International Financial Advisers KSCC and Another v Wood (4773/2006) [2010] ZAKZPHC 70 (29 October 2010)

IN THE KWAZULU-NATAL HIGH COURT, PIETERMARITZBURG

REPUBLIC OF SOUTH AFRICA

CASE NO: 4773/2006

In the matter between:

INTERNATIONAL FINANCIAL ADVISORS KSCC …...........................First Plaintiff

KUWAIT INVESTMENT COMPANY KSCC …...................................Second Plaintiff

and

STRATH McBARRON WOOD …................................................................Defendant

Delivered : 29 October 2010

JUDGMENT

KING AJ

[1] The two Plaintiffs in this case are companies registered in Kuwait. The Defendant is a local businessman.

[2] The Plaintiffs have sued the Defendant on an oral agreement concluded with him in 2004. The Plaintiffs' claim against the Defendant ("the main claim") was originally for an account of certain share dealings, a debatement of that account and payment of what might be found to be due to the Plaintiffs thereunder. At the end of the evidence, and by consent of the parties, the Plaintiffs amended their claim to one for payment of R3,090,843.83, together with interest thereon at the rate of 15,5% per annum from 1 October 2005 to date of payment, this being the amount which the Plaintiffs claim was due to them arising from the evidence led in regard to the share dealings.

[3] The Defendant pleaded a claim in reconvention against the Plaintiffs ("the counterclaim") and in terms thereof, the

Defendant seeks payment of some R47 million, being a commission which the Defendant claims under the terms of the same oral agreement

pleaded by the Plaintiffs, but related to another aspect thereof.

[4.1] There are disputes between the parties as to what was orally agreed between them in 2004.

[4.2] The Plaintiffs allege that such agreement was concluded during or about April of that year. The Defendant contends that it was concluded during or about March. Nothing turns upon that.

[4.3] In broad terms, what the Plaintiffs allege is an agreement under which the Defendant agreed to act as the agent of the Plaintiffs for the purpose of buying and selling shares in a company listed on the Johannesburg Stock Exchange ("the JSE") and to which I shall refer as "the DON".

[4.4] The Plaintiffs contend that the Defendant acted gratuitously as their agent. The Defendant asserts that, if certain circumstances

arose, to which I shall refer later, he was entitled to remuneration by way of a five percent commission to which I have already referred.

[4.5] In the pleadings and in the evidence led, it was common cause that the Defendant was, under his agreement with the Plaintiffs,

obliged to render to the Plaintiffs an account of the relevant share dealings and the Defendant's case was that he had rendered a proper account, which included the deduction of two amounts (of R800,000.00 and R100,000.00 respectively) which deductions were alleged to be amounts due to the Defendant. The Plaintiffs denied that the Defendant was entitled to make either of these deductions, in accounting to the Plaintiffs.

[5.1] It is trite to say that the party which relies upon an agreement bears the onus of proving the material terms thereof, even

if that means that such party must prove a negative, namely, that certain terms did not form part of that agreement.

Dave v Birrell 1936 (TPD) 192

Kriegler v Minitzer 1949 (4) SA 821 (A)

Nel v Nelspruit Motors (Edms) Beperk 1961 (1) SA 582 (A) at 584B

[5.2] However, the Plaintiffs' claim is simply for an account of the share dealings, with the consequences related thereto and there was no dispute between the parties about the terms of the contract relevant to that obligation.

[5.3] Thus, in regard to the main claim, the only dispute between the parties was whether the Defendant had, pursuant to his obligation to do so, accounted to the Plaintiffs properly or at all. What this dispute came down to was whether the Defendant was entitled, in accounting to the Plaintiff, to deduct or set-off the sums of R800,000.00 and R100,000.00 to which I have already referred.

[5.4] These deductions arose from causes alleged by the Defendant which had nothing to do with his mandate in regard to the DON shares. They arose from other dealings between the parties.

[5.5] It is equally trite to say that a party who is obliged, under a contract of mandate, to account to his principal, bears the onus of proving that he has accounted, fully and properly. It follows that it is up to the Defendant to establish that he was entitled to make the aforesaid deductions of R800,000.00 and R100,000.00, as part of his accounting to the Plaintiffs.

David Trust v Aegis Insurance Company Ltd

[2000] ZASCA 108; 2000 (3) SA 289 (SCA)

[5.6] When the matter was argued, both Mr HUNT SC for the Plaintiffs and Mr DICKSON SC for the Defendant, were agreed that the Defendant bore the onus of establishing that the Defendant had accounted properly and he was thus obliged to prove that he was entitled to make the deductions which he did from the proceeds of the sale of all the shares, which proceeds were agreed to be the sum of R3,090,843.83.

[5.7] The Defendant also conceded (correctly, in my view) that, if the Plaintiffs were successful, interest should run from 1 October

2005.

[6.1] The dispute over the Defendant's claim to a commission is not relevant to the Plaintiffs' claim for a proper accounting. Not even the Defendant contends that he was entitled to make any deduction, during the course of such accounting, in respect of such commission. That is why the claim for commission was separately made in the counterclaim.

[6.2] In regard to the counterclaim, Mr DICKSON conceded that the Defendant bore the onus of proving his mandate, the agreement

relating to his commission and that he had performed that part of his mandate which entitled him to such commission. I believe that concession was correctly made.

Da Silva v Janowski 1982 (3) SA 205 (A)

Middleton v Carr 1949 (2) SA 374 (A)

[7.1] I shall deal first with the main claim which comes down to a consideration of whether the Defendant was entitled to deduct the amounts of R800,000.00 and R100,000.00 in rendering his account to the Plaintiffs, as his principals.

[7.2] By the end of the evidence, it was common cause that, arising from his mandate to buy and sell the DON shares, in accordance with the instructions of the Plaintiffs, the Defendant had acquired, in his name, but as nominee for the Plaintiffs, some 25 million shares in the DON.

[7.3] It was also common cause that, by the end of September 2005, the Defendant had sold all of the DON shares and the proceeds (being the sum of R3,090,843.83) were deposited into an account held by the Defendant in his name.

[7.4] There is still a dispute between the parties as to whether the Defendant was instructed to sell all the shares or whether he did so in breach of his mandate. The Defendant alleges that he was instructed to sell all of the remaining DON shares during the course of a telephone conversation held on 28 February 2005 between him and Mr JAMES WILSON, representing the Plaintiffs. Whether that conversation took place, and what was agreed during it, was the subject of much dispute during the trial. However, that dispute is relevant only to what the Defendant says was agreed about his entitlement to deduct the sum of R800,000.00 from what was due to the Plaintiffs arising from the realisation of the DON shares. In that context, whether the Defendant sold the shares because he was instructed to do so, or whether he did so without such instruction, has no bearing upon his obligation ultimately to account, in one way or another, for the full amount realised of R3,090,843.83.

[7.5] It therefore seems convenient to deal next with the issues surrounding the Defendant's alleged entitlement to set-off the sum of R800,000.00 from what was due by the Defendant to the Plaintiffs in respect of the proceeds of the sale of the DON shares.

[8.1] To understand the issues surrounding the deduction of R800,000.00, one needs to summarise some of the background, as it emerged from the evidence.

[8.2] In September 2003, IFA HOTELS & RESORTS KSCC (Kuwait) ("IFA HOTELS & RESORTS") purchased from Besonia Investments (Pty) Ltd ("BESONIA") and Timothy Peter Dykins ("Mr DYKINS") all of the issued shares in a Zanzibar company named Ocean Leisure Company Limited ("OCEAN LEISURE").

[8.3] OCEAN LEISURE owned an hotel business in Zanzibar named the ZANZIBAR BEACH HOTEL.

[8.4] This hotel was only one of Mr DYKINS' business interests. His main interest was in a paint manufacturing and distribution business conducted by Chemical Specialities (Pty) Ltd ("the old CHEMSPEC"), a South African company which was owned and run by Mr DYKINS and his parents.

[8.5] Mr DYKINS was also involved in a boat manufacturing business, the assets of which were also owned by the old CHEMSPEC.

[8.6] The Defendant had worked for the old CHEMSPEC for many years and, in 2003, he was its financial director. He had also become

involved in the setting up and running of the ZANZIBAR BEACH HOTEL, at the behest of Mr DYKINS.

[8.7] A few days after the sale of the shares in OCEAN LEISURE to IFA HOTELS & RESORTS, the Defendant entered into a written

consultancy agreement with IFA HOTELS & RESORTS in terms of which he undertook, for a period of twelve months, to oversee the business of ZANZIBAR BEACH HOTEL on behalf of IFA HOTELS & RESORTS, reporting directly to Mr WILSON, for a remuneration of US$3,500.00 per month, plus certain expenses and accommodation privileges at the hotel.

[8.8] The old CHEMSPEC had stood surety, in favour of IFA HOTELS & RESORTS, for all the obligations of the sellers under the sale agreement relating to the ZANZIBAR BEACH HOTEL.

[8.9] Although the subject was not canvassed in detail during the course of the evidence, it is still clear that the old CHEMSPEC had been directly involved in the affairs of OCEAN LEISURE, prior to its sale and it remained involved after the sale to IFA HOTELS & RESORTS. For example, it appears that many of the guest booking arrangements were attended to in South Africa and many of the hotel purchases were made by the old CHEMSPEC, on behalf of the hotel.

[8.10] The net result was that, in the year that followed the sale of the ZANZIBAR BEACH HOTEL, the old CHEMSPEC paid a host of expenses incurred on behalf of OCEAN LEISURE, resulting in an indebtedness owed by OCEAN LEISURE to the old CHEMSPEC of some R875,000.00

(although the books of OCEAN LEISURE recorded, by 2005, a somewhat lower figure of approximately R671,000.00).

[8.11] In the books of the old CHEMSPEC this indebtedness was recorded as an account receivable (i.e. as a current asset) under a ledger account named "IFA loan account".

[8.12] The Defendant's evidence was that in the latter part of 2005 (he testified to different dates) the indebtedness owed by OCEAN LEISURE to the old CHEMSPEC was ceded to him, personally, during the course of the negotiation of the sale of the old CHEMSPEC'S business to a new company ("the new CHEMSPEC") which was controlled by the Defendant and his business associates. The sale of the old CHEMSPEC'S business was referred to in the evidence as a "management buy-out". I shall return later to this subject.

[8.13] The position was, therefore, that as at 28 February 2005, both the Defendant and Mr WILSON were aware that OCEAN LEISURE owed this large sum of money (the exact amount varies in the documents but the Defendant's amended Plea refers to a sum of R863,000.00) to the old CHEMSPEC. The Defendant testified that he had called upon Mr WILSON to arrange payment of this indebtedness by the end of 2004 but that payment had not been received.

[8.14] Amongst the documents produced by the parties during the course of the trial, the Defendant produced a schedule of the amounts

which he said related to the deduction of R800,000.00 claimed by him and that schedule appears in the first few pages of Exhibit C and at pages 12 to 18 of Exhibit H.

[8.15] Ms K. PILLAY, a chartered accountant, testified for the Plaintiffs that she had analysed the list of disbursements produced

by the Defendant, which ran to approximately R817,000.00, and apart from seven items, which totalled about R79,000.00, all of the

disbursements claimed by the Defendant were accounted for in the books of OCEAN LEISURE as part of the indebtedness owed by that

company to the old CHEMSPEC, arising out of the disbursements made by the old CHEMSPEC on behalf of OCEAN LEISURE, in respect of expenses relating to the ZANZIBAR BEACH HOTEL, to which I have referred in paragraph 8.10 above.

[8.16] With that background, I turn to the Defendant's version of what happened on 28 February 2005.

[9.1] At the time, the Defendant was in Sydney, Australia, staying at an hotel whilst on business. He testified that, during the evening of 28 February 2005 (which was thus still morning in South Africa), Mr WILSON telephoned him and instructed him to "dump" all of the DON shares which the Defendant had bought on behalf of the Plaintiffs. Mr WILSON indicated that the Plaintiffs were no longer interested in pursuing the matter of the DON acquisition and that is why they should be sold.

[9.2] In his examination in chief, the Defendant said that although the instruction came as something of a surprise to him, he did not challenge it. He said that Mr WILSON told him that, at the ruling price of the DON shares on that day, the value of all the shares amounted to about R1,9 million and that is the amount which Mr WILSON expected the Defendant to pay to the Plaintiffs in respect of those shares.

[9.3] The Defendant said that he told Mr WILSON that he wanted to deduct from that amount the sum of R800,000.00 in respect of the "IFA loan account" owed to the old CHEMSPEC and that Mr WILSON agreed to this. The Defendant said that the specific sum of R800,000.00 was mentioned by him, as a round figure, because he thought the indebtedness was of that order.

[9.4] The Defendant also said that he told Mr WILSON that, upon the Defendant's return to South Africa from his business trip, he would provide a cheque for the difference between the sum of approximately R1.9 million and the agreed deduction of R800,000.00.

[9.5] The Defendant then testified that, immediately after this conversation, he made use of the hotel's business centre to send, by e-mail, a letter to Mr WILSON, which recorded what had been agreed during this telephone conversation. The letter appears at page 272A of the bundle of documents which is Exhibit B.

[9.6] Mr WILSON'S version of these events is simply that they did not occur. He denies that any telephone conversation took place such as that described by the Defendant, and he accordingly denies having ever instructed the Defendant to sell all the DON shares, nor did he authorise the deduction of any amount from the proceeds thereof.

[10.1] The dispute between the parties over this telephone conversation could not be starker. Counsel for both parties correctly

contended that there is no possibility that one or other party is mistaken or might have misunderstood what was said on the telephone.

Either the telephone conversation took place or it did not.

[10.2] Thus, the only way to resolve the dispute between the parties is to consider the credibility of the witnesses, namely, Mr WILSON and the Defendant and to have regard to the probabilities.

[10.3] Predictably, Mr HUNT urged me to find that Mr WILSON was a truthful witness and that, for several reasons, the probabilities

favour the Plaintiffs' version.

[10.4] Equally predictably, Mr DICKSON urged me to find that Mr WILSON was not a truthful witness and that I should exercise care in assessing the probabilities, having regard to the generally accepted rules for evaluating the credibility of witnesses, as summarised in a publication by Nicholas JA in the South African Law Journal (Volume 102: 1985 at 32).

[10.5] I shall return later to a consideration of the demeanour of the two witnesses, because that is relevant to the veracity of their evidence. However, for the moment, I propose to examine the probability of the respective versions relating to the disputed

telephone conversation of 28 February 2005. Mr DICKSON submitted (correctly, I believe) that a consideration of those probabilities is one of the most powerful means of assessing the credibility of witnesses, especially when one is able to test their word against

contemporaneous documents, created by the parties, during the course of the relevant events.

[10.6] Mr DICKSON submitted that this assessment of the probabilities is nevertheless a subjective matter. I do not agree. The

probabilities of a version, when set in the factual matrix surrounding it, should be considered as objectively as possible but,

of course, those probabilities must be examined, not from the point of view of some hypothetical reasonable businessman, but from the point of view of the witnesses themselves.

[10.7] In considering these probabilities, Mr DICKSON also urged me to be cautious about rejecting the Defendant's version simply because it might be improbable. He submitted that, sometimes, the very improbability of a witness' version may point to its truthfulness, on the footing that no one would come up with such an outlandish version unless it were true.

[11.1] The first, and most obvious, "cross-check" of the Defendant's version of this telephone call is the letter which he says that he sent, by e-mail, to Mr WILSON, on the same night as the conversation. It is at page 272A of Exhibit B.

[11.2] Mr HUNT drew attention to the fact that the letter was produced by the Defendant, for the very first time, in November 2009,

when the trial was about to start. Mr HUNT submitted that, because the telephone conversation never took place, the letter itself was actually never written or sent and its sudden appearance, in November 2009, supports the view that it is a recent fabrication.

[11.3] There is no getting away from it; if the telephone conversation did not take place, then the letter must be a fabrication. On the other hand, if the telephone conversation did take place, one would expect it to accord with what the Defendant says was discussed telephonically, because it was written immediately thereafter.

[11.4] The material portion of the letter reads as follows:-

"Further to your instructions today to dump (dispose) of the shares held in the Don group as you have no further interest in pursuing the company, I have sold the entire holding as at the 28th February 2005.

I will account for the money less our agreed fee of R800,000.00 kindly inform me as were (sic) you would like me to transfer the balance which amounts to approximately R1,100,000.00 on my return to South Africa."

[11.5] When he was first cross-examined on the subject, the Defendant said that, immediately after this telephone conversation with Mr WILSON, he gave telephonic instructions to his stockbroker in South Africa. He said that he had instructed the broker to sell all the shares immediately but that he knew that the stockbroker would only be able to sell so many shares if there were buyers available.

[11.6] It is clear from other evidence given by both Mr WILSON and the Defendant that they both knew that selling a quantity of shares on the stock market could easily lead to a drop in the price. Implied in this knowledge is also the knowledge that one can only sell shares on the stock exchange if there are buyers available at the price at which the share is offered. It is thus overwhelmingly probable that, at the time of their alleged conversation, both Mr WILSON and the Defendant would have known that "dumping" 25 million DON shares on the market would, at the very least, cause a significant drop in the price and would probably not be achievable anyway, in the short term, because there would not be buyers immediately available for such a large number of shares.

[11.7] That gives rise to two significant improbabilities. The first is that Mr WILSON and the Defendant would so casually agree that 25 million shares would be "dumped". It would make no sense for Mr WILSON to suggest such a financially suicidal course of action and equally unlikely that the Defendant would agree to it on the basis that, as he testified, he became obliged to account to the Plaintiffs for the price of all 25 million shares, as the price stood on 28 February 2005. Both of them knew that selling all 25 million shares, without affecting the prevailing price, was a practical impossibility.

[11.8] The first paragraph of the letter is also not in accordance with the facts as the Defendant knew them at the time. In the letter, the Defendant said that he had already sold the entire shareholding as at 28 February 2005. That was certainly not true and, on 28 February 2005, the Defendant must have known that.

[11.9] On his initial evidence, all that Mr WOOD knew was that he had given instructions to the stockbroker to sell all the shares but I have already said that he knew that selling the shares all at once, at the prevailing price, was not realistic. If the Defendant was trying to convey, accurately, the position after the alleged telephone conversation with Mr WILSON, he would surely have used

words to the effect that, whilst he had given instructions to the stockbrokers to try to sell all the shares, such sale was unlikely

and that he would report progress when he could. The letter says nothing of the kind.

[11.10] When he was cross-examined further on this subject, the Defendant was referred to the document at page 308 of Exhibit E,

which records the manuscript notes made by the stockbroker as a consequence of Mr WOOD'S telephone call to the stockbroker on 28

February 2005.

[11.11] There are two entries. At 9.03 a.m. the stockbroker's note reads:-

"Strath Wood will call me back, will speak to main shareholders. Will let me know what to do. Looked at selling 3m shares in Don (1% of illegible)."

[11.12] At 9.06 a.m., the second entry reads, with reference to a sale of DON shares: "3m shares down to 6 cents. Reported 9:08"

[11.13] When cross-examined on these entries, the Defendant was asked why his instruction to the brokers referred to only 3 million shares and not to all 25 million. The Defendant then said that what had happened is that, after he had instructed the stockbroker to sell all 25 million shares, the stockbroker had telephoned him back to tell him that the price had come down to 6 cents and the stockbroker enquired whether the Defendant really wanted to sell all 25 million shares. This was a version different to that which he gave initially.

[11.14] As to the stockbroker's note that "looks at selling 3m shares in Don" the Defendant suggested that what this meant was that the stockbroker said that 3 million shares was all that he could sell to available buyers. The Defendant remained adamant that his instruction to the stockbroker was to sell all the DON shares.

[11.15] If this version of the Defendant's conversations with the stockbroker is correct, then the contents of his e-mail letter to Mr WILSON are even less probable. On the Defendant's new version, he knew within minutes after his initial instruction to the stockbroker that the stockbroker apparently could sell only 3 million shares and that the price had already gone down to 6 cents per share. If those were the facts, it is simply incredible that the Defendant would still have written to Mr WILSON to say that all 25 million shares had been sold and that the proceeds, less the deduction of R800,000.00, would be accounted for immediately upon the Defendant's return to South Africa.

[11.16] It must be remembered that this version of the Defendant's conversations with the stockbroker was elicited only when the

Defendant was confronted with the stockbroker's notes. His first version of the instruction given to the stockbroker was quite

different. Nothing was mentioned about a returned phone call from the stockbroker, about the stockbroker's ability to sell only 3 million shares and that the price had gone down to 6 cents per share. This is but one example of the instances in which the Defendant made significant changes to his version of events when confronted with awkward details during cross-examination.

[12.1] The second paragraph of the disputed letter of 28 February 2005, is equally problematic for the Defendant. There is no doubt

that the words used in the letter convey that "the money" (i.e. the proceeds from the sale of all 25 million shares at the ruling price on 28 February 2005) was already available and all that remained was for the Defendant to transfer the balance, after deducting the sum of R800,000.00, to a destination selected by Mr WILSON. In the circumstances which I have described, it is quite clear that the Defendant could never have realistically believed that those proceeds were available at all. His choice of words in the letter bear no relation to what he knew at the time.

[12.2] There was another aspect of the matter about which the Defendant was not able to provide any coherent explanation. The Defendant knew that he was simply the agent of the Plaintiffs, for the purpose of dealing in the DON shares, and that he was never

responsible to pay for any of those shares, nor was he at risk in regard to the changing price thereof.

[12.3] In those circumstances, it is difficult to imagine any basis upon which the Defendant would agree to account to the Plaintiffs,

for the full proceeds of some R1,9 million, arising from the disposal of all 25 million shares on the prevailing price at 28 February 2005, in circumstances in which both the Defendant and Mr WILSON knew that achieving those proceeds, in those circumstances, was practically impossible.

[12.4] It is overwhelmingly probable that, had the Defendant been confronted with such a suggestion by Mr WILSON, in such a telephone

conversation, he would have rejected any obligation to account in that fashion. He would surely have made it clear that his only

obligation, as agent, was to sell the DON shares in accordance with Mr WILSON'S instructions and to account, in due course, for those proceeds, as and when the shares were sold and at whatever price they went for. For the Defendant to contend, as he does, that he took upon himself, without protest, the responsibility of achieving the impossible and accounting for R1,9 million, is not just improbable, but bizarre.

[12.5] I am mindful of what Mr DICKSON urged me to remember, namely, that sometimes the truth is even stranger than fiction. While that may be so, in commercial transactions there are, inevitably, surrounding documents and circumstances which point to the truth of even such an outlandish version. In this case, there are no such documents or circumstances.

[12.6] On the contrary, what there is to go on, as I have already indicated, points clearly away from the truth of the Defendant's

version.

[12.7] For example, one is left with the contorted meaning which the Defendant needs to ascribe to the words used by the stockbroker in the document at page 308 of Exhibit E, to fit his version of events. Taken at face value, it is far more probable that what the note conveys is a simple instruction by the Defendant to the stockbroker to sell 3 million shares at any price between that prevailing and down to 6 cents per share. One would have expected the Defendant to call his stockbroker to give evidence if the note meant anything different.

[12.8] Although no evidence was led on the subject, the parties placed before me the bundle of documents which is Exhibit E and, at pages 323 and 324 thereof, the stockbrokers have provided a written summary of the history of their communications with the Defendant, including the manuscript notes made of their conversations. The summary records a series of instructions from the Defendant, to sell the DON shares, in a quite different fashion to the Defendant's alleged instruction to the brokers to sell them all at once on 28 February 2005.

[12.9] The Defendant's failure to back up his version with evidence from his own stockbrokers can only count against him.

[13] I turn now to deal with what the Defendant says was discussed, during the telephone conversation of 28 February 2005, about the deduction of R800,000.00.

[14.1] The Defendant testified that the sum of R800,000.00 which he says was discussed with Mr WILSON over the telephone was in fact the round figure used to describe the "IFA loan account" in the books of the old CHEMSPEC and that Mr WILSON authorised the Defendant to deduct, from the proceeds of approximately R1,9 million, the sum of R800,000.00 which would have the effect of discharging the indebtedness owed by OCEAN LEISURE to the old CHEMSPEC in respect of the "IFA loan account".

[14.2] First of all, the letter at page 272A of Exhibit B describes the deduction as "our fee". Although the Defendant tried to explain that, in his mind, there was no distinction between a fee and a disbursement, I find that most unlikely. Although he testified that he is not a qualified chartered accountant, he said that had worked as an accountant for many years. It was also quite clear from his evidence that his experience of accounting and business matters was considerable and I simply do not accept that the Defendant would not clearly distinguish between the entirely different concepts of a disbursement and a fee.

[14.3] In any event, even if "fee" was really intended to mean "disbursement", that does not explain why, during this conversation, the Defendant would choose to raise with Mr WILSON the payment of an indebtedness owed by OCEAN LEISURE to the old CHEMSPEC, neither of which companies had anything to do with the matter of the DON shares.

[14.4] The Defendant testified that the conversation was not a comfortable one because he and Mr WILSON had fallen out over another

issue some time before this. Although he said that their subsequent dealings were reasonably cordial, he was aware that Mr WILSON'S

attitude was not particularly friendly and he also knew that the instruction to "dump" all the DON shares meant that the entire project related to the DON was at an end. If that was the case, it is overwhelmingly probable that, rather than concern himself with the "IFA loan account", the Defendant would have raised, in this very telephone discussion, the matter of what remuneration he was to get for all the work that he said he had put into the DON project. After all, his version is (and I shall amplify later) that he was entitled to a commission of five percent of the profit made by the Plaintiffs, being the difference between the value of the investment made by the Plaintiffs and the price which the Plaintiffs paid for their investment in the DON.

[14.5] It was common cause between the parties that one of the main objects of the DON project was to acquire all of the shares in the DON group, so that the Plaintiffs controlled it. By this means, the IFA group's assets in South Africa might be transferred to a listed company which would enhance their value and make the raising of further investment capital an easier matter.

[14.6] In the course of his evidence, the Defendant stated that the multiplier effect of placing assets in a listed company was

considerable and could be as high as ten times more than their value outside a listed entity. He accordingly envisaged that his five percent commission, if assets were placed in a listed company, under the control of the Plaintiffs, would certainly be substantial and could even run to the sort of figure pleaded in his counterclaim, namely, R47 million.

[14.7] If a conversation took place as the Defendant testifies, it is surely overwhelmingly probable that what the Defendant would raise with Mr WILSON was the issue of his commission, rather than another indebtedness which had nothing to do with the DON project and to which the Defendant himself had no claim at the time.

[14.8] One can easily imagine the Defendant demanding some form of remuneration or commission, for all his efforts, if the DON project was to be abandoned and if the ultimate objective of acquiring a listed company was not to be pursued. Even if there existed the possibility that the same objective could be achieved via another listed company, (which the Defendant testified he knew about) he would surely have raised the subject of a commission in relation to that alternative company.

[14.9] The Defendant's version is that he did none of these things and the result is that, on his own version, the matter of any

remuneration in relation to the DON project was not raised during this telephone conversation at all. That is most improbable.

[14.10] If one looks at what the Defendant did after his return to South Africa, from Australia, his version becomes even less probable.

[14.11] According to him, he already knew, upon his return, that not all of the DON shares had been sold. In fact, by 4 March 2005, only 6 million out of approximately 25 million had been sold.

[14.12] According to the Defendant, Mr WILSON had insisted upon payment of the value of all the shares, as at the ruling price on 28 February 2005, which amounted to some R1,9 million. It must have been obvious to the Defendant, even on 28 February 2005, that it was just not possible to sell that many shares without affecting the share price. It simply makes no sense for the Defendant to have taken upon himself (as he said he did) the risk of having to account for R1,9 million, whilst a reduction in the share price could easily put him in the position of making a significant loss when the shares were actually realised.

[14.13] One would have thought that, immediately upon his return to South Africa, the Defendant would have contacted Mr WILSON to explain that it had not been possible to "dump" all the shares and ask for fresh instructions as to how he should carry out his mandate. He did not do that.

[14.14] Instead, he says that he instructed the stockbrokers to continue selling shares into the market, as and when they could. On any basis, that was not the mandate that was given to the Defendant and he provided no coherent explanation as to why he felt entitled to deal with the shares in that way.

[14.15] Although, when tested in cross-examination, the Defendant referred to the possibility that he might have had a telephone

conversation with Mr WILSON about the matter, after his return to South Africa, his only explanation for not accounting to the

Plaintiffs, as he had undertaken to in his disputed letter of 28 February, was that he was busy with other matters and had overlooked

the matter. Bearing in mind that, on his version, he was privy to facts that were different to what he said had been communicated to Mr WILSON, via the disputed letter, I regard it as somewhat less than probable that the Defendant would have dealt in so casual a manner with an obligation to account for R1,9 million in circumstances in which, on his own version, he could still sustain significant losses.

[14.16] The fact of the matter is that he made no enquiries from Mr WILSON as to where he was to send the balance owed to the Plaintiffs

and he made no attempt to explain to Mr WILSON that the circumstances recorded in the disputed letter had changed.

[14.17] Although, in his evidence in chief, the Defendant testified that, upon his return to South Africa, he had arranged to account to the Plaintiffs, by tendering a cheque for the sum of R1,088,042.85, it is common cause that what actually happened was that it was only after the Plaintiffs' attorneys demanded an accounting that the Defendant, through his attorneys, tendered the aforesaid cheque during October of 2005, more than seven months after, on the Defendant's version, such accounting should have been rendered.

[14.18] Certainly, by September of 2005, the Defendant knew that he had sold all the shares and had over R3 million in his bank account. That is not a matter which easily slips one's mind.

[15.1] If one turns to the pleadings, the probability of the Defendant's version of about the alleged deduction of R800,000.00 is not assisted.

[15.2] The original Plea was delivered in June of 2006 and it refers to the deduction of the R800,000.00 as being related to disbursements

incurred and fees charged by the Defendant in the sum of R863,000.00, which the Defendant reduced to R800,000.00. As already indicated, the R800,000.00 had nothing whatever to do with fees and the disbursements were not made by the Defendant at all, but by the old

CHEMSPEC. What is perhaps more important is that those disbursements (leaving aside the handful that could not be identified by the Plaintiffs) related exclusively to disbursements made in connection with the ZANZIBAR BEACH HOTEL. The disbursements had absolutely

nothing to do with the matter relating to the DON shares, and yet the Plea alleges that the fees and disbursements arose specifically from the Defendant's performance of his obligations in relation to his mandate regarding the DON shares.

[15.3] The Defendant's Plea was amended in November of 2009 but it still made reference to the R800,000.00 being related to disbursements claimed by the Defendant in relation to the DON project.

[15.4] The Plea was amended again in June 2010 and it was only then (months after the trial had already started) that mention is made, for the first time, of a cession of the "IFA loan account" from the old CHEMSPEC to the Defendant personally as being the source of the deduction of R800,000.00 discussed on the telephone.

[15.5] During his evidence, the Defendant said that, as far as he was concerned, he had always explained his case to his lawyers in the same way that he had testified. If that is so, it is more than difficult to understand why it took nearly four years for the issue of the R800,000.00 deduction to be pleaded in a manner which accorded even approximately with the Defendant's ultimate testimony.

[16.1] When the matter was argued, Mr DICKSON, for the Defendant, expressly disavowed any claim to the deduction of R800,000.00 arising from any cause of action other than an agreement with Mr WILSON concluded telephonically on 28 February 2005. It is therefore

unnecessary for me to consider whether, separately from that alleged conversation, the Plaintiffs became indebted to the Defendant for the same amount of R800,000.00, arising from a cession of a claim for that amount by the old CHEMSPEC to the Defendant personally.

[16.2] However, I cannot ignore the fact that, on the pleadings, after the Defendant had finished amending it, the R800,000.00

deduction was no longer pleaded as either fees or disbursements relating to the Defendant's mandate in relation to the DON shares. It was pleaded as a claim owed to him personally arising from the cession which I have mentioned. The subject of the cession is

therefore still relevant to the probabilities relating to the alleged conversation of 28 February 2005 and I must therefore consider the subject of the cession in that context.

[16.3] Considerable evidence was devoted to the circumstances under which the Defendant alleged that he acquired the "IFA loan account" from the old CHEMSPEC. At the root of it, the Defendant alleges that in about December 2005 (which he later changed to perhaps August 2005) he agreed, orally, with Mr DYKINS, representing the old CHEMSPEC, that the "IFA loan account" would be excluded from the management buy-out of the old CHEMSPEC'S business and would vest in him personally. When he testified, Mr DYKINS flatly denied that any such agreement had been reached and he said that he would, in any event, not have agreed to any such arrangement because the purchase price payable to the old CHEMSPEC, in terms of the management buy-out, was based upon the value of its assets and the exclusion of the "IFA loan account" would have reduced the value of the old CHEMSPEC'S assets and thus would have reduced the price payable under the management buy-out.

[16.4] In his evidence, the Defendant tried his best to explain why the "IFA loan account" was really irrelevant to Mr DYKINS because it either had been, or was in the process of being, written off as a bad debt, that the purchase price in terms of the management buy-out was not based on asset value and also, upon the Defendant's particular construction of certain of the terms of the management buy-out agreement, the "IFA loan account" was not part of the deal anyway, because it was not a trade receivable arising out of the conduct of the old CHEMSPEC'S paint business.

[16.5] To my mind, all of the Defendant's evidence in this regard was contrived and is designed to cover up some of the more obvious

discrepancies in his version of how he alleges he came to be the owner of this debt. In this regard, he was quite clear that he did not suggest that Mr DYKINS had lied about the matter but he was sure that Mr DYKINS had simply forgotten about what had been agreed.

[16.6] That is not the impression which I gained when Mr DYKINS gave evidence. He has no axe to grind in this case and no one suggested

that he had any motive to lie. He gave evidence in a clear and forthright manner and, in my view, if his memory was not as clear as it should have been, I have little doubt that he would have said so, if he was at all uncertain as to whether any discussion had taken place relating to the "IFA loan account". On the contrary, he was adamant that no such agreement was ever struck.

[16.7] I shall not dwell upon the other difficulties faced by the Defendant in his convoluted explanations as to how this indebtedness

came to be his. I mention that, on his version, he was forced to admit that he had not told Mr DYKINS, in the course of their dealings, that he, by reason of his earlier arrangement with Mr WILSON, had either already collected R800,000.00 on account of this

indebtedness or he was about to do so, out of the proceeds of the sale of the DON shares. Most of those shares had been sold by the end of August 2005 and the remainder had been sold by 26 September 2005.

[16.8] In short, there was no coherent explanation as to why he did not tell Mr DYKINS the truth about what he had arranged in regard to payment of the "IFA loan account", nor could he coherently explain why Mr DYKINS would have given away the old CHEMSPEC'S rights to this indebtedness had he known that there was absolutely no need to write it off because the bulk of it had either already been paid or was about to be paid to the Defendant. The Defendant himself accepted, in cross-examination, that the money which he collected from the sale of the DON shares, to the extent that it related to the R800,000.00 deduction, was money which he held on behalf of the old CHEMSPEC. On his own version, the Defendant was, to say the least, economical with the truth when he negotiated with Mr DYKINS.

[16.9] In any event, even if the "IFA loan account" was to vest in the Defendant, its deduction from money due to the Plaintiffs makes no sense.

[16.10] The fact of the matter is that the "IFA loan account" was actually owed by OCEAN LEISURE to the old CHEMSPEC. It was never owed by either of the Plaintiffs.

[16.11] The Defendant, in his evidence, tried to make much of the fact that, in all the dealings between him and Mr WILSON, no clear distinction was made between the different companies within the IFA group, even though both persons knew that the group consisted of a variety of quite separate companies.

[16.12] However, it was never suggested to Mr WILSON that, in his dealings with the Defendant, the IFA group of companies would be regarded as an interchangeable conglomerate, with no need to make any strict legal distinctions between one company or another. Nothing like this was ever suggested to Mr DYKINS either.

[16.13] The result is that there is no basis upon which the Defendant could ever contend that the "IFA loan account" was an indebtedness owed by either of the Plaintiffs. If he did in fact acquire that indebtedness from the old CHEMSPEC, it was a claim enforceable against OCEAN LEISURE only.

[17.1] All that I have said in regard to the probabilities of the matter, from the point of view of the Defendant’s version,

must, of course, be compared with the probabilities relating to the Plaintiff’s version.

[17.2] As I have said, the Plaintiff’s version, given by Mr WILSON, was that the telephone conversation of 28 February 2005 never took place and that the disputed letter of the same date had never been sent or received, because it was a fabrication.

[17.3] Mr WILSON testified that he did not ever give any instruction to the Defendant to sell all the shares. In fact, the matter of the DON shares did not receive any attention between about January 2005 and the latter part of that year.

[17.4] Mr WILSON conceded in his evidence that, during this period, the Plaintiffs had “taken their eye off the ball” for two reasons. The DON project had been abandoned and, through BDO, IFA HOTELS & RESORTS was pursuing a fresh deal which involved MORIBO LEISURE LIMITED (“MORIBO”).

[17.5] Secondly, Mr WILSON personally became involved in a different position within the IFA group which concentrated his attention on matters in the Middle East.

[17.6] It is in those circumstances that the Plaintiffs’ case is that it simply did not know what the Defendant was doing with the DON shares until much later in 2005.

[17.7] If the disputed telephone call had taken place, then it must follow that Mr WILSON knew, from 28 February 2005 onwards, that the Defendant either had sold all the DON shares or was in the process of doing so.

[17.8] What one does know is that the subject of the DON shares was taken up by the Plaintiffs’ attorney, Mr GREG LARSON, of LARSON FALCONER INC, early in October 2005, when he sent an e-mail to the Defendant and the Defendant’s stock broker, requesting them to transfer all of the DON shares and cash on hand into the name of ROJALES INVESTMENTS (PTY) LIMITED. This appears in the bundle of documents which is Exhibit E, at page 224. I should mention that the parties recorded that, in regard to all of the bundles of documents which formed the exhibits in this case, they were agreed that the documents were what they were purported to be and that communications purportedly sent were received in due course by the addresses thereof.

[17.9] It is most improbable that the Plaintiffs’ attorney would take this step without instructions to do so from the Plaintiffs. The request passed to the Defendant and his stockbroker mentions nothing about any earlier arrangement to “dump” the DON shares and, instead, it proposes a quite different course of action. There are two possibilities; either Mr WILSON kept secret his instruction to “dump” the shares, not telling the Plaintiffs’ attorneys about it, or there was no secret to keep because the instruction to dump the shares was never given.

[17.10] If Mr WILSON did give an instruction to the Defendant to dump the shares, I can think of no good reason why he would keep it a secret from the Plaintiffs’ attorneys. At some stage or another, the true facts would inevitably come to light, leaving Mr WILSON with the difficult task of explaining why he had kept secret his instruction to the Defendant. That is hardly probable.

[17.11] At page 227 of Exhibit E, there appears an e-mail from the Defendant to the stockbroker, dated 7 October 2005, in which he instructs the stockbroker to take no action in regard to Mr LARSON’s request and advises that he would attend to the matter himself upon his return to South Africa the following week.

[17.12] There followed an exchange of correspondence between the respective attorneys representing the Plaintiffs and the Defendant,

which culminated in the commencement of this action. It is clear from that correspondence that instructions were sought by the Plaintiffs’ attorneys from Mr WILSON and yet the context of the correspondence indicates that the Plaintiffs’ attorneys still knew nothing about any arrangement to “dump” the DON shares. If there was any such arrangement, that must mean that, even in the face of a looming dispute with the Defendant, with the prospect of litigation being threatened, Mr WILSON still kept secret his instruction to the Defendant to “dump” the DON shares. Again, there is no explanation, that I can think of, as to why Mr WILSON would remain silent on a topic that would inevitably come to light via the Defendant. That could only cause embarrassment to Mr WILSON.

[17.13] On the other hand, his silence on the matter is easily explained if his version is correct, namely, that there never was any such instruction.

[17.14] The same goes for the alleged agreement to deduct the sum of R800 000,00 from the proceeds of the DON shares. Mr WILSON

testified that, in relation to the alleged instruction to “dump” the DON shares, he had no authority to “play with shareholders’ money”.

[17.15] Is it then likely that, in relation to money due to the Plaintiffs, Mr WILSON would authorise the deduction of R800 000,00

which was owed by a completely separate company (with its own business operation) to the old CHEMSPEC? That is improbable.

[17.16] There is no dispute that Mr WILSON did nothing about collecting the proceeds of the “dumping” of the DON shares, between February 2005 and about October 2005, when the attorneys for the parties became involved. Even allowing for the distraction of his new job function and for the diversion of the new project involving MORIBO, it is unlikely that Mr WILSON would be so neglectful of his duties that he would do absolutely nothing about ensuring that his instruction to the Defendant was carried out or about collecting the proceeds of the shares.

[17.17] I have already said that, from other evidence given by both Mr WILSON and Mr WOOD, they both knew that the “dumping”

of the DON shares would probably have the effect of reducing the price at which the shares could be realised. If Mr WILSON knew that, I think it is quite improbable that he would not make a single enquiry of the Defendant, in the days and months that followed 28 February 2005, to find out what shares had been sold, at what price and what had happened to the proceeds. This must be seen in the context that, if the Defendant’s version was true, Mr WILSON also had the tangible reminder of the letter allegedly sent to him by the Defendant on 28 February 2005.

[17.18] In short, there is little to suggest any improbability in Mr WILSON’s version. In fact, his conduct is entirely consistent

with there having been no such arrangement concluded on 28 February 2005, as the Defendant alleges.

[18.1] To sum up, I find that the alleged telephone conversation between Mr WILSON and the Defendant, on 28 February 2005 did not take place at all. The alleged letter dated 28 February 2005 is therefore a fabrication. There is no evidence, other than the Defendant's

say-so, that it was ever sent by e-mail and there is nothing to contradict Mr WILSON'S evidence that it was in fact never received.

[18.2] I therefore find that the Defendant has not proved that there was any agreement which entitled him to deduct the sum of R800,000.00 in accounting to the Plaintiffs for the proceeds of the DON shares.

[19.1] I pause to mention another curious feature about the disputed letter of 28 February 2005. It is a letter which bears the

Defendant's personal letterhead.

[19.2] The Defendant explained that he made use of the Sydney hotel's business centre because he did not have his own computer with him.

[19.3] The Defendant did not explain why he went to the trouble of writing a letter on such a letterhead, when, if one has regard to the multitude of e-mail communications between him and Mr WILSON, over the long period that they dealt with each other, they both invariably used simple e-mail communications, without going to the trouble of drafting letters which would form an attachment to an e-mail.

[20.1] I turn now to deal with the second deduction of R100,000.00.

[20.2] In the pleadings, this deduction is described as an agreed fee payable by the Plaintiffs to the Defendant for work which the Defendant performed in relation to an audit of the books of account of OCEAN LEISURE, such having been agreed during or about August of 2004.

[20.3] In argument, Mr DICKSON conceded that, on the evidence, there was no basis upon which the Defendant could contend that any claim for this fee of R100,000.00 had been proved. Accordingly, the matter was not pursued in argument. Having regard to the limited evidence on the subject, I agree with Mr DICKSON that the claim was not proved.

[20.4] However, the subject was pleaded by the Defendant and it cannot simply be ignored. If nothing else, it is also relevant to the probabilities of the Defendant's version.

[20.5] As in the case of the five percent commission claimed by the Defendant in the counterclaim, the alleged fee of R100,000.00 is not mentioned in any of the written exchanges between the parties, which were frequent and comprehensive. One would have thought that a fee of R100,000.00, if it was quite separate from the consultancy fee of US$3,500.00 per month payable to the Defendant, would have deserved at least a mention.

[20.6] One would also have thought that the fee of R100,000.00 was an obvious matter for the Defendant to raise during his alleged

conversation with Mr WILSON on 28 February 2005. On the Defendant's version, that did not happen.

[20.7] This is yet another feature of the case which does nothing to support the probabilities, or the credibility of the Defendant, in relation to the matter of the disputed conversation and letter.

[21.1] I digress to deal with another feature of the evidence which is relevant to an assessment of the probabilities on all the issues in the case.

[21.2] The Defendant asserts in the pleadings, that his oral agreement with the Plaintiffs, relating to the DON project, included

a term that he would be entitled to charge for his time spent on the project at the rate of R1,500.00 per hour.

[21.3] None of this was put to Mr WILSON and, when the Defendant testified, he said that that rate was agreed because it was the usual rate at which he charged for his services. He did not say when, where or under what circumstances this part of the agreement was discussed.

[21.4] Even more strangely, he admitted, without enlargement or explanation, that he had never accounted to the Plaintiffs for these fees. He also did not raise them with Mr WILSON in the conversation of 28 February 2005, when one would have expected him to do so.

[21.5] Once again, there is no mention in any of the exchanges between the parties that any such fee had been agreed or that any

amount in respect thereof was claimed by the Defendant.

[21.6] In those circumstances, I conclude that there never was any agreement to pay any such fee. Mr DICKSON did not contend otherwise.

[22.1] It follows from what I have said that I do not believe that the Defendant has even begun to discharge the onus upon him to prove that he was entitled to deduct any amount from the amount payable by him to the Plaintiffs in respect of the proceeds of the sale of the DON shares.

[22.2] It follows that the main claim must succeed.

[23.1] I turn now to deal with the Defendant’s Counterclaim.

[23.2] It is again useful to sketch the factual background to the dispute, which is whether the Plaintiffs, represented by Mr WILSON,

concluded an oral agreement that the Defendant would be entitled to a commission of 5% of the profit or gain realised by the Plaintiffs, or their principals, arising from their acquisition of a share investment in a South African company.

[23.3] The Defendant and Mr WILSON had become acquainted arising out of the acquisition by OCEAN LEISURE of the ZANZIBAR BEACH HOTEL. IFA HOTEL & RESORTS had already acquired interests in the leisure industry at Zimbali on the KZN North Coast and Mr WILSON told the Defendant that the Plaintiffs were looking to make further investments in Southern Africa. He discussed with the Defendant the various ways and means in which such investments might be achieved.

[23.4] This led to a meeting at Mr WILSON’s home in Zimbali at which Mr J. MAEHLER, of BDO, was introduced to Mr WILSON. “BDO” is the way in which the parties referred to the firm of chartered accountants and financial advisors who became involved in the Plaintiffs’ business affairs and I shall refer to the firm by that abbreviation as well.

[23.5] More meetings were held and the theme of the strategy which evolved was that the Plaintiffs would look to acquire all or most of the shares in a company listed on the Johannesburg Stock Exchange, into which some of the Southern African interests of the IFA Group might be injected. The idea was that, by doing this, the inherent value of the IFA Group’s South African assets would be enhanced as the result of being housed in a company listed on the JSE and the Group’s access to South African finance, to further its business ventures in South Africa, would be made easier.

[23.6] Mr DICKSON submitted that Mr WILSON, in his evidence, sought to minimise the significant part played by the Defendant in

developing and carrying out the strategy which developed in these meetings. This is what he called Mr WILSON’s “big lie” and he urged me to find that Mr WILSON was untruthful on the subject, which led to his entire version of events being tainted. I shall return to this subject later.

[23.7] These meetings led to various exchanges between the parties, in the form of e-mails and reports. BDO also participated in the development and carrying out of this strategy, represented by Mr MAEHLER, and a Mr D. VAN HUYSTEEN.

[23.8] There appears to be no real dispute that the chosen target of the strategy, namely, the DON Group, was the Defendant’s idea and he proposed that efforts be made to acquire all of the shares in the DON, either by buying shares on the open market or by making a direct offer to the existing shareholders, or a combination of the two.

[23.9] It was agreed that the acquisition of at least a small percentage of the shares, on the open market, would be pursued and,

for that purpose, the Defendant was mandated by the Plaintiffs to buy DON shares, as and when instructed to do so, with funds provided by the Plaintiffs, via their attorneys, LARSON FALCONER INC. The consequences of this mandate formed the subject of the main claim.

[23.10] During the course of 2004, the Defendant, acting in accordance with his mandate, acquired the 25 million DON shares to

which I have already referred. At the same time, and with the input of both BDO and the Defendant, the DON project was further advanced by the structuring of a proposed offer to the DON’s existing shareholders, to acquire all their shares.

[23.11] For present purposes, there is no need to detail the numerous exchanges between the parties which arose out of their attempts to implement the DON project. Suffice it to say that the DON shareholders were not impressed by the approaches made to them and it became clear that, if the Plaintiffs were to acquire control of the DON, it was going to cost a good deal more money than had initially been anticipated.

[23.12] It was in these circumstances that, by about February 2005, the Plaintiffs had decided not to pursue the DON project any further and it is common cause that, from about that time, the Defendant no longer participated in any of the subsequent strategies which led to the acquisition of control of MORIBO.

[23.13] Mr WILSON’s evidence was that the acquisition of MORIBO had absolutely nothing to do with the Defendant. It was a project suggested by Mr VAN HUYSTEEN of BDO and it was developed to fruition by IFA HOTELS & RESORTS, with the professional assistance of LARSON FALCONER INC. and BDO. It is common cause that the project involved what is generally referred to as a “reverse listing” of certain of the assets of IFA HOTELS & RESORTS, into MORIBO.

[23.14] The Defendant testified that MORIBO, as a possible target for acquisition, was raised by him, early in 2004, when targets were being identified and that, at the time, the DON was chosen as the better target. He said that, although he was left out of the MORIBO project, and did not participate therein at all, he knew about it all along.

[23.15] What ultimately happened in regard to MORIBO was that IFA HOTELS & RESORTS made a proposal to MORIBO’s existing

shareholders, which was accepted. Simplifying matters considerably, the essence of the proposal was that the existing shareholders agreed to sell most of their shares to IFA HOTELS & RESORTS whilst, at the same time, MORIBO issued about 212 million new shares, at a par value of 1 cent each, as consideration for the acquisition from IFA HOTELS & RESORTS of various assets in the leisure industry already held by IFA HOTELS & RESORTS in South Africa. The relevant agreement is at pages 3 to 28 of the bundle of documents which is Exhibit D.

[23.16] For the purposes of that agreement, the price payable by MORIBO for those assets was approximately R105 million and, as I have said, it was to be discharged by the issue of approximately 212 million shares in MORIBO to IFA HOTELS & RESORTS.

[23.17] The Defendant’s case is that, in terms of the oral agreement which he struck with Mr WILSON, the conclusion of the

MORIBO deal constituted the fulfilment of the Defendant’s mandate which entitled him to a commission of 5% of the profit or gain made by IFA HOTELS & RESORTS arising from its investment in MORIBO. I shall return later to the Defendant’s calculation of his commission, which amounts to some R47 million.

[23.18] I shall first examine whether the Defendant has proved, on a balance of probabilities, that an agreement was struck, in terms of which he was entitled to receive this commission.

[23.19] Once again, the Defendant’s version is flatly contradicted by the version given on behalf of the Plaintiffs by Mr

WILSON. Mr WILSON said that there was never any discussion about any such commission and that there never would have been because he simply did not have the authority to “give away” any of the profit which might have been made by any such investment.

[23.20] Therefore, one must again look to the probabilities, having regard to the other evidence and surrounding circumstances, to establish whether any such agreement was concluded.

[24.1] The first unusual feature is that the arrangement in regard to this commission did not receive a single mention in any of the documents or communications between the parties.

[24.2] The Defendant testified that, although he believed that the commission might amount to the sort of money pleaded in his

counterclaim only in the most fortunate circumstance, the commission was still likely to be a substantial amount of money even if the profit made on the investment was much lower. In those circumstances, it seems to me that, if there was such an agreement, it is probable that it would have received at least a mention in the correspondence.

[24.3] One would also have thought that, once correspondence was being exchanged between the attorneys for the parties, from October

2005 onwards, letters from the Defendant's attorney would have raised the subject. Of course, the reverse listing of MORIBO was not announced until February of 2006 but the Defendant says that he was aware of that project long before that. Especially in circumstances

in which the Defendant had been left out of the MORIBO project, once the DON project was terminated, one would expect the Defendant to make sure that the Plaintiffs were reminded that he was still entitled to his commission if the MARIBO project, or any other

investment arising directly or indirectly from the DON project, was successful. That did not occur. The Defendant, when cross-examined,

alleged for the first time that he had raised the subject with Mr WILSON in a telephone conversation and had been told that he was welcome to sue for his commission in Kuwait.

[24.4] The correspondence also reveals another golden opportunity for the Defendant to at least mention this commission arrangement. At page 229 of Exhibit B, the Plaintiffs' attorneys wrote to the Defendant on 25 November 2004 to communicate Mr WILSON'S instruction

that the Defendant was to immediately suspend all his activities relating to IFA, namely, matters relating to the DON and the ZANZIBAR

BEACH HOTEL.

[24.5] One must also bear in mind that the Defendant's evidence was to the effect that, when he became concerned about the fact that a large number of DON shares were registered in his name, with no written recordal that he was simply the nominee of the Plaintiffs in regard thereto, he arranged for his position in regard to those shares to be reduced to writing. Furthermore, his consultancy

arrangement in regard to the ZANZIBAR BEACH HOTEL was also reduced to the form of a written contract. The Defendant is a businessman with considerable experience and it is simply unlikely that he would not make sure that such a potentially lucrative commission arrangement was not reduced to writing, in some fashion.

[24.6] At page 235 of Exhibit B, there appears an e-mail dated 25 November 2004 in which the Defendant writes to Mr MAEHLER of BDO to place certain matters on record. In doing so, he recorded that he had been instructed to immediately cease all activities in relation to both the DON and the ZANZIBAR BEACH HOTEL.

[24.7] On 26 November 2004, the Defendant addressed a lengthy e-mail to Mr WILSON, which appears at pages 233 and 234. In that e-mail, the Defendant says the following:-

"But all said and done I feel that I have at all times only acted in the best interests of IFA and to get a legal letter from Greg terminating my service is a personal affront to which I take strong exception, since I have last being paid for my services in September it appears this was the plan along and you just were looking for a excuse. James I helped you out only because of my passion for Zanzibar and I did enjoy working with you BUT I do have a full time job running a large company and all you needed to do was to say thanks for my services and I would have left on a positive note and you didn't need to get Greg to terminate me."

[24.8] If there was an arrangement in terms of which the Defendant was to earn a substantial commission if the DON project (or any related project) was successful, I cannot imagine why the Defendant would not have raised the subject in this e-mail, in circumstances in which he saw himself being pushed aside in an unfair manner.

[24.9] The Defendant's evidence about how and when agreement was reached in regard to this commission also warrants examination.

Throughout the history of amendments to his Plea, the Defendant alleged that his oral agreement with the Plaintiffs, represented by Mr WILSON, was concluded in March 2004 and was celebrated at the Kings Park Rugby Stadium in Durban.

[24.10] When Mr WILSON was cross-examined, what was put to him was that, whilst other elements of the agreement relating to the DON project were agreed during meetings held with Mr WILSON at his home and elsewhere, in about March / April of 2004, the agreement in regard to the commission was reached during August of 2004, at a rugby match between South Africa and Australia, held at the Kings Park Rugby Stadium in Durban. Mr WILSON testified that, whilst both he and the Defendant attended that match, together with other people, no business was discussed on this social occasion and he categorically denied having discussed or agreed to pay any such commission.

[24.11] When the Defendant testified, in relation to a report by him dated 14 April 2004, which appears at pages 37 and 38 of Exhibit B, that when he suggested to Mr WILSON that the best way forward was to engage in a reverse listing of IFA'S South African assets into a company listed on the JSE, he said that Mr WILSON told him that if the listing was successful, he would be happy to give the Defendant a commission of 5% of the profit generated by that listing. The Defendant said that he and Mr WILSON shook hands on that arrangement.

[24.12] I asked the Defendant whether he was able to place a date or occasion to the meeting at which this was agreed and he answered,

clearly and firmly, that this occurred during a meeting at Mr WILSON'S home in Zimbali in late March or early April of 2004.

[24.13] Later in his evidence in chief, the Defendant testified that, during the Australia / South Africa rugby match in August at Kings Park Rugby Stadium, the matter of the DON project was again discussed and, in the course of Mr WILSON expressing his satisfaction at progress made on that project, he told the Defendant "in no uncertain terms that he would make me a wealthy man". The Defendant said that Mr WILSON confirmed in this discussion that the Defendant would receive 5% of the profit made from the DON transaction.

[24.14] When he was cross-examined about the difference between his pleadings and his evidence, in regard to when and where his agreement was concluded in regard to the matter of the commission, the Defendant testified that, in March / April of 2004, agreement was reached "in principle" at Mr WILSON'S home and the arrangement was "confirmed" at the rugby match in August

2004.

[24.15] When tested about what made the agreement in March / April merely "in principle", as opposed to "confirmed"

in August, the Defendant testified that, in March / April, there was no certainty as to what assets were to be placed into the listed entity whereas, by August, he and Mr WILSON had a "fair idea" as to what assets were going to be housed in the listed company.

[24.16] I find this explanation unconvincing. In all the documents created during the relevant period, no mention is made that any particular assets were to be housed in the DON, if control of it was successfully acquired.

[24.17] The Defendant's documentation relating to the DON appears on Exhibit B at pages 37 and 38 (his report dated 14 April 2004), pages 41 to 44 (his subsequent report after a meeting with the CEO of the DON) and at pages 220 to 222 (the Defendant's report of 9 October 2004).

[24.18] Whilst the first two documents mention the prospect of transferring assets into the DON, no specifics were mentioned and,

throughout the project, the strategy was clearly one in terms of which control of the DON was to be taken by buying its shares for cash. There was never any suggestion, in the documents, nor in what was put to Mr WILSON, that the DON project would be pursued, even in part, on the basis that assets would be sold to the DON in exchange for the issue of new shares. It is quite apparent that the strategy was to achieve control of the DON simply by buying its shares from the existing shareholders, for money and, once control had been achieved, the Plaintiffs could do as they wished in regard to the transfer of assets into the DON, upon commercial terms. This is confirmed by the contents of paragraph 7 of Mr WILSON'S report to his principals at pages 166 to 168 of Exhibit B.

[24.19] To my mind, there was absolutely no difference between the situation in March / April of 2004 and August 2004, in regard to the DON project, save that a small percentage (less than 10%) of the DON'S issued shares had been acquired by the Defendant on behalf of the Plaintiffs. There was simply no need to "confirm" an agreement which, on the Defendant's version, had been concluded with a handshake in March / April of 2004.

[24.20] When Mr WILSON was cross-examined, it was put to him squarely that the agreement had been concluded at the rugby match in August of 2004. Nothing was said about any earlier agreement, at his home or anywhere else. If this was a simple omission by counsel, I am sure that I would have been told that that was the case.

[24.21] I find that the Defendant's version about the conclusion of the agreement is contrived. He gave evidence to suite the circumstances as he saw them.

[24.22] The next matter concerns the Defendant's evidence about an agreed fee of R1,500.00 per hour. Whilst it was conceded, in

argument, that this had not been proved, it is still a matter which was pleaded and about which the Defendant testified.

[24.23] What the Defendant never explained, however, is why anyone, in the position of Mr WILSON, would agree to pay a hefty commission

to someone who was already being reimbursed for his expenses and being paid a fee of R1,500.00 per hour for all of his services. It is improbable that a businessman would agree to both.

[25.1] Even if one has regard to the alleged terms of the agreement, there are improbabilities in the Defendant’s version.

[25.2] The Defendant’s case was that he would be entitled to commission whether the investments was made by the Plaintiffs “or their principals”. At the time, both Mr WILSON and the Defendant knew that the First Plaintiff was part of the IFA group of companies. The Second Plaintiff was a separate investment company. In that context, the Plaintiffs would not have “principals” in the sense that that term is ordinarily understood. Although the Defendant testified that, in his view, reference by him and Mr WILSON to “IFA” meant a reference to all and any of the companies in the group, nothing like that was put to Mr WILSON who testified that, whilst the various companies formed part of a “group” they were nevertheless separate legal entities. In my view, a businessman of the Defendant’s experience would certainly know that.

[25.3] Another matter concerns the measure of the gain against which the Defendant’s commission was to be calculated. It was alleged to be “the difference between the value of the investment immediately upon acquisition and the price paid therefor”.

Bearing in mind that the Defendant’s first acquisition of DON shares, on behalf of the Plaintiffs, was made as early as the 22nd April 2004, it is difficult to see how this measure could be applied. When the first shares were purchased, was a calculation of profit or gain to be done on that day? How and when were calculations to be made in regard to the subsequent acquisition of shares? Did the agreement only apply if 100% of the issued shares were purchased or did it apply to each individual purchase of shares?

[25.4] These were matters which, in my view, would obviously have exercised the minds of both Mr WILSON and the Defendant, if there had been any agreement, as alleged by the Defendant, in relation to the DON project. Apparently, none of these matters were even discussed and, if there had been talk of a commission, I find that unlikely.

[25.5] There is also a discrepancy between what was pleaded and the Defendant’s evidence, about how the commission was to be calculated. In the pleadings, the measure is referred to as the difference between the price and the value of the investment as soon as it was acquired. Whilst such an investment might include the concept of a “reverse listing”, it is certainly not restricted to that form of investment.

[25.6] When he testified in chief, the Defendant placed the agreement squarely within the context of only a “reverse listing”.

In the Defendant’s evidence, what he meant by a “reverse listing”, was what occurred in the case of MORIBO, namely, that assets belonging to an unlisted company are sold to a listed company and the price thereof is paid by way of the issue of shares in the listed company to the seller of the assets. By that means, the listed company becomes the owner of assets and the unlisted company acquires control of the listed company.

[25.7] Although the Defendant tried strenuously to assert that the DON project was no different to the MORIBO project, both being

“reverse listings”, I can find nothing in the facts to support that contention. The MORIBO project fits easily into the mould of a “reverse listing” but the DON project does not.

[25.8] The DON project involved the acquisition of control of a listed company by a means quite different to a “reverse listing”. Sufficient shares were to be bought, for cash, to gain control of the DON and that did not involve the transfer of any assets. Throughout the history of the DON project, nothing at all is said about acquiring any shares in the DON in exchange for assets. What was obviously intended was that, once control of the DON had been acquired, one could then consider what assets might be transferred into the DON and on what basis, at a time when the potential transferor of those assets, and the DON were no longer dealing at arm's length but were part of the same group of companies. I again refer to Mr WILSON'S report at pages 166 to 168 of Exhibit B.

[25.9] In this context, it is even more difficult to see how the terms of the commission agreement, as pleaded by the Defendant, would work in the context of assets being sold to the DON after the Plaintiffs had already made their investment in that company.

[25.10] In my view, there is nothing probable about the Defendant’s version of the alleged commission agreement. None of the surrounding facts and circumstances fit the Defendant’s case either.

[25.11] I find that there never was any agreement concluded in terms of which the Defendant was to receive the 5% commission which he alleges. It appears to me to have been an attempt, on the part of the Defendant, to plead a case which fitted the later circumstances which arose, namely, the success of the MORIBO project, which had nothing to do with him.

[25.12] In this regard, even the Defendant was able to point to only two significant features of his input into the DON project. One was that it was he who identified the target and the other was that, on his version, the very notion of a “reverse listing” was his idea.

[25.13] Mr WILSON conceded that it was the Defendant who identified the DON as a target but, in regard to “reverse listing”

he said that the concept was one which was already familiar to him and to his principals because it was a concept well known in the international business environment. No one suggested to Mr WILSON that the concept of a reverse listing was something unique, about which he and the IFA group would not have known before.

[26.1] Although I have found that there was no agreement to pay any commission, it is still appropriate to consider whether the Defendant was able to establish the quantum of the commission, as pleaded.

[26.2] In simple terms, the Defendant valued the investment made in MORIBO (about 212 millions shares) with reference to its share price on 27 February 2006, which was the first day of trade on the JSE after the reverse listing of MORIBO was announced. The share price was R5,00 per share, the shares having a par value of 1 cent each.

[26.3] From this value, the Defendant deducted the price which IFA HOTELS & RESORTS paid for the MORIBO shares. That price was represented by the assets sold to MORIBO and was stated to be (using round figures) R105 million. Subtracting that price from the aforesaid value, the Defendant arrived at a gain, 5% of which amounted to the sum which he claimed as commission.

[26.4] For the Defendant, it was argued that the value of the investment was a matter of fact and that one need look no further

than the share price prevailing on 27 February 2006. That proposition is lined with difficulties but there is no need for me to dwell thereon. There was simply no evidence that the price set in the agreement between IFA HOTELS & RESORTS, and MORIBO, for the assets, (at about R105 million), was equal to the value of those assets. How that price was chosen was simply not canvassed in the evidence.

[26.5] Even if that value was extracted, on some basis, from the books of IFA HOTELS & RESORTS, everyone knows that the carrying

value of assets in the books of a company do not necessarily equate to their actual value in the market place. That is one of the reasons why the price of a company's shares might be greater than the apparent net asset value of the company, ex facie its books.

[26.7] In short, the Defendant failed to prove all the necessary elements of value which were required to compute his commission, on his version of the agreement.

[26.7] For all these reasons, the counterclaim must fail.

[27.1] I said earlier that I would return to Mr DICKSON’s submissions in regard to what he described as Mr WILSON’s “big lie”. The Defendant’s case was that Mr WILSON deliberately underplayed the important role which the Defendant

assumed in relation to the DON project, that Mr WILSON deliberately lied about that subject and Mr WILSON’s evidence about other relevant subjects should therefore be rejected.

[27.2] Mr DICKSON described Mr WILSON as a witness who was guarded and suspicious, even during his evidence in chief and that he tended to regard the process of giving evidence as something of a contest with counsel.

[27.3] That was not my impression of Mr WILSON at all. Certainly he was cautious in answering questions. He was also garrulous and somewhat self-important.

[27.4] However, he was dealing with events which were already five years old and, throughout, he was careful to say that, after such a time, there were things that he could not remember. In fairness to Mr WILSON as well, some of the caution that he displayed in answering questions was the result of the questions not being clear in the first place.

[27.5] The evidence of Mr WILSON was transcribed and I have gone through it carefully, having regard to what he said, and recalling

his demeanour in the witness box. I am satisfied that Mr WILSON did his best to tell the truth as accurately as he could remember it.

[27.6] In chief, Mr WILSON was led through the events and communications which involved the Defendant and he made no attempt to

play down the Defendant's involvement in the DON project. He freely conceded that Mr WOOD was included in the project because of the trust which the Defendant had engendered as a result of his efforts in regard to the management of the ZANZIBAR BEACH HOTEL. In the document at page 131 of Exhibit B, prepared by Mr WILSON, the Defendant is expressly stated to be one of the advisers involved in the DON project.

[27.7] It must be said that Mr WILSON was also clear in his evidence that, whilst the identification of the DON as a target for

acquisition came from the Defendant, it was not true to say that the very idea of the acquisition of a listed company, or of housing

assets in such a company, came from the Defendant. Both in chief and in cross-examination, Mr WILSON was adamant that, as a group, IFA had been involved with listed companies as part of their business and they were perfectly familiar with the principles behind a reverse listing.

[27.8] Mr DICKSON contended that it was only after harsh cross-examination that Mr WILSON eventually conceded that the Defendant was a part of the team involved in the management and decision making of the DON project. I do not believe that that is a correct reflection of what emerged from Mr WILSON'S cross-examination.

[27.9] On the first occasion that Mr WILSON was confronted with the suggestion that he was trying to avoid conceding that the Defendant

was an important member of the negotiating team, the subject of his evidence was not the DON project but the conclusion of a management

agreement with another hotel group in relation to the ZANZIBAR BEACH HOTEL and Mr WILSON testified that the Defendant was not an important member of that negotiating team because he had very little experience in the management of hotels and management contracts relating thereto. Not even the Defendant challenged that reasoning.

[27.10] I have gone through Mr WILSON'S cross-examination carefully and I cannot find the theme of his evidence for which Mr DICKSON

argued.

[27.11] When it was put to Mr WILSON that he was trying to suggest that the Defendant was a mere front to buy shares who also attended a few meetings, Mr WILSON rejected that suggestion and said that, in his evidence to that point, he had tried to deal as specifically as he could with exactly how the Defendant had participated in the DON project.

[27.12] He was questioned as to why the Plaintiffs' pleadings were not as expansive about the Defendant's participation as they could have been. One is not surprised to find that Mr WILSON was not really in a position to comment on why matters had been pleaded as they were because such drafting was left to the Plaintiffs' lawyers.

[27.13] When he was questioned about the Defendant's allegations in his Plea and it was suggested to Mr WILSON that the Defendant was really a project manager who gathered about him a professional team to run the DON project, Mr WILSON correctly pointed out that the Defendant never hired any member of the professional team, never paid their fees and was thus never entitled to reimbursement for those fees, contrary to what is alleged in paragraph 2.3.2 of every version of the Defendant's Plea. Not even the Defendant testified in accordance with that paragraph of his Plea.

[27.14] Later it was put to Mr WILSON that the true position was that the Defendant had been given a problem to solve, that the Defendant had gathered around himself a professional team and that the Defendant had really acted as a project manager. Mr WILSON denied the suggestion and said that it was not true to say that the Defendant had acted as a project manager, spending all his time on the project, at the expense of his job with the old CHEMSPEC. It was only in this context that Mr WILSON said that the Defendant's participation was confined to acquiring shares and attending a few meetings.

[27.15] Mr WILSON was also consistent, throughout his evidence, that the Defendant was not the main driver behind the Plaintiffs'

acquisition strategy in South Africa. He conceded that the Defendant was certainly part of the process of managing that strategy but he never conceded that the very idea of acquiring a listed company, or placing assets in such an entity, came from the Defendant.

[27.16] In short, there was no "big lie". The truth is that the Defendant found it necessary, in his pleadings, to greatly

exaggerate the level at which he participated in the DON project. Not even his own evidence supported that version. In my view, all the evidence supports the general picture painted by Mr WILSON of the Defendant being an active participant in a strategy, but not its mastermind nor its project manager.

[28.1] Mr DICKSON also argued that the Plaintiffs ran their case as a "smear campaign", directed at the Defendant's credibility.

I do not agree. The only witness who might be said to have testified about an issue of credibility, which was not directly related to other issues in the case, was Ms WESSELS, of Turner's Travel, who gave evidence about the issuing of airline tickets to the Defendant in May of 2009. This was relevant to the Defendant's application for an adjournment of the trial of this action at that time, the costs of which were reserved for my decision.

[28.2] As to that matter, the Defendant was cross-examined extensively on what emerged from the evidence of Ms WESSELS, namely,

that the airline tickets had been issued only on 5 May 2009, whereas the copy of the airline ticket annexed to the Defendant's application for an adjournment was dated 7 April 2009.

[28.3] No one suggested that there was any prospect that Turner's Travel had issued two documents with different dates, or even that any ticket had ever been issued on any date earlier than 5 May 2009.

[28.4] According to the evidence, there remained only two possibilities. Either the Defendant's personal assistant, who was charged with the task of arranging the airline tickets, had altered the document to reflect the earlier date which appears in the application for an adjournment, or the Defendant himself had altered the document or given instructions to someone to do so.

[28.5] That subject was simply left in the air by the Defendant and one does not know why the Defendant did not call his personal

assistant to give evidence, to explain how this discrepancy arose.

[28.6] Be all that as it may, the Defendant did not come out well from his cross-examination on the subject of the affidavits which he filed in this application for an adjournment. In particular, he was confronted with what he had said in paragraph 12 of his Replying Affidavit, which read as follows:-

"Falconer's comments about the issue of the tickets are groundless and based in ignorance. Overseas flight tickets are paid for when they are issued. That was done on the 7th April 2009. However, the flights were booked about six months ago when the commitments referred to were arranged."

[28.7] The Defendant was forced to concede that, in fact, the process of booking the tickets had only commenced on 26 March 2009 and that the tickets themselves had been issued only on 5 May 2009. He then had to explain why he had said, in his Replying Affidavit, that the flights had been booked "about six months ago", bearing in mind that his affidavit was signed on 14 May 2009.

[28.8] The Defendant then testified that what he meant was that he had "booked" the flights in his diary about six months

earlier and that he had not meant to say that the tickets themselves had been booked six months ago.

[28.9] That explanation is not credible. Paragraph 12 of the Defendant's Replying Affidavit deals specifically with the booking of "overseas flight tickets", not the "booking" of an overseas trip in a diary.

[28.10] To my mind, this is yet another example (of which there were several in his evidence) of the Defendant tailoring his evidence to suit the new circumstances with which he was confronted. Throughout his evidence, the Defendant showed himself to be a man of

intelligence who had an answer for everything. Every time that he was confronted with discrepancies or problems with his version, he would modify or improve his version to fit the case. I shall name just one example.

[28.11] In cross-examination, the Defendant was forced to concede that he had been somewhat less than frank with Mr DYKINS, in

negotiating with him about the alleged cession of the IFA loan account from the old CHEMSPEC to the Defendant. He admitted that he had not told Mr DYKINS that, at the time, he had already collected payment of R800,000.00 in respect of that debt. This evidence was all given in the context of the Defendant's version that his negotiations with Mr DYKINS took place in December of 2005.

[28.12] Later in his cross-examination, the Defendant said that the subject of the cession of IFA loan account to him was discussed with Mr DYKINS much earlier, namely, in about August of 2005. By this means, the Defendant was able to avoid any accusation that he had failed to tell Mr DYKINS about the collection of R800,000.00 because, on his version, as the last sales of shares only occurred in September 2005, he had not yet received payment of the R800,000.00. This new version led him into other contradictions with his earlier version and this serves only to confirm my impression of the Defendant in the witness box as a quick-thinking witness, with a capacity for invention.

[29.1] During the course of the evidence, there were other issues raised which are relevant to credibility in this case. They have no direct bearing on the important facts relating to the claim and counterclaim.

[29.2] I do not propose to canvass these other issues in any detail. Suffice it to say that nothing in the evidence relating thereto has persuaded me to alter my view about the probabilities of the case or the credibility of the most important witnesses, namely, Mr WILSON and the Defendant.

[29.3] On those important facts, and as already indicated, I accept Mr WILSON'S version and I reject the Defendant's version.

[30.1] It remains for me to deal with the matter of costs.

[30.2] In relation to an adjournment of these proceedings which occurred in April 2010, the parties were agreed that those costs

should be costs in the cause.

[30.3] In relation to the adjournment of the trial, which took place in May 2009, the only remaining issue is whether the Defendant should be ordered to pay those costs on the scale as between party and party or on a higher scale.

[30.4] In relation to those costs, and the costs of the case itself, the Plaintiffs have contended that those costs should be awarded on the scale as between attorney and own client, because of the dishonest way in which the Defendant has conducted himself in these

proceedings.

[30.5] There was some debate about whether an order for costs on the scale as between attorney and own client (as distinct from as between attorney and client) was even competent. In my view, in the present circumstances, the practical difference between the two scales is insignificant.

[30.6] Counsel for both parties were agreed that the decision of this case depended upon the credibility of, in particular, Mr WILSON and the Defendant. There was no room for error or misunderstanding. One was telling the truth and the other was not.

[30.7] I have found that the Defendant did not tell the truth. There never was any arrangement which entitled him to deduct any amounts from the proceeds of the sale of the DON shares and his evidence about that arrangement was false. His evidence about the related letter of 28 February 2005 is also false which means that the Defendant fabricated that letter. I do not believe his version of the alleged agreement to receive a commission either.

[30.8] It was suggested by Mr DICKSON that even if I found in favour of the Plaintiffs, it did not necessarily follow that such finding justified a punitive order for costs against the Defendant. I accept that there may be circumstances in which a credibility finding might not necessarily lead to the conclusion that one party has deliberately lied but this is not one of those cases. Not only did the Defendant give false evidence but he went as far as to fabricate a letter in an attempt to bolster his version.

[30.9] In my view, such conduct fully justifies a clear expression of the Court's condemnation of such conduct. Simply put, parties are expected, in the conduct of their cases, to tell the truth, as best they can recall it. That is not what the Defendant did.

[30.10] I take the view that an order that the Defendant pay all of the costs of this action, on the scale as between attorney and client, is fully justified.

[31] I accordingly make the following order:-

In respect of the Plaintiffs' claim against the Defendant, the Defendant is ordered to pay to the Plaintiffs the sum of R3,090,843.83 together with interest thereon at the rate of 15% per annum calculated from 1 October 2005 to date of payment;

The Defendant is ordered to pay the costs of this action on the scale as between attorney and client, including the costs which were reserved upon the occasion of the adjournments which were granted in May of 2009 and April of 2010;

In respect of the Defendant's claim in reconvention against the Plaintiffs, that claim is dismissed with costs, also on the scale as between attorney and client.

International Strath Judgment

DATES OF HEARING : 23, 24, 25 26, 27 NOVEMBER

2009, 6 APRIL 2010, 27, 28, 29, 30 SEPTEMBER 2010, 1, 4 AND 7 OCTOBER 2010.

DATE OF JUDGMENT 29 OCTOBER 2010

COUNSEL FOR PLAINTIFFS MR C. P. HUNT SC

INSTRUCTED BY LARSON FALCONER INC, DURBAN

C/O MASON INCORPORATED, PIETERMARITZBURG

COUNSEL FOR DEFENDANT MR A. J. DICKSON SC

INSTRUCTED BY SHEPSTONE & WYLIE, DURBAN