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Ishmael v Joubert and Another (1651/06) [2008] ZANWHC 15 (17 April 2008)

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CASE NO: 1651/06

IN THE HIGH COURT OF SOUTH AFRICA

(BOPHUTHATSWANA PROVINCIAL DIVISION)



In the matter between:


BOTHA: DAWOOD ISHMAEL APPLICANT


vs


BOTHA: GIDEON DANIEL JOUBERT FIRST RESPONDENT

DITSOBOTLA LOCAL MUNICIPALITY SECOND RESPONDENT


JUDGEMENT


LEEUW J:


Introduction:


[1] This is an application for leave to appeal against the dismissal of the Applicant’s application in which he had sought the following order from this Court:


PART A:


  1. Pending the finalization of the relief set out in Part B of the Notice of Motion the First and Second Respondents be interdicted and restrained from transferring the property:-



PORTION 153, (A PORTION OF PORTION 1) OF THE FARM LICHTENBURG TOWN AND TOWNLANDS 27, REGISTRATION DIVISION I.P., NORTH WEST PROVINCE


IN EXTENT: APPROXIMATELY 25, 2947 HECTARES

to any person other than Marx Eindomme (Proprietary) Limited

-Registration Number: 1964/003842/07


  1. Directing the First Respondent to pay the costs;

  2. Directing the Second Respondent to pay the costs, only in the event of it opposing this application;

  3. Further and/or alternative relief.


PART B:


A declaratory order declaring that:-


  1. The partnership agreement entered into between Dawood Ismail Botha, ID Number 320813 5073 084 and Gideon Daniël Joubert Botha, ID number 440214 5109 082 on 18 February 2006 is a valid and binding partnership agreement for purposes of the provisions of the Broad Based Black Economic Empowerment Act, 53 of 2003 and as was required by Second Respondent as per its Resolution A268 dated 25/10/2005.


  1. Directing the First Respondent to pay the costs thereof.


  1. Directing the Second Respondent to pay the costs, only in the event of it opposing this application.


  1. Further and/or alternative relief.”


Grounds of appeal


[2] The applicant does not appeal against the dismissal of the order sought in PART A of the Notice of Motion. This is evident from one of the grounds appeal which is to the effect that the Court ought to have found “that any contract with Marx Eiendomme could similarly only be fulfilled after the Council of Second Respondent have approved and resolved so. This would have further led to the conclusion that neither Port Wild Property nor Marx Eiendomme accrued any real rights in the property, but a mere spes.” This line of argument is a deviation from the original order sought in the Notice of Motion. The Court was not called upon to decide whether or not Marx Eiendomme had a spes in the property at issue, but rather to order that the property be transferred to Marx Eiendomme as an entity which they (Botha and Dr Botha) “intended using as a funding agent and developer for the project.”

[3] The Applicant further states, in his grounds of appeal, that the Court should have come to the conclusion that “Port Wild was nor (sic) an interested party to the application, in that the Application was for the Second Respondent to consider Marx Eiendomme as a candidate in view of the partnership agreement entered into between Applicant and First Respondent together with the partnership agreement entered into between Port Wild Property and First Respondent.” Again this line of reasoning is a deviation from the original order sought in the main application for the same reasons mentioned in [2] above. I reiterate the fact that a written “Sale of Property Agreement” was entered into between the Second Respondent (represented by Moselane) and Port Wild Props. With regard to the same property at issue.


[4] This contract has not been cancelled. It is now the Applicant’s case that the Municipality ought to have considered Marx Eiendomme as a candidate for the purpose of acquiring the same property. I have alluded to the fact that the Applicant sought an order from Court that the said property be transferred to Marx Eiendomme. Port Wild Props has a direct and substantial interest in the outcome of these proceedings and should have been joined as a necessary party to these proceedings.


Declaratory Order


[5] The application for a declaratory order in PART II of the Notice of Motion was dismissed because:

(a) There is a serious dispute of fact with regard to whether or not Annexure DIB 12 was a partnership agreement for the purposes of the provisions of the Broad Based Black Economic Empowerment Act 53 of 2003 as was required by Second Respondent (the Municipality) per Resolution A268 dated 25/10/2005. The application could therefore not be properly decided on affidavits;


(b) Of failure by the Applicant to join the necessary parties who have an interest in the outcome of these proceedings; and


(c) With regard to the order sought against the Second Respondent, there was a substantive and procedural flaw in obtaining an order challenging the validity of the contract concluded between the Municipality and Port Wild Properties;


[6] Applicant sought an order declaring the agreement entered into (Annexure DIB 12), between him and Mr Botha on the 18th February 2006, as a valid and binding partnership agreement for the purposes of the BBBEEA as required by the Second Respondent’s Resolution A268 dated 25th October 2005. For convenience, I will first deal with the issue of the BBBEEA requirement.


[7] Moshe Moses Moselane (Moselane) extensively explained in his Answering Affidavit in the main application, inter alia; that


(a) The presentation which was put before the tender committee by Ms Rinie Oliver on behalf of Lockeport Projects stated that Mr Botha established a company, Marx Eiendomme, to be able to accommodate and comply with the black economic empowerment requirement;


(b) Mr Botha, in his capacity as Director of Marx Eiendomme, signed the power of attorney in favour of Lockeport Projects (Pty) Ltd to effect the development of a Private Clinic, Old Age Service Centre, business and residential development in Lichtenburg;

(c) Reference was made to the fact that Dr Botha would provide R26 million for funding the project, and that the Department of Health had granted approval to him (Dr Botha) to build a clinic at Lichtenburg; and


(d) that it was never disclosed to the tender committee that Dr Botha was either a partner or a BEE candidate

[8] When the Tender Committee’s report was presented to the Executive Committee of the Municipality Council (EXCO) and subsequently to the Full Council of the Municipality for consideration, the Council adopted the Resolution A268. Council approved the sale of the property to Marx Eiendomme on condition that proof of the BEE partnership be submitted to Council for “cognisance.”


[9] The Council Resolution was communicated to Mr Botha who later presented the written Contract of Sale to Moselane for his signature on behalf of the Municipality. Moselane refused to sign the contract because the BEE requirement was not complied with.


[10] Moselane was later approached by Mr Botha who informed him in writing, that it was no longer possible for him to utilize Marx Eiendomme for the purposes of complying with BEE requirement. The name of Port Wild Props was represented in its stead.


[11] Moselane satisfied himself that Mr Botha complied with the BEE requirement as well as the fact that Mr Botha, to whom the tender was awarded, was indeed a shareholder in the company. Moselane’s intimation as stated above are substantiated by the documents which form part of the Applicant’s Founding Affidavit as well as documents attached to the Municipality’s affidavits.


[12] The Applicant did not reply to Moselane’s Answering Affidavit. He however stated in his Founding Affidavit in the main application “…..that it would appear as though the First Respondent misled Second Respondent in advising Second Respondent that he cannot find a Black Empowerment partner.”


[13] In his written and oral submissions in the main application, as well as in the grounds of appeal, it is argued that the Court ought to have found that due to the fact that Dr Botha’s identity and origin was not in issue as well as the fact that he is known to the Municipality, it was not necessary to stipulate specifically that he was the BEE partner.


[14] This submissions flies in the face of the fact that there was nothing on record to indicate that the Municipality was made aware of the fact that Dr Botha was a BEE partner in view of the uncontradicted facts stated by Moselane in his Answering Affidavit.


[15] Prior to the agreement in Annexure DIB 12, there were clear indications that there was already a dispute between Dr Botha and Mr Botha with regard to the shareholding percentages in Marx Eiendomme, directorship of Mr Botha in this Company as well as the nomination of a BEE partner in order to comply with the Municipality Resolution A268.


[16] It is common cause between Dr Botha and Mr Botha that Marx Eiendomme was to be utilized as a vehicle through which the property would be acquired and that funding would be provided by Dr Botha for the development of the project. Lockeport Properties was contracted for the purpose of developing the property.


[17] Dr Botha in his Founding Affidavit, states that he was advised by Mr Botha that in order to succeed in obtaining the tender, he would need a black economic empowerment partner as required by the Municipality, and further that Mr Botha offered him equal partnership in the development of the project which he duly accepted.


[18] Mr Botha, on the other hand, denies that black empowerment was a requirement at the time when he submitted his tender to the Municipality, but that he was thereafter advised by Lockeport Projects (Pty) Ltd that the Municipality would require a BEE partner in compliance with the BBBEEA, and further that Dr Botha was never considered as a partner.


[19] Annexure DIB 3, which is a “Memorandum of Understanding for the development of a Private Hospital, Business Old Age Service Centre Business and Residential Stands at Bantjies Street/Beyers Naude Intersection”, was signed by Mr Botha (on behalf of Marx Eiendomme) and Dr Botha “as joint Developer and Funding Agent” and Lockeport Projects as Project Manager and Town Planner, on the 19th July 2005.


[20] The power of attorney authorizing Lockeport Projects to be the agent responsible for the development of the project was signed by Mr Botha on the 8th June 2005 on behalf of Marx Eiendomme. This document formed part of the documents submitted at the tender presentation, where it was stated that Marx Eiendomme was established to be able to accommodate black economic empowerment. The Council considered and approved the tender with conditions on the 25th October 2005.


[21] In the Memorandum of Understanding referred to above, it is recorded amongst others, that Marx Eiendomme and Dr D I Botha would provide funding for the project. This was on the 19th July 2005. On this date, Mr Botha was not yet registered as a director of Marx Eiendomme. He was registered as a director on the 24th January 2006.


[22] Annexure DIB 12 was signed on the 18th February 2006. Prior to this date, the following disputes are evident from the correspondence exchanged between the attorneys of Dr Botha and Mr Botha:


(a) After the tender was awarded to Mr Botha on the 25th October 2005, a draft Contract of Sale was prepared for signing by the directors of Marx Eiendomme, with Mr Botha as the director representing Marx Eiendomme. (It should be noted that as at this date 14 December 2005) Mr Botha was not yet as appointed a director with the Registrar of Companies;


  1. Moselane refused to sign the contract because the BEE requirement was not complied with by Mr Botha. As at 13 July 2006 this contract was not signed.


  1. According to Dr Botha, during January/February 2006, Mr Botha unilaterally drafted the “samewerkingsooreenkoms”, which deviated from their original agreement between himself and Mr Botha. This agreement had provided for 51% shareholding and 49% shareholding in Marx Eiendomme in respect of Mr Botha and Dr Botha respectively. It also provided that Dr Botha would be entitled to nominate a person who would fulfil the BEE requirement (“D I Botha is geregtig om enige persoon wat voldoen aan swart bemagtings vereistes, behalwe himself, te nomineer wat die balans van 49% …………aandeel in die maatskappy sal hou…….”) Dr Botha rejected this proposal;


  1. Subsequently, Annexure DIB 12 was signed by both Dr Botha and Mr Botha. This agreement provides for the equal sharing of assets and liabilities, and repayment of advanced monies with interest and the first option to buy the other party’s half in the event of death of the other party; and


  1. In the interim, Dr Botha and Mr Botha could not resolve their dispute with regard to the directorship and the shareholding in Marx Eiendomme as well as the nominated person who would represent Dr Botha and also fulfil the BEE requirement;


[23] After the 18th February 2006, whilst the dispute between them remained unresolved, Mr Botha wrote a letter dated 17 July 2006, informing Mr Botha that he was no longer interested in utilizing Marx Eiendomme as an entity for the purposes of the project, because Dr Botha had repudiated their contract.


[24] It is evident that when the Memorandum of Understanding which was signed by both parties on the 19th July 2005, the issue of the BEE partner was not mentioned. Even on the 18th February 2006, when Annexure DIB 12 was signed, the issue of Dr Botha as a BEE partner did not arise. Mr Botha had caused to be prepared a Contract of Sale of the property to Marx Eiendomme, and submitted same to the Municipality per letter dated 14 December 2005. When Moselane refused to sign the Contract of Sale on 13 July 2006, there were numerous communications between the parties with regard to this issue. These indicated that the dispute with regard to the BEE partnership as well as shareholding in Marx Eiendomme could not be resolved. For the above reasons I concluded that it can be inferred from Annexure DIB 12 that there was an agreement, amongst others to develop the property but that it cannot be held with certainty that in Annexure DIB 12 was entered into in compliance with the BEE requirement as stipulated in the Municipality’s Resolution A268.


[25] The Applicant has failed to prove on a balance of probabilities, that


(a) there was an agreement between himself and Mr Botha with regard to the fact that he was the BEE partner;

(b) that the agreement of the 18th February 2006, (Annexure DIB 12) was a partnership agreement for the purposes of the provisions of the BBBEEA; and that

(c) the Municipality had not complied with the objectives of the BBBEEA in awarding the tender to Mr Botha, which is an administrative act, which would properly be reviewed and set aside in accordance with the procedures laid down in the Promotion of


Administrative Justice Act No 3 of 2000 (PAJA).


[26] I am of the view that no other reasonable Court can come to any other decision.


The application for leave to appeal is dismissed with costs.




_________________________

M M LEEUW

JUDGE OF THE HIGH COURT






APPEARANCES:


Date of hearing : 29 February 2008

Date of judgement : 17 April 2008


Counsel for the Applicant : Adv A J SWART

Counsel for 1ST Respondent : Adv J H F PISTOR with

Adv CJ ZWIEGELAAR

Counsel for the 2nd Respondent : Adv A P ELS


Attorneys for the Applicant : G MAREE Attorneys

Ref: GM/rp/B37

Attorneys for the 1st Respondent : SMIT STANTON INC

Ref: SMIT/BOT25/1/06/nl

Attorneys for the 2nd Respondent : F K NEMANAME C/o PHASHA INC

Ref: Mr K Nema/sk/Civ: Dits: 1547