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FORM A

FILING SHEET FOR EASTERN CAPE HIGH COURT, POR ELIZABETH JUDGMENT

PARTIES:

GREENVEST 101 (PTY) LTD PLAINTIFF

and

TRIDENT STEEL (PTY) LTD DEFENDANT

• Registrar: CASE NO. 494/06

• Magistrate:

• High Court: EASTERN CAPE HIGH COURT, GRAHAMSTOWN

DATE HEARD: 12/6/07-14/6/07; 16-20/3/09

DATE DELIVERED: 30/7/09

JUDGE(S): Plasket J

LEGAL REPRESENTATIVES –

Appearances:

• for the Plaintiff(s)/Applicant(s)/ Appellant(s): Mr E.A.S. Ford S.C. and Mr C. Schuring

• for the Defendant(s)/Respondent(s): Mr A.J. Eyles and Ms C.L. Robertson

Instructing attorneys:

• Plaintiff(s)/ Applicant(s)/Appellant(s): Netteltons

• Defendant(s)/Respondent(s): Borman and Botha

CASE INFORMATION -

• Nature of proceedings : Civil case - claim for damages

IN THE HIGH COURT OF SOUTH AFRICA

(EASTERN CAPE -- GRAHAMSTOWN)

CASE NO. 494/06

DATE HEARD: 12/6/07-14/6/07; 16-20/3/09

DATE DELIVERED: 30/7/09

NOT REPORTABLE

In the matter between:

GREENVEST 101 (PTY) LTD PLAINTIFF

and

TRIDENT STEEL (PTY) LTD DEFENDANT

The plaintiff sued the defendant for damages arising from an alleged misrepresentation made by it when a commercial property was purchased, the plaintiff having duly being nominated as the purchaser. That representation was to the effect that no lease in respect of the property was in place, whereas the defendant had entered into a lease with a lessee. The plaintiff, on discovering the existence of the lease, elected to abide by the contract and to claim damages arising from the misrepresentation. It was held that the evidence established that the plaintiff’s sole director and his agent had not known of the lease, that they only discovered its existence on 19 February 2003, that the misrepresentation had, indeed, been made, that it was material and that it was fraudulent. In the result, it was declared that the defendant was liable for whatever damages the plaintiff proved in due course and it was directed to pay the plaintiff’s costs.

JUDGMENT

PLASKET, J:

[1] In this action for damages, Slipknot Investments 777 (Pty) Ltd (hereafter referred to as Slipknot), represented by Mr J.P. Du Plessis, purchased erf 50, New Brighton, Port Elizabeth (the property) from the defendant, Trident Steel (Pty) Ltd (hereafter referred to as Trident Steel). The agreement of sale provided for the nomination, by Slipknot, of a third party as purchaser. Slipknot nominated the plaintiff, Greenvest 101 (Pty) Ltd, as purchaser. (I shall refer to the plaintiff from now on as Greenvest.) Registration of transfer of the property into the name of Greenvest was duly effected.

[2] Du Plessis, the driving force behind both Slipknot and Greenvest, stated in his evidence that his intention in procuring the property was to let it on a long term basis and on the basis of a so-called triple net lease. This is a lease in terms of which the lessee is responsible for all costs such as maintenance, rates and so on. The case for Greenvest is that it was only after the sale had been concluded that Du Plessis learnt that, prior to the sale, Trident Steel had entered into a lease with Bosal Africa (Pty) Ltd (hereafter referred to as Bosal) on terms that were prejudicial to Greenvest and which would not have been agreed to by it. Greenvest’s case is that Trident Steel’s representatives fraudulently or negligently misrepresented to Du Plessis that no lease was in existence in respect of the property or, alternatively, that these representatives acted fraudulently or negligently in failing to disclose to Du Plessis that a lease was in existence.

[3] Prior to the commencement of the trial I was asked to separate the issue of liability from that of quantum. I duly did so. As a result, this judgment deals only with the question of whether Trident Steel is liable to Greenvest for any damages that it may later prove.

[A] THE PLEADINGS

[4] Paragraph 6.1 of Greenvest’s particulars of claim alleges that at all relevant times, both before and after the conclusion of the agreement of sale, Trident Steel’s representatives advised Du Plessis that ‘no long term agreement of lease had been concluded or existed’ in respect of the property, or alternatively, that they failed to disclose to him that any long term lease ‘had been concluded or existed’.

[5] Paragraph 6.2 alleges that in ‘making the aforesaid representations, alternatively in failing to disclose as aforesaid’, Trident Steel was represented ‘from time to time by its authorised representatives, being estate agent Warren Jack, defendant’s director Mr Ernie Behr and defendant’s director Mr Richard Martin’. Paragraph 6.3 says that these representatives were aware that Slipknot and Greenvest ‘wished to purchase the aforesaid premises for the purposes of commercial investment and that accordingly the existence of any such long term lease would impact upon the viability of the premises as a commercial investment’. The existence of the lease and its terms were, according to paragraph 6.4, materially relevant to the sale. Paragraph 6.5 alleges that in making the misrepresentations or in failing to disclose the existence of the lease, Trident Steel ‘acted fraudulently, alternatively negligently’.

[6] Paragraph 7.1 of the particulars of claim is to effect that Du Plessis, in calculating an appropriate value of the property as an investment and in assessing its reasonable market value, had regard to the absence of a lease and ‘considered the matter on the basis of the potential of the premises to be leased as a commercial property on terms favourable to Slipknot Investments and subsequently the plaintiff’. Paragraph 7.2 concluded that the purchase price was accordingly ‘calculated and fixed by Du Plessis on the basis of premises in respect of which a lease could be concluded on terms favourable to the plaintiff’.

[7] Paragraph 8 of the particulars of claim alleges that: (a) Greenvest acquired knowledge of the lease from Trident Steel’s attorneys on 19 February 2003; (b) the lease commenced on 1 November 2002, was to run until 30 September 2012 and allowed for the option of renewal until 30 September 2017; (c) it was concluded prior to 31 October 2002 or, alternatively, it was concluded subsequent to the offer to purchase the property having been made and without notification to Greenvest; (d) in concluding the lease and accepting the offer to purchase the property, Trident Steel acted fraudulently or negligently, as it knew or reasonably foresaw that the conclusion of the lease would prevent Greenvest from concluding a lease on more favourable terms and would cause it to suffer damages.

[8] Paragraph 9 alleges that if Du Plessis had known of the lease no offer to purchase in the amount of R4.9 million plus VAT would have been made by Slipknot, and Greenvest would not have accepted the nomination as purchaser. In the result Greenvest would either not have purchased the property or would not have purchased it for R4.9 million plus VAT.

[9] Paragraph 10 states that Greenvest elected not to cancel the agreement of sale but to abide by it and claim the damages it suffered ‘by reason of the aforesaid representations, alternatively non-disclosure, alternatively by reason of the defendant’s fraudulent, alternatively negligent conclusion of a lease agreement subsequent to the offer having been submitted by the plaintiff’.

[10] Trident Steel took a special plea of prescription alleging that the claim became due ‘to the knowledge of the plaintiff, as contemplated in section 12(3) of the Prescription Act, more than three years prior to the interruption of prescription by service of the summons on the defendant on 17 February 2006 i.e. before 18 February 2003’.

[11] In terms of paragraphs 3 and 4 of its plea over, Trident Steel admitted the sale or the property to Slipknot and the subsequent nomination of Greenvest as the purchaser. In paragraph 5 it admitted that the property was transferred from Trident Steel to Greenvest.

[12] In answer to paragraphs 6 and 7 of the particulars of claim, Trident Steel originally pleaded as follows: ‘The defendant denies these paragraphs.’ An alternative defence, set out below, was later added to this.

[13] In paragraph 7 of its plea, Trident Steel pleaded that on 12 February 2003 it, represented by Martin, and Bosal concluded a written agreement of lease in respect of the property but it denied every other allegation contained in paragraph 8 of the particulars of claim. Similarly, paragraph 8 of the plea denies paragraph 9 of the particulars of claim. It admitted, however, that it had been advised by Greenvest’s attorneys that Greenvest had elected to abide by the contract.

[14] In its request for further particulars, Greenvest asked the following in relation to the denial of the allegations contained in paragraphs 6 and 7 of the particulars of claim:

‘4.1 Does the defendant admit that Warren Jack represented the defendant in the negotiations which preceded the sale? If so, the defendant is required to state who it alleges Jack represented.¹

4.2 Does the defendant admit or deny that Jack made the representation alleged?

4.3 Does the defendant admit or deny that it was represented in its dealings with the plaintiff by its directors Behr and Martin?

4.4 Does the defendant contend that the existence of a long-term agreement of lease was disclosed to the plaintiff? If so, the defendant is required to state:

4.4.1 precisely when such disclosure was made;

4.4.2 in what manner such disclosure was made;

4.4.3 by whom on behalf of the defendant and to whom on behalf of the plaintiff such disclosure was made.’

[15] Trident Steel’s reply to this was:

‘4.1 The defendant avers that prior to the conclusion of the sale agreement (25 November 2002) Warren Jack was given a mandate by the defendant to sell the premises, for and on behalf of the defendant.

4.2 Deny.

4.3 Admit.

4.4 The plaintiff is referred to paragraph 1.2 above.’

[16] Paragraph 1.2, referred to above, deals with the special plea but in it Trident Steel alleges that when the sale was concluded and when Greenvest was nominated it, represented by Du Plessis, was aware ’that Bosal Afrika had taken occupation of the premises pursuant to an oral agreement of lease concluded between the defendant and Bosal Afrika’. The same paragraph alleges that ‘the existence of the oral Bosal lease was brought to the attention of Slipknot and/or the plaintiff (represented by Du Plessis) during the course of conversations held between Du Plessis and W Jack and/or T Terblanche and/or L Vorster and/or W Bodenstein’.

[17] During the course of the trial, another issue was added to those originally pleaded. An application was made by Trident Steel to amend its plea. The application was opposed by Greenvest and, after the matter was argued, I granted Trident Steel leave to amend its plea.² The amendment adds an alternative to the bare denial of the allegations contained in paragraphs 6 and 7 of the particulars of claim.

[18] That alternative is to the effect that Jack was Trident Steel’s agent for purposes of the sale and was, at all material times, Greenvest’s agent for purposes of the conclusion of a lease agreement between Greenvest and Bosal. In this latter capacity, it was pleaded, he became aware, on or before 4 December 2002, of the existence of the oral lease between Trident Steel and Bosal. From these facts, the following conclusions are drawn:

‘6.5 In so doing:

6.5.1 Jack had actual knowledge of the existence of the lease;

6.5.2 Such knowledge constituted a matter falling within the scope of Jack’s authority;

6.5.3 Jack had a duty to communicate the said knowledge to the plaintiff;

6.5.4 Jack at all material times hereto had an opportunity to communicate the said knowledge to the plaintiff;

6.6 In the premises:

6.6.1 Jack’s knowledge aforesaid, is to be imputed to the plaintiff; and

6.6.2 It is denied that a representation was made by representatives of the defendant.’

[19] In its replication, Greenvest made it clear that, as far as the plea of prescription was concerned, it only became aware of the facts from which the debt arose on 19 February 2003 and that the debt was only deemed to be due on that date. In addition, it pleaded that it had been wilfully prevented by Trident Steel from knowing of the existence of the debt prior to that date and so prescription did not begin to run until then.

[20] In respect of the amended aspects of the plea, the replication admitted that Jack became the agent of Greenvest for purposes of negotiating a lease with Bosal ‘on or subsequent to 10 December 2002’. It denied that Jack had knowledge of the lease on or before 4 December 2002 as alleged, that it fell within the scope of his authority, that he had a duty to communicate his knowledge to his principal and that he had the opportunity to do so.

[21] In response to the allegation that Jack’s knowledge could be imputed to Greenvest, and the denial that a representation was made to it by a representative of Trident Steel, Greenvest stated that, if Jack had knowledge, he held it as the agent of Trident Steel and that this knowledge would not have been imputable to Greenvest. In addition, it stated:

‘1.6.4 The plaintiff pleads further and in any event that the defendant’s authorised representative, R.J. Martin, in signing and submitting to the plaintiff through the defendant’s agent Warren Jack the amended offer to purchase … in terms of which the seller undertook to give the purchaser vacant occupation of the property on registration of transfer, represented to the plaintiff that no long term agreement of lease extending beyond the anticipated date of registration of transfer had been concluded in respect of the property.

1.6.5 The plaintiff pleads that such representation by its very terms precluded the possibility of a long term lease as contended for, and accorded with the direct representations made by the defendant’s agent Jack relevant to the sale of the property.

1.6.6 The plaintiff pleads that by reason of the nature of such direct representation by the defendant to the plaintiff any alleged knowledge on the part of Jack relevant to an oral long term lease agreement (which is in any event denied) cannot be imputed to the plaintiff and is irrelevant.’

[B] THE ISSUES AND THE ONUS

[22] The issue to be decided are: (a) when Greenvest acquired knowledge of the lease and whether the claim has prescribed; (b) whether Jack had knowledge of the lease while he was Greenvest’s agent, and whether such knowledge could be imputed to Greenvest; and (c) if the claim has not prescribed, whether Trident Steel misrepresented that there was no lease in place or failed to disclose that this was the case and whether, in so doing, it acted fraudulently or negligently.

[23] In order to determine these issues, it is necessary to traverse the evidence in some detail. Prior to doing so, however, I shall set out the proper approach to determining the facts in civil trials.

[24] Greenvest must, in order to succeed, prove its claim on a balance of probabilities. What that means, what has to be done to discharge the onus and how a court must approach the evidence in a civil trial were dealt with by Eksteen DJP in National Employers General Insurance Co Ltd v Jagers.³ He stated:

‘It seems to me, with respect, that in any civil case, as in any criminal case, the onus can ordinarily only be discharged by adducing credible evidence to support the case of the party on whom the onus rests. In a civil case the onus is obviously not as heavy as it is in a criminal case, but nevertheless where the onus rests on the plaintiff as in the present case, and where there are two mutually destructive stories, he can only succeed if he satisfies the Court on a preponderance of probabilities that his version is true and accurate and therefore acceptable, and that the other version advanced by the defendant is therefore false or mistaken and falls to be rejected. In deciding whether that evidence is true or not the Court will weigh up and test the plaintiff's allegations against the general probabilities. The estimate of the credibility of a witness will therefore be inextricably bound up with a consideration of the probabilities of the case and, if the balance of probabilities favours the plaintiff, then the Court will accept his version as being probably true. If however the probabilities are evenly balanced in the sense that they do not favour the plaintiff's case any more than they do the defendant's, the plaintiff can only succeed if the Court nevertheless believes him and is satisfied that his evidence is true and that the defendant's version is false.

This view seems to me to be in general accordance with the views expressed by Coetzee J in Koster Ko-operatiewe Landboumaatskappy Bpk v Suid-Afrikaanse Spoorweë en Hawens (supra ) and African Eagle Assurance Co Ltd v Cainer (supra ). I would merely stress however that when in such circumstances one talks about a plaintiff having discharged the onus which rested upon him on a balance of probabilities one really means that the Court is satisfied on a balance of probabilities that he was telling the truth and that his version was therefore acceptable. It does not seem to me to be desirable for a Court first to consider the question of the credibility of the witnesses as the trial Judge did in the present case, and then, having concluded that enquiry, to consider the probabilities of the case, as though the two aspects constitute separate fields of enquiry. In fact, as I have pointed out, it is only where a consideration of the probabilities fails to indicate where the truth probably lies, that recourse is had to an estimate of relative credibility apart from the probabilities.’

[25] This dictum has been cited with approval and applied on many occasions. In Plaatjies and another v Road Accident Fund,⁴ for instance, Horn AJ summarised its import when he said that a trial court ‘is required to consider the credibility of witnesses in conjunction with the probabilities and it is only when the probabilities fail to indicate where the truth probably lies that the court should have recourse to an evaluation of the credibility of the plaintiff’s witnesses on the one hand and the defendant’s witnesses on the other hand’.⁵

[C] THE EVIDENCE

(1) The Case for Greenvest

[26] Warren Jack, a commercial industrial property broker with approximately 25 years experience, was the first witness called on behalf of Greenvest. Jack’s involvement with this matter began when he introduced a firm by the name of Johnson Control to Bosal when the latter wished to move from its premises in Uitenhage. Once Johnson Control had agreed to lease the Uitenhage property, Jack began to look for a property for Bosal in the Port Elizabeth area. He found two, one of these being the property involved in this matter. He discovered that Trident Steel wished to sell the property and he was asked by Mr Ernie Behr of Trident Steel to have the property valued. His efforts turned initially to attempting to sell the building to Bosal.

[27] Bosal did not want to purchase the property but expressed an interest in renting it instead. Jack then turned his attention to trying to sell it to someone else. That person was Du Plessis, acting on behalf of Slipknot. At that stage -- at the end of October 2002 -- as far as Jack knew, there was no lease between Trident Steel and Bosal in place even though he knew that Bosal was in occupation: he had discussed the matter with Behr who had assured him of this on ‘numerous occasions’. Behr had told him, however, that Trident Steel and Bosal had ‘chatted’ about Bosal being housed in the property, ‘but nothing had been signed’. Behr and Mr Willie Bodenstein of Bosal had, furthermore, informed him that there was a temporary arrangement in place in terms of which Bosal would be able to store their goods on the premises. He was not, however, aware of the terms of this temporary arrangement.

[28] Jack then prepared a deed of sale for Du Plessis in respect of the property. In it, he made provision for occupational interest of one percent of the purchase price in the event of Trident Steel remaining in occupation after registration of transfer. He stated that he inserted this provision because, as far as he was aware, no lease in respect of the property was in existence: if a lease had existed, he would not have inserted the provision.

[29] On 31 October 2002, Jack sent the offer to purchase to Behr. In the covering letter he made specific reference to the issue of occupational interest. He concluded his letter thus:

‘Kindly note that we have informed Mr. Bodenstein of all matters that have transpired, and he has indicated that all is in order. We await your earliest response in order that we can conclude a lease with Mr. Bodenstein, however, should this transaction not proceed, and you elect to house the tenant, we would certainly value the opportunity of being granted a mandate to sell the property on a sole agency basis for a period of time, as we are confident that we would sell the building with Bosal as a tenant.’

[30] Thereafter Jack received a letter from Bodenstein, dated 1 November 2002. This was a response to a letter that he had earlier sent to Bodenstein in which he had made certain proposals concerning the letting of the premises to Bosal in the event of it being purchased by Slipknot. In his response Bodenstein said, inter alia, that ‘Bosal would not be interested in entering into any other agreement that is worse than the current R10 per square metre excluding VAT rental’. Bodenstein later stated that the alternatives faced by Bosal were ‘either to continue with the existing rental of property or buy the property at an attractive price to Bosal for Bosal’. Jack stated that he understood the reference to the ‘existing rental of the property’ to be a reference to the temporary arrangement that he had been told about, or another arrangement that Bosal had been discussing with Trident Steel.

[31] In Jack’s next letter to Bodenstein, he stated that he had ‘a prospective purchaser in place’ who was interested in letting it to Bosal at R10 per square metre. The prospective purchaser he referred to was Du Plessis.

[32] At the request of Behr, the offer to purchase was extended until 15 November 2002 and, after further extensions, finally to 25 November 2002. At about this time, Jack received a copy of a letter, drafted by Bodenstein and addressed to Behr, in which it was stated: ‘We regret to inform you that Bosal Afrika (Pty) Ltd are not interested at this stage to purchase the building. We will send the signed lease agreement to Mr Richard Martin today’. When he received a copy of this letter, Jack was shocked because he thought, from his dealings with Bodenstein, that he would be concluding a lease on behalf of Du Plessis with Bosal.

[33] The offer to purchase, signed by Du Plessis on 31 October 2002, was accepted by Trident Steel on 25 November 2002. On 25 November 2002 Jack wrote to Martin to congratulate him on the sale of the property. He ended his letter by saying that in order for him to prepare documents for the letting of the property to Bosal, he requested a copy of the lease ‘prepared between Trident Steel and Bosal’. When he was asked about this request, he said:

‘They were going to enter into an agreement between the two of themselves. Bosal was going to lease from Trident then Trident decided to sell on the building and there was no lease in place, so what we did to try to speed the matter up, Bosal had gone through the contents of their lease, so Mr Jean Du Plessis said to me let us don’t complicate everything and because a warehouse lease is very similar, all leases are very similar and he said don’t complicate matters, let us keep the same terms and conditions in the documentation’.

[34] On the same day Jack wrote to a person who had been interested in purchasing the property. He told this person that the property had been sold and that to the best of his knowledge it ‘was purchased voetstoots and was not subject to a lease’. He also wrote to Bodenstein on that day. After informing him of the sale, he wrote: ‘We request that you kindly advise us with whom we should liaise in respect of the leasing of this property in order that we can get underway with the necessary arrangements on behalf of the purchaser.’

[35] On the next day he wrote to Du Plessis to give him ‘a breakdown of what the procedure would now be’. In the course of this letter he wrote: ‘We have requested Trident Steel to forward us with a copy of the lease that was prepared for Bosal in order to expedite matters and finalise documentation in respect of the leasing of these premises to Bosal.’ He also wrote to a Ms Belinda Saayman of BOE. During the course of the letter he said that ‘we are underway with Bosal, who are already in occupation, in respect of the leasing of these premises’.

[36] On 29 November 2002, Jack sent an e-mail to Mr Andreas Jonkers of Bosal in which he stated that he had not received the lease as a whole but had received a few pages of it. He stated too that Du Plessis wished to conclude the lease with Bosal the following week and wanted to know whether he and Du Plessis should fly to Pretoria for this purpose or whether Bodenstein would be visiting Port Elizabeth. In a subsequent letter to Du Plessis, he said that he did not believe that Bosal would turn down the lease proposal that Du Plessis would make and that Jonkers had informed him that he and Bodenstein would discuss the finalisation of the lease and revert to him.

[37] Jack was asked whether, in all his dealings with Bosal and Trident Steel, it was ever suggested that he was wasting his time because a binding lease was already in existence. His answer was:

‘No, at all times I was unaware of it and on numerous occasions it was discussed and hence why I took a reduction in the commission in Uitenhage was because I was going to secure them as a tenant.’

[38] On 4 December 2002 Du Plessis, having by now received the lease from Bosal, put together a proposal that was to be put to Bosal. Jack forwarded the proposal to Jonkers on the same day. A few days later Jonkers sent an e-mail to Jack’s secretary in which he arranged a meeting between Bodenstein and Du Plessis and Jack on 12 December 2002 to finalise the matter of the lease.

[39] They met, in fact, on 20 January 2003. Jack said the following of the meeting:

‘The meeting was set up with Mr Bodenstein, myself and for Jean to meet him in connection with concluding the lease agreement with Jean putting up a proposal to him and also meeting one another as being the landlord and the tenant, which the meeting went exceptionally well. In fact we were mandated to source premises in Durban for them as well, and the rentals, everything was basically the same. There was just one or two things that Mr Du Plessis requested in the lease, i.e. it being a triple net lease which at the time Mr Bodenstein said “everything sounds in order, I will come back to you on that” … .’

[40] Immediately after the meeting Jack sent an e-mail to Bodenstein in which he referred to the meeting and attached a lease agreement ‘reflecting the changes as proposed by Mr Du Plessis’. He confirmed that ‘as discussed’, Bodenstein would revert to him on it by 22 January 2003.

[41] When Bodenstein gave his answer to the proposal (nearly a month later) he told Jack that he could get a better deal from Trident Steel. This came as a surprise to Jack not least of all because ‘at that stage Jean Du Plessis had owned the building already’. Jack contacted Du Plessis and informed him that Bodenstein had told him that Bosal had a lease with Trident Steel.

[42] When he was cross-examined Jack was adamant that, as far as he knew, the arrangement between Trident Steel and Bosal to accommodate the latter was a temporary one. He conceded that Bosal was in occupation when Du Plessis made his offer to purchase the property. It was put to him that Bodenstein would testify that he told Jack during October or November 2002 that he had concluded an oral long lease with Trident Steel to secure Bosal’s position in relation to the property. Jack said that he could not recall being told this.

[43] He did not believe, however, that Bodenstein sending a signed lease agreement to Trident Steel on 15 November 2002 would have an impact on Du Plessis because, as he said, ‘at that time Mr Ernie Behr had told me that he is not going to accept that offer and sign it, and there were numerous discussions with him and I that he would not accept the deal’. He proceeded to say:

‘So it was now my, my concern was now that I was going to lose the client, who is going to be running off to Trident Steel, and then my discussions with Mr Behr, and he said to me, “Warren, I haven’t signed the lease at this stage. I haven’t signed anything.” He said, “Does your client want to buy it without a lease”, to which I said “yes”. So that is, I mean, my concern was that I was going to lose out and Mr Behr on numerous occasions told me that he has not signed their signed offer.’

[44] He testified that the response of Du Plessis to the news that Bosal had signed a lease was to ask him to set up a meeting with Bodenstein to discuss the issue, and to conclude a deal. This was borne out by a letter sent to him by Du Plessis on 4 December 2002, referring to a lease with Bosal, in which he enclosed a proposal to let.

[45] Jack was then cross-examined about the meeting that he and Du Plessis had with Bodenstein in Port Elizabeth on 20 December 2002. It was put to Jack that Bodenstein would testify that he told Jack and Du Plessis that he had a lease with Trident Steel and that he was not prepared to negotiate with them. To this Jack said: ‘Well, then I wonder why he actually came and met with me and discussed that.’

[46] Towards the end of Jack’s cross-examination, he confirmed that he was Slipknot’s agent, for purposes of concluding the lease with Bosal, and Greenvest’s agent for the same purpose after the nomination of Greenvest. The cross-examination proceeded as follows:

‘You agree with that as well. Now I put it to you that you had actual knowledge of the existence of the oral long term lease by 4 December 2002, on the terms and conditions as set out in the three pages that were sent to you and the unsigned lease agreement. Do you agree with that? – Yes.

And do you agree with the proposition that I put to you now, that in executing your mandate to Mr Du Plessis, you would have been obliged to inform him of any facts that would have adversely affected his position as a landlord and in concluding a lease? – Yes, that is correct.

And, in fact, you had a duty to disclose the existence of the lease agreement to him? – Yes.

And would it be correct for His Lordship to accept that you were never prevented in any way from disclosing this to Mr Du Plessis? – No, I wasn’t.

And you were in no way ever prevented from communicating with him in any way? – No.’

[47] When he was re-examined, he confirmed that Behr had told him on numerous occasions that no lease had been signed, that he had asked whether Du Plessis wanted the building with or without a lease and that Jack had told him Du Plessis wanted it without a lease in place.

[48] After the amendment to the plea was allowed and effected, it became necessary for Mr Ford, who together with Mr Schuring, appeared for Greenvest, to re-call Jack for further re-examination. The purpose was to explain his answer that he had knowledge of an oral long term lease between Trident Steel and Bosal. His explanation was this:

‘When I say oral long term lease it was just at that time Mr Bodenstein had told me that he had been in negotiations with Trident and they put a proposal forward to him on a basis and I think the word “oral long term” at the time maybe I just said yes to it, but there was no actual deal that had transpired as far as I recall and what Willie had told, Mr Bodenstein had told me, so I think maybe it’s a mix of words here but there was no oral long term lease, because if there is an oral long term lease then I would think that the tenant should be in occupation.’

[49] The second witness called in support of Greenvest’s case was Mr John Wilson who had worked for Investec and had dealt with an application made by Du Plessis for a loan to finance the purchase of the property. He testified that Du Plessis approached him for finance in December 2002 and, on the basis of information supplied to him by Du Plessis, he prepared a credit minute dated 19 December 2002. This document stated that ‘Bosal will sign a 10 year triple net lease’ as Du Plessis had informed him that he had acquired vacant occupation of the premises and that a lease was being negotiated. In March 2003, however, Du Plessis informed Wilson that the lease negotiations had broken down and that Bosal had entered into a lease with Trident Steel. This necessitated an amendment to the credit minute, the details of which were contained in an e-mail from Wilson to his superior on 8 March 2003.

[50] The third and final witness to testify in support of Greenvest’s case was Mr Jean Du Plessis, the founder of the Slipknot group of companies (of which Greenvest is part). He is a specialist in the development and letting of commercial industrial properties. He is the driving force behind the group of companies and he does everything from acquiring property to tenant installation.

[51] When Du Plessis was introduced to the building, he was made aware at an early stage of the possibility of a lease agreement with Bosal. On 9 October 2002, he telephoned Jack for the first time to ask him about the availability of the property. Jack reverted to him towards the end of October 2002 to inform him that the property was indeed available. He arranged to meet Jack in Port Elizabeth on 31 October 2002 to view the property.

[52] After viewing the property, he decided to purchase it. He had discussions with Jack about the possibility of letting the property to a tenant. It had, however, been made clear to him that ‘no offer would be accepted that was subject to a lease negotiation and that this property would have to be bought vacant’. He was sure that he would be able to let the property as he was confident that Bosal had no other option but to contract with him because, Jack told him, there were no other properties available that were suited to its requirements. Du Plessis, when he inspected the property, was aware that Bosal was in occupation. He said that he was not sure what the arrangement was between Bosal and Trident Steel but he was assured by Jack that it had to do with them doing business with each other as supplier and client and that it involved Bosal storing their goods there on a temporary basis.

[53] Du Plessis signed an offer to purchase the property that same day. Trident Steel was to accept the offer by 6 November 2002. This date was extended from time to time and the offer was accepted by Trident Steel on 25 November 2002. At that point, Du Plessis said, he then had ‘the green light to be able to sit around a table and actually negotiate with interested parties’. He had Bosal in mind specifically and he thought that, given its lack of options, it would be ‘a formality to get the lease agreement in place’.

[54] He confirmed that he had instructed Jack to obtain a copy of a lease that Trident Steel and Bosal had been negotiating on. He stated that he knew that the negotiations had not been concluded so, rather then starting from scratch, he intended to use that lease as the basis for his negotiations with Bosal. In short, he wanted this document to help him draft a proposal to put to Bosal. He was pleased to then receive three pages of the lease which contained such terms as the duration of the lease, the renewal period and the rental. He said that he was reassured by Jack’s covering letter which had stated: ‘We do not believe that Bosal will turn down the proposal that you wish to submit to them, and Mr Jonkers of Bosal informed us that he will be discussing the finalising of the lease with Mr Bodenstein and will revert to us.’ In due course Jack e-mailed the complete lease to Du Plessis. This was on 2 December 2002.

[55] Within two days Du Plessis compiled a proposal for Bosal. The document proposed an agreement ‘as per copy lease received from Bosal dd 02.12.2002’ and stated further: ‘Common law to apply until signature by both parties.’ The proposal differed from the Bosal lease in some respects, the most important being that it envisaged a triple net lease.

[56] It was important for Du Plessis to finalise negotiations because he could only obtain access to finance when a lease was in place. As it happened, the matter was not finalised on the date envisaged by him, namely 6 December 2002, despite a number of meetings being set up with Bosal.

[57] By this stage Mr Len Vorster of Deneys Reitz Inc was in the process of preparing the conveyancing documentation. Du Plessis spoke to him about using the fact of the temporary arrangement that saw Bosal occupying the premises to zero rate the transaction for VAT purposes in terms of s 11(1)(e) of the Value-Added Tax Act 89 of 1991. Vorster undertook to take instructions from Trident Steel. He reverted to Du Plessis to say that his client was happy with the arrangement. He prepared an addendum to the agreement to reflect this.

[58] The meeting with Bosal eventually took place on 20 January 2003. Du Plessis and Jack met with Bodenstein and one McLeod. Du Plessis stated that when the offer to let was discussed, there was no animosity between the parties. He felt confident that a deal would be concluded. The outcome of the meeting was that Bodenstein undertook to revert to Jack within two days on whether Bosal would accept the offer. Du Plessis was adamant that there was never any suggestion that Bosal already had a lease in place with Trident Steel.

[59] Despite his undertaking, Bodenstein did not revert to Jack within two days. On 19 February 2003, however, Du Plessis returned a telephone call from Jack who informed him that Bosal had rejected his offer and had, instead concluded a lease with Trident Steel. He verified this information by speaking to Martin. Du Plessis also asked Martin why Bodenstein had met with him on 20 January 2003 to discuss a possible lease of the same property and had promised to report back with an answer within two days. To this Martin had no answer. He then telephoned Vorster and asked him if he had a copy of the lease signed by Bosal and Trident Steel. He received a copy by fax shortly thereafter. He saw that Bosal had signed the lease on 13 November 2002 and Trident Steel had signed on 12 February 2003. It struck him that Bosal had signed the lease while he was giving Trident Steel extensions on the offer to purchase and that Trident Steel had signed well after the offer to purchase had been accepted by it. This, he said, confused him because ‘Trident never had the right to actually contract or transact with my property after having accepted my offer on 25/11/2002, due to the fact that vacant occupation was promised to me …’.

[60] Du Plessis then finalised his application for finance with Wilson by informing him of the lease of which he had become aware. He did this because he had decided to abide by the contract with Trident Steel, despite the set back of discovering the lease. This explains the amended credit minute about which Wilson testified. He also set up a consultation with his attorney, Mr Terence Mathie, who wrote a letter to Vorster in which he sought an explanation from Trident Steel. Vorster replied to this letter on 26 March 2003. He stated that it was his client’s instructions that Du Plessis knew of the lease at all relevant times. On 9 April 2003, Mathie wrote to Vorster again. In this letter he informed Vorster that Greenvest would abide by the agreement of sale and later recover any damages it may have suffered.

[61] Mathie also wrote letters to Vorster and to Bosal in which he requested answers to a number of questions relating to when the lease between Bosal and Trident Steel came into existence, who represented the parties and what the terms were. When Vortser responded, about eight months later, he referred exclusively to the written agreement, saying that it contained the answers sought by Mathie. He said that Trident Steel had been represented by Behr and Martin and Bosal had been represented by Bodenstein and Jonkers. Bosal replied to Mathie through its attorneys who said that a ‘valid and enforceable oral lease agreement forming the basis of the written lease agreement was entered into prior to the 1^st of November 2002 as our client, as a matter of fact, leased the premises as from 1^st November 2002’.

[62] Du Plessis was adamant that he was never informed of the existence of an oral lease. When it was put to him that he had knowledge of an oral long term lease before 2 December 2002, he denied this. Indeed, he stated:

‘I had no knowledge of any oral long term lease or any lease for any matter whatsoever and based on the facts of a signed offer to purchase and deed of sale by the seller giving me vacant occupation I had no reason to suspect any possibility of any oral long term, short term, whatever lease you want to call it.’

(2) The Case for Trident Steel

[63] The first witness called by Trident Steel was its conveyancing attorney, Mr Len Vorster. He had attended to the transfer of the property from Trident Steel to Greenvest. The main thrust of his evidence concerned the request to him by Du Plessis to draft an addendum to the deed of sale to allow for the transaction to be zero-rated for VAT purposes. He said that Du Plessis telephoned him on 13 December 2002 and made this request on the basis of there being a lease in existence in respect of the property. Vorster contacted Martin who confirmed that there was indeed a lease in existence and Vorster then drafted the addendum.

[64] When Vorster was cross-examined, he conceded that a lease terminable by either party on a month’s notice or even less would qualify for zero rating and that a temporary arrangement which would have allowed Bosal to occupy the premises until a formal lease was concluded would also qualify.

[65] The final witness to be called was Mr Willie Bodenstein who was, at the time, the managing director of Bosal. He testified that Bosal had decided to move its operation from Uitenhage to Port Elizabeth. Jack had been involved in that he had proposed a tenant for the Uitenhage premises. This had occurred in 2002 and the tenant was Johnson Control. Bodenstein was happy to let the premises to Johnson Control but, in order to be able to service the motor industry uninterrupted, Bosal had to have a back to back lease. He said that he had never been interested in obtaining premises on a temporary basis.

[66] Bosal was at first happy to either purchase or lease suitable premises. If it was to choose the latter option, the lease would have to correspond, in duration, with the Johnson Control lease, so that Bosal could move back to Uitenhage if it had to.

[67] Bodenstein heard about the property in issue in this matter from one of his employees. He inspected it prior to October 2002 but no agreement was reached about the property.

[68] Jack had been appointed as one of Bosal’s agent to assist it to find premises. In a letter from Jack dated 1 July 2002, Jack informed Bodenstein that Trident’s Steel’s asking price for the purchase of the building was R7.5 million which Bodenstein was not prepared to pay. In a later letter from Jack, he valued the property at R4.3 million but Bosal never made an offer to purchase it at all. The reason for this was that Bodenstein had ascertained that Trident Steel still wanted more for the premises than he was prepared to pay. Instead, he was happy ‘to continue with the arrangement that we have got on the lease until we can find a different arrangement on the price’. When he was asked about this lease arrangement, he said:

‘The meeting that I had with Andrew and Mr Behr in his office we basically agreed that Bosal would rent the property from him at a specific rental price at a specific, if I remember correctly 8 percent escalation and that it would definitely be at the same period as our lease with Johnson Control, five years plus five years.’

All Bodenstein could recall of the date of this meeting was that it was in 2002. He said further that they agreed on both the price and the period of the lease, the price being R65 000.00 per month.

[69] Bodenstein knew at the time that Behr was still looking to sell the premises but that did not bother him: he had an agreement that would bind a purchaser. When Bodenstein was asked whether Jack knew of the agreement he said:

‘I can’t recall exactly the date I have mentioned that to Warren Jack but we have spoken often and I have mentioned to him that I have got that agreement. He was also aware of that agreement because he was pushing me to move out of Uitenhage so that they can start with the preparations for the Johnson Control building. We had to do an office block, we had to build for them a complete office block to house them and they had strict timelines to take care of that, so we had to move out and he knew about that.’

When he was asked specifically whether Jack knew that Bosal had taken occupation of the Trident Steel premises, he said that he could not recall whether Jack knew of this but ‘he must have known that we left.’ He did not, however, show Bodenstein any more properties to lease.

[70] On 28 October 2002, however, Jack sent Bodenstein a fax in which he spoke of the rent for the property being R10.00 per square metre, or R65 000.00 per month and that in view of the asking price it would be best to lease it. Bodenstein said of this fax that since the terms mentioned were what he had already agreed with Behr, he was prepared to continue with the lease rather than purchase the property.

[71] The fax also stated that Jack had spoken to a ‘local investor’ – a reference to Du Plessis – who was considering purchasing the property if Bosal was interested in entering into a triple net lease. Bodenstein said that he ‘indicated as so many time before and after to Warren Jack that I am not prepared to change, enter into a lease agreement that is different or worse than the one that I have got currently with Behr’.

[72] Bodenstein responded to Jack’s fax on 1 November 2002. He stated that ‘Bosal would not be interested in entering into any agreement that is worse that the current R10.00 per square metre excluding VAT rental’. Later in the letter, after dealing with the drop in the purchase price of the property he said that Bosal’s alternatives were to ‘either continue with the existing rental of the property or buy the property at an attractive price for Bosal’. Jack responded to this by saying that he had a prospective purchaser who was interested in ‘entering into a lease agreement with your company at R10.00 per square metre plus VAT, should you elect not to purchase the property yourselves’. Bodenstein’s view of this was that this was much the same as he had with Trident Steel ‘so if he can give me that lease or better I would be prepared to enter into a new agreement with the new owner’.

[73] Despite the reduction in the purchase price Bosal decided not to purchase the property and so Bodenstein submitted what he termed ‘the final written lease agreement’ to Trident Steel. That was on 15 November 2002. A copy of the letter to this effect was sent to Jack. The written lease, Bodenstein said, mirrored the terms that had been agreed to orally.

[74] Bodenstein was informed that the property had been purchased by Du Plessis, although he was not sure when he was informed. He did not dispute the contents of a letter written to him by Jack dated 25 November 2002 that stated that Trident Steel had accepted the offer to purchase made by Du Plessis and asking for a contact person with whom to liaise ‘in respect of the leasing of this property in order that we can get underway with the necessary arrangements on behalf of the purchaser’.

[75] Bodenstein confirmed that, in early December 2002, he received a proposal from Du Plessis for the letting of the property but that he was not prepared to accept the terms proposed as the lease that Bosal had agreed to with Trident Steel was more favourable. He recalled having met with Jack and Du Plessis on 20 January 2003 at which the lease proposal was discussed. He said that, at the outset, he had told Jack numerous times that ‘I cannot enter into something that is worse than I have got currently with Trident’. Thereafter the rest of the discussion concerned other properties owned by Du Plessis and specifically one in Durban and one in East London that Bosal was interested in.

[76] When he was cross-examined Bodenstein was adamant that he knew that, in the form of the oral agreement with Behr, he had a lease that was good against any purchaser of the property.

[77] He was also asked about his interactions with Jack in his capacity as the agent of Du Plessis for purposes of concluding a lease in respect of the property and, particularly, Jack’s correspondence with Bosal to set up a meeting to finalise the proposal that he had earlier forwarded to Bosal on the instructions of Du Plessis. First, he denied that Bosal received Jack’s e-mail in which he stated that Du Plessis wanted to conclude a lease with Bosal and enquiring whether he and Du Plessis should fly to Pretoria or whether they could meet in Port Elizabeth for this purpose. His basis for saying this was that if it had been received, Jonkers, to whom it had been addressed, would have discussed it with him. Secondly, he suggested that Jonkers may have received it and disregarded it ‘because he also knew Warren by that time’. This was a reference to Jack ‘bombarding you with documentation, with phone calls, that do not necessarily reflect all the discussion you have made with him’. Thirdly, in any event, he suggested that he would have ‘discarded this e-mail in any case like I have done with many others’.

[78] Despite this, Bosal sent through to Jack three pages of the lease that had at that stage been signed by Bodenstein but had not as yet been signed on behalf of Trident Steel. He also stated that the resulting proposal from Du Plessis -- sent to Bosal by Jack -- was brought to him by Jonkers. Bodenstein said, however, that he did not even look at the document because he already had a lease in place in the form of the lease he had signed ‘backed up by the oral agreement I had with Ernie Behr’.

[79] He claimed that he had told Jack on a number of occasions that he was not interested in the lease but Jack would not listen: Jack telephoned and wrote letters incessantly to cover himself. Despite all of this, however, Bodenstein agreed to meet Jack and Du Plessis in Port Elizabeth, his e-mail to Jonkers saying: ‘Ek sal Donderdag in P.E. wees. Reel asseblief met Warren en Amanda dat ek die saak afhandel’. When he was asked what he planned to do he said:

‘Finally speak to Warren Jack face to face and say to him that this is the scenario, because he doesn’t listen. He keeps on harassing Andreas and I said to Andreas “Okay, I will go to Port Elizabeth Thursday and I will speak with Warren and we will settle the issue.” ‘

[80] When it was put to him that the response to the invitation (from Jonkers to Jack’s secretary) did not seem to foretell of what he intended to do, he said:

‘Well, it has two possible outcomes. It is either Warren accepts the fact that we have got a lease agreement together with his new landlord or he allows me to sign a lease agreement which is at least better or the same terms that I have got currently with Ernie Behr.‘

He conceded that, in fact, he went to the meeting with a view to trying to negotiate better terms than he already had.

[D] DECIDING THE ISSUES

[81] The three issues that must be decided have been set out above. In short they are: when Greenvest acquired knowledge of the lease; whether Jack had knowledge of it while he was Greenvest’s agent; and whether Trident Steel had either misrepresented that no lease was in place or had failed to disclose that this was so, and had done so either fraudulently or negligently. It is convenient to start with the second issue, namely whether Jack had knowledge of the lease and whether, if so, this knowledge could be imputed to Greenvest. I shall then deal with the remaining issues together.

(1) Jack’s Concession

[82] Jack conceded in cross-examination that he had actual knowledge of the oral lease by 4 December 2002, that he had a duty to inform Du Plessis of this and that he was not prevented from doing so. This concession ran counter to everything that he had said until then. Indeed, when he was recalled to be further re-examined on this aspect of his evidence, Mr Ford took him through the numerous instances in the record where he had made it clear that he had no such knowledge. His explanation for this inconsistent answer was that he had made a mistake and that in fact he had no knowledge of an oral lease. This is, I may add, consistent with what he said when he was first re-examined namely that Behr had told him on a number of occasions that no lease had been signed and that he had told Behr that Du Plessis wanted the building without any lease in place.

[83] From the above it can be seen that the concession made by Jack is entirely at odds with the rest of his evidence. The question of how to approach a concession such as this was dealt with in the following terms by Kroon J, for a full bench, in Harlech-Jones Treasure Architects CC and others v University of Fort Hare:⁶

‘[87] Counsel next sought to pass strictures on the manner in which Jones J approached the concessions made by the respondent’s witnesses and the bearing they had on the other evidence. The specific aspects raised appear from the paragraphs that follow.

[88] The discussion of those aspects must, however, be preceded by the following remarks: a concession, like any other evidence, may either be conclusive or count for nothing; witnesses make concessions for any number of reasons, sometimes because the concession is in fact warranted, sometimes because, for example, they are confused or tired or because they do not understand the effect of the concession, sometimes in circumstances in which they are asked, impermissibly, to put their interpretation on certain events; the concession, like other viva voce evidence, must be weighed by the Court in the light of the totality of the evidence before it and the probabilities revealed thereby.’

[84] When Jack’s evidence is considered in its totality, it is clear that he did not intend to make the concession that he had actual knowledge of the oral lease before 4 December 2002. It was, as I have said, totally at odds with the entire body of his evidence and this was certainly not one of those instances in which a witness is forced into a corner and has no option but to make the concession: the concession made by Jack came out of the blue. He has sought to explain it and, although he did not rely on this as an excuse, it was clear to everyone that Jack was ill when he testified and battled his way through his evidence on this account. I am satisfied too, for reasons that will be dealt with fully below, that the concession is also at odds with the probabilities.

[85] In the result, I am of the view that it counts for very little in the greater scheme of things and is certainly not conclusive. In other words, I take the view that the concession does not establish the defence that through Jack’s knowledge of the oral lease, Greenvest had imputed knowledge of it when it was nominated as the purchaser by Slipknot, and that as a result there was no misrepresentation on the part of Trident Steel.

[86] It was argued by Mr Eyles who, together with Ms Robertson, appeared for Trident Steel that, apart from the concession, certain letters written by Jack indicate that he had knowledge of the oral lease. These letters all relate to the partial or full copy of the lease that was in the process of being negotiated by Trident Steel and Bosal. There is no suggestion that, at the time that Jack wrote these letters, the offer made by Bosal had been accepted by Trident Steel: it was only later – on 12 February 2003 – that Trident Steel signed the lease. The purpose of asking for a copy of the lease was to enable Du Plessis to use it as the basis for his proposal to Bosal: this purpose presupposes that Jack and Du Plessis were of the view, correctly on every version, that the written lease had not been agreed to by Trident Steel when they asked for a copy. It also cannot be inferred from the fact that Jack and Du Plessis knew of the written lease that they knew also of the antecedent oral agreement. Their evidence is to the contrary. For these reasons I am of the view that the letters written by Jack do not afford evidence that he knew of the oral lease at the time that those letters were written.

(2) The Remaining Issues

[87] It is common cause that Bosal was in occupation of the property when Slipknot purchased it and when Greenvest was nominated as the purchaser. The understanding of the parties as to the nature of that occupation is disputed. It is also common cause that a lease had been signed by Bosal on 13 November 2002, shortly before Slipknot’s offer to purchase was accepted by Trident Steel on 25 November 2002, and that the lease was only signed on behalf of Trident Steel on 12 February 2003, some two and a half months after Trident Steel had accepted the offer to purchase.

[88] It must be accepted that prior to November 2002, Trident Steel and Bosal entered into an oral lease in respect of the property. This regulated Bosal’s occupation of the property from the beginning of November 2002 onwards. Whether Du Plessis, on behalf of Greenvest, knew of this lease, and when he acquired that knowledge, is at the heart of this case. In order to determine these issues it is necessary to consider the probabilities that emerge from the evidence which I have set out in some detail above.

[89] Both Jack and Du Plessis were adamant that they had no knowledge of the oral lease. As I have said above, where Jack conceded that he had such knowledge, he did so erroneously and in stark contradiction of his evidence as a whole. In my view, the conduct of both Jack and Du Plessis is consistent with them not knowing of the oral lease.

[90] Jack testified that he had been told by Behr that no lease with Bosal was in place and, after Bosal had sent Trident Steel the lease agreement signed by Bodenstein on 13 November 2002, that Trident Steel did not intend accepting the offer by signing the lease. Du Plessis was informed before he submitted his offer to purchase that ‘no offer would be accepted that was subject to a lease negotiation and that this property would have to be bought vacant’. The factors that I list below give credence to their evidence.

[91] First, it was not in dispute that Jack prepared the offer to purchase. He made provision for occupational interest being payable in the event of Trident Steel still being in occupation of the building after registration of transfer. He did so, he said, because as far as he was aware, there was no lease in existence in respect of the property: if he had known of a lease, he would not have made provision for occupational interest. This evidence was not challenged in cross-examination.

[92] Secondly, as early as 31 October 2002, when Jack sent the offer to purchase to Behr, he said in his covering letter that he awaited an early response so that a lease could be concluded with Bosal. When the offer to purchase was accepted, he wrote to Martin requesting a copy of the lease that Bosal had submitted to Trident Steel so that negotiations between Du Plessis and Bosal concerning a lease could be expedited. On the same day he wrote to a prospective purchaser to say that the property had been sold voetstoots and that it was ‘not subject to a lease’. He also wrote to Bodenstein and asked to be advised of the identity of the person from Bosal with whom he could liaise ‘in respect of the leasing of this property’.

[93] On the following day he wrote to Du Plessis about obtaining a copy of the lease so that the letting of the property to Bosal could be expedited and he wrote to a Ms Saayman of BOE and informed her that ‘we are underway with Bosal … in respect of the leasing of the premises’. Towards the end of November 2002, he wrote to Jonkers of Bosal requesting a meeting for purposes of discussing the lease and he then wrote to Du Plessis to say that he did not think that Bosal would refuse the proposal he intended to make and that Jonkers had told him that Jonkers and Bodenstein would discuss the issue and revert to him. In early December 2002, Du Plessis drafted his proposal for the lease with Bosal and this was sent to Bosal. A few days later, Jonkers sent an e-mail to Jack’s secretary in which he arranged a meeting to discuss the proposal. In December 2002, Du Plessis also applied to Investec for finance for the sale. He told Wilson that ‘Bosal will sign a 10 year triple net lease’, that the lease was being negotiated and that he had acquired vacant possession of the property.

[94] All of these instances are indicative of neither Jack nor Du Plessis being aware of the existence of a lease. It is true that they were aware that Bosal had sent the signed lease to Trident Steel but that the latter had not accepted the offer by signing the lease. The probabilities are heavily stacked in favour of neither knowing of a lease that would bind Greenvest. If they had known, it is inconceivable that they would have gone to the trouble they did in the furtherance of a still-born endeavour. I cannot conceive of the purpose of pursuing negotiations with Bosal if they knew that Bosal had a lease with Trident Steel that bound Greenvest. The alternative is that they deliberately manufactured a false paper trail. That was never put to either of them and is so improbable that it can be discounted entirely.

[95] I turn now to the period from 20 January 2003 to 19 February 2003. On 20 January 2003, Du Plessis and Jack met Bodenstein in Port Elizabeth. The purpose of the meeting and what transpired at it are in dispute. According to both Du Plessis and Jack, the lease proposal was discussed and Bodenstein undertook to revert to them within two days. Thereafter they discussed Bosal’s needs in other areas in which the Du Plessis empire had property. Bodenstein, on the other hand testified that he immediately told Du Plessis and Jack that he had a lease with Trident Steel and was not prepared to agree to terms with Du Plessis that were less favourable.

[96] Immediately after the meeting, however, Jack wrote to Bodenstein. He referred to the meeting and attached a lease agreement which reflected certain changes proposed by Du Plessis and he confirmed that, as discussed, Bodenstein would revert to them on 22 December 2003. Reference was also made to discussions of property in other areas that might have interested Bosal. He confirmed a file note made by his secretary which showed that she telephoned Bosal on 23 January 2003 in an effort to obtain Bodenstein’s response. Jack also telephoned Bosal on a number of occasions for the same purpose but he was always unable to speak to Bodenstein for one reason or another: Jack said in cross-examination that when he telephoned he was told that Bodenstein ‘was overseas, then he was back, then he wouldn’t take calls …’. When he eventually managed to speak to him – by catching him on his private line, as he put it -- Bodenstein told him that he had a lease with Trident Steel. Jack immediately informed Du Plessis of this.

[97] In my view, the probabilities that emerge from the correspondence that I have referred to and the efforts to speak to Bodenstein all favour the version of Du Plessis and Jack that the purpose of the meeting of 20 January 2003 was to negotiate a lease with Bosal and that Bodenstein undertook to revert to them within two days but did not do so. As with the events prior to the meeting and that I have referred to above, it is overwhelmingly probable that neither Du Plessis nor Jack knew of a concluded lease between Bosal and Trident Steel by 20 January 2003 and thereafter, until Bodenstein told Jack that he had such a lease. Bodenstein’s version, that Jack was trying to cover himself by pestering Bodenstein despite knowing all along of the lease strikes me as highly improbable.

[98] I turn now to what Du Plessis did on being told by Jack of Bodenstein’s response to the meeting of 20 January 2003. That occurred on 19 February 2003. He immediately called Martin and asked him whether it was true that Trident Steel and Bosal had entered into a lease in respect of the property. Martin said that this was true. Du Plessis recorded this in a contemporaneous file note and also recorded that he asked Martin ‘why would Mr Bodenstein, MD of Bosal, meet with me on 20/01/2003 at 11a.m. with Warren Jack at Bowmans to discuss possible lease on the same property and promise to report back to me on Wednesday, the 22^nd of the 1^st’? To this, Martin said he did not know.

[99] He then telephoned Vorster and asked if he had a copy of the signed lease. Vorster undertook to contact Martin and ask him to fax a copy to Du Plessis, who received the lease a short while thereafter. His file notes show that he read the lease and tried to track, in relation to the offer to purchase and its acceptance, the signing of the lease by the parties. When he did this exercise, he saw that Bosal had signed the lease after he had given Trident Steel an extension of time for accepting his offer to purchase and that Trident Steel had signed the lease only a week before. He could not understand how Trident Steel could do such a thing having sold the property to him some time before and having agreed to give him vacant occupation.

[100] Du Plessis then arranged a consultation with his attorney, Mathie, who later wrote to Vorster stating inter alia that at the time Du Plessis submitted his offer to purchase, it was made clear to him that no offer would be entertained that was subject to the negotiation of a lease and that no lease existed. His position was repeated in a letter sent by Mathie to Vorster on 9 April 2003. Finally, Mathie wrote to both Vorster and Bosal requesting answers to certain questions about the lease. (This letter to Bosal elicited the first mention of an oral lease having been entered into prior to 1 November 2002.)

[101] Once again, the events that I have outlined above are consistent with Du Plessis not having any knowledge of the lease between Trident Steel and Bosal prior to 19 February 2003. If he had known, it is improbable that he would have reacted in the way in which he did: it is more probable that he would have resigned himself to the fact – as he would have had to – that he had been saddled with a lease that was not of his own making. I conclude that at every stage of the process, from when Du Plessis first became interested in purchasing the property until after he had confirmed the existence of a lease between Trident Steel and Bosal, the conduct of both Du Plessis and Jack is consistent with them not having known of the existence of the lease until 19 February 2003 and that consequently the probabilities favour this version.

[102] It was argued by Mr Eyles that the evidence of Vorster establishes that Du Plessis knew of the lease by 13 December 2002, and hence long before 19 February 2003. It will be recalled that Du Plessis approached Vorster about zero-rating the transaction for VAT purposes. The evidence of Du Plessis was that as Bosal was in occupation, albeit on a temporary basis as far as he was concerned, the sale of the property was a sale of a going concern and thus zero-rated in terms of the Value-Added Tax Act if the parties agreed in writing to this effect. Vorster then made enquiries, was told of an existing lease by Martin and he duly prepared an addendum reflecting an agreement that the transaction be zero-rated. In my view, the evidence of Vorster, when it is viewed within the context of the evidence as a whole, does not establish that Du Plessis knew of the lease between Bosal and Trident Steel. Instead, it is clear that the parties were contemplating different arrangements for Bosal’s occupation of the property. That Du Plessis was contemplating a temporary arrangement is borne out by his conduct after he approached Vorster: that conduct is consistent with him not having knowledge of the lease, as I have concluded above. In my view, therefore, the evidence of Vorster does not disturb the probabilities in favour of the version of Du Plessis and Jack.

[103] Trident Steel’s response to the allegation that its representatives, including Behr and Martin, had represented to Slipknot and subsequently Greenvest that no long term lease existed in respect of the property was a denial. One would certainly have expected Behr to have testified but he did not. The result was that his version of events was not put to Jack, who had testified that he had been told by Behr that no lease was in place. It must, in my view, be accepted that representations were made by Behr that no lease was in existence in respect of the property at times material to this dispute.

[104] I find, therefore, that as a matter of probability: (a) Du Plessis discovered the existence of the lease between Trident Steel and Bosal on 19 February 2003 when he had obtained confirmation from Martin; and (b) prior to that date, neither he nor Jack knew of the lease and Jack had, in fact, been told by Behr that no such lease was in existence and that Trident Steel did not intend to accept the offer to enter into a lease submitted to it by Bosal on 13 November 2002. As a result, the special plea of prescription fails and Greenvest has proved that Behr misrepresented the true state of affairs in relation to the lease between Bosal and Trident Steel.

[105] The misrepresentation made by Behr to Jack and conveyed by Jack to Du Plessis induced Du Plessis to enter into the contract of sale for the property. His evidence was that he determined the price that he was willing to pay based on him acquiring vacant occupation and being able to enter into a triple net lease with Bosal knowing that Bosal would have little option but to accept his terms. He also testified that the lease that he found himself bound to honour was not favourable to him and that it impacted negatively upon the viability of the property as a commercial investment. The misrepresentation as to the existence of a lease was therefore material. It was also fraudulent in the sense that, when it was made, Behr could not have held an honest belief that it was true.⁷

[D] THE ORDER

[106] In the result, I conclude that Greenvest has proved its case and I make the following order:

(a) It is declared that the defendant is liable to the plaintiff for such damages as it may prove in due course.

(b) The defendant is directed to pay the plaintiff’s costs, such costs to include the costs of two counsel.

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C. PLASKET

JUDGE OF THE HIGH COURT

APPEARANCES

For the plaintiff: Mr E.A.S. Ford S.C. and Mr C. Schuring instructed by Netteltons, Grahamstown

For the defendant: Mr A.J. Eyles and Ms C.L. Robertson instructed by Borman and Botha, Grahamstown

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