Case Law[2024] ZAGPPHC 696South Africa
Development Bank of Southern Africa Ltd v Prinsloo and Others (63387/2020) [2024] ZAGPPHC 696; [2024] 4 All SA 440 (GP) (24 July 2024)
Headnotes
bound – Arbitration
Judgment
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# South Africa: North Gauteng High Court, Pretoria
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## Development Bank of Southern Africa Ltd v Prinsloo and Others (63387/2020) [2024] ZAGPPHC 696; [2024] 4 All SA 440 (GP) (24 July 2024)
Development Bank of Southern Africa Ltd v Prinsloo and Others (63387/2020) [2024] ZAGPPHC 696; [2024] 4 All SA 440 (GP) (24 July 2024)
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sino date 24 July 2024
FLYNOTES:
ARBITRATION – Order of court – Return to litigation –
Applicants securing award yet respondents refusing to pay and
seeking to return to court – Parties and facts remain
same –
Defence disposed of in arbitration proceedings and hit by
application of res judicata – Or by way of “once
and
for all” rule – Or because respondents have made
election to which they must be held bound – Arbitration
award made an order of court –
Arbitration Act 42 of 1965
,
s
31.
Last amended version 12
August 2024.
IN THE HIGH COURT OF
SOUTH AFRICA
GAUTENG DIVISION,
PRETORIA
CASE Number:
63387/2020
(1)
REPORTABLE:
YES
/
NO
(2)
OF INTEREST TO OTHER JUDGES:
YES
/
NO
(3)
REVISED:
YES
/
NO
24 July 2024
In the matter between:-
DEVELOPMENT BANK OF
SOUTHERN AFRICA LTD
Applicant
and
HOFMANN
PRINSLOO
First Respondent
PIETER DU
PLESSIS
Second Respondent
DR CORNELIUS
PAPENFUS
Third Respondent
DIRK
CONRADIE
Fourth Respondent
MASHUPYE
MATLALA
Fifth Respondent
JUDGMENT
SNYMAN, AJ
Introduction
[1]
The current matter
concerns an application brought by the applicant on 15 May 2023 to
make an arbitration award handed down in its
favour, and against the
respondents, an order of Court as contemplated by
section 31
of the
Arbitration Act (AA
)
[1]
. In
turn, and in a counter application filed on 14 July 2023, the
respondents have prayed for either the dismissal of the applicant’s
application, alternatively the stay of the proceedings until a
further claim the respondents have instituted in the High Court
against the applicant has been decided.
[2]
From the outset, it must be stated that the arbitration
award, which
was handed down by retired Judge C Pretorius on 12 April 2023 (
the
award
) is uncontested. The respondents have received the award,
are fully familiar with its contents, and have elected not to further
challenge such award on review to this Court in terms of
section
33(1)
of the AA. The award thus stands. There is accordingly no
reason why the award cannot be made an order of Court by virtue of
section 31
of the AA, and the applicant be afforded the relief sought
in its notice of motion.
[3]
The only issue that can possibly stand in the way of
the award being
made an order of Court is the counter application brought by the
respondents against the applicant in these proceedings,
referred to
above. The particulars and basis of this counter application will be
dealt with in full later in this judgment.
[4]
I now turn to deciding this application and associated
counter
application, by first setting out the relevant background facts,
which facts were, fortunately, largely common cause and
/ or
undisputed.
The relevant
background facts
[5]
In the course of
2009,
the applicant agreed to advance funds to Proline Trading 60 (Pty) Ltd
(
Proline
),
for the purpose of funding, by way of a loan, a property development
being conducted by Proline. This agreement was reduced to
writing,
and was contained in a document known as a Loan Facility Agreement
(
LFA
).
There were also several further addenda to the LFA,
[2]
which together with the original agreement, encompassed the entire
loan agreement between the parties, and all together constituted
the
LFA. When I refer to the LFA in this judgment, it must be taken to
include the addenda.
[6]
In terms of the LFA, the applicant advanced a total capital
amount of
R125 million to Proline, payable in tranches as the development
progressed. As part of the entire transaction, the applicant
required
that all five the respondents provide personal surety for at least
part of the capital amount advanced by it to Proline,
as they were
the five directors of Proline. As a result, and on 16 January 2009,
all five respondents concluded individual suretyship
agreements in
favour of the applicant, for a collective total amount of R12.5
million (
the suretyships
).
In terms of the suretyships, the respondents bound themselves as
sureties and co-principal debtors with Proline for all amounts
owing
by Proline to the applicant from time to time under the LFA,
obviously to the limit of R12.5 million.
[7]
The LFA provided for private arbitration to resolve any
disputes that
may arise out of the LFA, between the applicant and Proline. However,
the suretyships concluded between the applicant
and the respondents
did not provide for dispute resolution by way of private arbitration.
[8]
A dispute arose between the applicant and Proline with
regard to a
breach by Proline of the LFA. According to the applicant, Proline
defaulted on its prescribed payment obligations under
the LFA.
Proline in turn contended that the applicant had breached the LFA,
because it had failed to make funds available to Proline
when it was
required to do so, thereby causing Proline to suffer significant
damages.
[9]
Because
Proline did not dispute that it owed the applicant the amounts
demanded by the applicant as being due under the LFA, the
applicant
issued summons out of the High Court in Johannesburg under case
number 30282 / 20 against Proline, in terms of which
the applicant
claimed the outstanding sum of the capital amount it advanced to
Proline under the LFA, plus interest.
[3]
This amounted to the sums of R147 990 239.95 and
R101 728 020.92 respectively. Where it came to the
respondents
in
casu
,
as personal sureties for the debt owing by Proline, and again
considering that Proline did not dispute that the debt was owing
to
the applicant, the applicant also issued summons out of the High
Court in Pretoria on 2 December 2020 under case number 63387
/ 20,
claiming the combined sum under the suretyships of the respondents,
amounting to R12 500 000.00, from the respondents.
[10]
Both Proline and the respondents contested the claims brought by the
applicant
against them. Proline on 8 December 2020 filed its plea to
the applicant’s particulars of claim, wherein it raised a
defence
that the applicant breached the LFA in material respects when
it failed to make the agreed funds available when actually required
by Proline during the various stages of the development. According to
Proline, it suffered material damages as a result of not
being
favoured with the funds by the applicant when due, resulting in
Proline also instituting a counterclaim against the applicant
for
damages, in the sum of R133 400 000.00. Proline raised a
further defence of rectification of the LFA and the suretyships.
As
to the respondents, they in essence raised the same defences as
Proline, by way of a plea filed on 13 July 2021. They also instituted
the same counterclaim, and contended that these alleged material
breaches by Proline absolved them from their suretyships. As to
the
rectification pleaded, the respondents contended that the
rectification, if granted, would also cause them to be absolved of
their liability in terms of the suretyships.
[11]
Because the determination of the defences raised by Proline in its
plea would
be susceptible to private arbitration under the LFA, the
applicant brought an application in the Johannesburg High Court to
stay
the High Court litigation and to have these disputes decided by
a private arbitrator under the LFA. This application was opposed
by
Proline, but ultimately an order was granted on 5 September 2022 by
Strydom J, directing that the litigation pending between
the
applicant and Proline in the High Court be stayed, pending the
outcome of private arbitration to be conducted between the two
parties. At this point the respondents, who were not parties to the
arbitration agreement under the LFA, that formed the basis
of the
Court order, contended that the evidence in the arbitration will be
relevant to their disputed claim as well, and expressly
requested to
be joined in the arbitration.
[12]
As
a result of all of the aforesaid, a formal arbitration agreement was
concluded on 19 and 20 October 2022 (being the dates when
signed on
behalf of the parties) between the applicant, Proline, and the
respondents, in terms of which all the disputes between
the parties
arising from the LFA and the suretyships would be resolved by way of
private arbitration (
the
arbitration agreement
).
It was specifically said that all actions between the parties would
be resolved simultaneously and that separate orders would
be granted
by the arbitrator for each of the actions.
[4]
[13]
As
to the specific salient terms of the arbitration agreement, it was
agreed that the disputes to be determined in the arbitration
were
those disputes as articulated in the pleadings filed by the parties
in the High Court cases referred to above.
[5]
It follows that the pleadings filed by the parties in the High Court
proceedings were considered the pleadings in the arbitration,
and
also determined the issues the arbitrator would be called on to
decide. It was further agreed that the Uniform Rules of the
High
Court would apply to the conducting of the arbitration proceedings,
and this would include the entitlement of the arbitrator
to make an
order of absolution from the instance.
[6]
The parties agreed to retired Judge C Pretorius as arbitrator.
[7]
Several procedural issues, relating to discovery, further particulars
and a pre-arbitration conference were regulated in the arbitration
agreement.
[8]
It was agreed that
the arbitration would be final and binding on the parties with no
right to appeal.
[9]
[14]
The arbitration took place on 20 to 24 February 2023, as agreed
between the
parties. As to what evidence was presented in the
arbitration, and considering that the award is unchallenged and
stands, I will
simply defer to the findings of fact as made by
arbitrator retired Judge Pretorius and recorded in the award.
Further, I will only
refer to those factual findings the arbitrator
had made which are of relevance to deciding the case
in
casu
, and not all the findings of
fact.
[15]
As already said, it was undisputed that Proline received the capital
amount
of R125 million in terms of the LFA from the applicant, and
that it failed to replay this debt plus interest as prescribed in the
LFA. It was common cause that Proline and the respondents had the
onus to prove the breach of contract and rectification defences,
which they relied on to defeat the applicant’s claim.
[16]
Only two witnesses testified in the arbitration. Mr B B Berry (Berry)
testified
for the applicant, whilst the first respondent (Hofman
Prinsloo) testified for Proline and the respondents. Considering the
testimony
led, the arbitrator concluded that the applicant had proven
its claim against Proline. The arbitrator was then presented with an
application by the applicant for absolution from the instance where
it came to the claims by Proline and the respondents of alleged
breach of the LFA by the applicant in failing to make funds
available, the associated counterclaim, and the rectification sought.
After considering argument by the parties, the arbitrator upheld the
applicant’s application for absolution from the instance.
As
far as the current proceedings are concerned, this put paid to any
case of breach of contract alleged to have been perpetrated
by the
applicant, as well as the counterclaim, and this need not be
considered further.
[17]
Where it came to the rectification case, the respondents contended
before the
arbitrator that when the LFA and the suretyships were
concluded, there were ‘
certain
mistakes
’ that were made,
which mistakes were
bona fide
and arose in the course of the drafting of the various agreements.
According to the respondents, these mistakes in the course of
the
drafting of the agreements resulted in the agreements not reflecting
the true intention of the parties. The first respondent,
as witness
for the respondents, sought to present evidence as to what these
mistakes were, how the same came about, and what the
rectified
provisions would be. Needless to say, this was disputed by the
applicant when presenting its own evidence.
[18]
The arbitrator was referred to the specific clauses in the LFA and
the suretyships
that were the subject matter of the rectification
case. First, clause 1.2 in the suretyships as it stands reads: ‘
It
is specifically recorded that
…
notwithstanding anything to the
contrary in the suretyship, our liability under this deed of
suretyship, shall lapse immediately
upon the debtor receiving the
Shareholder Equity Contribution, as defined in the loan agreement, as
specified in clause 6.1(aa)
of the loan agreement.
’
The respondents contended that the words ‘
or
the creditor
’ be added after
the word ‘debtor’ in this clause 1.2.
[19]
The loan agreement referred to in clause 1.2 of the suretyships is
the LFA,
which contains a specific definition of what constitutes the
‘
Shareholder Equity
Contribution
’ referred to in
the suretyships. This definition, as its stands in the LFA, reads:
‘
an amount of not less than R12
500 000.00 (twelve million five hundred thousand rand) to be injected
by Cranbrook into the Borrower9
as Equity, which amount could either
be injected as cash into the Borrower, alternatively be received by
the Borrower as proceeds
from the sale of Extension 7 (or any other
extension approved by the DBSA) to ASA Metals and accounted for as
Equity in the Borrower’s
books of account’
.
The LFA further provides in clause 6.1(n)(aa) that ‘...
It
is agreed that the Individual Sureties shall be released from their
respective liabilities under the Individual Surety Documents
upon
receipt by the Borrower of the Shareholder Equity Contribution’.
[20]
Despite these terms in the LFA being quite clear as they stand, the
first respondent
testified in the arbitration that changes had been
proposed to the original draft agreement that had been prepared in
October 2008.
These changes were proposed in various e-mails and
meetings, and the testimony relating to such interactions are
recorded in the
award and need not be repeated in this judgment. The
upshot was that according to the respondents, the definition of
‘
Shareholder Equity
Contribution
’ in the LFA
should have read: ‘
means an
amount of not less that R12 500 000.00 to be received by
either the borrower or the lender, from the proceeds
of the
realisation of any of the properties which constitute phase 3, 4, 5,
6 or 7 of the envisaged development.’
This is clearly markedly different from the definition of
‘
Shareholder Equity
Contribution
’ as actually
contained in the LFA.
[21]
It was specifically recorded in the LFA that Proline would repay its
debt to
the applicant out of the proceeds of properties sold in the
course of the property development forming the subject matter of the
loan by the applicant to Proline. In this context, and in the
addendum of 5 September 2011 to the LFA, it was required that Proline
repay the debt owed to the applicant by utilising a prescribed 70% of
all amounts paid into its revenue account from the proceeds
of sale
of properties, until all principal amounts and interest on the loan
is repaid in full. The percentage of 70% was later
further increased
to 80%. As further security, all the immovable properties owned by
Proline were encumbered in favour of the applicant
with a covering
mortgage bond.
[22]
It was common cause that in 2016, Proline requested the applicant to
release
a specific property it intended to sell, from the covering
mortgage bond held by the applicant over that property. In exchange,
Proline promised the applicant that it would receive R14 400 085.00
from the proceeds of the proposed sale. The applicant
agreed to the
proposal, on the basis that the promised payment of R14 400 085.00
would exceed the 80% repayment threshold
in terms of the LFA, and
accordingly approved the requested release. The transaction then
proceeded, the property was sold, and
upon registration of transfer,
the applicant was paid a sum of R14 400 085.00 on or about
31 March 2016. Importantly,
this sum was attributed to the payment of
Proline’s debt to the applicant as prescribed by the LFA.
[23]
It is the aforesaid events relating to the sale of the property in
2016 and
the consequent payment of R14 400 085.00 to the
applicant that was the factual basis for the respondents’
contention
that they had been released from the suretyships, once the
rectification of the LFA and suretyships is considered and should
this
claim be approved by the arbitrator. This is because, in terms
of rectified clauses thereof as propagated by the respondents, such
payment would then qualify as the payment of the Shareholders Equity
Contribution, as it was proceeds from a sale of one the identified
properties received by the lender / creditor, being the applicant.
[24]
This all featured prominently before the arbitrator. In short, the
arbitrator
was called on to decide whether rectification should be
granted, because if it was granted, then the respondents would be
released
from their suretyships by virtue of the payment of the sum
of R14 400 085.00 to the applicant. The arbitrator
comprehensively
dealt with the evidence relating to the suggested
rectification, and the exchanges that took place between the parties
that led
to the conclusion of the LFA and the suretyships. The
arbitrator was especially critical of the fact that the alleged
‘
common mistake
’
was only raised for the first time in response to the letters of
demand from the applicant, which was more than 11 years
after these
agreements had been concluded. The arbitrator, having considered all
the evidence, consequently decided that: ‘
I
cannot find that prima facie a “common mistake” has been
proved ...
’. It follows that
the rectification claim failed.
[25]
In the award delivered on 12 April 2023, and in particular relating
to the
claim by the applicant against the respondents, the arbitrator
held that absolution from the instance be granted, and that the
respondents were ordered to pay, jointly and severally, the one
paying the other to be absolved, the sum of R12 500 000.00
to the applicant.
It
is common cause that despite being ordered to do so in the award, the
respondents refused to pay the sum of R12 500 000.00
million to the applicant. This led to the current application to make
the award an order of Court, for the purposes of execution
thereof
against the respondents.
[26]
However, the respondents were not done yet. In opposition to the
application
to make the award an order of Court, the respondents on
14 July 2023 filed a counter application and answering affidavit. In
the
counter application, the respondents pray that the application to
make the award an order of Court be dismissed, alternatively be
stayed pending the final adjudication of an action instituted by the
respondents, now acting as plaintiffs, against the applicant
as
defendant, for a declarator seeking confirmation that the respondents
have been released from their suretyships because the
necessary
‘
Shareholder Equity
Contribution
’ triggering
such release had been fulfilled by the payment of the sum of
R14 000 085.00 to the applicant
on 31 March 2016.
[27]
With the claim for rectification having been disposed of by the
arbitrator
in the award against the respondents, the respondents now
change tack, and contend that rectification is not necessary. It is
now
contended, in the founding affidavit to the counter application
(which also serves as the answering affidavit to the applicant’s
application), that when applying the relevant clauses in the LFA and
suretyships as they stand, the respondents would be released
from
their suretyships by the payment of R14 000 085.00 to the
applicant on 31 March 2016. This is described as a new
defence that
was not before the arbitrator to decide, and therefore, according to
the respondents, they are entitled to raise such
a defence now.
Analysis
[28]
I must confess that I
find the conduct of the respondents in this case lamentable. For the
reasons ventilated below, it is my view
that not only is this new
defence raised by the respondents a bad one, but it is not even
competent to have raised this defence
in the first place, considering
all that has transpired before. What happened in this case flies
squarely in the face of what is
sought to be achieved by way of
private arbitration proceedings, which is to finally resolve all
disputes between the parties and
bring a final end to the litigation
in an expeditious manner. As said in
Lufuno
Mphaphuli and Associates (Pty) Ltd v Andrews and Another
[10]
:
‘
.... Courts should
be respectful of the intentions of the parties in relation to
procedure. In so doing, they should bear in mind
the purposes of
private arbitration which include the fast and
cost-effective resolution of disputes. …'
[29]
The first problem the
respondents face, in my view, is that they are in essence returning
to Court to litigate an issue that was
agreed by them be submitted to
private arbitration for final resolution. Even accepting for the
purposes of argument that it is
competent to now raise the so-called
new defence, the undeniable reality is that all the facts giving rise
to this defence and
the consequential relief sought based on that
defence, was agreed to be subjected to arbitration. In my view, it
does not matter
if the respondents seek release from the suretyships
on the basis of clause 1.2 of the suretyships and clause 6.1(n)(aa)
of the
LFA as they stand, or on the basis of these clauses being
rectified. The broad issue in both instances, is that the release of
the respondents from their suretyships based on the terms of the LFA
and suretyships and as a result of the payment of R14 400 085.00,
was agreed to be arbitrated, and not be continued to be litigated.
The respondents simply cannot do a volte face and return to
litigation in the High Court again. After all, they did not have to
agree to arbitration, and could simply have persisted with
the
litigation against them. They must be held to their bargain, which
entails an abandonment of any litigation on this issue in
the High
Court. In
Canton
Trading 17 (Pty) Ltd v Hattingh NO
[11]
the Court held as follows:
‘…
When
parties agree to refer a matter to arbitration, unless the agreement
provides otherwise, they implicitly, if not explicitly
(and, subject
to the limited power of the high court under
s 3(2)
of the
Arbitration Act), abandon
the right to litigate in courts of law and
accept that they will be finally bound by the decision of the
arbitrator. …’
[30]
The second problem faced
by the respondent is, in my view, the application of the principle of
res
judicata
.
In
Prinsloo NO and Others v Goldex 15 (Pty) Ltd and Another
[12]
the Court said that: ‘
The
expression 'res iudicata' literally means that the matter has already
been decided. The gist of the plea is that the matter
or question
raised by the other side had been finally adjudicated upon in
proceedings between the parties and that it therefore
cannot be
raised again ...
’
.
In
National
Sorghum Breweries Ltd (t/a Vivo African Breweries) v International
Liquor Distributors (Pty) Ltd
[13]
the Court summarized the requirements for the successful application
of
res
judicata
as
being the following:
‘
...
idem
actor
,
idem
reus
,
eadem
res
and
eadem
causa petendi.
This
means that the
exceptio
can
be raised by a defendant in a later suit against a plaintiff who is
'demanding the same thing on the same ground' ...;
or which
comes to the same thing, 'on the same cause for the same relief' ...;
or which also comes to the same thing, whether the
'same issue' had
been adjudicated upon ...’
And in
Yellow
Star Properties v MEC Department of Development Planning and Local
Government
[14]
the
Court added the following:
‘…
.
it is necessary to stress not only that the parties must be the same
but the same issue of fact or law which was an essential element
of the judgment on which reliance is placed must have arisen and must
be regarded as having been determined in the earlier judgment.’
[31]
In casu
,
and conducting a comparison between the proceedings before the
arbitrator and then the proceedings before this Court, it clear
that
the parties to the dispute remain the same, and the facts remain the
same. The consequential relief demanded (sought) is also
the same.
The only question that remains is whether the cause of action remains
the same. On face value, it does appear to be the
same, because the
respondents in both instances advance a case that in terms of clause
1.2 of the Suretyships and clause 6.1(n)(aa)
of the LFA, that they
were absolved from their sureties as a result of the payment to the
applicant of the sum of R14 400 085.00
on 31 March 2016.
The arbitrator decided in the end that the respondents had failed do
make out even a
prima
facie
case
that they were absolved from the suretyships in terms of these
contractual provisions. Whilst the respondents in the arbitration
did
seek the rectification of the definition of ‘
Shareholder
Equity Contribution
’
in
the LFA as part of this defence (case), and that not being the case
in the claim now brought by the respondents, this distinction
in my
view changes nothing. It must be remembered that rectification, if
successful, does not introduce a new agreement, and simply
confirms
the terms of the existing agreement reflecting the common intention
of the parties. It is thus all the same thing. In
Boundary
Financing v Protea Property
[15]
the Court held:
‘ …
Rectification
of an agreement does not alter the rights and obligations of the
parties in terms of the agreement to be rectified:
their rights and
obligations are no different after rectification. Rectification
therefore does not create a new contract; it merely
serves to correct
the written memorial of the agreement. It is a declaration of what
the parties to the agreement to be rectified
agreed. For this reason
a defendant who contends that an agreement sued upon does not
correctly reflect the agreement between the
parties may raise that
contention as a defence without the need to counterclaim for
rectification of the agreement ...'
[32]
Undeniably, and before this Court, the so-called new defence offered
by the
same respondents is based on the same facts that featured in
the arbitration concerning them being absolved from their suretyships
as a result of the payment to the applicant of the sum of
R14 400 085.00 on 31 March 2016. This new defence also
relates
to the same provisions in the very same agreements. The same
relief is sought, being release of the respondents from the
suretyships.
The only difference, being the fact that rectification
is no longer sought, because that has been disposed of, simply does
not
matter. All the requirements for the application of
res
judicata
have in my view been satisfied. This principle has been
specifically relied on by the applicant in opposition to the
respondents’
counter application, and in my view, the point is
well made, and this should in reality be the end of the matter for
the respondents.
[33]
But even if it is
accepted that a distinction can be drawn, in the context of seeking
to defeat
res
judicata
,
between the reality that in the arbitration proceedings,
rectification of the LFA and suretyships was relied upon, whilst in
the current proceedings before this Court the relevant clauses of the
LFA and suretyships are relied on as they stand, this still
does not
exclude the application of another form of
res
judicata
,
for the want of a better description. This is because, in my view,
what is commonly known as the ‘
once
and for all
’
principle
is brought into play. In
MEC
for Health and Social Development, Gauteng v DZ obo WZ
[16]
the Court held that this principle: ‘
...
still forms part of our law …
’
.
This principle is a manifestation of
res
judicata
,
[17]
even though it is not exactly the same.
[18]
The current operative exposition of this principle is found in
Smith
v Porritt and Others
[19]
,
where the Court held:
'Following the decision
in
Boshoff
v Union Government
1932
TPD 345
the ambit of the
exceptio
res judicata
has
over the years been extended by the relaxation in appropriate cases
of the common-law requirements that the relief claimed and
the cause
of action be the same (
eadem
res
and
eadem
petendi causa
)
in both the case in question and the earlier judgment. Where the
circumstances justify the relaxation of these requirements those
that
remain are that the parties must be the same (
idem
actor
)
and that the same issue (
eadem
quaestio
)
must arise. Broadly stated, the latter involves an enquiry whether an
issue of fact or law was an essential element of the judgment
on
which reliance is placed. Where the plea of
res
judicata
is
raised in the absence of a commonality of cause of action and relief
claimed it has become commonplace to adopt the terminology
of English
law and to speak of issue estoppel. But, as was stressed by Botha JA
in
Kommissaris
van Binnelandse Inkomste v Absa Bank Bpk
1995
(1) SA 653 (A)
at
669D, 670J – 671B, this is not to be construed as implying
an abandonment of the principles of the common-law in favour
of those
of English law; the defence remains one of
res
judicata
.
The recognition of the defence in such cases will however require
careful scrutiny. Each case will depend on its own facts and
any
extension of the defence will be on a case-by-case basis. ...
Relevant considerations will include questions of equity
and
fairness not only to the parties themselves but also to others. ...’
And in
Evins
v Shield Insurance Co Ltd
[20]
,
the Court described the ‘
once
and for all rule
’
as
follows:
'… the rule is to
the effect that in general a plaintiff must claim in one action all
damages, both already sustained and
prospective, flowing from one
cause of action (see
Cape Town Council v Jacobs
1917 AD 615
at
620;
Oslo Land Co Ltd v The Union Government
1938 AD 584
at
591;
Slomowitz v Vereeniging Town Council
1966 (3) SA 317
(A)
at 330;
Custom Credit Corporation (Pty) Ltd v Shembe (supra
at
472). …. it is a well-entrenched rule. Its purpose is to
prevent a multiplicity of actions and to ensure that there is
an end
to litigation.'
[34]
As to when the cause of
action would be considered to be the same for the purposes of the
application of the ‘
once
and for all’
principle,
the Court in
Fidelity
Guards Holdings (Pty) Ltd v Professional Transport Workers Union and
Others
[21]
said
:
‘
The
cause of action is the same whenever the same matter is in issue:
Wolfaardt
v Colonial Government
16
SC 250
at 253. The same issue must have been adjudicated upon. An
issue is a matter of fact or question of law in dispute between two
or more parties which a court is called upon by the parties to
determine and pronounce upon in its judgment, and is relevant
to the
relief sought:
Horowitz
v Brock & others
1988
(2) SA 160
(A) at 179F-H. …. The reason for the rule is
to prevent difficulties arising from discordant or mutually
contradictory
decisions due to the same action being aired more than
once in different judicial proceedings: Voet 44.2.1. The object of
the rule
is that of public policy which requires that there
should be an end to litigation and that a litigant should not be
harassed twice
upon the same cause:
Boshoff
v Union Government
1932
TPD 345
at 350;
Custom
Credit Corporation (Pty) Ltd v Shembe
1972
(3) SA 462
(A) at 472A-E. ….’
[35]
Applying the above principles, what is really the situation
in
casu
, if it is considered what was before the arbitrator, as
opposed to what would be the case before the Court in terms of the
respondents’
’
new defence
’? First, the
defence the arbitrator had to decide, as articulated by the
respondents themselves in their plea, was whether
they had been
absolved from their suretyships by virtue of the requirements of the
Shareholder Equity Contribution having been
fulfilled. Considering
the particulars of claim in respect of the claim the respondents now
wish to pursue against the applicant,
the articulated claim is
exactly the same. Second, the facts serving as basis for this defence
before the arbitrator was that the
payment of R14 400 085.00
to the applicant on 31 March 2016 constituted the payment as
contemplated by clause 1.2 of
the suretyships and clause 6.1(n)(aa)
of the LFA necessary for release from the suretyships, considering
that it meant that Shareholder
Equity Contribution was fulfilled.
Turning to the respondents’ new particulars of claim, these are
the exact same facts forming
the basis of the new defence from which
is drawn the exact same conclusion. In particular, the respondents
have not added any new
or further facts to the equation, because
there are none. And third, what the respondents sought from the
arbitrator and would
now again seek from the Court is nothing more
than declaratory relief that they are absolved from their
suretyships. Overall considered,
it is simply the same case that was
brought before the arbitrator and which was decided by him, being
brought again.
[36]
It follows that the only
difference between the case before the arbitrator and the case now
articulated in the respondents’
new particulars of claim, is
the issue of rectification. In my view, the distinction is of little
consequence when considering
the facts and the legal principles that
have to be decided. It is, in essence, the same case. In any event,
once the arbitrator
effectively declined rectification as prayed for,
what was before him was the clauses in the LFA and suretyships as
they stood,
and when applying the facts relating to the payment of
the R14 400 085.00 in 2016 as basis for absolving the
respondents
from the suretyships, the arbitrator in essence found
that the respondents have failed to make out a
prima
facie
case
in this regard. It is irrelevant whether the arbitrator’s
conclusion is right or wrong.
[22]
In, the end, and all the above considered, it is undeniable that the
same ultimate question based on the same facts and the same
legal
principles leading to the same relief, would be need to be decided by
this Court in terms of the new particulars of claim,
and this is not
allowed. This conclusion is in line with the following
dictum
in
Democratic
Alliance v Brummer
[23]
,
where the Court dealt with what should be considered when determining
whether the same issue had already been decided, and had
the
following to say
:
‘
Where
the judgment does not deal expressly with an issue of fact or law
said to have been determined by it, the judgment and order
must be
considered against the background of the case as presented to the
court and in the light of the import and effect of the
order. Careful
attention must be paid to what the court was called upon to determine
and what must necessarily have been determined,
in order to come to
the result pronounced by the court. The exercise is not a mere
mechanical comparison of what the two cases
were about and what …’
[37]
I also wish to make
reference to a number of pertinent examples of how the ‘
once
and for all
’
principle
has been applied by the Courts. In
Caesarstone
Sdot-Yam Ltd v World of Marble and Granite 2000 CC and Others
[24]
the Court conducted a comparison between what had to be decided in
two different proceedings, on what the Court considered to be
the
same issues, and had the following to say
:
‘
In para [11] supra
I described the central issues that will have to be determined
in both the Israeli and these proceedings.
If those issues are
determined in favour of Caesarstone it will be entitled to the
declaratory order it seeks that the agency agreement
has either
lapsed or been cancelled and to such consequential relief as may
properly flow from that. If they are determined against
Caesarstone
it seems necessarily to follow that WOMAG and the Sachs family can
legitimately claim that there was a repudiation
of the agency
agreement and recover from Caesarstone any damages they may have
suffered as a result. While the form in which
those issues arise and
the relief that is claimed consequent upon them differ in the two
actions the central issue remains essentially
the same. While there
is not strict compliance with the requirements for res judicata this
is in my view a proper case to relax
those requirements in accordance
with the approach in
Kommissaris
van Binnelandse Inkomste v Absa Bank Beperk …’
[38]
The
next reference as an example is to
Brummer
supra
,
which case concerned a claim by the respondent party for
reinstatement of his party membership of the appellant political
party.
The respondent did not raise all the grounds upon which he
could apply to declare the termination of his membership unlawful,
and
sought to add an additional ground in later proceedings. The
Court reasoned as follows:
[25]
‘
Counsel
for the appellant argued that in order to succeed in obtaining orders
for re-instatement (whether interim or final) Brummer
had to
establish that the termination of his membership was unlawful on one
or more bases. He set out to establish that case before
Traverso DJP.
He was required to advance his case upon every ground available to
him. He did not do so. He therefore sought to
introduce a further
ground, i.e., the constitutional invalidity ground, at the hearing
but was not permitted to do so when the
amendment was refused. Since
he pursued the relief, he must be bound by the outcome
notwithstanding that he did not advance every
ground available to
him. Once the question of lawfulness of the termination of his
membership is decided, he is not at liberty
to seek to advance
another ground not considered by the court. This, it was submitted,
is the essential rationale for the
res
judicata
principle.
It applies equally in relation to the
exceptio
in
the form of issue estoppel.
The argument is sound. …’
[39]
Another apposite example
can be found in
Manana
and another v Manana and Others
[26]
.
In that case, the applicants had brought an application asking for
relief that a title deed pertaining to immovable property registered
in the name of one of the respondents be cancelled and the Registrar
of Deeds be authorised to bring about such a cancellation.
However,
and in earlier proceedings, the same applicants brought an
application against the same respondents pertaining to the
same
immovable property, in which application the remedy sought was that
the sale in execution of that property be declared null
and void.
This earlier application was however dismissed. The Court held as
follows in this context:
[27]
‘
It
is clear from the above that the lawfulness of the sale in execution
of the property and the transfer thereof to the sixth respondent
has
been ventilated in court before. The matter is therefore
res
judicata
.
The
res
judicata
rule
states that a matter that has been finally determined by a court of
competent jurisdiction cannot be re-litigated by the same
parties or
their privies in a later suit. The previous and current litigation
involves the same parties, for the same relief or
the same cause of
action ...’
[40]
I next refer to
C3
Shared Services (Pty) Ltd v Grange
[28]
.
This case concerned a restraint of trade. In earlier private
arbitration proceedings, the applicants sought to enforce a monetary
penalty payable in terms of a non-complete clause in the restraint
agreement, which claim was unsuccessful. However, and in later
proceedings before the High Court, the same applicants then sought to
enforce the same non-complete clause by way of specific performance
in the form of an interdict. The Court had the following to say about
this:
[29]
‘
What
is clear from the arbitration award is that both Cowley and C3 sought
as claimants to enforce the same non-compete clause as
is the subject
matter of these proceedings before me. The difference is that in the
arbitration proceedings, Cowley and C3 sought
to enforce the monetary
penalty payable following upon a breach of the non-compete clause, as
provided for in clause 7.2 of the
Sale of Shares Agreement. In the
present matter, C3 seeks to enforce the non-compete clause by way of
specific performance in the
form of interdict proceedings. But
whether the remedy is payment of a penalty or specific performance,
both are dependent upon
the same clause, namely clause 7.1, and which
includes a finding of who the beneficiary is of the undertaking in
that clause. That
the issue was decided in the context of different
causes of action does not, in the circumstances of this case, prevent
issue estoppel
from operating ...’
[41]
In
Du Plessis
v Public Protector and Others
[30]
the applicant had referred an unfair dismissal dispute to the
Commission for Conciliation, Mediation and Arbitration (CCMA) seeking
relief that his dismissal be declared to be unfair, and he be
reinstated. The referral was however out of time,
[31]
and the applicant applied for condonation. The CCMA refused
condonation, thereby finally disposing of the unfair dismissal
dispute.
The applicant sought to challenge this decision of the CCMA
on review to the Labour Court, which was unsuccessful. An attempt to
appeal to the Labour Appeal Court was also unsuccessful. The
applicant was unphased and brought a complaint relating to his
dismissal
to the office of the Public Protector, contending that his
dismissal constituted maleficence by his employer, being an employer
in the public service, and that the Public Protector direct he be
reinstated. The Public Protector however refused to entertain
the
complaint,
inter
alia
because
his case had been disposed of by the CCMA. The applicant then sought
to review the decision of the Public Protector not
to entertain his
complaint, and as consequential relief sought a declaration that his
dismissal was unlawful, and he be reinstated.
The Court held as
follows, all the above considered
:
[32]
‘
Applying the most
generous approach to the applicant, it can perhaps be said that the
applicant’s notice of motion contemplates
a prayer that his
dismissal be reviewed and set aside, and that he be reinstated, which
would of course be something the Labour
Court has the power to
decide. Even accepting this is so, and considering it in isolation,
the applicant faces an insurmountable
obstacle. That obstacle can be
found in the fact that the applicant already pursued an unfair
dismissal dispute to the CCMA and
lost. He then challenged the matter
further to the Labour Court and Labour Appeal Court, and also lost.
It simply does not matter
on what basis he lost. What matters is that
his unfair dismissal case is finally disposed of, and therefore, it
is simply not competent
to afford the applicant any relief setting
aside his dismissal and affording him reinstatement. …
... In
short, the parties are the same, the cause is the same, and what is
ultimately demanded as consequential relief is the same. The
Labour Court has already decided all of this. The LAC declined leave
to appeal. The case is thus disposed of, and cannot be revisited
under a new guise
.’
[42]
I refer as a final
example to the judgment in
Fidelity
Guards Holdings supra.
[33]
In that case, the court dealt with two different applications
to declare a strike unprotected in terms of sections 64 and
65 of the
Labour Relations Act (LRA).
[34]
The parties, the facts, and the ultimate interdictory relief sought
in both matters were the same. However, the cause of
action in
the two applications were based on different grounds flowing from the
aforesaid sections of the LRA. The Court described
the issue as
follows
:
[35]
‘
The
enquiry in this matter is whether the cause of action in the first
application (heard by Revelas J) was the same in the second
application which is the subject-matter of this appeal. In both
applications the contention was that the strike was unprotected.
What
differed was the basis for that contention. In my view, the cause of
action was nevertheless the same, namely, that the strike
was
unprotected for want of compliance with the provisions of the 1995
Act.’
The
Court then concluded:
[36]
‘
...
In an application for a declaratory order and an interdict on the
basis that a strike is unprotected, the employer is obliged
to raise
all its contentions in that application. It is not entitled to
litigate piecemeal with the union and its members. ...
What the appellant did in
the present matter, however, was to attempt to circumvent these
provisions of the law by launching new
proceedings on the same issue,
albeit on a different basis. That it cannot do.’
[43]
I am satisfied that
in
casu
,
the respondents are seeking to do nothing else, where it comes to
instituting the new claim and associate purported new defence
against
the applicant, other than instituting further proceedings between the
same parties relating to the same cause of action
and seeking the
same outcome.
[37]
It is,
simply put, the same case. It follows that the respondents cannot
keep litigating by just changing the grounds of their
claim (or
defence). The ‘
once
and for all
’
rule
must find application, bringing matters to an end. Such continued
piecemeal litigation is equally contrary to public policy.
As held in
Du
Plessis supra
:
[38]
‘
...
It is entirely undesirable that a litigant brings one claim after
another based on in essence the same lis between the same
parties,
simply by rotating different possible causes of action to justify the
same ultimate relief. ...
’
.
Even if it can be said that the respondents would be prejudiced by
this, I believe this prejudice is insufficient to detract from
the
application of the principle, considering all that transpired in this
case and the fact that the respondents were throughout
represented by
senior legal representatives. All said, I thus conclude that the
application of the ‘
once
and for all
’
rule
renders the respondents’ new defence and / or new claim they
seek to raise and bring against the applicant as incompetent,
and it
must fail on this basis as well.
[44]
But even if I am wrong
where it comes to the application of
res
judicata
and
/ or the ‘
once
and for all
’
rule,
and that it may be feasible or competent for the respondents to
pursue their new defence / claim against the applicant, the
respondents still face another formidable obstacle. This obstacle is
found in the doctrine of election (acquiescence). In
Hlatshwayo
v Mare and Deas
[39]
the
Court said: ‘…
Whether
then we base the doctrine of acquiescence on the consent which is
implied or the choice which is exercised, or call it waiver
makes no
difference. At bottom the doctrine is based upon the application of
the principle that no person can be allowed to take
up two
positions inconsistent with one another, or as is commonly
expressed, to blow hot and cold, to approbate and reprobate’.
Applying
this doctrine, the Court in
Equity
Aviation Services (Pty) Ltd v Commission for Conciliation, Mediation
and Arbitration and Others
[40]
held:
‘…
The
principle of the right of election is a fundamental one in our law.
… When exercising an election, the law does
not allow a party
to blow hot and cold. A right of election, once exercised,
is irrevocable particularly when the volte-face
is prejudicial or is
unfair to another …’
[45]
Examples of exactly how
this doctrine works is perhaps once again the best manner in which to
illustrate its application
in
casu
.
Virtually in point is the judgment in
Shepherd
Real Estate Investments (Pty) Ltd v Roux Le Roux Motors CC
[41]
.
The Court in that case considered a rectification defence, relating
to a particular paragraph in an agreement. The defence was
that the
presence of the relevant paragraph in the agreement was as a result
of a
'bona
fide mistake
’
and
did not represent the common intention of the parties.
[42]
The Court however found that there was no such common mistake proven,
on the facts.
[43]
Importantly
however, the respondent party relied on that very same clause in
support of its main defence, whilst the rectification
defence was the
alternate defence. The Court concluded
:
[44]
‘
... Moreover, the
respondent relied on the relevant paragraph in support of its main
defence. But relying on the provision for the
purposes of its main
defence, and seeking to escape it for the purposes of its alternative
defence, is mutually incompatible. '(N)o
person can be allowed to
take up two positions inconsistent with one another, or as is
commonly expressed to blow hot and
cold, to approbate and
reprobate.'
[46]
In fact, where the
doctrine of election most often comes into play is in the instances
concerning an innocent party’s rights
relating to a material
breach of contract, constituting repudiation of the contract. It is
trite that in such a case, the innocent
party has an election. It can
either cancel the agreement and claim damages, or it can enforce the
agreement and claim specific
performance. These remedies are mutually
exclusive and inconsistent, and once one remedy is elected, a party
cannot change its
mind and revert to the other.
[45]
As said in
Thomas
v Henry and Another
[46]
:
‘
It has often
been said that if an innocent party is entitled to cancel a
contract, whether on the ground of misrepresentation
or breach of
contract, he must exercise an election between two inconsistent
remedies, ie whether to cancel or to abide by the
contract; that the
election of one remedy necessarily involves the abandonment of the
other and that he therefore cannot both approbate
and reprobate.
In
Feinstein
v Niggli and Another
1981
(2) SA 684 (A)
at
698 TROLLIP JA said that election generally involves a waiver in the
sense that one right is waived by choosing to exercise another
right
which is inconsistent with the former, and pointed out that election
and waiver have been equated as being species of the
same general
legal concept.’
[47]
In casu
, I have little hesitation in concluding that the
doctrine of election scuppers the ability of the respondents to now
seek to rely
on the definition of ‘
Shareholder Equity
Contribution
’ as it stands in the LFA, unrectified. I must
confess that considering the gist of the rectification proposed by
the respondents,
I find it difficult to comprehend how the
unrectified provisions could ever sustain the respondents’
defence. Nonetheless,
where it came to the arbitration proceedings,
the respondents had to make a choice between to mutually exclusive
and inconsistent
remedies. On the one hand, the remedy pursued was
that the said definition needed to be rectified to sustain the
defence that the
payment of R14 400 085.00 on 31 March 2016
absolved the respondents from their suretyships. But on the other
hand, the
remedy would be that the said definition as it stands,
would sustain the defence that the payment of R14 400 085.00
on
31 March 2016 absolved the respondents from their suretyships. To
put it simply, it surely cannot be said that a change to the
agreement is needed to win, but when the proposed change fails, it
then be said that no worries, a change is not needed to win.
In my
view, and obviously, both cannot be applied as remedies sought in one
single case on the same facts. It takes little insight
to appreciate
that these remedies cannot exist side by side or even in the
alternative. It is either the one or the other, with
the one applying
to the exclusion of the other
.
[48]
The above being said, and in the arbitration, the respondent
consequently made
their choice. They elected to pursue the remedy
based on rectification. When they first filed their defence, it was
open to the
respondents to plead a case based on the provisions of
the LFA and suretyships as they stood, without relying on
rectification.
But instead, they only pleaded a case and remedy based
on rectification. They stuck with this choice when concluding the
arbitration
agreement. Based on this choice made up to this point,
they cannot now reprobate, and now decide to pursue the contradictory
remedy
.
[49]
But it is even more than
just the choice made as described above. It appears undisputed from
the affidavits before me that in the
course of conducting the
arbitration, the respondents actually suggested to the arbitrator
that she could decide whether they were
absolved from their
suretyships based on the definition of ‘
Shareholder
Equity Contribution
’
as
it stood, without rectification. The applicant raised an objection in
this regard, as such a case was never pleaded, and the
arbitration
agreement provided that only the cases of the parties as contained in
the pleadings were before the arbitrator to decide.
The arbitrator
upheld this objection, and determined that she had no jurisdiction to
decide the case on this basis.
[47]
The respondents suggest that this indicates that the issue of
absolving them from their suretyships without rectification was
expressly excluded from the arbitration, and thus they would be able
to raise it now. But what respondents seem to completely ignore
is
that the arbitration agreement specifically provided that the
arbitration would be conducted in terms of the Uniform Rules.
It is
trite that in terms of Rule 28(1) of the Uniform Rules, a party would
be entitled to amend it pleadings at any time prior
to judgment.
[48]
With the arbitration agreement providing that the issues to be
decided are determined by the pleadings, all that was needed was
an
amendment of the respondents’ plea. There was nothing standing
in the way of the respondents seeking to amend their plea,
but they
elected not to do so, and persisted having the arbitrator decide the
matter based on the plea as it stood. They must be
held to the
outcome resulting from this election, even if it is to their
detriment
.
[49]
[50]
In the end, the
respondents cannot approbate, and rely on rectification, but when
that does not turn out well for them, reprobate,
and rely on the very
same contractual provisions without seeking rectification. In fact, a
logical conclusion would surely be that
if rectification is necessary
to sustain a claim, then the unrectified contractual provision cannot
sustain the claim. The respondents
must be held to their choice,
which also puts paid to the new defence sought to be raised now. As
held in
Pitelli
v Everton Gardens Projects CC
[50]
:
‘…
A
litigant cannot expect to blow hot and cold depending upon
which is most advantageous at the time
…’
.
[51]
The conclusion I have reached as summarized above should really be
the end
of the matter where it comes to the respondents’
counter application, as a whole. The claim / defence proffered in the
counter
application is not competent, either because it had been
disposed of in the arbitration proceedings and thus being hit by the
application
of
res judicata
, or by way of the application of
the ’
once and for all’ rule
, or because the
respondents had made an election to which they must be held bound.
The counter application falls to be dismissed
for these reasons
alone.
[52]
For the sake of being complete, I will nonetheless touch on the
merits of the
respondents’ counter application, which would
obviously now be based on the definition of ‘
Shareholders
Equity Contribution
’ in the LFA as it stands. As already
said, the facts remain the same, namely whether the payment of
R14 400 085.00
on 31 March 2016 to the applicant, which
payment emanated from the sale of certain property in the
development, constituted payment
of the Shareholders Equity
Contribution, thus absolving the respondents from their suretyships.
[53]
Where it comes to
interpreting the LFA and the suretyships, the principes to be applied
in doing so are trite.
In
Natal
Joint Municipal Pension Fund v Endumeni Municipality
[51]
the
Court held as follows:
‘
... The
present state of the law can be expressed as follows: Interpretation
is the process of attributing meaning to the words
used in a
document, be it legislation, some other statutory instrument, or
contract, having regard to the context provided by reading
the
particular provision or provisions in the light of the document as a
whole and the circumstances attendant upon its coming
into existence.
Whatever the nature of the document, consideration must be given
to the language used in the light of the
ordinary rules of grammar
and syntax; the context in which the provision appears; 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 the 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 temptation to substitute what they regard as reasonable, sensible
or businesslike for the words actually
used. To do so in regard to a
statute or statutory instrument is to cross the divide between
interpretation and legislation;
in a contractual context it is to
make a contract for the parties other than the one they in fact made.
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.’
[54]
The approach established
in
Endumeni
supra
has
been consistently applied since.
[52]
In
Capitec
Bank Holdings Ltd and Another v Coral Lagoon Investments 194 (Pty)
Ltd and Others
[53]
the Court had the following to say:
... I would only add that
the triad of text, context and purpose should not be used in a
mechanical fashion. It is the relationship
between the words used,
the concepts expressed by those words and the place of the contested
provision within the scheme of the
agreement (or instrument) as a
whole that constitute the enterprise by recourse to which a coherent
and salient interpretation
is determined …’
And in
University
of Johannesburg v Auckland Park Theological Seminary and Another
[54]
it was held:
‘…
The
Supreme Court of Appeal has explicitly pointed out in cases
subsequent to
Endumeni
that
context and purpose must be taken into account as a matter of course,
whether or not the words used in the contract are ambiguous. A
court interpreting a contract has to, from the onset, consider the
contract's factual matrix, its purpose, the circumstances leading
up
to its conclusion, and the knowledge at the time of those who
negotiated and produced the contract …’
[55]
In my view, the terms of the LFA and suretyships, where it comes to
the issue
at stake in this case, are clear, unambiguous, and
interpreting the same is relatively simple. As to context, it appears
from the
evidence that the affording of the suretyships by the
respondents was initially a contentious issue, but it was ultimately
agreed
to, as it stands, as an essential component of the entire
transaction. It was also agreed that the suretyships be limited to
R12.5
million, and provision was specifically made for the discharge
of the same if a specific condition was met. There can be nothing
contentious in any of this. And added to this, there is a binding
finding by the arbitrator that there is no evidence that the
LFA, as
it stands, does not accord with the true intention of the parties.
So, and considering the definition of ‘
Shareholder
Equity Contribution
’ as the
agreed basis for discharge of the suretyships, what is needed? The
answer is not just simply the payment of a sum
of money. First, the
sum of R12.5 million must be injected by Cranbrook into Proline as
equity. Second, the injection must either
be made in cash, or from
the proceeds of the sale of extension 7 (or any other extension
approved by the applicant) to ASA Metals.
And thirdly, the payment
must be accounted for as equity in Proline’s books of account
.
Added to this, clause 1.2 of the suretyships require this payment to
be made to the ‘
debtor
’
,
which is Proline.
[56]
Did the above happen
in casu
? Surely not. First and foremost,
a proper consideration of what is intended by clause 1.2 of the
suretyships is the release of
the sureties once Proline had received
a capital injection of R12.5 million to be held as equity. This cash
equity would obviously
be in exchange for the security in the same
amount provided by the suretyships of the respondents. It is the
exchange of one form
of security for another, and does not
contemplate any payment to the applicant. The applicant receives its
payments from Proline
by virtue of entirely different provisions of
the LFA. Therefore, the payment to the applicant of the sum of
R14 400 085.00
simply cannot qualify as a ‘
Shareholder
Equity Contribution
’.
[57]
But even more, further context clearly indicates that what happened
is that Proline
defaulted where it came to its payment obligations
under the LFA. Various addenda to the LFA were concluded to
accommodate Proline,
culminating in an agreement that Proline repay
the debt owing to the applicant utilising 80% of all amounts paid
into the revenue
account of Proline from the proceeds of sale of
stands in the development, until all principal amounts and interest
on the loan
was repaid in full. The applicant also had the added
security of all the immovable properties owned by Proline being
encumbered
with a covering mortgage bond. In this context, Proline
then sold a specific property to a third party (not ASA metals). It
needed
the applicant’s agreement to do this, as a result of the
covering mortgage bond. Out of the proceeds of this sale, the
applicant
was then paid R14 400 085.00, and this met the
80% requirement of the proceeds of sales of properties being
attributable
to the applicant in settlement of the debt owing to it.
This is clearly a transaction in line with what is contained in the
LFA
where it comes to Proline settling the debt owing to the
applicant
, and nothing else.
[58]
In sum, I am convinced that on the facts, the payment of the
R14 400 085.00
to the applicant was not payment of the
Shareholder Equity Contribution as contemplated
by the suretyships and the LFA, and had nothing at all to do with it.
It was a part
payment towards the capital debt owing by the applicant
to Proline, in the manner prescribed by the LFA. And in any event,
t
he payment was not the result of a sale of a property to ASA
Metals, and Cranbrook did not inject the proceeds of the sale as
equity
into Proline which was recorded in the books of Proline as
such, which is also required to exist in order for the payment to
qualify
as the
Shareholder Equity Contribution
contemplated by the LFA. On the merits, the respondents’ claim
/ defence has zero substance.
[59]
In my view, the conduct of the respondents
in casu
constitutes
nothing else but pure opportunism. They opportunistically seized upon
what was simply a payment by Proline dating back
some seven years
ago, towards the debt it still owed the applicant as already in
arrears, to extract themselves from the suretyships
they had given.
This is undoubtedly a contrived defence, all facts considered. Since
Proline does owe the debt, as has been found
by the arbitrator to be
the case, the respondents must be held to their bargain, and come to
the party to at least make the limited
contribution they had agreed
to make if matters went south. The counter application must therefore
equally fail because of the
complete lack of substance thereof
.
Conclusion
[60]
For all the reasons set
out above, I am satisfied that the applicant is entitled to the
declaratory relief sought in the notice
of motion, to the effect that
the arbitration award of the arbitrator, retired Judge C Pretorius,
handed down on 12 April 2023,
be made an order of Court in terms of
section 31 of the AA. The respondents simply have no defence to such
relief, for the reasons
elaborated on in full, above. In
Cool
Ideas 1186 CC v Hubbard and Another
[55]
the Court held
:
‘
...
Courts should respect the parties' choice to have their dispute
resolved expeditiously in proceedings outside formal court
structures. If a court refuses too freely to enforce an arbitration
award, thereby rendering it largely ineffectual, because of
a defence
that was raised only after the arbitrator gave judgment, that
self-evidently erodes the utility of arbitration as an
expeditious,
out-of-court means of finally resolving the dispute. ...’
[61]
Where it comes to the respondents’ claim / defence as contained
in their
counter application, it falls to be dismissed in its
entirety, as the claim / defence raised therein is simply not
competent, and
in any event lacks substance, as I have also discussed
in full above. The counter application must therefore be dismissed
.
[62]
This only leaves the issue of costs. The applicant was successful. In
the notice
of motion, the applicant did not seek costs, but this was
subject to the proviso that the application to make the arbitration
award
an order of Court was unopposed. The application turned out to
be far from unopposed. And not only that, it was opposed on a basis
that in my view is nothing but contrived and undermines the objective
of the finality of arbitration awards, without any justification
for
such conduct. This justifies a costs award against the respondent,
including the costs of two counsel, at scale C. I am also
satisfied
that the matter is of sufficient complexity to justify such a costs
award
.
[63]
In all the circumstances as set out above, the following order is
made:
Order
1.
The arbitration award delivered by arbitrator retired
Judge C
Pretorius, on 12 April 2023, is made an order of Court.
2.
The respondents’ counter application is dismissed.
3.
The respondents are ordered to pay the applicant’s
costs on a
party and party scale C, the one paying the other to be absolved,
which costs shall include the costs of two counsel.
SNYMAN
AJ
Acting
Judge of the High Court of South Africa
Gauteng
Division, Pretoria
Appearances
:
Heard
on:
5
June 2024
For the Appellant:
Advocate J Vorster SC
together with
Advocate
B Ramela
Instructed
by:
Norton
Rose Fulbright (SA) Attorneys
For
the First and Second Respondent:
Advocate
A Els SC
Instructed
by:
Couzyn
Hertzog & Horak Attorneys
Date
of Judgment:
24
July 2024
[1]
Act
42 of 1965 (as amended).
[2]
These addenda were concluded on 3 March 2009, 24 August 2011, and 5
September 2011.
[3]
There were also legal proceedings by the applicant against Cranbrook
(Pty) Ltd, being the shareholder of Proline, and who had
also
concluded a suretyship agreement with the applicant in terms of
which it bound itself as surety and co-principal debtor
with Proline
for the debt owing by Proline to the applicant in terms of the LFA
from time to time. These legal proceedings are
of no concern
in
casu
.
[4]
Clause 6 of the arbitration agreement.
[5]
Clause 7 of the arbitration agreement.
[6]
Clause 9 of the arbitration agreement.
[7]
Clause 10 of the arbitration agreement.
[8]
Clause 11 of the arbitration agreement.
[9]
Clause 17 of the arbitration agreement.
[10]
2009
(4) SA 529 (CC)
at
para 236.
[11]
2022
(4) SA 420
(SCA) at para 55.
See
also
Amalgamated
Clothing and Textile Workers Union of South Africa v Veldspun (Pty)
Ltd
[1993] ZASCA 158
;
1994
(1) SA 162
(A) at 169.
[12]
2014 (5) SA 297
(SCA) at para 10. See also
Kgekwane
v Department of Development Planning and Local Government, Gauteng
(2015)
36 ILJ 1247 (LAC) at para 26;
Du
Plessis v Public Protector and Others
(2020)
41 ILJ 919 (LC) at para 32.
[13]
[2000] ZASCA 159
;
2001 (2) SA 232
(SCA) at para 2 of the majority judgment. See also
SA
National Defence Union and Another v Minister of Defence and Others;
SA National Defence Union v Minister of Defence and Others
(2003) 24 ILJ 2101 (T)
at 2109H-J;
Yellow
Star Properties v MEC Department of Development Planning and Local
Government
2009
(3) SA 577
(SCA) at para 21.
[14]
2009 (3) SA 577
(SCA) at para 22. See also
Gauteng
Shared Services Centre v Ditsamai
(2012)
33 ILJ 348 (LAC) at paras 13 – 14.
[15]
2009 (3) SA 447
(SCA) at para 13. See also
Gralio
(Pty) Ltd v DE Claassen (Pty) Ltd
1980
(1) SA 816
(A) at 824A–C.
[16]
2018 (1) SA 335
(CC)
at
para
15.
[17]
In
DZ
(
supra
)
at para 16, the Court said that: ‘…
It
is buttressed by the res judicata principle, the purpose of which is
to prevent a multiplicity of actions based upon a single
cause of
action and to ensure that there is an end to litigation …
’
.
See also
Du
Plessis
(
supra
)
at para 36.
[18]
Caesarstone
Sdot-Yam Ltd v World of Marble and Granite 2000 CC and Others
2013 (6) SA 499
(SCA) at
para 28, the Court held: ‘…
the
'once-and-for-all' rule preclude the institution of the second
action? Whilst that rule and the defence of res judicata have
the
same rationale they are different …
’
.
[19]
2008 (6)
SA 303 (SCA)
at para 10. See also
Caesarstone
(
supra
)
at para 28;
Kommissaris
van Binnelandse Inkomste v Absa Bank Bpk
1995
(1) SA 653
(A) at 669F–G.
[20]
1980 (2) SA 814
(A) at 835C-E. See also
Janse
van Rensburg NO and Others v Steenkamp and Another; Janse van
Rensburg and Others v Myburgh and Others
2010
(1) SA 649
(SCA) at para 27.
[21]
(1999) 20 ILJ 82 (LAC) at para 7.
[22]
Democratic
Alliance v Brummer
2022
JDR 3159 (SCA) at para
16.
[23]
2022
JDR 3159 (SCA) at para 15.
[24]
2013
(6) SA 499
(SCA) at para 24.
See
also the conclusion reached by the Court at para 28 of the judgment.
[25]
Id
at paras 28 – 29.
[26]
2024 JDR 0311 (GJ).
[27]
Id
at para 16
[28]
2022 JDR 0987 (GJ).
[29]
Id
at para 69.
[30]
(2020) 41 ILJ 919 (LC).
[31]
In terms of section 191(1) of the Labour Relations Act 66 of 1995
(as amended), a referral to the CCMA must be made within 30
days of
the date of the dismissal, and if not, good cause must be shown to
allow a late referral (section 191(2)).
[32]
Id at paras 31 and 33. See also the final conclusion in the judgment
at para 42.
[33]
Id
fn 21.
[34]
Act
66 of 1995 (as amended).
[35]
Id
at para 5.
The
court held that a strike could be considered unprotected for various
reasons under the LRA, as contained in sections 64 and
65, and on
either substantive or procedural grounds, or both.
[36]
Id
at paras 11 and 13.
[37]
In
Boshoff
v Union Government
1932
TPD 345
at 350 – 35, the Court said that: ‘…
Where
the decision set up as a res judicata necessarily involves
a judicial determination of some question of law or
issue of fact,
in the sense that the decision could not have been legitimately or
rationally pronounced by the tribunal without
at the same time, and
in the same breath, so to speak, determining that question or issue
in a particular way, such determination,
though not declared on
the face of the recorded decision, is deemed to constitute an
integral part of it as effectively as if
it had been made so in
express terms …
‘
.
See also
Horowitz
v Brock and Others
1988 (2)
SA 160
(A) at 179A-D;
Aon
South Africa (Pty) Ltd v Van den Heever NO and Others
2018
(6) SA 38
(SCA) at para 22.
[38]
Id at para 36.
[39]
1912 AD
242
.at 259.
[40]
[2008] ZACC 16
;
2009 (1) SA 390
(CC) at para 54. See also
Chamber
of Mines of SA v National Union of Mineworkers
1987
(1) SA 668
(A) at 690D-E, where it was said: ‘…
One
or other of two parties between whom some legal relationship
subsists is sometimes faced with two alternative and entirely
inconsistent courses of action or remedies. The principle that
in this situation the law will not allow that party to blow
hot
and cold is a fundamental one of general application …
’
.
[41]
2020 (2) SA 419 (SCA).
[42]
In
terms of the rectification sought, the clause was to be removed.
[43]
Id
at para 21.
[44]
Id
at para 23.
[45]
See
Consol
Ltd t/a Consol Glass v Twee Jonge Gezellen (Pty) Ltd and Another (2)
2005 (6) SA 23
(C) at
para 32;
Bekazaku
Properties (Pty) Ltd v Pam Golding Properties (Pty) Ltd
1996 (2) SA 537
(C) at
542F-G;
Ocean
Echo Properties 327 CC and Another v Old Mutual Life Assurance
Company (South Africa) Ltd
2018
(3) SA 405
(SCA) at para 14;
Primat
Construction CC v Nelson Mandela Bay Metropolitan Municipality
2017 (5) SA 420
(SCA) at
para 23;
Daljosaphat
Restorations (Pty) Ltd v Kasteelhof CC
2006
(6) SA 91
(C) at para 51.
[46]
1985 (3) SA 889
(A) 895J-896C.
[47]
This
approach of the arbitrator would be correct – see
Hos+Med
Medical Aid Scheme v Thebe Ya Bophelo Healthcare Marketing and
Consulting (Pty) Ltd
[2007] ZASCA 163
;
2008
(2) SA 608
(SCA) at para 30;
Close-Up
Mining and Others v Boruchowitz NO and Another
2023 (4) SA 38
(SCA) at
para 13.
[48]
In
Belrex
95 CC v Barday
2021
(3) SA 178
(WCC) at para 30, the Court held: ‘
In
terms of Rule 28(10) the court may, at any stage before judgment,
grant leave to amend any pleading or document. The defendant
in this
matter was clearly entitled to amend his plea at any stage
of the proceedings before judgment …’.
Also
compare
Phoenix International Logistics (Pty) Ltd v QD Cellular (Pty) Ltd
2021 JDR 3230 (GJ) at
para 30;
Estate
Agency Affairs Board v Pasco Risk Management (Pty) Limited
2017 JDR 1618 (GJ) at
para 4;
Minister
of Police v Phalafala
2015
JDR 0447 (GP) at para 37;
Generaal
Hendrik Schoeman Laerskool v Bastian Financial Services (Pty) Ltd
2013 JDR 1663 (GNP) at
para 11.
[49]
Compare
Boverhoff
v Aldes Business Brokers (Pty) Ltd
2023
JDR 2654 (GP) at para 54.
[50]
2010
(5) SA 171
(SCA) at para 34.
[51]
2012
(4) SA 593
(SCA) at para 18.
[52]
See
Bothma-Batho
Transport (Edms) Bpk v S Bothma & Seun Transport (Edms) Bpk
2014 (2) SA 494
(SCA) at
para 12;
Unica
Iron and Steel (Pty) Ltd and Another v Mirchandani
2016 (2) SA 307
(SCA) at
para 21 and all the authorities cited there;
Nel
v De Beer and Another
2023
(2) SA 170
(SCA) at paras 22 – 23.
[53]
2022
(1) SA 100
(SCA) at para 25.
[54]
2021
(6) SA 1
(CC) at para 66.
[55]
2014 (4) SA 474
(CC) at para 56.
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