Pezzutto v Dreyer and Others

• Jurisdiction: South Africa
• Judge: Joubert JA, E M Grosskopf JA, Smallberger JA, Van Den Heever JA and Van Coller AJA
• Judgment Date: 27 March 1992
• Citation: 1992 (3) SA 379 (A)
• Hearing Date: 17 February 1992
• Court: Appellate Division

A Smalberger JA:

The appellant and one De Polo instituted action against the three respondents in the Witwatersrand Local Division. (For the sake of convenience, and in order to facilitate the reading of this judgment, the appellant will be referred to as 'Pezzutto'; the three respondents will be referred to individually as 'Dreyer', 'Wylie' and 'Mincorp' respectively, B and collectively as 'the respondents'.) Appellant and De Polo's action was based on an oral agreement allegedly concluded between themselves, Dreyer and Wylie in September 1987. The nature and details of the agreement relied upon, and the relief sought consequent thereon, will appear in more detail below. The institution of the action was preceded by a successful interdict application by Pezzutto and De Polo restraining the respondents C from dealing in five million ordinary shares in Knights Gold Mining Company Ltd ('Knights'). There followed a number of preliminary skirmishes between De Polo and the respondents, the details of which need not detain us. This eventually led to Pezzutto applying to separate his trial action from that of De Polo. The application was granted despite the respondents' D opposition. The judgment on the application is reported - see De Polo and Another v Dreyer and Others 1990 (2) SA 290 (W). Pezzutto's separated trial eventually came before Flemming J. Pezzutto himself gave evidence and in addition called two witnesses, a Mr Laing and a Miss Wegener. A large number of documentary exhibits was handed in during the trial. The E respondents closed their case without calling any evidence. After the hearing the learned Judge a quo granted an order of absolution from the instance, with costs, against Pezzutto. However, he disallowed a limited portion of the respondents' costs to mark his disapproval of their opposition to his having sight of certain documents which, although before F the Court, had not been admitted or proved in evidence. In a subsequent application Pezzutto was granted leave to appeal to this Court by Flemming J against the whole of his judgment and order; he however refused the respondents leave to cross-appeal against the adverse order of costs made against them. The respondents were later granted the necessary leave by this Court. It is perhaps appropriate to mention at this stage, without G going into unnecessary detail, that the attitude adopted by the respondents, which was censured by the trial Judge, was perfectly legitimate and in keeping with a prior agreement between the parties with regard to the production and proof of documents. The adverse order as to costs amounted to an improper exercise of the trial Judge's discretion, H and was not justified. Mr Grbich, for Pezzutto, did not contend to the contrary. It follows that if the appeal were to fail, the cross-appeal must succeed. If the appeal succeeds, the cross-appeal would fall away, as the respondents would in any event be liable for all the costs in the Court a quo.

From the uncontradicted (and in many respects unchallenged) evidence of Pezzutto and his witnesses, as well as the relevant documentation, the I following picture emerges. Pezzutto was 70 years of age at the time of the trial. A former Italian prisoner of war in South Africa, he stayed on in this country when the war ended. He is by occupation a prospector, and was involved, over the years, in apparent pursuit of his dreams of wealth, in numerous prospecting ventures in a variety of minerals, including gold. J With the passage of time he acquired some measure of expertise in the

Smalberger JA

A prospecting for, and identification and exploitation of, minerals. Many years ago he met a certain Mia, a wealthy, influential and astute businessman who directly or indirectly controlled various mining rights and institutions. One such was the Witwatersrand Gold Mining Company Ltd ('Wit G M') of which Mia at all relevant times was the chief executive.

As a result of their dealings with each other a healthy relationship was B established between them. In September 1986 Pezzutto was granted permission by Mia to prospect a defunct gold mine called the 'Joker and Jackpot' which Pezzutto hoped to start up again with one Tuininge. Samples taken from the mine by Pezzutto were assayed for him by De Polo who worked as a chemist in the assay laboratory at Rand Leases Gold Mine ('Rand C Leases'), and with whom he had previously been associated in certain gold recovery ventures. (It would seem, although at the relevant time Pezzutto was unaware thereof, that De Polo had neither a matriculation certificate nor any technical qualifications and had perpetrated frauds on this score on a number of people; he appears none the less to have been capable of doing the laboratory work which he did.) The samples taken proved D unpromising and in the end nothing came of the venture. Pezzutto reported the unsatisfactory nature of the samples to Mia. In the course of the ensuing discussion Pezzutto was given the right by Mia to investigate an old mine dump near Germiston known as the Jesus dump. Their understanding was that if the initial investigation of the dump demonstrated a basic E potential Pezzutto would report back to Mia with a view to the matter being taken further. At this stage Tuininge dropped out of the picture and it was left to Pezzutto and De Polo to proceed with the initial investigation. Pezzutto first went on his own to take samples. He took these to De Polo at Rand Leases for analysis and testing. This was done, F but it was considered necessary to take further samples. Pezzutto and De Polo went together to take these. In the meantime Mia was being kept abreast of developments. From De Polo's results it became apparent that cheap 'heap leaching' of the dump was out of the question and that the much more expensive 'carbon-in-pulp' process would have to be employed if the dump was to be exploited. This was reported to Mia. It was apparent G that any project would involve the exploitation of more than just the Jesus dump. Other dumps, the rights to which Mia controlled, would also be involved. Mia required the removal of these dumps as he wished to develop the underlying land for industrial purposes. Pezzutto arranged for Mia and one Karrim, Mia's right-hand man, to meet De Polo at Rand Leases, where De H Polo explained to them, inter alia, the difference between 'heap leaching' and 'carbon-in-pulp' gold recoveries, both of which processes were in use at Rand Leases. At the conclusion of this meeting Mia authorised a more extensive investigation of the Jesus and other dumps. The cost of the further investigation was to be for Pezzutto's account. As he was unable to fund these costs alone, he entered into an agreement with De Polo I whereby the latter would assume responsibility for the further investigation and they would share equally in the proceeds of any successfully concluded operation. In this way they became partners in the venture they had embarked upon. (At that stage Pezzutto had no right to recover any gold found in the Jesus and other dumps - he merely had Mia's J permission to investigate them. Their

Smalberger JA

A agreement was therefore in anticipation of obtaining the necessary rights in due course.) This agreement was later recorded in a document which forms part of the record. De Polo engaged the services of a surveyor, one Ashman, to take certain sand samples and to prepare certain maps and plans. The results were promising, but Pezzutto and De Polo realised that B they would not be able to take the project much further on their own. Pezzutto had in mind to approach Rand Leases for assistance, but De Polo persuaded him to meet Dreyer. He (Dreyer) was known to De Polo and Pezzutto was impressed by what De Polo had told him about Dreyer.

The meeting between Pezzutto and Dreyer took place in September 1987 at House 5 at Rand Leases. De Polo was also present. The discussion and C events that occurred are critical to the outcome of the appeal, and for this reason I set out verbatim Pezzutto's evidence-in-chief in relation to the meeting:

'Would you tell his Lordship what happened? - Well, we sat down at the table and Dr Dreyer said to me, he said, "I heard via Mr De Polo that you D got the right to investigate the Jesus dump by Mr Mia?" I said, "Yes, that is correct." I said, "We have already done a lot of work towards the investigation." He said, "Have you got this right, or this permission - whatever - in writing from Mr Mia?" I said, "No, I haven't got it in writing. But as far as I am concerned, Mr Mia's word is good enough for me." So, "All right", he said, "now I presume that you would like to know who I am and what I am doing, and what I can do for you should we agree to E go further together?" So I said, "Sure, I would like to hear." So he told me that he had a lot to do with Rand Leases plant, and he was busy with East Rand alluvial gold recovery. He also consulted for Rand Barlows. He was consulting - or he did consult - for Anglo American. And he was due to go to Germany for the purchase of a plant to mine ferro-chrome, or to process ferro-chrome in Botswana. Well, you know, to me it was more than F wonderful what I heard from him, and I was very, very pleased.

Did he mentioned Mr Glenn Laing at any time? - Yes. Somewhere along the line he said, "Look, if we join forces, and we've got to take this project further". He said, "I know a Mr Glenn Laing." And he said, "The reason that I am saying that is that I have got in mind using Glenn Laing for the establishment of the plant required there, which is the exact duplicate of G what we need. So naturally", he said, "Glenn Laing hasn't got to start finding out - asking left, right and centre. He just knows exactly what to do because he has got one operating exactly the same." So I said, "Well, I am quite happy with that."

Did...