties. This was denied by the JK respondents. They
contend that they seek an interpretation of the agreement by the court, insofar
necessary, to vary the written wording to avoid a further dispute. They also
contend that the words “any recognised method” does not exclude a forensic
audit or investigation.
[15] The principles of pacta sunt servanda and privity of contract provide that
contractual obligations must be honoured when a contract is entered into freely
and voluntarily. The principle of freedom to contract applies since parties are free
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to enter into contracts and decide the terms thereof. He referred to Capitec Bank
Holdings Limited and Another v Coral lagoon Investments 194 (Pty) Ltd2.
[16] The first respondent in essence seeks a further agreement based on the
averment that a resolution should be reached though the determination of the
true meaning of the settlement agreement. It was pointed out that the settlement
agreement was typed by the attorney of the first and fourth respondents while
the terms thereof were dictated by counsel of the first and fourth respondent .
This was denied by the first and fourth respondents.
[17] It was submitted that the settlement agreement was made an order of court and
does not provide for a forensic audit. The valuation of the businesses and the
first and fourth respondents’ shareholding is inherently an opinion not a precision
calculation. The valuation of the shares is based on professional judgment . The
valuation is based on variable factors which are considered by the analysis of
available information and assumptions about the future which are all variable.
[18] It was submitted that clause 4.21 of the settlement agreement provides that “any
dispute concerning or in connection of this agreement will be referred to
arbitration…” It was contended that the court’s jurisdiction to entertain any
dispute is ousted. The JK respondents’ counterclaim is a new remedy that they
are seek, and the financials should have been investigated prior to the signing of
the settlement agreement.
[19] Mr De Villers argued that the settlement agreement already protects the audit in
that clause 4.4 provides for ‘unfettered access’, 4.5 provides for ‘all payments
made by the fifth and/or seventh respondent to the third respondent will be taken
into account in the evaluation’.
[20] In his reply to submissions, Mr De Viliers submitted that the settlement
agreement in full and final settlement cannot be varied, the ex parte oppression
agreement in full and final settlement cannot be varied, the ex parte oppression
application is not relevant to the present application and the application to vary
the valuer should stand. He also submitted that the court should not consider the
2 2022 (1) SA 100 (SCA).
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personal conflict between the first applicant and the first respondent and
conceded that the court does have jurisdiction to hear the application.
[21] In respect of costs, Mr De Viliers asked for party and party costs including costs
of counsel on scale B.
The First and fourth respondents’ submissions by Mr Desai
[22] Mr Desai submitted that t he Court is required to determine whether the parties to
the settlement agreement had agreed that the valuer , appointed to determine
the value of the first and fourth respondents (“ the JK respondents”) shares, being
22% in the second applicant (‘M&S”) and 22% in the third applicant (“Makaya “),
could investigate and inquire into payments made by M&S and Makaya to
creditors of the fourth applicant (“`Route 59”) for the purpose of determining the
value of the JK respondents’ shares.
[23] Mr Desai submitted that the valuation contemplated in the settlement agreement
was no simple evaluation of shares. In his answering affidavit, the first applicant
depicts the misappropriation of M&S and Makaya funds as “loans” to route 59:
the ledger of M&S reflects a loan of R30 800.00 to Route 59; and the `ledger of
Makaya reflects a loan of R489 895.00. These amounts are not what is alleged
by the first and fourth respondents which is R16 200 000.00 and which they
demonstrated was misappropriated. The amounts in the first applicant’s hearsay
trial balance reflects amounts of R2751 526.00 and R4828 863.00 does not tally
with either the general ledgers or the hearsay trial balance. The reason for this
is that the first applicant is intent on avoiding paying the first and fourth
respondents the true value of what is owed.
[24] The relevant clauses of the settlement agreement read as follows:
“4.3 through the employment of any recognised valuation method, such method to
be determined by the valuer in his sole discretion
4.4 [Route 59, M&S Sasolburg and /or Makaya] shall provide the valuer with
4.4 [Route 59, M&S Sasolburg and /or Makaya] shall provide the valuer with
unfettered access to all accounts, documentation and information as may be
required by the valuer, upon reasonable demand of such information having been
requested in writing by the valuer.
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4.5 All payments made by [M&S Sasolburg and /or Makaya to Route 59] will be
taken into account in the evaluation.
4.7 the valuer shall have all such powers as he, in his sole discretion, may deem
necessary to determine the value of [the JK respondent ’s] shares in [M&S
Sasolburg and/or Makaya] to be acquired by the first applicant as above;
4.11 the valuer’s report shall be final and binding between all parties…;”
[25] Mr Desai contended that the valuer had “unfettered access” to the books of Route
59 in terms of 4.4 of the settlement agreement and that the court was required to
interpret the provisions of the settlement agreement to include a forensic audit /
evaluation. He contended that, even though the word “forensic” was not
expressly stated in the settlement agreement it is implied in the settlement
agreement. This was disputed by Mr De Villiers who contended that to do so
would require the court to contact on behalf of the parties.
[26] Mr Desai referred to Novartis v Maphil 3 which held:
“Interpretation is a process of attributing meaning to the word used in the
document, be it legislation, some other statutory instrument, or contract, having
regard to the context provided by reading the particular provisions in light of the
document as a whole in circumstances attendant upon its coming into existence.
Whatever the nature of the document, considerations must be given to the
language used in light of the ordinary rules of grammar and syntax; the context in
which the provisions appear; the apparent purpose to which it is directed and the
material known to those responsible for its production. Where more than one
meaning is possible each possibility must be weighed in light of all these factors.
The process is objective not subjective. A sensible meaning is to be preferred to
one that leads to insensible or unbusinesslike results or undermines the apparent
purpose of the document. Judges must be alert to, and guard against, the
purpose of the document. Judges must be alert to, and guard against, the
temptation to substitute what they regard as reasonable, sensible or businesslike
for the words actually used…The “inevitable point of departure is the language of
the provision itself ” read in context and having regard to the purpose of the
provision and the background to the preparation and production of the document.”
3 2016 (1) SA 518 (SCA) at para 23
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[27] It was submitted that the “distinction between background and surrounding
circumstances” is no longer consistent with the approach to interpretation and
“interpretation does not stop at a perceived literal meaning of those words but
considers them in the light of all relevant and admissible context, including the
circumstances in which the document came into being4.
[28] Mr Desai submitted that the purpose of the settlement agreement was to bring a
full and final settlement of the dispute which was common cause. The
interpretation of the clauses must be commercially sensible therefore the
information to be considered by the valuer must be wider rather than narrower.
[29] Mr Desai referred to Bester and Others v Lebra Developments (Pty) Ltd and
Others5, in which this court rejected an argument that a forensic audit was not
required on the basis that the allegations of mismanagement and unauthorised
payments were such that only a forensic audit would determine the fair value of
the shares. The Court held:
“However, the shareholders would require an insight into the financial affairs of
Lebra for the 2018, 2019 and 2020 financial year period. The fair value would have
to be determined through an accurate and justifiable valuation of the shares. Such
value can only be ach ieved after a forensic audit is undertaken with an audit
opinion expressed. In this manner one would ensure that the applicant’s valuation
of its 10% is not inflated and that by this time the potential profits may have been
realised.”
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[30] Mr Desai argued that similar allegations have been made in casu in respect of
payments made to Route 59’s creditors. The JK respondents are unable to
determine if other payments were made. The settlement agreement makes
provision for this in paragraph 4.5. If such payments are hidden, the financial
statements will not be accurate and will not be able to be relied upon.
[31] BDO was appointed as an expert valuer which required it to decide on the
[31] BDO was appointed as an expert valuer which required it to decide on the
method to be used to value the shares. He referred to Total South Africa (Pty)
Ltd v Bonaiti Developments (Pty) Ltd; Total South Africa (Pty) Ltd v Valdave
4 Natal Joint Municipal Pension Fund v Endumeni Municipality 2012 (4) SA 593 (SCA).
5 [2022] ZAGPPHC 211
6 Id at para 59
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Investments (Pty) Ltd; Total South Africa (Pty) Ltd v Dave White Holdings
(Pty)Ltd7, which found that the appointment of a third party as an expert valuer
meant that such party would be at liberty to consider any relevant determination
when making a valuation.
[32] Mr Desai therefore submitted that from the background and surrounding
circumstances and context (including the oppression application and orders
granted), the express wording of the settlement agreement meant that the valuer
would investigate and enquire into the alleged misappropriation of styled
payments made to Route 59. The valuer had the requisite powers to do so as
well as any forensic powers and access to the books of account.
[33] It was submitted that the first applicant and Route 59 are contending that a
forensic audit was not agreed to, to avoid the disclosure and accounting.
[34] Mr Desai submitted that the first applicant and Route 59 perpetrated a ‘Route 59
scheme’ which enabled them to misappropriate the monies of M&S and Makaya
for the purpose of devaluing the shares of the JK respondents.
[35] Documentary evidence found by the JK respondents indicates that through the
Route 59 scheme, the first applicant and Route 59 misappropriated
R16 200 000.00. Through the scheme:
a. M&S and Makaya pay the creditors of Route 59 as if they were direct
creditors of M&S and Makaya.
b. No entry was made in the books of account of M&S and Makaya as against
Route 59, except for a loan amount to Route 59 of R30 800.00; a nd in
Makaya’s books for a loan of R489 895 00.
[36] The trial balance relied on by the first applicant reflecting Route 59 as a debtor
of M&S and Makaya and prepared by the auditors, was not confirmed under oath.
It was further alleged by the first applicant that Route 59 formed part of the same
group of companies as M&S and Makaya and the loans to and from the group
as included in the financial statements of M&S and Makaya includes loans to
as included in the financial statements of M&S and Makaya includes loans to
Route 59. There is no basis for the first applicant to assert that Route 59 forms
7 1981 (2) SA 263 (D)
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part of the group of companies. The group’s financial statements disclose that
Route 59 does not form part of the group, and the financials do not depict any
loans to Route 59.
[37] The allegations are hearsay and have no probative value . In Swissborough
Diamond Mines (Pty) Ltd and Others v Government of the Republic of South
Africa and Others 8, with reference to Galp v Tansley NO and Another 9 it was
held:
“…, [I]t is trite law that our courts have consistently countenanced the admission
of hearsay evidence.”
[38] Mr Desai argued that the value of the misappropriation has not been determined
or agreed. If that were so the settlement agreement would not include such wide
provisions, including that the valuer be provided with “unfettered access to all
accounts, documentation and information as may be required”, by Route 59 who
is not part of the group, and that Route 59 would account.
[39] On 12 February the BDO requested written submissions from the parties to assist
with its determination of the fair value of the shares. The JK respondents
provided detailed submissions on 25 March 2024. JK respondents set out its
discovery that the first applicant unlawfully appropriated funds in the second and
third applicants for his personal benefit in the amount of R16 million over 3 years,
grounds for its reasonable belief that more funds may be involved as reasons
why the financials could not be relied on and a request for further investigations
covering the period since inception of M&S and Makaya. BDO then informed the
parties that the allegations placed the accuracy of the financials in dispute and
the request for a forensic audit was beyond its powers in terms of the settlement
agreement.
[40] Mr Desai argued that the conclusion of BDO that a forensic audit was beyond its
powers is not supported by the settlement agreement , in particular paragraphs
4.4, 4.5 and 4.7. According to Mr Desai the clauses are sufficiently wide to
8 1999 (2) SA 279 (T) at 339 F-G
8 1999 (2) SA 279 (T) at 339 F-G
9 1966 (4) SA 555 (C)
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include a forensic audit and that BDO could have conducted a forensic audit and
were empowered to do so in terms of the settlement agreement.
[41] Mr Desai submitted that the applicant contends that the Court’s jurisdiction is
ousted because the settlement agreement has an arbitration clause, yet the
applicant brought the application to this court and by doing so he submitted to
the jurisdiction of this court. Mr Desai referred to the case of Eskom Rotek
Industries SOC Ltd v Geo-X (Pty) Ltd 10. Mr Desai argued in this regard that the
only reason the applicant has raised the issue of arbitration is to avoid the
consideration of the counterclaim brought by the JK respondents by this Court.
I agree with this contention of Mr Desai.
[42] Mr Desai contends that the settlement agreement is not a final determination in
respect of the valuation of the accounts are concerned and BDO will not complete
the valuation of the shares. BDO stated in the email dated 16 May 2024 that it
could not proceed unless an agreed set of financials were provided it could not
proceed with the valuation.
[43] It was further contended that there would be no purpose to change the valuer
where the same dispute will always emerge. The valuation will not be possible,
and the answer would remain the same. An accounting process with full and
frank disclosure is required to resolve the dispute.
[44] With regard to the type of orders that should be varied Mr Desai referred to
Democratic Alliance in re Electoral Commission of South Africa v Minister of
Cooperative Governance and Others
11 where it was held:
“Interpreting Court Orders
The order with which a judgment concludes has been described as the “executive
part of the judgment”, because it defines what the court requires of the parties who
are bound by it.. For this reason, it was said in Ntshwaqela that although the order
must be read as part of the entire judgment, and not as a separate document, the
must be read as part of the entire judgment, and not as a separate document, the
order’s meaning, if clear and unambiguous, cannot be restricted or extended by
anything else stated in the judgment. The modern approach is not to undertake
10 [2023] ZAGPJHC 1140 (11 October 2023)
11 2022 (1) BCLR 1 (CC) at para 12
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interpretation in discrete stages but as unitary exercise in which the court seeks to
ascertain the meaning of a provision in the light of the document as a whole and
in the context of admissible background material . This principle applies to the
interpretation of court orders , as decisions of this Court make plain. ” [footnotes
omitted]
[45] It was contended that the words “all payments…”, in clause 4.5 is important in
respect of the intention at the time of the settlement agreement , since several
misappropriations took place in the manner described above by the first
respondent.
[46] The first respondent had no financial oversight in M&S or Makaya as they were
run by the first applicant. In Snyman v De Kooker NO and Others12, the SCA with
reference to Doyle v Fleet Motors PE (Pty) Ltd13 held:
“In the present case, there is no dispute that the trustees stand in a fiduciary
relationship to the appellant as both an income and capital beneficiary. The
appellant averred that the trustees’ account ing to her was inadequate for her to
have a full understanding of the trust’s financial position. In Doyle v Fleet Motors,
it was held that if it appeared from the pleadings that a plaintiff who is entitled to
an account had already received an account which he averred was insufficient, he
or she is entitled to press for his or her claim for a due and proper account”.
[47] Accordingly, it was submitted by Mr Desai that the settlement agreement was
entered into on 6 September 2023, prior to the submission of the requested
financial document of from BDO. The documents submitted were insufficient . If
the valuation is taken on the ipse dixit of the first applicant, the first and fourth
respondents will be ‘short changed’. The rendering of the account depends on
the circumstances and what was made available for inspection.
[48] It was further submitted that settlement agreement with regard to the accounting
[48] It was further submitted that settlement agreement with regard to the accounting
was not a final definitive order which cannot be varied/ revisited by the court and
is not dispositive of the court’s jurisdiction. It was interlocutory in the sense that
it was conditional upon the accounting. It would become final and definitive after
12 2024 (6) SA 136 (SCA) at para 27
13 1971 (3) SA 760 (A) at 762 E-763D
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the shares are valued. The court can vary/revisit the order since the accounting
process which first has to be to be carried out made provision for that.
[65] In respect of costs Mr Desai asked for punitive costs on scale C.
Issues to be determined
[49] Against this background, the following issues are to be determined by this Court:
a. Whether the court is empowered to vary the settlement agreement.
b. Whether the contention by the applicants that the interpretation of the
relevant clauses amounts to a variation of the settlement agreement by the
court.
c. Whether upon the interpretation of the settlement agreement, in particular
paragraphs 4.4, 4.5 and 4.7, it can be implied that a forensic audit can be
conducted.
Evaluation
[50] The applicant is seeking a variation of the settlement agreement in respect of the
replacement of the previous valuer BDO with a new valuer, PwC. There was a
dispute regarding who the new valuer should be prior to the hearing of the
application. The JK respondents conceded to the appointment of P wC at the
hearing. The appointment of PwC is therefore not in issue.
[51] The applicant contends that the matter is res judicata and that this court has no
power to vary the settlement agreement in full and final settlement which was
made an order of court by the order of Wilson J on 6 September 2023. I was
referred to the case of Eka v Parsons where the Constitutional Court found that
a settlement agreement, once made an order of court is a binding contract
between the parties and Courts typically will refrain from interfering with
settlement agreements which are entered into freely and voluntarily.
[52] I agree with the contention of Mr de Villiers that a settlement agreement, once
made an order of count, becomes a binding contract. The counts will generally
not change the terms of binding contracts between parties. As per the principle
of pacta sunt sevanda, courts should typically refrain from interfering with the
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terms of a settlement agreement that was entered into freely and voluntarily and
in full and final settlement . However, the contention by Mr De Villiers that if the
clauses in the settlement agreement are interpreted to determine its true
meaning it is a variation of the settlement agreement which the Court is not
empowered to do is misplaced.
[53] In their counter application the JK respondents explain that they are not seeking
the Court to make a contract between the parties. The JK respondents seek the
interpretation of the relevant clauses in the settlement agreement, and insofar as
is necessary to vary the written wording thereof to avoid a further dispute. I agree
with this contention and accordingly, in interpreting the relevant clauses, this
Court is not setting out to vary the settlement agreement.
[54] The main issue is the interpretation of the relevant clauses and whether a
forensic audit/valuation is implied in the words of the relevant clauses as opposed
to a fair value valuation exclusively.
[55] In the interpretation of the relevant clauses, the starting point is the manifest
purpose of the settlement agreement. It is common cause that the manifest
purpose of the settlement agreement was to bring about the full and final
settlement and speedy resolution to the sale of the shares of the JK respondents.
[56] In addition, t he settlement agreement was made to settle the litigation brought
by the JK respondents for relief in terms of Section 163 of the Companies Act 71
of 2008.
[57] Mr De Villiers relied on 4.3 of the settlement agreement which states that the
valuer in terms of the settlement agreement shall decide the valuation method,
while Mr Desai submitted that the terms of paragraphs 4.4, 4.5 and 4.7 were wide
enough to include the undertaking of a forensic audit. Clauses 4.2 and 4.3 of the
settlement agreement state as follows:
“4.2. the value of such shares and loan accounts to be determined by the valuer
“4.2. the value of such shares and loan accounts to be determined by the valuer
shall be determined- as at date of the Court Order;
4.3. through the employment of any recognised valuation method, such method to
be determined by the valuer in his sole discretion;”
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[58] The words ‘any recognised valuation method’: while the phrase is grammatically
simple, it implies a wide discretion to consider ‘any valuation method’. The plain
meaning is ambiguous since different methods could mean a different valuation.
There is also a conflict between the wide discretion in the words “any” and the
words “sole discretion”.
[59] In consideration of the interpretation of clause 4.3, I have considered firstly, the
purpose of the settlement agreement, the language used and the contextual
setting in which the settlement agreement was made. At the time of the
settlement agreement, the manifest purpose of the parties was to reach a
resolution of the dispute. The settlement negotiations took place after the ex
parte application and reconsideration application. Apparent from the evidence
the nature of relationship between the first applicant and first respondent is
clearly an acrimonious relationship.
[60] At the time the settlement agreement was drafted both parties were aware of
allegations of misappropriation by the first respondent against the first applicant.
The background of the litigation at that stage would not have inclined the first
applicant to agree to a full investigation into the financials of the business’ in
question and the first respondent would not have agreed to anything other than
full disclosure and account of the financials in question.
[61] The first respondent expected that the appointed valuer, would be mandated to
determine the true value of the shares in light of the misappropriation. If he
subjectively believed that the valuer would be restricted in his duty to determine
true value of the shares, he would not have agreed to the terms of the settlement.
Subsequently, the documents that were disclosed by the first applicant were
disputed by first respondent as a true reflection of the financials and the purpose
of the settlement agreement could not be fulfilled.
of the settlement agreement could not be fulfilled.
[62] The first respondent pertinently took issue with the financial documents
submitted to BDO by the first applicant and Route 59 on the basis that the reports
on which it is premised have not accounted for the manner in which the amounts
which they admit is made up or which transactions form part thereof. Apart from
that, the auditors of the first applicant and Route 59 have not confirmed the
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amounts submitted under oath, rendering the evidence submitted to BDO
hearsay evidence. It was further submitted that the first applicant and Route 59
are contesting a forensic audit to avoid financials and accounting for the purpose
of devaluing the relevant shares.
[63] The words in clauses 4.4, 4.5 and 4.7:
“4.4 [Route 59, M&S Sasolburg and /or Makaya] shall provide the valuer with
unfettered access to all accounts, documentation and information as may be
required by the valuer, upon reasonable demand of such information having been
requested in writing by the valuer.
4.5 All payments made by [M&S Sasolburg and /or Makaya to Route 59] will be
taken into account in the evaluation.
4.7 the valuer shall have all such powers as he, in his sole discretion, may deem
necessary to determine the value of [the JK respondent’s] shares in [M&S
Sasolburg and/or Makaya] to be acquired by the first applicant as above;”
[64] The words “unfettered access to all accounts, documentation and information” in
clause 4.4, implies a wide rather than a narrow interpretation. According to the
Oxford dictionary “unfettered” is an adjective that means not limited or restricted
in any way. It describes something or someone that is completely free from
controls, regulations or controlling influences. The words “as may be required by
the valuer” implies that the valuer could have requested whatever was required
to determine the fair value of the shares.
[65] The words “all payments made” in clause 4.5, is grammatically simple and
implies all payments, without exception. The words “the valuer shall have all such
powers, as he in his sole discretion, may deem necessary to determine the value
of the shares”, imply that the valuer had a wider rather that a limited discretion to
determine the value of the shares.
[66] In this regard it is difficult to understand the decision of BDO to refuse to continue
with the determination of the fair value of the shares. Apparent from the evidence,
with the determination of the fair value of the shares. Apparent from the evidence,
after receiving the information from both the first applicant and the first and fourth
respondents BDO became aware of the dispute. At that stage it was within its
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mandate in terms of all the relevant clauses to initiate a forensic audit in order to
determine the value of the shares. However, BDO stated that it was not within
their mandate to conduct a forensic audit.
[67] It was submitted that the BDO was able to go beyond the financial statements
submitted to it. Its power to determine the value necessitated conducting a
forensic audit. BDO was made aware of the allegations of misappropriation. It
had before it the full disclosure of the first respondent and the documents
submitted by the first applicant. The conduct of the first applicant by making
payments to Route 59, claiming it was part of the group of companies, required
BDO to investigate further.
[68] The first applicant has not addressed the reason for the refusal to fulfil its
mandate and subsequent withdrawal of BDO at all in the application. Rather, it
was contended that the matter is res judicata and that this court has no power to
vary the settlement agreement in full and final set tlement which was made an
order of court by the order of Wilson J on 6 September 2023.
[69] The JK respondents contend that the dispute involves the refusal to disclose
financial statements. When BDO requested financial disclosure from the parties,
the JK respondents made full disclosure. The dispute remains what was
disclosed by the first applicant and the contention is that the first applicant did
not make full disclosure.
[70] The financial statements supplied by the first applicant and Route 59 have not
accounted for the manner in which the amounts which they admit is made up or
which transactions form part thereof . Furthermore, the auditor who audited the
accounts submitted by the first applicant to BDO did not confirm the amounts
submitted under oath. The trial balance relied on by the first applicant is
unreliable and the true value of the shares remains undetermined.
[71] What is evident from the submissions and the evidence is that a forensic audit
[71] What is evident from the submissions and the evidence is that a forensic audit
and a fair value determination are two distinct processes. While a forensic
investigation entails financial detective work, a share valuation determination
entails only a determination of the fair value of the shares by means of different
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methods which can yield different results. In terms of the settlement agreement
the valuer in his sole discretion may decide on the method to be employed.
[72] In light of the allegations made by the first respondent, a fair valuation
determination cannot be accurately determined until a forensic audit is complete.
The fair valuation expert would need the finalized finding/s of the forensic audit
to normalize the financial statements before applying a valuation model to
determine the fair value of the shares.
[73] I find accordingly that the fair value determination cannot rationally be achieved
without ascertaining the true state of the financials by means of a forensic audit.
It is therefore my view that the forensic audit is an implied and necessary
preliminary step to giving effect to the purpose of the settlement agreement.
[74] It would make sense that the same auditing firm replacing BDO utilize their
respective internal forensic and valuation specialists to complete their mandate
in two sequential phases. To hold otherwise would not be just and equitable.
[75] I have had regard to the affidavit of BDO Advisory’s Mr Michael Nicholas Rayner,
on behalf of BDO. It evidences a number of incorrect assertions that were made
by the first applicant in relation to the inability of BDO to continue with the
valuation of the shares. Firstly, as a point of departure, BDO were incorrectly
cited in the papers before Court. The correct citation is BDO Advisory Services
(Pty) Ltd. The third respondent is therefore incorrectly described as an associate
director of BDO SA Inc. when in fact he is the associate director of BDO Advisory.
[76] Secondly, the incorrect statements made by the first applicant as stated by Mr
Rayner relate to the first applicant laying the blame on BDO and asserting that
BDO did not comply with the settlement agreement by refusing to complete the
valuation based on financials it provided to BDO. Mr Rayner states that BDO had
valuation based on financials it provided to BDO. Mr Rayner states that BDO had
no knowledge of the dispute when appointed to conduct the valuation of the
shares. Soon after its engagement BDO became aware that the various financial
information that was provided was disputed. BDO then raised the issue with the
parties, representatives by email and pointed out that it is alleged that the
historical financial information presented in the financial statements and trial
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balances are not reflective of the actual operational results of the second and
third applicants.
[77] The representations made on behalf of the JK respondents demanded a forensic
audit relating to allegations concerning expenses of approximately R16.2 million
which are illegitimate and would have a direct impact on the profitability of the
businesses. According to Mr Rayner, BDO were not engaged to conduct a
forensic investigation as part of the valuation, and they could not conduct the
valuation based on disputed financial information.
[78] BDO did conduct in depth reviews of the historical financial affairs of the second
and third applicants and the extensive amount of information provided by the
legal representatives of the JK respondents in respect of alleged irregular
expenditure. BDO also engaged with potential forensic experts to provide the
parties with a solution. They also completed the valuation analysis workbooks,
which can be adjusted arising from any findings by any future forensic analysis
as demanded by the first respondent and recommended by BDO.
[79] To my mind, even though BDO did not decide to itself conduct a forensic audit,
it assisted the JK respondents by performing reviews on the historical financial
affairs of the second and third applicants, engaged potential forensic experts to
provide a solutions and has completed valuation workbooks subject to potential
adjustments arising from any findings by forensic analysis demanded by the JK
respondents. BDO said they were able assist up to a point, but later they stopped
and refused to continue. More importantly, BDO recommended that a forensic
audit be conducted as part of the valuation.
[80] After the reconsideration application Holland -Muter J in his judgment at
paragraph 8 said the following:
“It is impossible to unwind the interwoven structures of the various companies and
group structures. There are several instances where the third respondent [Route
group structures. There are several instances where the third respondent [Route
59] appears to be a vehicle to serve some of the parties, in particular the first
respondent [ the first applicant]. The applicants aver that ongoing alleged
misappropriation of monies by the First Respondent of the Fifth to Seventh
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Respondents monies over the past three years amounted to more than R16
million.”
[81] It is apparent from the evidence that BDO refused to continue with the valuation.
The reasons it gave is that there was a dispute concerning the amounts
submitted by the parties and it was not mandated to conduct a forensic
investigation as requested by the JK respondents and the parties could not reach
agreement on the disputed amounts. I find that it cannot be said that BDO,
through any fault of their own, refused to complete their mandate and finalise the
valuation. The reason for BDO not being able to complete the valuation is
incomplete financials that were submitted by the first applicant. In this instance
the issues could not be resolved to achieve finality and certainty.
[82] In SA Breweries Ltd v Shoprite Holdings Ltd
14, on the role of an expert valuer,
the SCA held:
“In summary, what is required is that all issues submitted must be resolved in a
manner that achieves finality and certainty.
[83] The auditors appointed to replace BDO may request the completed valuation analysis
workbooks which may be supplemented and adjusted as required by any forensic audit.
[82] In sum, having considered all the evidence and the manifest purpose of the
settlement agreement, the words in the relevant clauses in light of the ordinary
rules of grammar and syntax, the context and circumstances in which the
provisions were drafted, I find that the commercially sensible meaning of the
relevant clauses is that a forensic audit is implied in the words of the relevant
clauses even though the actual words “forensic audit” are not expressly stated in
the settlement agreement.
14 2008 (1) SA 203 (SCA) at para 22
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Date of Hearing: 10 June 2026
Date of Judgment: 28 July 2026