CASE LAW UPDATE

Facts: Routemaster (applicant) relies on a series of written loan agreements with Retro Active (respondent). Under an initial agreement, Routemaster advanced R12,5 million. Under a further agreement, Routemaster advanced a further amount of R9,057,289.25 for other business interests of Retro Active. Routemaster provided Retro Active with a total capital amount of R21,557,289.25. The loans are unsecured. Retro Active made two repayments to Routemaster, totalling R230,000. Retro Active’s indebtedness was further reduced when Routemaster credited it R728,000 for a separate property transaction. The parties also agreed to reduce the return on the loan from 35% to 30% per annum. Accounting for the repayments and the agreed reduction in return, Routemaster’s profit and loss statement shows that Retro Active owes it R29,493,130.09. In a series of emails and a draft agreement to consolidate their transaction, Retro Active’s sole member, Mr Boolay, accepted the accuracy of Routemaster’s calculation of the amount owing. While the consolidation agreement was not concluded, the draft terms are an admission by Mr Boolay of Retro Active’s liability for R29,493,130.09, which was payable by December 2022. By May 2022, relations soured, with Retro Active refusing to repay anything but the capital and refusing to sign the consolidation agreement.

Application: This is the return date of a provisional order of winding-up of the respondent. The application is made by Routemaster, supported by the intervening party, SJP Investments CC (SJP) and opposed by Retro Active.

Discussion: Mr Boolay’s subsequent affidavit compounds his dishonesty with implausible excuses and falsehoods. For example, he claims that the amount Retro Active owes to SJP "does not represent an actual debt". In fact, SJP’s uncontested claim is that it lent Retro Active R90 million, of which R59,396,918 is secured, and that the debt is "due, owing and payable". Mr Boolay also stated that SJP intends to intervene on the return date to oppose the winding up of Retro Active. In fact, SJP intervened to seek a final order of winding-up against Retro Active if Routemaster’s provisional order is not made final. After the provisional liquidation order had been granted, the joint liquidators of Retro Active applied to the Master of the High Court for an extension of their powers to proceed with certain incomplete sales of immovable property. As a prerequisite to consenting to the transfers in the absence of a final order, the Master requested Mr Boolay to confirm that Retro Active will not oppose a final order. Mr Boolay gave the Master written confirmation that Retro Active will not oppose the granting of the final order. That undertaking was false. Two days earlier, Mr Boolay had filed an opposing affidavit in this application. At the hearing, Retro Active’s attorney continued to argue in opposition to a final order.

Findings: Perjury is the unlawful and intentional making of a false statement by a person who has taken the oath or made an affirmation in a judicial proceeding. It is a serious offence against the administration of justice. Retro Active says it can pay its debts when they become due. It denies that its debt to Routemaster is not owing. However, Routemaster has established that Retro Active’s admitted indebtedness for the capital of R21,557,189.25 has been owing since the end of December 2022. The failure of a debtor to pay an admitted debt is sufficient to demonstrate the insolvency of the respondent, such failure being prima facie proof of an inability to pay its debts. Retro Active’s own management accounts show its inability to pay its debts. Retro Active has not provided credible evidence that it can pay its debts. Retro Active’s management accounts are unsubstantiated and inconsistent with the facts before the court. None of the claimed asset values are supported by an independent valuation. They appear inflated. It has been proved that Retro Active cannot pay its debts. SJP’s intervention was reasonably necessary to protect its interests, and it is entitled to a costs order.

Order: Retro Active CC is placed under final winding up. The costs of the application are to be costs in the liquidation, to be recovered by the applicant and the intervening party (SJP) on a scale as between attorney and client. The Registrar is directed to refer the matter to the Director of Public Prosecutions to investigate Mr Boolay, the member of Retro Active CC, for the offence of perjury.

PASCHKE AJ

Facts: The parties were married to each other in 2018, out of community of property, with the inclusion of the accrual regime in terms of Chapter 1 of the Matrimonial Property Act 88 of 1984. No children are born of their marriage. In 2022, the parties, as purchasers, executed an agreement of sale for a property in Sunningdale for R3,715,000. Both parties signed a home loan application with Standard Bank. The parties took occupation of the Sunningdale property as their marital home. Problems arose in the marital relationship. The parties applied for protection orders against each other and the applicant instituted divorce proceedings.

Application: This opposed application concerns the termination of the parties’ co-ownership of the Sunningdale property under the actio communi dividundo. The applicant has pleaded and proved the necessary elements for that cause of action, namely: co-ownership of the property with the respondent, that he no longer wishes to be co-owner, that the property, which is a residential home, cannot readily be partitioned, and that the parties have not agreed upon the mode of division of the property. The respondent contends that the fate of the Sunningdale property is inextricably intertwined with the issues in the parties’ pending divorce action and resists the relief sought.

Discussion: The applicant is aggrieved that he no longer enjoys the use of the property, yet the respondent does, while he continues to pay the bond and insurance costs. In the present matter the parties’ co-ownership of the Sunningdale property arises from and is constituted as a consequence of their marriage relationship. But for his marriage to the respondent, he would not have shared ownership with her. The Sunningdale property was purchased for and occupied as the parties’ marital home. Independently of the matrimonial property regime chosen by the parties, and as matter of law, a reciprocal duty of support arose between them from the moment of their marriage. A legal relationship exists between the parties, other than the co-ownership itself.

* See paras [38]-[40] for the discussion of Municipal Employees' Pension Fund v Chrisal Investments [2020] ZASCA 116.

Findings: Taking account of the facts of this case, the marriage relationship (despite being out of community of property) renders the parties’ co-ownership of the Sunningdale property as bound co-ownership, and for so long as the parties remain bound to each in marriage – which is their primary “extrinsic relationship” – their co-ownership endures. It can be terminated only when the marriage is dissolved. Even if the court’s finding characterising the parties’ co-ownership (and deferring the termination of the co-ownership) is wrong, it does not follow that it is equitable that the property must be sold as prayed for by the applicant. Where physical division of the property is not possible or is impractical, as in the present matter, the court has a wide equitable discretion to order alternative appropriate relief.

Order: The application is postponed for hearing as a trial in the fourth division simultaneously with the divorce action. The affidavits filed of record in this application shall stand as the parties’ respective pleadings. All directives issued in the case management of the divorce action shall apply equally to the further conduct of the trial of this matter. All questions of costs stand over for later determination.

GORDON-TURNER AJ

Facts: Jordan and Joel Basdeo (applicants) were the nominated beneficiaries in respect of their father’s death benefit policy (Discovery Life Plan). The value of the policy was R400,000, hence each beneficiary was entitled to receive R200,000 (50% of the policy amount). The deceased was murdered in 2020 and an investigation ensued. The applicants submitted their claim as beneficiaries in terms of the policy, but in December 2020 Discovery was informed by the police to “stop all insurance payments” relating to the deceased. The SAPS letter mentioned that “(t)he story what witness the son of deceased Jordan Basdeo told police does not add up.” Two years later, on 6 September 2022, the applicants’ attorney issued a letter of demand on Discovery requesting the payout of the benefits.

Application: In this summary judgment application, the first applicant seeks relief only for the accrued interest and costs incurred in respect of his claim. Before the hearing of this application, both applicants were paid their capital amounts. The only outstanding amounts due to the first applicant were interest and costs.

Discussion: Discovery’s main contention was that in terms of the policy, the first applicant was not entitled to his benefit payout. Discovery argued that the applicants were aware that it was not withholding the beneficiary payment because of the first applicant’s personal interest, but that Discovery was contractually bound to await confirmation in respect of the investigation. No evidence was presented that Discovery followed up on the status of the SAPS investigation in the period before summary judgment proceedings was instituted. An enquiry was made only after the institution of the summary judgment proceedings.

Findings: Although it may be necessary to await the outcome of investigative processes, there was a need to balance the fairness in respect of both the insurer and the insured under the prevailing circumstances. The assessment of the claim has to be done within a reasonable time. The defence is neither bona fide nor good in law and does not raise a triable issue. The first applicant was justified in pursuing the summary judgment proceedings and is entitled to the interest and costs. Discovery withheld the benefit payout without following up on the investigation status. It appears to have only made enquiries after the institution of this application. Litigation, as well as the continuation thereof, could have been avoided if Discovery dealt with the claims timeously. The court is inclined to order costs on the punitive scale.

Order: Summary judgment is granted for the interest on R200,000 at the applicable rate in terms of the Prescribed Rate of Interest Act 55 of 1975, a tempore morae, from 6 September 2022 to date of payment. Discovery is ordered to pay the costs on an attorney and client scale.

KOOVERJIE J

Facts: Bidvest (applicant) conducts business and prides itself as a leading corporate service-orientated business providing hygiene services. Waco is a direct competitor of the applicant, also conducting business as a service provider of professional washroom hygiene services. Ms Urwin was employed by the applicant and promoted to the role of New Business Consultant. Ms Urwin was required to by the applicant to conclude a new letter of appointment and furnish new restraint undertakings to the applicant, intended to supersede and replace a 2015 restraint. Ms Urwin adopted the view, correctly, that the Werksmans Agreement relied upon by the applicant, is inchoate and invalid, and of no force or effect. The inchoate state of the Werksmans Agreement is glaring, more so because of the express recordal in bold type on the cover page thereof of the words "Draft- Not For Signature". Following her resignation from her position with the applicant and her request to the applicant to be provided with a copy of the restraint agreement which the applicant contended she was bound by, the applicant provided her with a copy of the Steiner Agreement. As regards the Werksmans Agreement, Ms Urwin alleges that she is not bound thereby because she did not intend to sign any restraint over and above the Steiner Agreement.

Application: Bidvest seeks to enforce certain contractual restraint of trade, non-solicitation and confidentiality undertakings provided by Ms Urwin in favour of the applicant, on an urgent basis. The relief sought is final in effect. The applicant seeks to justify the enforcement of a restraint against Ms Urwin in terms of what is described as the Werksmans Agreement, alternatively the Steiner Agreement, on the grounds of the need to protect its trade connections which it alleges Ms Urwin can target for the benefit of Waco Africa in the Republic.

Discussion: The parties contractually determined the nature of the interests they intended to protect by the imposition of the restraints. Bidvest discharged such onus flowing from the Steiner Agreement. The respondent does not seriously assail the enforceability of the restraint in issue on the basis that it is too widely framed. Neither as to area nor period of operation. The question whether an agreement in restraint of trade is against the interests of the public is a factual issue. The applicant submits importantly that Ms Urwin obtained detailed enough confidential information regarding the applicants' customers’ requirements to be able to prepare competitive proposals for the benefit of Waco in any of its businesses that compete with the applicant. The applicant is perfectly entitled to rely on the Steiner Agreement as it does in the alternative basis. Ms Urwin’s argument that her new position with Waco would not afford her access to customer connections and confidential information is unsustainable. The respondent was employed by the applicant at a senior level as a National Manager, a senior position within the applicant's overall business. In matters concerning restraint agreements, the seniority of the employee is an important consideration.

Findings: The protectable interests of the applicant, the subject of the application from the Steiner Agreement, weigh up qualitatively or quantitatively against the interest of the respondent being gainfully employed by the applicant’s direct competitor. Knowledge of the applicant's customers’ requirements is not in the public domain and would be extremely valuable to a competitor. Ms Urwin can use the information at her disposal to target or train her trainees to target those customers for the benefit of Waco, using the applicant’s confidential and proprietary information and the personal customer connections that she has established, thereby competing unfairly and unlawfully with the applicant for Waco's benefit. The applicant has shown that it is entitled to final relief as sought as it has established a clear right. Not only has Bidvest’s clear right been demonstrated but also its breach. The applicant has discharged its onus of proving the existence of the contract in restraint of trade, and that the respondent is in breach of the contract, in that she has taken up employment with a direct competitor of the applicant, in this case Waco. Bidvest has a real right not to be faced with unfair competition. The restraint is not unreasonable and therefore enforceable and not against public interest.

Order: The first respondent is interdicted and restrained until 12 August 2025.

MUDAU J