Steenbokpan Trust and another v Trout Trust and others
| Jurisdiction | http://justis.com/jurisdiction/166,South Africa |
| Judge | Sardiwalla J |
| Judgment Date | 13 September 2023 |
| Citation | 2023 JDR 3551 (GP) |
| Hearing Date | 13 September 2023 |
| Docket Number | 46321/2021 |
| Court | Gauteng Division, Pretoria |
Sardiwalla J:
The Applicants seek to review and set aside the determination of the Fourth Respondent dated 9 July 2021. The application was opposed by the First and Second Respondents.
Background Facts
The following are the relevant facts:
The two Trusts were the sole shareholders in a company Hotdog Café (Pty) Ltd, (hereinafter referred to simply as “Hotdog”).
The First Applicant, Booysen Junior, and the deceased, were, in practice, the individuals and office bearers who made all relevant decisions pertaining to the Trusts and Hotdog.
Hotdog’s Shareholders Agreement evinced a desire by the shareholders to keep the shareholding in Hotdog within a limited circle of shareholders. This was further advanced in a later agreement between the two Trusts with the title “Buy and Sell Agreement’.
The limited circle of shareholders consisted, in the first instance, of the existing shareholders. The two aforementioned Agreements, (i.e. the Shareholders Agreement and the Buy and Sell Agreement), provided for situations where either the First Applicant or the deceased might become disabled or die and did so by stipulating that upon the occurrence of one of these fortuitous events a so called “deemed sale” of
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shares in Hotdog, (of the disabled or deceased First Applicant or the deceased Mr Smith), would occur in terms of prescribed value determinations.
The Buy and Sell Agreement was intended to provide for funds to any shareholder constrained to purchase any other shareholder’s shares should the last mentioned shareholder be constrained, (by the deeming provision, to “retire” and transfer his shares to the remaining shareholder.
In the premises disability and life cover on the lives of the First Applicant and the deceased were taken out by them by means of insurance policies. The rights of the Trusts to these policies are the bone of contention in that Steenbokpan contends that the policies taken out in respect of the disability and life of the deceased belonged to Steenbokpan and/or were outright ceded to Steenbokpan. Trout on the other hand, contends that the balance of such policies, above the purchase price of the deceased Mr Smith’s shares when he became disabled and/or died, belong to Trout.
The bone of contention about the status of the policies is also at the heart of Steenbokpan’s contention that the Fourth Respondent breached his mandate in deciding the disputes between the two Trusts, acted irregularly in deciding the disputes as he did and consequently his determination falls to be reviewed and set aside.
On 6 April 2017 the deceased suffered a stroke which disabled him. A disability claim was made in terms of his disability policy but there was a waiting period before payments could occur.
On 19 June 2018 one of the deceased’s insurers, Hollard Insurance, paid an amount of R2 million to Steenbokpan due to the deceased’s disability occasioned by the deceased’s stroke. In terms of clause 7.1 of the Buy and Sell Agreement a deemed sale of Trout’s shares to Steenbokpan thus occurred on 18 June 2018, (as the clause determines that the day before the disability is deemed to be the day of sale).
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On 9 December 2019 the deceased passed away.
On 3 March 2020 one of the deceased’s policies viz an Old Mutual policy paid an amount of R3 million to Steenbokpan due to the deceased’s demise.
On 20 May 2020 a Hollard policy on the deceased’s life paid an amount of R2 019 829.68 to Steenbokpan.
Trout claimed the proceeds of the aforementioned policies on the basis that the deemed sale of shares had to be paid for whilst the balance of the proceeds of the policies above and beyond the value of the shares belonged to Trout. Consequently Trout initiated dispute resolution proceedings before the Fourth Respondent.
The dispute resolution process was provided for in the Buy and Sell Agreement, in clause 10 thereof deals with this issue.
Comprehensive pleadings, even consisting of a reply and a re- joinder, were filed.
In addition to the aforegoing a massive bundle of documents was provided to the Fourth Respondent to prove the factual matrix about the contract in dispute.
In addition to the aforegoing the legal representatives of both Trusts submitted comprehensive written submissions to the Fourth Respondent.
On 24 June 2021 the Fourth Respondent informed the parties by e- mail that, given the extensive written submissions, he did not see the necessity for viva voce argument.
On 5 July 2021 Trout’s attorneys notified the expert that the parties had discussed the question of viva voce argument and had arrived at an agreement that oral argument would not be necessary.
On 9 July 2021 the Fourth Respondent published his determination, upholding Trout’s claims.
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Grounds of Review
The Applicant’s basis of review are that:
In the first instance the expert’s powers were contractual and are to be found in clause 10 of the contract between the two Trusts.
In the second instance it is to be found in the contract between the disputing parties on the one hand and the expert on the other hand.
It was a term of the appointment of the expert that he would determine the disputes in a proper manner i.e. a manner which would ensure the legitimate expectations of the parties that the dispute would be met.
The legitimate expectations consisted of the following:
Evidence referred to as relevant by the parties would be considered by the expert in making his determination.
The modern interpretation to the interpretation of contracts viz taking into consideration the factual matrix would be followed and if the expert intended not to do so he would be obliged to inform the parties of same and invite argument about same.
Had the expert concluded that, prima facie, the basis upon which one or both of the parties submitted the determination should be done was not permissible or would not be entertained by the expert he would call for arguments with regards to such prima facie view and would not make a determination until this had occurred.
The rules of natural justice pertaining to the aforegoing would be followed.
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The Applicants submission in support of the relief
The Applicants contend that despite the contents of the parties’ written submissions and the voluminous documentation and references to same in the submissions the expert excluded the factual matrix. By doing so he breached his mandate, did not fulfil the task he was given, and acted irregularly. In the premises no fair hearing and adjudication of the disputes occurred. They further contend that the expert’s approach to determining the disputes does not pass constitutional muster as a result of which the determination proceedings should be found to be invalid and stands to be set aside specifically on the manner in which the expert decided to determine the dispute which led to a failure to adjudicate and determine the dispute properly.
They allege that the failure to allow for vive voce argument resulted in incorrect conclusions being made by the expert. The Applicant’s submit that although they agreed not to advance oral argument on the experts notion that as there were extensive submissions that oral argument wasn’t necessary, this not did mean that the Applicant’s agreed that the expert should not take a contextual approach. In support of its argument the Applicants relied on the Constitutional Court case University of Johannesburg v Auckland Park Theological Seminary and Another [1] that parties would invariably have to adduce evidence to establish the context and the purpose of the relevant contractual provisions. It was submitted that both parties requested the expert to have regard to the factual matrix and this is the reason the voluminous documentation was provided for in the first place. It is submitted that the approach of the expert in ignoring
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