Counsel for the respondent relied upon three selective passages in the founding affidavit in support of his contention that the substitution
route was contemplated. 1 do not think that those passages really support counsel's argument. Be that as it may, when regard is had
to the whole history leading up to Heyns's letter of 12 July 1993 there is little room for doubt that, on the first appellant's version,
the parties intended that the respondent would with immediate effect become liable, vis-a-vis the first appellant, to pay the ex-employees'
contributions to the scheme. Put differently, that obligation devolved upon the respondent whether or not the ex-employees accepted
the "benefits" under the agreement. It is, indeed, unthinkable that the respondent and the first appellant could have intended
that the former's liability to pay the contributions would, so to speak, be suspended until such time as the ex-employees (on the
respondent's argument all of them) signified their consent to the replacement of their debtor. And that is precisely why the respondent
started paying the contributions before any of the ex-employees had intimated
consent.
In the light of what has been said above the argument concerning non-joinder has no real
19
merit. We are concerned with the obligations of the respondent as against the first appellant and
not with a substituted obligation the former may or could have incurred in respect of some or all of the ex-employees. At all events
the only one of those employees who may have accepted the benefit - the second appellant - was a party to the application. Was consensus reached?
It will be recalled that according to the findings of the court a quo (see (a) above) five of the respondent's directors agreed on
11 February and again on 18 March 1993 that the respondent would assume liability in respect of the contributions of 50% of the central
ex-employees. Du Plessis J also found that those employees were identified in Heyns's list who intended to contract on behalf of
the respondent.
These findings were assailed on appeal by the respondent. Firstly, it was submitted that it is not apparent that the first appellant
was represented at the two meetings. The point is without any real substance. Present was inter alia Cook, the chief executive officer of Randcoal, which held the entire issued share capital of the first appellant and clearly represented
both companies. Second, it was argued that the agreement "that Randcoal would pick up 50% of .... [the first
20
appellant's]... liability" said nothing of the remaining 50%, and in particular of a taking over of
the remainder by the respondent. However, if regard is had to what had gone before, and
especially to Stevens's letter of 26 October 1992, there can be no doubt that it was agreed that the
respondent would assume liability for 50% of the contributions and not for 75% thereof as
suggested by Stevens and which Turner did not accept.
It may be that a Anal agreement was reached at the two Exco meetings. In favour of the
respondent I shall assume, however, that it was contemplated that consensus still had to be
reached as to the practical implementation of what was agreed in principle. I therefore turn to
Heyns's letter of 12 July 1993. Counsel for the respondent contended that this letter was not
written animo contrahendi. I disagree. The letter clearly contained an offer by the respondent to
pay the contributions (some R50 000 per month) of the ex-employees whose names appeared on
the attached lists. It is true that the letter was written to the Scheme and not to the first appellant,
but it was copied to Stevens who was a member of the Exco. There can thus be little doubt that
Heyns intended the letter to be brought to the attention of the first appellant, as it certainly was.
There is as little doubt that the offer contained in the letter was accepted by the first appellant;
21 if not expressly then tacitly, to the knowledge of the respondent, by making no further payments
of contributions as from July 1993.
Another point made by counsel for the respondent was that Heyns's lists do not in all respects correspond with the lists of ex-employees
to which the main relief sought by the first appellant was directed. However, this point and a further one relating to the extent
of the contributions fell away when counsel consented to an amendment of the first appellant's prayers proposed by its counsel.
Then it was submitted that Heyns made the allocation in the mistaken belief that a substitution agreement had been incorporated in
the unbundling agreement. In this regard reliance was placed upon the letter written on 15 June 1993 by Abbott, the respondent's
financial controller, to Macleod of Randcoal and Abbot's evidence thereanent. In the letter it was said that the respondent would
accept the charge for the balance of the central ex-employees with three exceptions. Abbot averred that he wrote the letter on the
instructions of Heyns and that he understood from Heyns that an obligation had been undertaken by the respondent in terms of the
restructuring agreement and that he was required to attend to the finalization of the detailed
22
allocation. Heyns's answer in the motion proceedings was that he did not recall the use of the
words "unbundling agreement" but that if he used them he was not referring only to the written restructuring agreement but
also to the negotiations preceding them. Since Heyns was aware of the Exco resolutions adopted on 11 February and 18 March 1993 there
is no room for concluding that when writing his letter of 12 July 1993 Heyns was labouring under any misapprehension. The inference
of a mistake on Heyns's part - and it was no more than a mere inference - which the respondent sought to draw is therefore clearly
untenable.
I accordingly agree with the findings of the court a quo (see (a) above) that consensus on the question of substitution was in fact reached. Was the substitution agreement authorized?
It must be accepted that the conclusion of the agreement was not authorized under the
specific provisions of the respondent's articles of association. Paragraphs 107 and 109, in so far
as material, read:
"107 Resolutions shall be determined by a majority of votes of the directors present at a meeting of directors and in the event
of an equality of votes the chairman shall only have a second or casting vote if more than 3 (three) directors are present at
23
the meeting. 109 A resolution in writing signed by a quorum of directors who may at the time be present in the town where the office
of the Company is situate shall be as valid as if it had been passed at a meeting of the directors duly held and constituted."
Ashworth says, either explicitly or by implication, that the only relevant resolution adopted by the respondent's directors was that
of 16 November 1992 which authorized him and Stevens, or in the absence of either or both of them, any one or two directors to sign
the restructuring agreement and any amending agreements of a minor nature; that no amending agreement was signed and that no resolution
in writing was signed in terms of clause 109 of the articles of association.
Counsel for the appellants contended that the word "sign" in the above resolution should not be literally interpreted and
that both Ashworth and Stevens were parties to the substitution agreement but, as will appear, I am of the view that the substitution
agreement did not constitute an amendment of or addition to the restructuring agreement.
In the founding affidavit it was alleged that five of the respondent's directors including Ashworth, were aware of the obligations
which had been undertaken by the respondent. This, it
24
was said, appeared from the letters and minutes referred to above. In the answering affidavit
Ashworth's only material response was a denial that he had agreed to a substitution agreement in his capacity as a director of the
respondent. It is certainly not easy to grasp the import of this denial since there is no doubt that Ashworth was a party to the
decisions reached at the above two Exco meetings.
In the replying affidavit Heyns alleged that all the respondent's directors had knowledge of the conclusion of the substitution agreement.
This was not denied by Ashworth in a supplementary answering affidavit filed by the respondent.
Ashworth furthermore did not aver that he, or any other director of the respondent, was aware of the contents of Heyns's letter of
12 July 1993. His only response was that Heyns "clearly was mistaken in believing that an agreement had been reached".
(My emphasis.) This inference was denied by Heyns and rightly so. I may add that it is more than passing strange that the mistaken
impression only dawned on Ashworth in 1995.
In a nutshell the position is then this. Six of the respondent's directors attended the first or second Exco meetings. The absentees
were Heyns, who clearly was aware of what had been
25
decided, and Waterson. The latter was the chairman of the respondent's audit committee and it
is highly unlikely that he would have been kept in the dark in regard to the agreements reached at the Exco meetings and Heyns's letter.
There are other pointers to knowledge and consent on the part of all the directors. They must have known that as from July 1993 the
respondent was making monthly payments in respect of contributions of central ex-employees and did not demur until after the hostile
take-over. The reason why the new board of directors decided in April 1995 to stop paying contributions, says Ashworth, was because
it was then discovered that no binding substitution agreement had been concluded. On a fair reading of his affidavit this was not
based on an absence of knowledge and consent on the part of the directors who served as such until the take-over but on a conception
that, notwithstanding such consent, no binding substitution agreement had come into being.
I am therefore of the view that all the respondent's directors had at least impliedly resolved
to authorize the conclusion of the substitution agreement as amplified by Heyns's letter. I am not
unmindful of the fact that this resolution was not adopted at a properly convened board meeting.
But the doctrine of unanimous assent does not require that all the directors should meet together.
26
See Alpha Bank Bpk v Registrateur van Banke 1996 (1) SA 330 (A) 348 G-I; Levitan NO v Petrol
Conservation (Pty)Ltd 1962 (3) SA 233 (W) 235 C-D, and cf Gohlke and Schneider v Westies Minerals (Edms) Bpk 1970(2) SA 685 (A) 693-4. Counsel for the respondent countered by submitting that Alpha Bank, and, by implication also Levitan, which deal with the doctrine in relation to directors, were wrongly decided. That doctrine, so it was argued, applies only to meetings
of shareholders.
It may be that some provisions in the articles of association of a company relating to directors may not be altered by their unanimous
assent. The test, I would suggest, is whether a particular provision is capable of waiver, and that is the case if the provision
enures for the benefit of the directors as opposed to the company. In my view the above quoted clause 107 clearly is such a provision.
Its purpose is to give all the directors an opportunity to partake in a decision of the board. Hence there is no reason why the doctrine
of unanimous assent could not have governed the conclusion of the substitution agreements). (As to the corresponding position in
English law see TCB Ltd v Gray [1986] Ch 621, 636-7, and Re Bonellis Telegraph Co Collies Claim (1871)LR 12 Eq 246,258-60.)
27 The above conclusion can also be reached along a different route. Heyns was an executive
director of the respondent, i.e. the financial director. As such he had prima facie authority to bind
the respondent in regard to financial matters, which the conclusion of the substitution agreement
clearly was. See Gower, Principles of Modem Company Law 5th ed. pp 188-9, and Pennington,
Company Law , 7th ed, p 156. And that prima facie authority has not been refuted by the
respondent .
In the light of what has been said above, I find it unnecessary to deal with the appellants' alternative submission that the respondent
in any event ratified the substitution agreement, particularly because of its directors' acknowledgment of the respondent's liability
in the 1993 and 1994 financial statements signed by them. The effect of clause 16(4) of the restructuring agreement
The sub-clause has been quoted above. In so far as material, it provides that no agreement to vary, add to or cancel the restructuring
agreement shall be valid unless it is in writing "and
signed by
the parties to this agreement". The court a quo found (see (d) above) that the
substitution agreement fell foul of clause 16(4). If it did, it would no doubt have been of no force
28
and effect: SA Sentrale Ko-op Graanmaatskappy v Shifren 1964(4) SA 760 (A) 766 H-767 B.
However, in my view a non-variation clause curtails common law freedom to contract and must hence be restrictively interpreted.
The parties to the restructuring agreement were the first appellant, the respondent, Rand Mines and Virginia-Merriespruit Investments
Limited ("Virginia"). Its main objects were:
(i) a disposal by Rand Mines of its property rights (in the main gold rights) to the
respondent.
(ii) a disposal by the first appellant of its non-coal property rights to the respondent;
(iii) a disposal by Virginia of its Harmony shares to the respondent;
(iv) a disposal by Rand Mines of 200 000 ERPM preference shares to the respondent.
Various other assets were also sold to the respondent. The agreement, with annexures, comprised some 100 pages, and made provision
for numerous warranties, but did not deal at all with liability for the payment of ex-employees' contributions. That, of course,
was an aspect which did not directly concern either Rand Mines or Virginia. The substitution agreement consequently did not amend the restructuring agreement. But did it constitute an addition thereto
29
as contemplated by clause 16(4)?
I am of the opinion that the answer must be in the negative. Clause 16.1 provides that "this document and the Schedules thereto"
contain the entire agreement between the parties in regard to the subject-matter contained in this document. Moreover, in clauses 1.8,1.22 and 1.23 there are references to a coal restructuring agreement to be concluded between Rand Mines
and Rand Coal: a platinum restructuring agreement entered into between Rand Mines, the first appellant and another company, and a
property restructuring agreement to be entered into between Rand Mines, Barlow General Investments Ltd and Randgold.
It is therefore apparent that the unbundling of the Barlow Rand group of companies involved far more than the topics dealt with in
the restructuring agreement under consideration. Hence it cannot be said that the substitution agreement was an addition to the subject
matter contained in the restructuring agreement. For, at the risk of repetition, it must again be emphasized that the question of
liability for contributions was not at all dealt with in the restructuring agreement in question.
It is in any event questionable whether the substitution agreement, concluded by two of
30
the parties to that agreement, could be said to be an addition required to be signed "by the parties
to this agreement", i.e. all four parties.
It follows that in my view the substitution agreement was not hit by clause 16(4). The supplementary pensions
I need say little more than that 1 agree with the court a quo (see (e) above) that no case was made out for fixing the respondent
with liability to pay those pensions. There is nothing in writing relating to the pensions; there is no resolution of the respondents'
board of directors authorizing payment thereof, and it is not possible to infer that all the respondents' directors knew of some
or other undertaking by somebody on behalf of the respondent to take over the first appellant's liability to the pensioners concerned.
In the result counsel for appellant was virtually driven to concede that the claim in question must fail.
This means that the appeal of the third appellant cannot succeed. His joinder in the court a quo and lack of success in the appeal have, however, had such an insignificant impact on the costs incurred in both courts that no special
costs order is called for. The same holds good for the very minor lack of success of the first appellant.
31 The counter-application
It is hardly necessary to say that in the light of my above findings the counter-application, in so far as it sought payment from
the first appellant of the contributions paid by the respondent, should have been dismissed by the court a quo. What remains to be considered is whether the respondent was entitled to claim from the first appellant the supplementary pensions
paid by it to the seven pensioners concerned.
The onus of establishing the counter-claim under consideration rested, of course, on the respondent. If the application contains little
detail concerning the pensions and the cause of the respondent's payment thereof the answering affidavit and counter-application
are virtually silent on it. It can be inferred from the third appellant's affidavit that he thought that a delegation had been effected,
and it may well be that the other six pensioners entertained the same belief. For all that we know, the respondent may also have
believed that it had become the pensioners' debtor. The claim in question must therefore be decided upon this assumption.
Counsel for the respondent nevertheless relied upon cases such as Licenses and General Insurance Co v Ismay 1951(2) SA 456 (E), in support of the proposition that a payment
32
in error may be recovered with the condictio indebiti from what may be called the legal recipient
of the money even if another was the factual receiver thereof. In that case an insured had incurred
I
a liability to X. Under the mistaken impression that it was obliged to compensate the insured in
respect of that liability, the insurer paid X. It then discovered that the policy was void and sought
to claim the amount in question from the insured. Sampson J rejected a proposition that the
amount had to be claimed from X; held that the condictio indebiti lies against "the person who
is in law considered to have received the money", and dismissed an exception against the insurer's
claim. But, and this is important, the decision proceeded from the premise that the insurer had
no right to claim the money from X since the payment had been made "on behalf of the insured"
(at p 461 G-H).
In support of his approach Sampson J referred to the following example of Paulus, D 12.4.9.1, cited with apparent approval by Voet 12.6.11: One who believes himself to be the debtor of an affianced woman on her instructions pays the debt as dowry to her fiance . After the marriage he discovers his mistake. He may now prefer the condictio indebiti against the wife as if what had been paid on her instruction had in law been paid to her.
33
It is hardly necessary to say that the judgment of Sampson J and the authority of Voet do
not support the submission now under consideration. They are, indeed, destructive of it. On the above assumption the respondent did
not make the payments to the pensioners on the instruction of the first appellant. Nor did the respondent labour under the mistaken
impression that it was discharging the first appellant's liability. On the contrary, the pensioners were paid because the respondent
thought that it had become the pensioners' debtor. Hence the first appellant was neither in fact nor in law the recipiens. In the result the counter-application must fail in all respects. This court's order
The appeal of the first and second appellants is allowed with costs, including the costs of two counsel, and the following is substituted
for the order of the court a quo:
"(1) The applications of the first and second applicants are allowed with costs, including the costs of two counsel, and the
counter-application is dismissed, also with such costs.
(2) The appeal of the third appellant is dismissed.
34
(3)
The respondent is directed to pay, and continue to pay, to the Barlow Rand
Medical Aid Scheme the monthly medical aid contributions of all those persons whose names are set out in annexure "C" to
the founding affidavit on the same basis as it did prior to its repudiation of April 1995, subject to the provisions of that Scheme,
as from the date(s) that the respondent stopped making such payments.
(4)
It is declared that the respondent is obliged to continue to pay to the Barlow Rand
Medical Scheme the monthly medical aid contributions of the second applicant".
HJO VAN HEERDEN DEPUTY CHIEF JUSTICE
Concur:
Smalberger JA Howie JA Schutz JA PlewmanJA
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