II Incentives Ltd v Sergovia Properties (Pty) Ltd and Others (5522/2012) [2017] ZAGPPHC 1141 (24 August 2017)

IN THE HIGH COURT OF SOUTH AFRICA

(GAUTENG DIVISION, PRETORIA DIVISION)

(1) NOT REPORTABLE

(2) NOT OF INTEREST TO OTHER JUDGES.

(3) REVISED

Case No. 5522/2012

25/8/2017

In the matter between:

II INCENTIVES LTD

APPLICANT

and

SERGOVIA PROPERTIES (PTY) LTD

FIRST RESPONDENT

HAEMATITE PROPERTIES (PTY) LTD

SECOND RESPONDENT

CARL ALBERT WILHELM FOOT

THIRD RESPONDENT

JUDGMENT

MILLAR, AJ

1. This is an application by the applicant to have the first and second respondents ("the respondents") held in contempt of an order of this court granted by agreement on 11 May 2015[1] and for ancillary relief.

2. The applicant is the plaintiff in an action brought against the respondents[2] as defendants for payment of what is alleged to be due in terms of certain agreements. The applicant did not set out the background to the matter in any detail contending that it was not relevant for purposes of the present application. The respondent was of a different view and set out the background in some detail in its answering affidavit.[3]

3. The background to this matter provides a context to what subsequently transpired and may be summarized briefly as follows:

3.1 The owner of certain property[4] in Rustenburg entered into various agreements with the applicant during 2009. These agreements were loans of substantial sums of

money. Security was given for the repayment of the loans which included cessions of the property owner's rights to the applicant.

3.2 The property owner subsequently sold certain property to the first respondent who with the second respondent proceeded to develop a sectional title scheme upon it. It had been agreed between the property owner and the first respondent that part of the purchase price of the property it had purchased would be paid through a "profit share" scheme in terms of which a percentage of the profits generated by the development of the scheme by the respondents would be paid to the property owner. The applicant subsequently took cession of the rights of the property owner

3.3 The development was to be conducted in 6 different phases with the total number of units developed consisting of 152 residential units and 120 garage units - a total of 272 units in total.

3.4 The development was, by all accounts, a substantial one.

4. It is the applicants claim to what it asserts is its share of the profit that has led to the present litigation between the parties and led ultimately to the granting by agreement of the order of this court on 11 May 2015.[5]

5. The applicant is of the view that the respondents have not complied with the order in that they have failed to "render a Statement of Account" as provided for in the order.[6]

6. The respondents assert on the other hand that they have in fact compiled with the order. The respondents rely on various documents furnished to the applicant during the trial preparation process and in particular to documents styled "Profit Share"[7], "Nett Sales Analysis”[8], "Interest Analysis"[9] and "Payments II lncentives"[10]. The respondents also rely on a bundle of documents that they prepared for the trial in the matter- "Plaintiffs & Defendants Discovery Documents"[11]. This is a 32 page list of documents which number 1087pages. These 1087 pages are what the respondent contends are the "relevant

vouchers and documents" they were required to furnish to the applicant in "support" of the statement of account.

7. It is common cause that all of these documents were furnished to the applicant prior to the granting of the order.

8. After the granting of the order, and on the same day, the respondent's attorney wrote to the applicant's attorney[12]. In the letter, the obligation to deliver a statement of account was acknowledged. For the first time, it was stated that "To a very large extent our client has already provided the Plaintiff with a statement of account and all the underlying source documents related to this statement of account."[13]

9. On 26 May 2015 the response by the applicant was that the documents furnished prior to the granting of the order did not constitute

compliance with the order.[14]

10. The proverbial line in the sand had now been drawn. The parties exchanged correspondence with each other over the next 14 months with neither moving from the position they had taken in May 2015. The present application was brought on 25 August 2016.

11. In considering an application, such as the present one, the Supreme Court of Appeal has held in the case of FAKIE NO v CCII SYSTEMS (PTY) LTD,[15] as follows:

"[42] To sum up:

(a) The civil contempt procedure is a valuable and important mechanism for securing compliance with court orders, and survives constitutional scrutiny in the form of a motion court application adapted to constitutional requirements.

(b) The respondent in such proceedings is not an 'accused' person, but is entitled to analogous protections as are appropriate to motion

proceedings.

(c) In particular, the applicant must prove the requisites of contempt (the order; service or notice; non-compliance; and wilfulness and ma/a tides) beyond reasonable doubt.

(d) But, once the applicant has proved the order, service or notice, and non­ compliance, the respondent bears an evidential burden in relation to wilfulness and ma/a fides: Should the respondent fail to advance evidence that establishes a reasonable doubt as to whether non-compliance was willful and ma/a fide, contempt will have been established beyond a reasonable doubt.

(e) A declarator and other appropriate remedies remain available to a civil applicant on proof on a balance of probabilities".

12. The granting of the relief sought by the applicant is thus dependent upon the criteria set out in paragraphs (c) and (d) above being met. I propose dealing with each of these in turn.

13. Firstly, as to the granting of the court order and its delivery to the respondents, this is common cause between the parties[16]. Besides the fact that the order was made by agreement and the parties were in court when it was made, the letter from the respondent's

attorney of 11 May 2015[17] confirms that the order was in their possession.

14. Secondly, as to whether or not there was non-compliance with the order will depend on whether the documents furnished, to which I have referred to above, did indeed constitute the statement of account and supporting documentation which the respondents were ordered to render to the applicant. This is the crux of the matter before me.

15. The respondents state that in regard to the "Excel Spreadsheet"[18]which had been previously furnished to the applicants and was attached to the letter of 11 May 2015 that:

"The account clearly differentiates between ordinary costs associated with each of the six phases of the development. The account includes the exact net income generated by each phase and, contains details of the expenses incurred in each phase."[19]

16. The characterization of the document furnished firstly, as an “Excel Spreadsheet” and thereafter as an "account" does not change the nature of what was furnished to the applicant.

17. The respondent's explanation as to what the documents furnished - Annexures "AA1 to "AA4" contain, is 7 pages in

length[20] whereas the documents themselves number only 4 pages.[21]

18. When regard is had to each of the documents, each is in the format of columns of numbers with various narrations. The individual items are not numbered and it is apparent from a reading of the documents that these at best represent a summary.

19. The applicant took the view from the outset that what was furnished did not comply with the order[22] The respondents themselves recognized that what had been furnished required the third respondent to "explain the intricacies of the development project and costs to the plaintiff's representatives".[23]

20. It is apparent that the documents cannot be considered alone and that the documents required explanation and clarification.

21. What construction is to be placed on the order to "render a Statement of account"? On the construction of the respondents the "Excel Spreadsheet" constituted such statement of account and they were in compliance.

22. It is settled law that:

“[A] Courts intention [is] to be ascertained primarily from the language of the judgment or the order - Usual rules of interpretation to be applied - Judgment, order and court's reasons to be read as a whole to ascertain its intention”[24]

23. Having regard to the nature of the dispute between the parties and applying the ordinary rules of interpretation, the order to render a statement of account could only have been to render what is ordinarily understood to be a statement of account, which would have enabled the applicant to determine from the account whether it was due anything (further).[25]

24. The Oxford Dictionary provides a helpful definition: "Statement of Account - a document setting out the items of debit and credit between two parties"[26]

25. The specific form of account required by the circumstances may however not necessarily fit strictly into this form. Our courts have held that:

'"'The degree or amplitude of the account to be rendered would depend on the circumstances of each case. In some cases it might be appropriate that vouchers or explanations be included".

"If it appears from the pleadings that the plaintiff has already received an account which he avers is insufficient, the Court may enquire into and determine the issue of sufficiency, in order to decide whether to order the rendering of a proper account."

"In general the Court should not be bound to a rigid procedure, but should enjoy such measure of flexibility as practical justice may require.[27]

26. The statement which was rendered is not in the format of debits and credits and cannot stand alone without the further explanations of the third respondent. It is in my view quite clear having regard to the nature of the claim brought by the applicant that what was contemplated in the court order was a something more than what the respondents have chosen to furnish to the applicant.

27. It would be of no assistance in resolving the dispute between the parties if the order were to be interpreted to permit the render of a statement in the form contended for by the respondents. The court order would in those circumstances be rendered nugatory.

28. A statement of account, in the present circumstances should be capable, ex facie, of an understanding on its own. The supporting vouchers would assist a party who was considering the account in checking the veracity of that which is contained in the account.[28]

29. The "Excel Spreadsheet" is not in the form of a statement of account and is not capable of interrogation with reference to the supporting vouchers, without the explanation of the third respondent. The supporting vouchers listed in Annexure "AA5" are not cross referenced with Annexures "AA1" to "AA4".[29] In my view, the applicant's refusal to "trawl through the discovered documents"[30] in order to see what documents related to or supported what was furnished was not unreasonable. The documents referred to in Annexure

"AA5"[31] are also of no assistance. It was never contemplated that the applicant would be required to "write up" the respondent's

books of account so as to enable it to understand the "Excel Spreadsheet" and this is what it would have had to do in order to correlatethe two.

30. For the respondents to contend that the documents that were discovered, no matter how they were ordered or described, would be of any assistance to the applicant in circumstances where the "Excel Spreadsheet " itself required the further explanation of the third respondent is untenable.

31. The order certainly does not permit of an interpretation that any statement of account to be rendered and supporting relevant vouchers and documents would only be capable of analysis and understanding with the assistance of the third respondent.[32]. It is clear in my view that the order contemplated that the applicant would be placed in possession of the account and supporting documents for it to conduct its own analysis and only if it required more documentation, could it then request this. Paragraph 3 of the order specifically provides for this.[33]

32. Until the statement of account had been rendered and the applicant had called for any further documentation it required, no meeting was contemplated. The meeting would only take place after paragraphs 1 and 3 of the order had been fulfilled.[34]

33. Accordingly, I find that the respondents did not render a statement of account as they were required to do.

34. That the respondents pinned their colours to the documents furnished is not in dispute. What is not explained by the respondents is why they agreed to the court order in the first place when on the version they have proffered they had already complied. The applicant for its part had not accepted what had been furnished and clearly contemplated something other than what had been furnished. Thereafter despite a number of requests that they comply with the terms of the court order, the respondents steadfastly refused to do so. Counsel for the respondent argued that the applicant had been invited to explain why it did not accept what the respondents had furnished[35] and that because they had not done so the respondents did not know what the applicant required. The underlying matter is a commercial

transaction and it was certainly not for the applicant to tell the respondents what was required of them in order to comply with the order. The applicant's persistence that they had not complied with the order should have been indication enough.

35. The respondents knew that the documents furnished would be of no assistance to the applicant absent the "explanation"[36] of the third respondent. It was submitted on behalf of the respondents that a reasonable person would be able to correlate Annexures "AA1" to "AA4" with the documents in "AA5".

36. This submission is not tenable having regard to the circumstances for which the statement of account was to be prepared, that is to ascertain the share of the profit to which the applicant was entitled from the sectional title development.. The respondents knew that the "Excel Spreadsheet" and other documents they had furnished to the applicant could not be debated.[37] They knew this when they agreed to the granting of the order.[38]

37. In the circumstances, I find that the respondent was willful and mala fide in their failure to comply with the court order.

36. The applicant has sought a punitive order for costs on the scale as between attorney and own client[39]. I am of the view that such a punitive order is warranted in the circumstances of this case. This application could have been avoided

had the respondents complied with their agreed obligations in terms of the court order.

In the circumstances, I make the following order:

2.1 The first and second respondents are held in contempt of the order of this court granted on 11 May 2015;

2.2 The first and second respondents are directed to comply with the terms of paragraph [1] of such order within 30 days from date of service of this order upon them;

2.3 The applicant is directed to instruct the Sheriff of this Court to serve a copy of both the orders referred to in paragraphs [1] and [2] above personally on the third respondent within 5 days of the granting of

this order;

2.4 The applicant is granted leave to apply to this court on the same papers, duly supplemented, in the event of non-compliance, for an order for the payment of a fine by the first and second respondents and/or for the incarceration of the third respondent.

2.5 The first and second respondents are ordered to pay the costs of this application, jointly and severally, on the scale as between attorney and own client.

A MILLAR

ACTING JUDGE OF THE HIGH COURT

HEARD ON:

24 AUGUST 2017

JUDGMENT DELIVERED ON:

24 AUGUST 2017

COUNSEL FOR THE APPLICANT: ADV G NEL

INSTRUCTED BY: NEIL

ESTERHUYSEN ATTORNEYS

COUNSEL FOR THE RESPONDENTS: ADV J VORSTER

INSTRUCTED BY: DAWIE

DE BEER ATTORNEYS

[1] Annexure "WJV1" on page 21

[2] There is a third respondent, Mr. CAW Foot, the sole director and shareholder of the first and second respondents but no relief is sought against him in the present application.

[3] Answering Affidavit paragraphs 5 to 16 on pages 54 to 56

[4] Annexure "WJV1" paragraph 1 on page 21 where the property is described as Erf 351, Waterval East, Extension 42, Rustenburg

Township

[5] Annexure "WJV2" on page 25

[6] see footnote 1 supra, Paragraph 1 of the Order

[7] Annexure "AA1" on page 81

[8] Annexure "AA2." on page 82

[9] Annexure "AA3" on page 83

[10] Annexure "AA4" on page 84

[11] Annexure "AAS" on pages 85 to 117

[12] Annexure "WJV2" on page 25

[13] footnote 12 supra, paragraph 3.2

[14] Annexure "WJV4" paragraph 3, page 32

[15] [2006] ZASCA 52; 2006 (4) SA 326 at 344G - 3458

[16] Founding affidavit paragraph 16 on page 12 & Answering Affidavit paragraph 37.1 on page 68

[17] Footnote 5 supra

[18] The term used by the respondents in the Answering affidavit paragraph 17 on page 57 to describe what was furnished to the applicant.

[19] Answering Affidavit paragraph 20 on page 57. The respondents then went on to set out in paragraphs 21ff what was contained in

Annexures "AA2" to "AA4" also.

[20] Answering affidavit pages 57 to 64

[21] Answering Affidavit pages 81 to 84

[22] Annexure "WJV4" paragraph 3 on page 32

[23] Annexure "WJV5" paragraph 3.2 on page 36

[24] Van Rensburg and Another NNO v Naidoo and Others NNO; Naidoo and Others NNO v Van Rensburg and Another 2011 (4) SA 149 (SCA) at 149 E-F

[25]It is the case for the respondents that they have already made payments to the applicant as set out in Annexure "AA4"

[26] Shorter Oxford English Dictionary Vol. 2, Fifth Ed. 2002 at page 3009

[27] DOYLE AND ANOTHER v FLEETMOTORS P.E (PTY) LTD 1971 (3) SA 760 (A) at 762 H and 763 B-D

[28] see footnote 26 supra

[29] The respondents 7 page explanation referred to in paragraph 17 supra was disputed by the applicant and its difficulties explained in paragraphs 59 to 73 of the Replying Affidavit at pages 140 to 143 as to why annexures "AA1" to "AA4" did not comply.

[30] Annexure "WJV6" paragraph 8 page 40

[31] see Footnote 11 supra

[32] see in regard to the "adequacy of an account" Graney Property limited and Another v Seena Marena Investment (Pty) Ltd and Others (244/13) [2014] ZASCA 50 (1 April 2014) at paragraph 19

[33] Annexure "WJV1" paragraph 3 on page 22

[34] Annexure "WJV1" paragraph 4 on page 22 - the meeting would only take place within 15 days after receipt of any additional

documentation called for by the plaintiff. If they did not require any further documentation then they would notify the respondents and the meeting would be called

[35] Annexure "WJV5" paragraph 3.3

[36] See Footnote 23 supra

[37] See Footnote 32 supra

[38] See Footnote 5 supra and in particular paragraphs 3.2 and 3.3 - On furnishing the documents they recognized they they could not be understood or interrogated without further explanation from the third respondent.

[39] see De La Guerre v Ronald Bobroff & Partners Inc. (22645/2011) [2013] ZAGPPHC 33 an unreported decision of the full court in this division where an order for costs on the scale as between attorney and own client was made.