Fedsure Life Assurance Co Ltd v Worldwide African Investment Holdings (Pty) Ltd and Others

• Jurisdiction: South Africa
• Judge: Cloete J, Joffe J and Horn J
• Judgment Date: 04 December 2002
• Hearing Date: 28 November 2002
• Docket Number: A5029/2002
• Citation: 2003 (3) SA 268 (W)
• Court: Witwatersrand Local Division
• Counsel: W H G van der Linde SC (with him P N Levenberg) for the appellant. C D A Loxton SC (with him A E Bham) for the first respondent.

Cloete J: E

Introduction

[1] The purpose of the application brought in the Court below was to preserve amounts of money totalling R352 609 296 pending the award of the arbitrator in arbitration proceedings which commenced after the F founding papers were served but which have not yet terminated.

[2] The learned Judge who heard the application concluded that a prima facie right had been shown in respect of two amounts comprising the total, but found it unnecessary to come to any conclusion in respect of the remaining amounts. The application was dismissed, with costs. The primary reason given by the learned Judge G for this order was that the applicant had not shown an actual or well-grounded apprehension of irreparable loss if no interdict was granted. The learned Judge also found that the applicant had failed to show that the harm it would suffer if the interdict was not granted, was greater than the harm the first respondent would suffer if the H interdict was granted.

[3] A Full Bench was convened to deal with the applicant's appeal as a matter of some urgency. Only the first respondent opposed the relief sought in the Court below and only the first respondent opposes the appeal. I

The facts

[4] I do not propose analysing the facts and the many disputes in any detail. The record runs to 950 pages. The essential facts, somewhat simplified, are the following. J

Cloete J

[5] Athlin Investments (Pty) Ltd, the third respondent, is a so-called 'special purpose vehicle' (SPV) formed for investment A purposes by its shareholders with the intention that it be wound up after a specified number of years. There were at all material times three such shareholders. The applicant's predecessor, to whose rights and obligations the applicant succeeded, advanced R146 million to the third respondent and in return acquired B-class shares in the third respondent. The first respondent has A-class shares with loaded B voting rights and at all material times controlled the third respondent. The second respondent, BOE Bank Ltd, has preference shares with very limited voting rights.

[6] In terms of a shareholders' agreement (the Athlin shareholders' agreement) to which the applicant and all of the C respondents are parties, the third respondent was obliged to hold shares in a specified company, Plessey (Pty) Ltd (Plessey); and in this regard the first respondent gave a warranty to its co-shareholders and the third respondent in the following terms: D

'12.6

For the avoidance of doubt Worldwide [the first respondent] as the controlling shareholder of Athlin . . . as a material term of this agreement warrants to the other parties hereto that it will not by any act or omission do anything which will prejudice the rights and interests of the other parties to this agreement in respect of the underlying investment covered by this agreement namely all the additional Plessey shares dealt with herein.' E

[7] The first respondent is the sole shareholder in two other SPVs. Those SPVs together with the third respondent held 51% of the shares in Plessey when this matter was heard in the Court below. The remaining 49% was held by a company in the Dimension Data group of companies (the DiData company). It is important to emphasise that the first respondent at no stage itself held shares in Plessey. F

[8] The DiData company and the first respondent are parties to another shareholders' agreement concluded on 12 October 1998 (the Plessey shareholders' agreement) in terms of which the first respondent was entitled to put the 51% shareholding held by the three SPVs in Plessey to the DiData company. Clause 13 of the put G option, in its ultimate form (as amended by the parties to the shareholders' agreement in terms of an addendum thereto dated 8 December 2000), made provision for two components: a fixed price for a percentage of the shareholding (clause 13.2.1) and a variable price for the remainder of the shareholding which depended on the valuation of the Plessey shares (clause 13.2.2). That latter valuation had to be H agreed upon by the DiData company and the first respondent and failing such agreement, it had to be determined by an independent merchant bank acceptable to both parties and in accordance with specified criteria. The addendum also provided that the DiData company was obliged to pay the first respondent an amount of R169 145 139 I in consideration for the first respondent agreeing to fix that part of the value of the put equity referred to in clause 13.2.1. Payment had to be made in cash on 11 December 2000 or once a suspensive condition had been fulfilled, whichever was the later.

[9] When the application was heard in the Court below, the first J

Cloete J

respondent had not exercised the put option and the applicant sought an order restraining the first respondent from doing so. But A once the applicant had had sight of the terms of the put option, as amended (which the first respondent had deliberately withheld from it until a late stage in the proceedings when the first respondent could no longer avoid doing so), the applicant wished the first respondent to exercise it. The first respondent gave a formal B undertaking, recorded by the Court below in the order made, to exercise the option, and gave a further formal undertaking, also recorded by the Court below in the order, to pay a portion of the proceeds of the put option (the clause 13.2.2 proceeds) into an interest-bearing trust account with a neutral third party on behalf of the third respondent. C

Evidence on appeal

[10] Well after the appeal had been set down for hearing and indeed after heads of argument had been delivered by both sides, the first respondent delivered an application to lead further evidence in this Court on affidavit. That application was opposed by the applicant. D The first respondent's replying affidavit was delivered only the day before the appeal was heard. This Court's displeasure at the inconvenience caused was voiced during argument and is repeated. We heard argument on the application at the commencement of the appeal and dismissed the application. We indicated that reasons for the order E would be furnished, and an appropriate order as to costs made, in due course. The reasons follow.

[11] The evidence which the first respondent wished to lead relates to what happened when the put option was exercised, ie to events which occurred after the application had been dismissed by F the Court below. According to the founding affidavit in the application brought before this Court, the first respondent agreed with the DiData company to reduce the clause 13.2.1 fixed component of the put price by R24 million in order to compromise a dispute which had allegedly arisen between the first respondent and the DiData G company as to the validity of the put option; a substantial proportion of the proceeds of the put has been paid over to Old Mutual, which finances the two SPVs of which the first respondent is the sole shareholder; and for the purposes of the clause 13.2.2 variable component of the put price, the first respondent and the DiData H company agreed the value of Plessey at R160 million - which was about half the amount (R310 million) which the first respondent had, in its dealings with the applicant prior to the application being heard in the Court below, contended Plessey was worth. The applicant was not consulted prior to the reduced valuation being agreed upon and repeated requests addressed on behalf of the applicant to the first respondent for an explanation as to I why, and on what basis, the valuation was arrived at, were only answered when the replying affidavit was filed less than 24 hours before the appeal was heard. That, of course, means that the applicant has not at any stage had an opportunity of dealing with the first respondent's assertions. J

Cloete J

[12] The Supreme Court of Appeal has laid down repeatedly that, in general, that Court, in deciding an appeal, decides whether the A judgment appealed from is right or wrong according to the facts in existence at the time it was given and not according to new circumstances which came into existence afterwards (Weber-Stephen Products Co v Alrite Engineering (Pty) Ltd and Others 1992 (2) SA 489 (A) at 507C - D and cases there quoted). It was held, therefore, that in principle, evidence of events subsequent to the judgment under B appeal should not be admitted in order to decide the appeal (ibid at 507D - E). It has not yet been decided by the Supreme Court of Appeal whether that Court could in any circumstances admit evidence of events subsequent to the judgment under appeal in order to decide the appeal; but that Court has held that in the absence C of express provisions, it is very doubtful, to put it no higher, that it can do so - although the possibility has not been excluded (Goodrich v Botha and Others 1954 (2) SA 540 (A) at 546B - C).

[13] After Weber-Stephen Products was decided, s 21A was inserted into the Supreme Court Act 59 of 1959, by s 22 of the General Law Third Amendment Act 129 of 1993 and substituted by s 7 of D the Judicial Matters Amendment Act 104 of 1996. Subsection (1) in its present form provides:

'When at the hearing of any civil appeal to the Appellate Division or any Provincial or Local Division of the Supreme Court the issues are of such a nature that the judgment or order sought will have E no practical effect or result, the appeal may be dismissed on this ground alone.'

[14] It was submitted that evidence would be necessary to establish whether the order sought would have no practical effect or result and that s 21A(1) accordingly rendered the decision in Weber-Stephen Products and the previous decisions of the F Appellate Division referred to therein, inapplicable. I am by no means...