Neonomad Capital (Pty)Ltd v Nordien Family Enterprises (Pty) Ltd and Others (11238/23) [2024] ZAWCHC 444 (20 March 2024)

begin wrapper begin container begin header begin slogan-floater end slogan-floater - About SAFLII About SAFLII - Databases Databases - Search Search - Terms of Use Terms of Use - RSS Feeds RSS Feeds end header begin main begin center # South Africa: Western Cape High Court, Cape Town South Africa: Western Cape High Court, Cape Town You are here: SAFLII >> Databases >> South Africa: Western Cape High Court, Cape Town >> 2024 >> [2024] ZAWCHC 444 | Noteup | LawCite sino index ## Neonomad Capital (Pty)Ltd v Nordien Family Enterprises (Pty) Ltd and Others (11238/23) [2024] ZAWCHC 444 (20 March 2024) Neonomad Capital (Pty)Ltd v Nordien Family Enterprises (Pty) Ltd and Others (11238/23) [2024] ZAWCHC 444 (20 March 2024) Download original files PDF format RTF format make_database: source=/home/saflii//raw/ZAWCHC/Data/2024_444.html sino date 20 March 2024 IN THE HIGH COURT OF SOUTH AFRICA (WESTERN CAPE DIVISION, CAPE TOWN) CASE NO: 11238/23 In the matter between: NEONOMAD CAPITAL (PTY) LTD APPLICANT and NORDIEN FAMILY ENTERPRISES (PTY) LTD FIRST RESPONDENT THE IT EXPERIENCE GROUP SA (PTY) LTD SECOND RESPONDENT BAKED GROUP (PTY) LTD THIRD RESPONDENT JUDGMENT Barendse AJ Judgment delivered electronically on 20 March 2024. [1]        This is an opposed motion in which the applicant asks for an order declaring an oral agreement entered into between it and first and second respondents void for lack of consensus, alternatively declaring that the said agreement was cancelled by applicant on account of repudiation thereof by respondents. Applicant claims further ancillary relief for repayment by respondents of an amount that it paid pursuant to the agreement. Factual Background [2]        The applicant conducts business as a crypto currency exchange, tokenizer and investor. [3]        The first respondent conducts the business of operating cafes, delis, bars, lounges and online shops specialising in the sale of cannabis infused products. First respondent uses the trade name "Baked". [4]        It is common cause between the parties that applicant entered into an oral agreement with first and second respondents and that applicant paid an amount of R5.7million to the first respondent in terms of the said agreement. The agreement came into being over a period at the end of 2021 and beginning of 2022. [5]        When it appeared to applicant that the respondents were not performing as agreed/required and that the business relationship had broken down irretrievably, it instructed attorneys to write to respondents' attorneys. In this letter dated 1 June 2023 applicant cancelled the agreement and claimed repayment of the amount of R5.7 million. [6]        The attorneys for first and second respondents replied to this letter on 7 June 2023 and it then became apparent that the parties held diverse views of what their agreement entailed. The Disputes [7]        According to applicant the salient terms of the agreement were as follows: 1.         the applicant and second respondent would incorporate the third respondent to use it as a vehicle to conduct and expand the Baked business. At that stage the Baked business consisted of an outlet in Bloubergstrand and the business activities related to that outlet; 2.         the applicant would invest the sum of R5.7 million in the Baked business and first respondent would contribute the existing Baked outlet in Bloubergstrand to the business. Applicant would pay the aforesaid amount into the bank account of first respondent; 3.         applicant's R5.7 million investment would be utilized to conduct and expand the business and, more particularly, to fund the establishment of a new Baked outlet in Greenpoint as well as some office space for the third respondent and the applicant. 4.         the applicant and the second respondent would each obtain 50% of the authorised and issued share capital in the third respondent. 5.         the directors of the applicant and the directors of second respondent would all be entitled to serve as directors of the third respondent. [8]        Applicant annexed to its founding affidavit ("FA") copies of a thread of WhatsApp messages exchanged between Johannes Beukes ("Beukes") of the applicant and one Nordien, one of the directors of second respondent. In one such message Nordien expressly mentioned that he did not have sufficient funds to open the Greenpoint outlet, having spent R3.9million on the Bloubergstrand outlet. [9]        The WhatsApp thread also contains messages in which Beukes asked Nordien " Is it 3M, 4M, 5M I need to know" . This was met by a reply from Nordien " Max R5m but you know me, there will be savings". [10]      The third respondent was incorporated and the applicant and second respondent each received 50% of the issued share capital of third respondent. [11]      The Baked outlet in Greenpoint opened during October 2022. [12]      Applicant avers that it performed all its obligations under the agreement. This notwithstanding, the respondents failed to provide applicant with a share certificate for its shares in third respondent and refused to allow Beukes on behalf of applicant to participate in the Baked business at all. This conduct was regarded as a repudiation of the agreement, hence the cancellation letter dated 1 June 2023. [13]      In its answering affidavit, deposed to by Jiahd Nordien a director of the respondents, the respondents aver that Beukes was keen to branch into the cannabis-friendly industry. Beukes made a proposal that would generate funds to expand the Baked business brand in South Africa and later, internationally. [14]      According to respondents Beukes proposed to issue 200 million cryptocurrency tokens when launching the applicant on the crypto market. Beukes further undertook to prepare a prospectus which applicant would present to the crypto market to raise funds for expanding the Baked brand globally. [15]      Applicant would first invest R10million for the purpose of opening two more Baked branches, before taking Baked into the crypto market. Beukes would then sell 200 million Baked tokens on the crypto market and of the funds so raised, R10million would be paid to first respondent and applicant's initial R10 million investment would be repaid. [16]      The assets of first respondent would be transferred to a new entity called Baked Group (Pty) Ltd (third respondent) and the funds raised from the crypto currency listing would be used to expand the Baked brand globally. Only once Beukes had raised the required funds on the crypto market would third respondent commence operations. [17]      Once the Baked Crypto tokens were launched, third respondent would pay Beukes a salary, pay office rental, buy vehicles and pay vehicle insurance. [18]      The parties allegedly identified premises for the Baked Greenpoint outlet. Applicant advanced R5million to first respondent for the establishment of the Greenpoint outlet. This R5million was part of the initial R10million that applicant was required to invest. [19]      Respondents further alleged that applicant agreed to advance a further amount of R2.5 million towards the establishment of the Greenpoint outlet but only paid a further R700 000.00 and that the first respondents had to contribute the balance of around R900 000.00. Jiahd Nordien alleged that he and his parents had to contribute a further R2.8million to complete the project and fund the rental of the premises. [20]      According to respondents, Beukes took occupation of an office at the Greenpoint outlet during February 2022, free of charge and that first respondent pays the instalment and insurance on a vehicle used by Beukes as well as the rental of a parking bay. These expenses amount to around R42 633,00 per month in value. [21]      Respondents deny that they repudiated the agreement and aver that applicant repudiated same, which repudiation they do not accept. They submitted that it would be unfair if first respondent is ordered to return applicant's R5.7million while Beukes is receiving R42 833,00 per month in value from first respondent. Reasoning and Findings [22]      On behalf of applicant it was submitted that if first and second respondents genuinely believed that the agreement required applicant to pay an additional R10million of crypto money to first respondent, then there was fundamental dissensus between the parties regarding the material terms of the agreement. This renders the agreement void. [23]      Applicant's alternative argument is that the respondents' conduct demonstrated a clear intention not to be bound by the agreement and that this amounted to a repudiation which applicant accepted. The agreement was cancelled on the basis of such repudiation. [24]      For the above reasons applicant tendered the return of the 50% shares in third respondent against repayment of the amount of R5.7 million. [25]      Respondents argued that there is a material dispute of fact around the terms of the oral agreement. These disputes cannot be determined on the papers and the court must accept the respondents' version in line with the rule in Plascon-Evans Paints Ltd v Van Riebeeck Paints (Pty) Ltd [1984] ZASCA 51 ; 1984 (3) SA 623 (A). [26]      Respondents further argued that their version was communicated to applicant before the commencement of these proceedings. Applicant was able to set out respondents' version in the FA and it ought to have been aware of the dispute prior to launching this application. [27]      On the issue of dissensus the respondents submitted that the the iustus error approach to mistake in contract functions as a corrective measure. With reference to Hutchison et al in "Law of Contract in South Africa" 2 nd edition p99 counsel for respondents argued the onus is on applicant, as the contract denier, to show that its mistake as to the material terms of the oral agreement was reasonable. The argument further went that the FA was silent as to how this mistake came about. [28]      It was further the respondents' case that the applicant is estopped from denying that a valid agreement was entered into in that it misrepresented to respondents that an agreement was reached by: 1.         making payment of the amount of R5.7 million; 2.         occupying office space in the Greenpoint outlet of Baked since February 2022 without paying rental; 3.         using the Audi vehicle paid for by the first respondent. [28]      It is clear that there is a dispute on the papers as to what the terms of the oral agreement were. The court has to consider the facts as presented by the parties in order to determine whether the dispute of fact is a genuine and bona fide one. [29]      On the papers it is clear that the applicant performed the obligations which it had to perform on its version of the terms of the agreement. Beukes taking up the office space in Greenpoint and accepting a company vehicle was consistent with the applicant's version of the terms of the agreement.  On the other hand, the respondents alleged that Beukes would only become entitled to the aforesaid benefits once the Baked crypto tokens were launched and that the aforesaid benefits and a director's salary would be payable by third respondent. [30]      On the respondents' own version Beukes has been receiving benefits to the value of R42 833.00 per month and that first respondent was paying for such benefits. The AA is silent on the genesis of these benefits. Importantly, this amounts to performance by respondents under the terms of the agreement advocated for by the applicant. [31]      The letter from respondents' attorneys dated 7 June 2023 also contained respondents' version. This letter was annexed to the FA and respondents had the opportunity to consider its contents prior to filing its AA.  Paragraph 5 of this letter reads as follows: "5.        Baked Group (Pty) Ltd was formed by virtue of an agreement between Neonomad Capital, the represented by Mr. Beukes (the funding platform) and The IT Experience Group (Pty)  Ltd, represented by Mr. Shaan Nordien. In short the agreement was that Neonomad Capital would raise funds for expanding the Baked Concept in South Africa and eventually globally. The funds for the expansion of the Baked Concept were to be raised by way of releasing a new cryptocurrency on the market linked to the Baked Concept. Mr Beukes promised to complete the white paper to take to the market and once the money is raised, R10 million would be paid to Nordien Family Enterprises to settle its liabilities and then transfer the existing Baked Business to the newly formed Baked Group (Pty) Ltd. The balance of the funding will be used to open Baked De Waterkant and any other new Baked Branches nationally. It was agreed that Mr Beukes would fund the De Waterkant Branch and once the funds are raised through the crypto platform, he will be paid R10 million for financing the Baked De Waterkant  Branch." [32]      Apart from admitting that applicant paid R5.7million to first respondent, the letter makes no mention of a term that required applicant to contribute an initial R10million, even before launching the crypto currency. Had this been the agreement, as was later alleged in the FA, one would have expected the letter to mention this. It would have been a material term of the agreement. [33]      What is even more bizarre is that at no stage did first and second respondents request payment of the balance of R4.3million of the initial R10million which applicant still owed on the respondents' version. [34]      The WhatsApp messages constitute the only contemporaneous written record of exchanges between the parties during the dealmaking phase. Nordien stated that he would require a maximum amount of R5million to fund the establishment of the Greenpoint branch of Baked. This is consistent with applicant's version. [35]      Respondents' version entails applicant contributing R20million for a 50% share in third respondent, which would remain an empty shell until the assets of first respondents are transferred thereto. [36]      Respondent's counsel referred the court to the judgment in Room Hire Co (Pty) Ltd v Jeppe Street Mansions (Pty) Ltd 1949 (3) SA 1155(T) for a submission that in motion proceedings it is undesirable for courts to settle dispute of facts solely on probabilities disclosed in contradictory affidavits. [37]      There are a number of unsatisfactory features to respondents' version. These include: 1.         the inconsistencies between the AA and the letter dated 7 June 2023 from respondents' attorneys; 2.         usage of a vehicle, parking, vehicle insurance and office space by Beukes despite this being inconsistent with respondents' version; 3.         first respondent allegedly digging into own funds to complete the establishment of the De Waterkant, Greenpoint branch without requesting applicant to contribute the R4.3million which it still owed on respondents' version; 4.         the extremely unbusinesslike (if not absurd) consequences of the terms alleged by respondents for the applicant. [38]      Applicant is seeking final relief (a declaratory order) by way of motion proceedings. In line with the judgments in Plascon Evans Paints (referenced in paragraph 25 above) and Wightman t/a as LW Construction v Headfour (Pty) Ltd and Ano [2008] ZASCA 6 ; 2008 (3) SA 371 (SCA) the court has to decide this matter on the respondent's version unless it is so farfetched and untenable that the court cannot do so. [39]      For reasons outlined above the court finds that the respondents did not raise a bona fide, genuine dispute of fact and that their version of the material terms of the agreement is untenable.  The court is satisfied with the inherent credibility of the version put forward by the applicant and that the oral agreement contained the material terms as alleged by the applicant. Order [40]   The following order is made: (a)  The cancellation of the agreement by the applicant on account of respondents' repudiation thereof is confirmed; (b)  First, second and third respondents are jointly and severally ordered to repay the amount of R5.7 million to the applicant; (c)  Applicant shall, against and upon receipt of any payment of the amount of R5.7million from the respondents, provide the respondents with a duly signed and completed share transfer form (omitting only the identity of the party to whom the shares are to be transferred) in terms of which applicant's shares in the third respondent to the transferee identified by the applicants; (d)  The three respondents shall pay the applicant's costs, jointly and severally, one paying the others to be absolved. R BARENDSE Acting Judge of the High Court Appearances: Counsel for Applicant: Advocate A Newton Counsel for Respondents: Advocate P Gabriel sino noindex make_database footer start