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[2015] ZAWCHC 88
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Leopont 471 (Pty) Ltd v Business School Support Services (Pty) Ltd and Others (23953/12) [2015] ZAWCHC 88 (11 June 2015)
IN
THE HIGH COURT OF SOUTH AFRICA
(WESTERN
CAPE DIVISION, CAPE TOWN)
Case
No: 23953/12
DATE:
11 JUNE 2015
In
the matter between:
LEOPONT
471 (PTY)
LTD
.........................................................................................................
Plaintiff
And
BUSINESS
SCHOOL SUPPORT SERVICES (PTY)
LTD
.........................................
First
Defendant
(Registration
number: 2004/015863/07)
THEODORE
WILHELM VAN DEN HEERVER
N.O
...........................................
Second
Defendant
[In
his capacity as joint liquidator of Toits Motor Group
(Pty)
Ltd (in liquidation) T867/09]
MABUTU
MOHLONGU
N.O
.....................................................................................
Third
Defendant
[In
his capacity as joint liquidator of Toits Motor Group
(Pty)
Ltd (in liquidation) T867/09]
ROYAL
ALBATROSS PROPERTIES 102 (PTY)
LTD
..........................................
Fourth
Defendant
(Registration
number: 2004/015863/07)
JUDGMENT
DELIVERED
ON 11 JUNE 2015
BOQWANA,
J
Introduction
[1]
This is an exception brought by the
first and fourth defendants against the plaintiff’s particulars
of claim, as amended,
wherein the plaintiff claims that it acquired
one preference share in the fourth defendant as a result of which it
became entitled
to a claim for dividends over a specified period. I
refer to the first and fourth defendants collectively as ‘defendants’
for the purposes of convenience.
[2]
The exception is brought on the
basis that the facts as pleaded in the amended particulars of claim
lack averments which are necessary
to sustain a cause of action. The
defendants contend that the plaintiff’s claim is based on the
acquisition of the preference
share by means of a sale and cession
between it and a third party. This, they contend, was precluded by
the terms of the agreement
concluded between the defendants and third
parties in March 2007.
[3]
Furthermore, any variation,
cancellation and novation of that agreement had to be reduced to
writing and signed by both parties
to the agreement or their duly
authorised representatives, which according to the defendants did not
happen.
[4]
The crux of the plaintiff’s
submission is that its claim is based on a new agreement that it
concluded with the first defendant
and Kevin Beatty Goddard
(‘Goddard’) in October 2007, in terms of which a ‘new’
preference share was to
be issued in the fourth defendant. It also
contends that cancellation of the March 2007 agreement and conclusion
of a new agreement
were admitted by Goddard in an opposing affidavit
filed in the summary judgment application.
Relevant facts
of the amended particulars of claim
[5]
The essential facts alleged by the
plaintiff are that on 20 March 2007 a written agreement was concluded
between RJS Trust (IT4300/20030)
and Toitjie du Toit Trust (IT
11801/98) (collectively referred to as ‘the dealer’ in
the agreement) and Goddard, acting
in person, and the first defendant
represented by Goddard.
[6]
In terms of the said agreement
Goddard would ensure that the dealer acquired one preference share
(‘the preference share’)
in the capital of the fourth
defendant without any costs on the part of the dealer and accordingly
any subscription or purchase
price payable to acquire the preference
share had to be paid by Goddard.
[7]
Goddard would also ensure that the
dealer received a share certificate and a photocopy of the terms of
the preference share once
it was issued. The dealer and the fourth
defendant agreed that the dealer could receive dividends by way of
holding a preference
share to be acquired by the dealer. The amount
of such dividends would be based on the operation of a formula with
which the parties
are familiar. That agreement is attached as
‘annexure ‘L1’ to the particulars of claim. I refer
to it as the
March 2007 agreement.
[8]
On 08 August 2007, the RJS Trust
sold its one half of the 1% preference share in the fourth defendant
to the Toitjie du Toit Trust.
This 1% preference share was sold again
to the plaintiff on 30 August 2007. Toits Motor Group (Pty) Ltd (in
liquidation) owns 100%
of the plaintiff’s issued shares.
[9]
On 27 September 2007 the first
defendant was informed of the transfer of the preference share by the
Toitjie du Toit Trust to the
plaintiff by way of written notice.
[10]
The sale of 30 August 2007 referred
to in the notice was apparently by way of an oral agreement between
Toitjie du Toit Trust and
the plaintiff both represented by one Abel
Jacobus Du Toit. In terms of this oral agreement, the plaintiff would
pay to the Toitjie
du Toit Trust all the dividends to which the Trust
was entitled in terms of the agreement of March 2007, up to the date
of the
said oral agreement.
[11]
According to the plaintiff the
Toitjie du Toit Trust ceded to the plaintiff all of its rights in
terms of the March 2007 agreement.
[12]
The plaintiff pleads that the
defendants did not object to the alleged cession but gave effect to
it by, subsequent to the September
2007 notice, recognising the
plaintiff as the holder of the one preference share in the fourth
defendant. According to the plaintiff,
this acceptance took the form
of the defendants instructing their attorneys Sonnenberg Hoffman
Galombik to draw up a new agreement,
between Goddard, the first
defendant and the plaintiff in terms of which it was agreed that a
preference share would be issued
to the plaintiff on the same terms
and conditions as the March 2007 agreement. This alleged new
agreement is attached as annexure
X to the particulars of claim.
Annexure X is identical to the March 2007 agreement with the
exception of the dealer being replaced
with the plaintiff.
[13]
Annexure X is not signed on behalf
of Goddard and the first defendant. The plaintiff alleges that
Goddard admitted on behalf of
the defendants in an affidavit opposing
summary judgment application deposed to on 26 February 2013 that
annexure X ‘
was entered into
between the plaintiff, duly represented by Mr AJ du Toit, and the
first defendant, duly represented by me’
.
[14]
The plaintiff further alleges that
Goddard also made the following admissions on behalf of the first and
fourth defendants in paragraph
41 of the same affidavit:
‘
The
effect of the
cancellation of the
March 2007 agreement
, and the
entering into of the
new written
agreement
, [which h is a
reference to annexure “X”] was accordingly as a result of
the parties’ attempts to legitimise
the sale and cession of the
preference share as pleaded by plaintiff.’ (
Own
emphasis)
[15]
The plaintiff alleges further that,
Annexure X [as it stood] did not accurately reflect the intention of
the plaintiff and the defendants
in that clause 3.1 which provides
that: ‘
The parties record that
BSSS has incorporated a holding company (“the Holdco”) –
“ROYAL ALBATROSS PROPERTIES
102 (PTY) LTD which shall be
entitled to issue preference shares.’
should have read as follows:
‘
The
parties record that BSSS had incorporated a holding company (‘the
Holdco’) – Royal Albatross Properties 102
(Pty) Ltd which
is entitled to issue preference shares.’
[16]
It also alleges that Clause 3.2 in
annexure X, which currently reads as follows:
‘
Goddard
shall ensure that the Dealer acquires one preference share (“the
Pref Share”) in the capital of” ROYAL
ALBATROSS
PROPERTIES 102 (PTY) LTD.’
should
have contained the following at the end of the existing clause:
‘
This
preference share will replace the preference share to which the RJS
Trust (IT43200/20030) and the Toitjie du Toit Trust (IT11801/98)
was
entitled and will in all respects replace that share and carry the
same rights of Leopont 471 (Pty) Ltd as if it is a continuation
of
the share to which the abovementioned trusts were entitled.’
Defendants’
submissions
[17]
The essence of the complaint in the
exception is that the basis for the acquisition of the preference
share by the plaintiff, as
pleaded, is that:
the
preference share ‘was sold’
to the plaintiff; the rights in terms of the agreement were ‘
ceded
to the plaintiff’;
the first
defendant was informed of the ‘
transfer
of the preference share
’; [t]he
defendants did not object to the
cession
by the Toitjie du Toit Trust to plaintiff of all the rights in
terms of the agreement but gave effect to it, subsequent to
the 20
September 2007 notice, by recognizing the plaintiff as the holder of
the one preference share in the fourth defendant.
[18]
It was submitted by Mr Kantor on
behalf of the defendants that the keyword to be noted from what is
pleaded is ‘
the
’
preference share, which is a definite article, indicating that it is
a specific preference share that was being referred
to. (It is
not very clear from the pleading whether the preference share was
actually
issued,
pursuant to the March 2007 agreement. The plaintiff, however, does
allege in paragraph 13.1 of the amended particulars of
claim that
pursuant to the conclusion of the March 2007 agreement, the first
defendant represented to the dealer that the one preference
share in
the fourth defendant was issued in favour of the dealer although the
share certificate reflecting such issue was never
delivered to the
dealer).
[19]
Mr Kantor argued that the preference
share referred to in the amended particulars of claim is the one
preference share which was
held by the dealer in terms of the March
2007 agreement. It is that one preference share which formed the
subject of the sale and
cession or transfer as pleaded by the
plaintiff.
[20]
This view, the defendants argue, is
confirmed by the 27 September 2007 notice which records that
‘...the
1% was sold again to Leopont 471 (Pty) Ltd [the Plaintiff] on 30
August 2007
.’
[21]
The plaintiff initially sued in
terms of the March 2007 agreement as cessionary and purchaser of a
preference share. The defendants
raised an exception to the original
particulars of claim to the effect that the sale or cession of the
preference share was invalid,
a nullity and of no force and effect
because such a transaction was precluded by clause 4 of the March
2007 agreement.
[22]
Clause 4 of the March 2007 agreement
provides as follows:
‘
4
NO SALE, PLEDGE OR TRANSFER
The Dealer shall not
be entitled to sell, pledge, lend, grant any option in respect of or
in any other way encumber or transfer
the Pref share or any of the
rights comprising the Pref share.’
[23]
The plaintiff amended its
particulars of claim and pleaded further terms alleging an oral
agreement concluded in August 2007 or
an agreement in the form of
annexure X created in October 2007 which was not signed by or on
behalf of all the parties to the agreement.
[24]
According to the defendants,
annexure X or the oral agreement did not have legal effect because
any variation, cancellation or novation
of the March 2007 agreement
had to be reduced to writing and signed by both parties to such
agreement in terms of clause 10.2.
It therefore did not matter if
annexure X was meant to be a new agreement, a variation or novation
of the March 2007 agreement.
[25]
Clause 10.2 of the March 2007
agreement states that:
‘
10
GENERAL PROVISIONS
10.1 This agreement
constitutes the whole agreement between the parties in relation to
the subject matter thereof and no party shall
accordingly be bound by
any undertaking, representation or warranty not recorded therein.
10.2 No addition to
or variation, consensual cancellation or novation of this Agreement
and no waiver of any right arising from
this Agreement (or its breach
or termination) shall be of any force or effect
unless reduced to
writing and signed by both parties or authorised representatives
.’
[26]
Mr Kantor submitted that the Court
should accept that there was an agreement between the plaintiff and
the defendants. He however
contended that the point taken by the
defendants was that the oral agreement and/or annexure X did not have
any legal effect by
virtue of clause 10.2.
Plaintiff’s
submissions
[27]
In response, Mr Van der Merwe SC,
who appeared for the plaintiff, with Ms de la Hunt, argued that
allegations relating to the sale
and cession of the preference share
are only pleaded to reflect the history of how the preference share
was sold to the plaintiff.
It was not the basis of the
plaintiff’s claim.
[28]
According to the plaintiff, the
March 2007 agreement was cancelled. Its case therefore was not an
amendment of the March 2007 agreement
but a new agreement as
constituted by the August 2007 oral agreement and annexure X in terms
of which the plaintiff acquired a
new share, which share was issued
in favour of the plaintiff. It is on that basis that the plaintiff
became the holder of the share
and is entitled to dividends.
[29]
Mr van der Merwe advanced his
argument by making the following submissions: Firstly, the plaintiff
was not a party to the March
2007 agreement. That agreement was
between different parties. The plaintiff was accordingly not bound by
any provision to the effect
that the original agreement could not be
cancelled unless signed by all parties thereto. The defendants can
only blame themselves
if they issued a fresh share without properly
cancelling the original share. Furthermore, cancellation of the March
2007 agreement
was admitted by Goddard in the opposing affidavit of
the summary judgment application. Annexure X is clearly to the effect
that
a new shareholding would be issued to the plaintiff. As a
result, whether or not there was proper cancellation of the original
shareholding in favour of a third party does not affect the validity
of a new share issued in terms of annexure X.
[30]
Secondly, the holding of a share is
not dependent on the validity of the agreement in terms of which the
share was purchased, once
the share was intentionally issued to the
plaintiff (as admitted by Goddard). The existence of the share and
the holding by the
plaintiff of rights flowing from the shareholding
cannot be denied.
[31]
Thirdly, there are no grounds to
conclude that annexure X does not constitute a valid and binding
agreement as it does not contain
any provision to the effect that it
would be binding only when signed by both parties thereto. It is only
an amendment or variation
of the annexure X that needs to be signed
by all parties thereto.
[32]
Fourthly, clause 10.2 of the March
2007 agreement requires no more than that a cancellation of the
initial agreement or a waiver
of rights must appear from a document
signed by an authorised representative of each of the parties. There
is no reason why such
cancellation cannot, like any other contract,
be contained in a different document. There is no allegation that
this did not happen.
In this regard Mr van der Merwe submits that the
cancellation of the March 2007 agreement was admitted in writing and
under signature
of a representative of the defendants (i.e. in the
opposing affidavit). They can no longer deny that they agreed to the
cancellation
of the March 2007 agreement and the original preference
shareholding, of which they admit they were notified.
[33]
Fifthly, there is no admission in
the particulars of claim that the agreement of October 2007 (Annexure
X) was not validly concluded.
In addition there is an admission under
oath on behalf of the defendants that it was duly entered into. The
issue of whether annexure
X required a signature for the validity of
the October 2007 agreement would only arise when raised as a dispute
in a valid plea.
[34]
Finally, it would be incorrect to
decide any issue of invalidity of a contract at the exception stage
where it is alleged that the
contract was not only entered into but
also executed and implemented. The reason is that under such
circumstances the possibility
that the plaintiff may wish to
replicate with a valid plea of
estoppel
cannot at the exception stage be ruled
out.
Discussion
[35]
It
is trite that when an exception is taken, the Court must look at the
pleading excepted to as it stands.
[1]
The Court must assume the facts stated in the pleading to be true.
Facts outside those in the pleading cannot be brought into issue
and
no reference can be made to any other document.
[2]
In order to succeed with the exception, the defendants must persuade
the Court that the pleading is excipiable on every interpretation
that can reasonably be attached to it.
[3]
[36]
The plaintiff pleads a sequence of
events. It begins with the March 2007 agreement to which it was not
party. It then avers a sale
of one half of the 1% preference share
from one trust, RJS Trust, to another, Toitjie du Toit Trust, on 8
August 2007. It then
alleges an oral agreement taking place between
Toitjie du Toit Trust and the Plaintiff on 30 August 2007.The
plaintiff then pleads
a cession of rights and the acceptance thereof
before it gets to the conclusion of the new agreement.
[37]
The submissions made on behalf of
the defendants are on the face of it quite compelling. It is evident
from the reading of the pleading
that several events occurred before
the plaintiff became the alleged holder of the preference share. The
allegation of the new
agreement only becomes clear later on in the
particulars of claim and is only averred in the latter part of
paragraph 13.5.
[38]
It
is however important to note that the complaint is not about lack of
particularity or clarity in the particulars of claim as
to how the
preference share was acquired (i.e. by means of the sale and transfer
of the preference share or by means of a new agreement).
The
defendants could have perhaps contended that the amended particulars
of claim were vague and embarrassing for failing to allege
clear
terms of an agreement on which the plaintiff relies or for containing
matters that are irrelevant to the claim. In
Secretary
for Finance v Esselmann
it
was held that: ‘A pleading should not contain matter irrelevant
to the claim. The facts whereon a plaintiff relies should
be
concisely stated in his particulars of claim and these facts only,
and no other, should be pleaded. However, for the sake of
clarity it
is sometimes necessary to plead history. The pleader should do this
with caution. Unless such history is clearly severed
from the cause
of action the pleading may be vague and embarrassing.
’
[4]
[39]
This is however an exception based
on no cause of action disclosed. The test for the exception on this
basis is whether on any reasonable
construction of the pleadings the
plaintiff has made out a case to sustain a cause of action. Confining
myself to the issue before
me, I am not convinced that a cause of
action has not been disclosed on any reasonable construction of the
pleadings.
[40]
In
my view, the strength of the plaintiff’s case lies on the fact
that it was not a party to the March 2007 agreement. It
therefore was
not bound by the provisions of the 2007 March agreement.
[5]
It was therefore not required to demonstrate in its pleading that the
parties to the March 2007 agreement had complied with the
relevant
provisions prior to its acquisition of the preference share in terms
of a new agreement.
[41]
The
plaintiff has alleged a new agreement in terms of which a new
preference would be issued to it on the same terms and conditions
as
the March 2007 agreement. Material terms of the new agreement have
been pleaded and a nexus between the August 2007 oral agreement
and
annexure X has also been pleaded. The validity of this new contract
is not challenged. In fact it is accepted. Mr Kantor emphasised
that
the Court must accept that the alleged new agreement is valid. In
ABSA
Bank v Zalvest Twenty (Pty) Ltd and Another
[6]
Rogers
J (with Traverso DJP concurring) held at paragraph 21 that: ‘If
a plaintiff pleads the conclusion of a written contract
and the terms
relevant to his cause of action, the cause of action will appear
ex
facie
the particulars of claim’. It is not necessary for me to
delve into the validity or otherwise of annexure X as it is
not in
issue in this exception. In any event, any invalidity of the
agreement would be a matter to be raised in a plea.
[42]
I
am satisfied that a new agreement with Goddard and the first
defendant has been disclosed. Mr van der Merwe devoted a considerable
amount of time of his argument dealing with admissions made by
Goddard in his opposing affidavit to the effect that the March 2007
agreement was cancelled and a new agreement entered into with the
plaintiff. I agree with Mr Kantor, that at this exception
stage, the Court is to take as true the allegations pleaded and not
concern itself with any piece of evidence outside the pleading.
It
has been stated that the cause of action must consist of
‘
every
fact which it would be necessary for the plaintiff to prove, if
traversed, in order to support his right to the judgment of
the
Court. It does not comprise every piece of evidence which is
necessary to prove each fact, but each fact which is necessary
to be
proved.’
[7]
If the
admission of the cancellation of the March 2007 agreement by Goddard
is not a necessary fact to be proved by the plaintiff,
then the Court
ought not to concern itself with it for the purposes of the
exception.
[43]
I am, in any event, not persuaded
that the legal force and effect of annexure X depended on ‘proper’
cancellation of
the March 2007 agreement in terms of clause 10.2 for
reasons that I have already alluded to. In my view, the plaintiff
could still
rely on the oral agreement and/or annexure X as the basis
for its cause of action. It has been able to show that the
basis
of how it became the holder of the preference share is
independent of the March 2007 agreement. Therefore, even if the
allegations
relating to the ‘history’ were to be
discarded, annexure X and the oral agreement would remain.
[44]
It is contended that the existence
of a new agreement was not only acknowledged by the defendants, but
it was executed in that a
preference share was issued, business was
channelled to the defendants, annexure X was purportedly cancelled by
the defendants
and the liquidators of the plaintiff’s
shareholder (holding company) in February 2009, dividends were
declared and an amount
of over R400 000.00 was paid to the
plaintiff’s shareholder by the first defendant. Mr van der
Merwe’s submission
that
estoppel
could possibly be raised in these circumstances is not too
far-fetched.
[45]
Even
though the issue of the non-variation clause contained in the March
2007 agreement does not render the plaintiff’s cause
of action
unsustainable as I have already found, it is worth mentioning that,
there is judicial support for departure from the
general principle
that parties cannot vary a contract informally when it contains a
non-variation clause. In
Gray
v Waterfront Auctioneers (Pty) Ltd and Another
[8]
,
the Court held that:
‘
Even
if the non-variation clause had been relevant because the parties’
conduct amounted to a variation of the lease, the
applicant may well
have been precluded from praying it in aid because, as it is put by
Christie in “The Law of Contract in
South Africa 2
Nd
ed
at 535, ‘a party whose conduct is “fraudulent, or
unconscionable, or a manifestation of bad faith......will not be
permitted to rely on a non-variation clause.’
[46]
It
has been held that a party may be precluded from relying on a
non-variation clause where it offends public policy.
[9]
Those however would be exceptional cases.
Costs
[47]
Turning to the issue of costs, Mr
van der Merwe submitted that defendants must be ordered to pay the
costs of the plaintiff on an
attorney and own client scale. The basis
for this is that the defendants had initially raised an objection to
the plaintiff’s
amendment of the particulars of claim on the
same grounds as they raised in exception. They subsequently abandoned
the objection.
Had the defendants not been of the view that the
objection would dispose of the matter, they should not have raised
it. As a result
of this, the plaintiff suffered extra costs and a
delay in litigation.
[48]
Mr Kantor’s response was that
the defendants have a right to choose which course they should follow
in pursuing their case
and they cannot be penalised by not persisting
with the objection. Whilst Mr van der Merwe has a point that the
defendants could
have still achieved the same result had they
followed through with their objection, I do not believe that the
choice they made
necessitates them being met with a cost order sought
on behalf of the plaintiff. Costs incurred after the objection were
allegedly
for the application for leave to amend, appearance in court
by applicant’s counsel, notice of bar and the defendants’
exception. Whilst there would have been some delay in prosecuting the
matter, as well as additional costs occasioned by counsel’s
appearance to move the unopposed application for leave to amend, I am
not convinced that the defendants’ conduct is such
that it
should be visited with a cost order on attorney and client scale.
[49]
In the circumstances, the exception
is dismissed with costs.
N
P BOQWANA
Judge
of the High Court
APPEARANCES
FOR
THE PLAINTIFF: Adv J L Van der Merwe SC with Adv V L A de la Hunt
INSTRUCTED
BY: Tintingers Inc. C/O Norman, Wink & Stephen Attorneys, Cape
Town
FOR
THE FIRST AND FOURTH DEFENDANTS: Adv A Kantor
INSTRUCTED
BY: Ashersons Attorneys, Cape Town
[1]
Burger
v Rand Water Board and Another
2007 (1) SA 30
(SCA) at 32 D –
E
[2]
Gallagher
Group Ltd and Another v IO Tech Manufacturing (Pty) Ltd and Others
2014 (2) SA 157
(GNP) at para 19
[3]
First
National Bank of Southern Africa Ltd v Perry N O and Others
2001 (3)
SA 960
(SCA) at 965 D - E
[4]
1988(1)
SA 594 (SWA) at 597G-H it was held:
[5]
In
this regard see
:
Hillock and Another v Hilsage Investments (Pty) Ltd
1975 (1) SA 508
(A) at 515A-C and Aviation Union of South Africa and Another v
South African Airways (Pty) Ltd and Others
2012 (1) SA 321
(CC)
at para 59 where the Court referring to the principle raised in
Hillock said: “...
This
accords with the general common-law principle that only parties to a
contract may enforce its terms
.
”
[6]
2014(2)
SA 119 (WCC)
[7]
Stols
v Garlicke & BousfieldInc
2012 (4) SA 415
(KZP) at 422A, quoting
Maasdorp JA in McKenzie v Farmers’ Co-operative Meat
Industries Ltd
1922 AD 16
at 23
[8]
1996(2)SA
662 (W), at 668I-669B,
[9]
See
Nyandeni Local Municipality v Hlazo
2010 (4) SA 261
(ECM), Steyn and
Another v Karee Kloof Melkery (Pty) Ltd and Another (2009/45448)
[2011] ZAGPJHC 228 (30 November 2011)