Hayes v Rheeder and Others (CA&R EL 886/08, ECD 2186/08) [2009] ZAECGHC 84 (26 November 2009)

FORM A

FILING SHEET FOR SOUTH EASTERN

CAPE LOCAL DIVISION JUDGMENT

PARTIES: BRYAN HAYNES V KIM RHEEDER & 12 OTHERS

Case Number: CA&R EL 886/08 ECD 2186/08

High Court: Eastern Cape – East London

Date Heard: 24 November 2009

Date Delivered: 26 November 2009 (order delivered)

02 December 2009 (reasons available)

JUDGE(S): Revelas J

LEGAL REPRESENTATIVES –

Appearances:

for the Applicant(s): Adv Rowan

for the Respondent(s): Adv Cole

Instructing attorneys:

Applicant(s): Cox Yeats Attorneys c/o

Drake Flemmer & Orsmond

Respondent(s): Gravett,Schoeman,Van Rensburg,

& Moodley Inc

CASE INFORMATION –

Nature of proceedings:

Key Words:

Not Reportable

IN THE HIGH COURT OF SOUTH AFRICA

(EAST LONDON CIRCUIT LOCAL DIVISION)

Case No: EL 886/08

ECD 2186/08

Date Heard: 24/11/09

Order Delivered: 26/11/09

Reasons Available: 2/12/09

IN THE MATTER BETWEEN:

BRYAN HAYNES Applicant

and

KIM RHEEDER First Respondent

THE REGISTRAR OF DEEDS

EASTERN CAPE Second Respondent

GRAVETT, SCHOEMAN,

VAN RENSBURG & MOODLEY INC. Third Respondent

COASTAL HUBBS CC Fourth Respondent

EAST COAST RETAILERS CC Fifth Respondent

ALLJAZZ LIQUORS CC Sixth Respondent

UMGAZANA TRADING CC Seventh Respondent

COASTAL DIY CC Eight Respondent

THE REGISTRAR OF CLOSE

CORPORATIONS Ninth Respondent

HOMENET REAL ESTATE Tenth Respondent

MARK WILLIAMS Eleventh Respondent

CRAIG LINDHORST Twelfth Respondent

PLATINUM MILE INVESTMENTS

207(PTY) LTD trading as

CROSSWAYS KWIKSPAR Thirteenth Respondent

REASONS FOR JUDGMENT OF 26 NOVEMBER 2009

[1] On 7 November 2008, Pillay J issued a rule nisi, returnable on 25 November 2008, in terms whereof the first respondent was interdicted from transferring two properties situated at Coastal Hubbs and Sunrise-On-Sea, both in East London, pending the finalization of an action to be instituted for the dissolution of the alleged partnership between the first respondent and the applicant, and from paying out any of the monies they held in trust belonging to the alleged disputed partnership between the first respondent and the applicant which is referred to herein below. The first respondent was also interdicted from selling or disposing or in any way dealing with certain assets of the close corporations referred to in the above heading as the respondents. At the time, the granting of this interim relief was granted unopposed.

[2] The purpose of the relief sought and obtained was because of the applicant’s contention that he and the first respondent, his former lover, had formed a business partnership, and ever since they terminated their private and partnership relationship, the first respondent believed and behaved as if she had sole control and dominium over certain immovable property, which the applicant maintains, belongs to the partnership. The first respondent indeed holds the aforesaid belief, and has boldly stated as much in her answering affidavit in which she vehemently disputes that any partnership, other than a romantic one, ever existed between them.

[3] The first respondent worked as the applicant’s secretary during the 1990’s. According to the applicant, due to her administrative skills and competence in sorting out the numerous complexities in his various business affairs, the first respondent became involved in his business activities and a partnership was formed between them in November 2001. The first property bought by them as a partnership, was an immovable property in Mthatha in the name of Umgazana Trading CC. They each shared a 50% membership interest in it. This is the seventh respondent. Thereafter they bought properties and business in the proximity of East London in the names of other close corporations which include the fourth, fifth, sixth and eight respondents.

[4] The tenth respondent is the estate agency employed by the first respondent to sell the very valuable property owned by the fourth respondent. The fourth respondent is a close corporation, of which the first respondent claims, she is the sole member, the first respondent having resigned as a member on 3 November 2003.

[5] The applicant has indeed instituted the action mentioned above in paragraph [1], against the first respondent for the dissolution of the alleged partnership. It is not certain how far that litigation has progressed, but in anticipation of an outcome in that matter, the rule issued more than a year ago, has been extended on eight previous occasions. In the cause of pursuing his claim, the plaintiff came upon information which led him to believe that Ixolo Trading 20 CC (“Ixolo”) was a tenant of the fourth respondent (or “Coastal Hubbs”), and he brought an application to join Ixolo as the twelfth respondent. Upon learning that Ixolo was no longer a tenant, the applicant withdrew the application and brought an application to join Craig Lindhorst and Kwikspar (later discovered to be Platinum Mile Investments 207 (Pty) Ltd, trading as Crossways Kwikspar), as the twelfth and thirteenth respondents respectively.

[6] Apart from the application for joinder the applicant also seeks an order that the first respondent be held in contempt of Court, because she, in breach of the terms of the rule nisi, concluded a new lease agreement with Ixolo and the last two respondents to be joined, in respect of the property at Coastal Hubbs.

[7] The applicant also seeks further supplementary relief to the effect that the first respondent pays the income received from the lease, (rental and “additional amounts”) into the trust account kept by the third respondent, and be interdicted from drawing any funds against mortgage bonds over the immovable property at Coastal Hubbs and Erf 111 Sunrise-on-Sea. In terms of the rule nisi, Pillay J, interdicted the first respondent from “in any way” dealing with the aforesaid property.

[8] When the second application for joinder and further relief was argued before me, counsel for the applicant, Mr Rowan, proposed that I grant the draft order which he handed up before commencing with his argument. It reads as follows:

1. That the Rule Nisi granted on 7 November 2008, in terms of which the following interdicts as reflected in paragraphs 1.1, 1.2 and 1.3, be extended to 23 February 2010.

Respondents are interdicted and restrained from passing transfer of the following properties:

the immovable property situate at Coastal Hubbs, East London described as “Remainder of Portion 2 of Farm 742, Division of East London, the Province of the Eastern Cape” and held under deed of transfer T121/2004;

Erf 111 Sunrise-on-Sea, East London and held under deed of transfer T513/2008;

pending the finalisation of an action to be instituted for the dissolution the partnership between the Applicant and the First Respondent.

1.2 That the First Respondent be interdicted and restrained from selling or disposing of or dealing in any way with the following assets;

All assets held by Coastal Hubbs CC, East Coast Retailers CC, Alljazz Liquors CC, Umgazana Trading CC and Coastal Diy CC including a Kia light delivery motor vehicle, computer and office furniture previously used in the business trading as Crossways Kwikspar and a Toyota Forklift;

The member’s interest of Coastal Hubbs CC, East Coast Retailers CC, Alljazz Liquors CC, Coastal Diy CC and Umgazana Trading CC;

pending the finalisation of an action to be instituted for the dissolution of the partnership between the Applicant and the First Respondent.

That the Third Respondent be interdicted and restrained from making any payments to anyone whatsoever from the monies held in trust, arising out of the sale of the business owned by Coastal Hubbs CC and Alljazz Liquors CC and the property owned by Umgazana Trading CC, save for those payments agreed upon in writing by the Applicant, pending the finalisation of an action to be instituted for the dissolution of the partnership between the Applicant and the First Respondent.

2. That the Twelfth and Thirteenth Respondents be joined as Respondents in the main application hereunder.

3. That a further Order is made in terms of which the following Orders be added to the existing Rule Nisi referred to in paragraph 1, as sub paragraph 1.4, 1.5 and 1.6 hereof, reading as follows:

“1.4 That the Thirteenth Respondent, through and under the control of the Twelfth Respondent, be and is hereby ordered to effect payment of the monthly rental and additional amounts payable in terms the agreement of lease entered into between himself/itself and the Fourth Respondent,

COASTAL HUBBS CC, directly into the trust account of the Third Respondent, pending the finalisation of the action already instituted for the dissolution of the partnership between the Applicant and the First Respondent.

That the Third Respondent be directed to retain the nett proceeds of the said monies after payment of the bond, rates and taxes and any other necessary expenses in respect of the leased premises, pending the finalisation of the action already instituted for the dissolution of the partnership between the Applicant and the First Respondent.

That the First Respondent be and is hereby interdicted and restrained from drawing any funds against the Mortgage Bonds over the properties mentioned in paragraphs 1.1.1 and 1.1.2 above or from extending any existing bonds or taking any further bonds over the said properties for any purpose whatsoever, unless agreed to by the Applicant and the First Respondent in writing.”

4. That the Contempt of Court Application institutes under the Further Interlocutory Application be postponed to 23 February 2010.

5. That the First Respondent and any other Respondent wishing to file an Answering Affidavit in the Contempt of Court application, do so on or before 20 January 2010.

6. That the Applicant file his Replying Affidavit, if any, by no later than 4 February 2010.

7. That leave be granted to the Applicant to withdraw the First Interlocutory Application and the issue of the costs thereof be postponed to 23 February 2010 for decision by the Court hearing the opposed application on aforementioned issues.

8. That the costs of:

8.1 the Main Application hereunder;

8.2 the Further Interlocutory Application for Joinder and further relief and Contempt of Court;

stand over for decision by the Court hearing the opposed application.

[9] The first part of the order (paragraph 1) the rule nisi, issued by Pillay J which had become necessary because of the attitude in of the first respondent as expressed in her answering affidavit, that she will deal with the properties in question as she deems fit, since she is the owner thereof and has never formed a partnership with any person. This response of the first response in effect presents a challenge to the express terms of paragraph 1 of the rule nisi, which precisely prevents her from dealing with those properties as she deems fit.

[10] It is simply not open to the first respondent to challenge the rule nisi in this manner. Firstly, she did not oppose the application in terms of which the interim relief interdicting her, was sought. Secondly, there has been a challenge to her assertion of sole ownership of the properties in question, in that the applicant contends that they (he and the first respondent) did business in partnership and in that capacity, inter alia, owned the property.

[11] There may very well be a possibility that in the pending action for the dissolution of the alleged partnership, the applicant might not be able to prove the existence of such a partnership. That possibility however, which on the papers before me, appears to be somewhat remote, does not entitle the first respondent to take up the stance adopted by her. The aforesaid observation is made in the light of the 50% membership held by the applicant and first respondent holds (or was held by them in the case of the fourth respondent) in the different fifth to ninth respondents. The affidavit filed by Margaret Keil, chartered accountant of the firm Crest Accountants, casts some doubt on the first respondent’s averment that the applicant willingly resigned as a member from the fourth respondent, signing the relevant CK 2 form in July or August 2003, in her presence, and that she explained the consequences to him. It is rather peculiar that the applicant should have chosen to give up his entitlement to the most valuable

asset held by one of the various close corporations of which he was a 50% member.

[12] Another factor which deserves mention in this context, is the fact that on the papers before me, the first respondent has not demonstrated that she bought the properties with her own, independently earned finances. The financial link between the first property bought (Umgazana Trading), and the property at Coastal Hubbs seems obvious.

[13] All the aforesaid considerations resulted in my granting the order in paragraph 3 of the order granted on 26 November 2009, interdicting the first respondent from drawing funds against and extending the existing bonds over the properties mentioned or taking out further bonds over them.

[14] Mr Rowan was unable to persuade me to grant prayers 1.5 and 1.6 of his proposed draft order. These paragraphs, if incorporated in my order would have compelled the first respondent to pay all rental and other proceeds from the property in question into the trust account of the third respondent. In my view, there is a limit to the extent to which the applicant may be permitted to curtail the business activities of the first respondent with further interdicts. At the moment the first respondent is responsible for the property in the commercial sense, even though the question of her sole ownership thereof has been temporarily placed on hold by the interdict. She, or the fourth respondent, would probably need some of the proceeds derived from the property, to maintain it and pay the rates and taxes thereon. The applicant is not burdened with those responsibilities.

[15] The first respondent has already been interdicted from dealing with the property “in any way”. By entering into any lease, or causing the fourth respondent to enter into any lease of the Coastal Hubbs property, may constitute a contravention of the interim interdict. That question to be finally decided by the judge who will be tasked with the determination of the main application.

[16] In my view, the interim interdict should not be construed to curtail the commercial activities of the fourth respondent to the extent that it is unable, as lessor, to meet its lawful obligations and to properly maintain the premises. An order controlling and preserving every rand made from the property, which is what the applicant has set out to achieve, is not practicable and may have highly prejudicial consequences in a commercial sense, to all parties concerned. For these considerations I declined to grant prayers 1.4 and 1.5 of the proposed draft order. This does not mean that the first respondent is now at large to flout the interim order of Pillay J.

[17] In terms of the proposed draft order, leave was also sought to withdraw the application for joinder of Ixolo, as the twelfth respondent. Since the lease agreement between Ixolo and the fourth respondent had been terminated some time ago, it is imperative that such leave be granted to the applicant. The first respondent argued that the applicant should pay the costs of that application for joinder. In the normal course, if a party brings an unnecessary application which it subsequently withdraws, it stands to reason that such a applicant party is liable for the costs of the withdrawn application. In the matter at hand, it has not been

sufficiently demonstrated that the applicant simply did not do his homework, as submitted by the first respondent. The applicant acted on information given to him in the course of his investigations into the business activities of the fourth respondent. The first respondent, who controls those business activities, has been less than co-operative in providing details of such matters, being motivated by her assertion that there was no partnership. In the final determination of the matter, the question of the costs of the first joinder application might not prove to be a simple matter of the applicant being liable for those costs, purely because he withdrew the application. There are indications of certain factors which could result in a different costs order. It would make more sense to let the question of those costs stand over for later determination, when all the affidavits have been filed.

[18] In the result I made the following order:

1.1 That the Rule Nisi granted on 7 November 2008, in terms of which, the following interdicts as reflected and restated below in paragraphs 1.1, 1.2 and 1.3, be extended to 23 February 2010.

That the Respondents are interdicted and restrained from passing transfer of the following properties:

The immovable property situate at Coastal Hubbs, East London described as “Remainder of Portion 2 of Farm 742, Division of East London, the Province of the Eastern Cape” and held under deed of transfer T121/2004;

erf 111 Sunrise-on-Sea, East London and held under deed of transfer T513/2008;

pending the finalisation of the action which has been instituted for the dissolution of the alleged partnership between the Applicant and the First Respondent.

That the First Respondent be interdicted and restrained from selling or disposing of or dealing in any way with the following

assets:

All assets held by Coastal Hubbs CC, East Coast Retailers CC, Alljazz Liquors CC, Umgazana Trading CC and Coastal Diy CC including a Kia light delivery motor vehicle, computer and office furniture previously used in the business trading as Crossways Kwikspar and a Toyota Forklift;

The member’s interest of Coastal Hubbs CC, East Coast Retailers CC, Alljazz Liquors CC, Coastal Diy CC and Umgazana Trading CC;

pending the finalisation of the action which has been instituted for the dissolution of the partnership between the Applicant and the First Respondent.

1.3 That the Third Respondent be interdicted and restrained from making any payments to anyone whatsoever from the monies held in trust, arising out of the sale of the business owned by Coastal Hubbs CC and Alljazz Liquors CC and the property owned by Umgazana Trading CC, save for those payments agreed upon in writing by the Applicant, pending the finalisation of the action which has been instituted for the dissolution of the alleged partnership between the Applicant and the First Respondent.

2. That the Twelfth and Thirteenth Respondents be joined as Respondents in the main application hereunder.

3. That a further Order is made in terms of which the following Order is added to the existing Rule Nisi referred to in paragraph 1, as sub paragraph 1.4 thereof, reading as follows:

“1.4 That the First Respondent be and is hereby interdicted and restrained from drawing any funds against the Mortgage Bond over the properties mentioned in paragraphs 1.1.1 and 1.1.2 above or from extending any existing bonds or taking any further bonds over the said properties for any purpose whatsoever, unless agreed to by the Applicant and the First Respondent in writing.”

4. That the Contempt of Court Application instituted under the Further Interlocutory Application be postponed to 23 February 2010.

5. That the First Respondent and any other Respondent wishing to file an Answering Affidavit in the Contempt of Court application, do so on or before 20 January 2010.

6. That the Applicant file his Replying Affidavit, if any, by no later than 4 February 2010.

7. That leave be granted to the Applicant to withdraw the First Interlocutory Application and the issue of the costs thereof be postponed to 23 February 2010 for decision by the Court hearing the opposed application on aforementioned issues.

8.1 the Main Application hereunder;

8.2 the Further Interlocutory Application for Joinder and further relief and Contempt of Court;

stand over for decision by the Court hearing the opposed application.

______

E REVELAS

Judge of the High Court