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[2012] ZAWCHC 261
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Russell v One Vision Investment 443 (Pty) Ltd and Others (20105/2011) [2012] ZAWCHC 261 (10 May 2012)
IN
THE HIGH COURT OF SOUTH AFRICA
WESTERN
CAPE HIGH COURT, CAPE TOWN
Thursday,
10 May 2012
CASE NO: 20105/2011
In the matter between:
ANTHONY
BRYN RUSSELL
.........................................................................................................
Plaintiff
and
ONE
VISION INVESTMENT 443 (PTY) LTD
.....................................................................
First
Defendant
MICHAEL
JOSIAS DU PLESSIS
..................................................................................
Second
Defendant
JOHANNES
LODEWIKUS BOUWER
..............................................................................
Third
Defendant
IGNATIUS
LEOPOLDUS ROSSOUW
............................................................................
Fourth
Defendant
HENDRIK
JOHANNES BASSON
......................................................................................
Fifth
Defendant
JUDGMENT
Weinkove A.J.
1. In this matter
Plaintiff instituted an action against First Defendant as the
principal debtor and Second, Third, Fourth and Fifth
Defendants as
sureties for payment of the sum of R2.4 million. Defendants entered
an Appearance to Defend and Plaintiff applied
for summary judgment.
2.
Plaintiffs claim is based upon a written agreement of loan which was
concluded in April 2011. The terms of that loan agreement
was that
Plaintiff would lend to First Defendant the sum of R2.4 million and
the capital, together with interest, would be repaid
on or before 1
August 2011
.
3. The written agreement
further provided that repayment had to be made without any deduction
or settlement for any reason whatsoever
and that First Defendant was
not entitled to withhold any payments notwithstanding the existence
of any dispute which may arise
from any cause whatsoever.
4. Finally, there is an
entrenchment clause which records that the written agreement is the
whole agreement between the parties
and that no variation of that
agreement shall be of any force and effect unless it is reduced to
writing and signed by the parties.
5. Defendants rely upon a
written memorandum of understanding (“MOLT) which was concluded
on 21 April 2011 and which specifically
refers to the written loan
agreement concluded between the parties.
6. That MOU gives
Plaintiff an option to take up shares in First Defendant. The MOU
further provides that it is envisaged that certain
further funding
would be required by First Defendant and it is envisaged that that
funding would be secured by Plaintiff. The MOU
furthermore provides
that until a new agreement dealing with that funding is concluded,
the loan agreement is to remain of full
force and effect. Defendants
do not allege that a further agreement was in fact concluded, but
rely on exchanges in correspondence
between the parties to the effect
that Plaintiff certainly had a future intent to provide funding. S
agree with Plaintiff’s
Gounsel that the MOU is a recordal of a
future intent and that in the absence of a final agreement between
the parties, the terms
of the loan agreement remain of full force and
effect.
7. The loan agreement
unequivocally obliges Defendants to effect payment of the debt on 1
August 2011 and that, that payment cannot
be set off or delayed for
any reason otherwise than in terms of a new formal agreement. That
agreement was not finalised, it was
not concluded and it was
certainly not reduced to writing in any manner which would: amend the
terms of the main loan agreement.
8.
Mr De Vries on behalf of Defendants, sought leave to appeal against
my judgment
inter alia
on the basis that. I had rejected the contention that the MOU created
binding rights and obligations. He relied on clause 9 of
the MOU
which provides as follows:
“
9. The terms of this
Memorandum of Understanding shall be in force until such a time as
the Parties enter into an agreement in
writing that will set out the
future relationship between the Parties and that agreement shall
incorporate the principles and
terms as set out herein.”
To my mind, this clause
underscores my belief that the MOU is of a provisional nature and
that a written agreement will be necessary
to create binding
obligations between the parties. It is nothing more than an
understanding between the parties of their future
intention.
9.
I am also unpersuaded by the contention that the fact that
Plaintiff purchased a 50% share in First Defendant created an
obligation
to secure funding for certain projects. Clause 3 must be
read in the context of the whole MOU and it is merely a recordal of
Plaintiff’s intention to seek funding for certain projects.
10.
As far as my failure to find that Defendants have a counterclaim for
specific performance is concerned, I am unpersuaded by
Counsel's
submission that it is not necessary for the purposes of opposing
summary judgment to detail the counterclaim in all.
its respects. In
support of this contention Counsel relied upon the case of So/7
Fumigation Services Lowveld CC v
Chemfit Technical Products (Pty) Ltd
2004
(6) SA 29
(SCA). That
ease neutralises this argument because in paragraph 10 of the
Judgment (p 34), the Court held as follows:
“
In order to be
successful in a defence, the defendant must, of course, comply with
the provisions of Rule 32(3)(b), which requires
a full disclosure of
the nature and the grounds of the counterclaim as well as the
rnateriai facts upon which it relies.”
The Court emphasised
that failure to comply with the said sub-rule does not preclude the
Court from the exercise of its discretion
to refuse summary
judgment.
In the present case, the
lack of particularity and detail in connection with this
counterclaim is such that far more detail is
necessary to establish
a binding obligation on behalf of Plaintiff to secure the funding
referred to and to show that Plaintiff
deliberately or negligently
or recklessly failed to secure such funding. The other terms of the
MOU point convincingly to the
agreement that the securing of this
funding was envisaged and, if successful, would require further
agreements to be concluded.
11.
In paragraph 25, p 39 of the
Soil
Fumigation
matter, the Court
recorded that it:
“
should be less inclined to
exercise its discretion in favour of a defendant in a matter such as
this where the answer to plaintiffs
claim is raised in the form of a
counterclaim as opposed to a defence to the plaintiff’s claim
ih: the form of a plea.
Moreover, and in any event, a Court can only
exerdse its discretion in the defendant's favour on the basis of the
material placed
before it aind not on the basis of hiete conjecture
or speculation.”
Applying this test, the
Appeal Court held that the counterclaim did not have merit and the
summary judgment was rightly granted.
12. I am satisfied that
the MOU is a statement of a future intent and is not a binding or
enforceable agreement to invest large
sums of monies for particular
developments. No dates are furnished for this funding and the
“Vinyard” proposal is
so vague and improbable as to
proclaim its own
absurdity. How does one
arrive at a figure of R107 million by funding R200 000.00 per month?
Why has there been no formal demand
by Defendants in connection with
Plaintiffs alleged failure to provide funding as agreed? Also, how
can Defendants rely on the
email dated 9 May 2011 which states that:
“
We obviously would prefer
to have you as a partner and allow you to provide the financing as
soon as possible. Please let
us know what your current
expectation is regarding the availability of the payment
guarantee......” ?
These words are not
commensurate with the suggestion that the MOU is a final and binding
agreement as opposed to a statement of
future intent.
13. Counsel for
Plaintiff correctly points out that whereas the loan agreement is
specific and comprehensive in its terms, the
MOU contains no
repayment terms, no terms relating to security, no dates for the
commencement of any projects and the other clauses
that one would
expect to find in a final and binding agreement.
14. I am not satisfied
that any other Court could reasonably conclude that the MOU
overrides the terms of the loan agreement or
that a final agreement
was concluded between the parties which had the effect of overriding
the terms of that loan agreement.
In the result, i am not satisfied
that another Court could reasonably find that the application for
summary judgement should
be refused.
15. In the result, the
application for leave to appeal is dismissed with costs.
Weinkove, AJ