REPUBLIC OF SOUTH AFRICA

THE HIGH COURT OF SOUTH AFRICA
GAUTENG LOCAL DIVISION, JOHANNESBURG

CASE NO:   31038/2014

(1)	REPORTABLE: YES / NO
(2)	OF INTEREST TO OTHER JUDGES: YES/NO
(3)	REVISED. 

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                   DATE			        SIGNATURE

In the matter between:

MINTAILS SA PROPRIETARY LIMITED 		       First Applicant

HVH GOLD PROPRIETARY LIMITED			       Second Applicant

DENIKA MINING AND MINERAL PROCESSING 
PROPRIETAY LIMITED					       Third Applicant

And

CUBENCO 192 PROPRIETARY LIMITED                          Respondent

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J U D G M E N T
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MPHAHLELE, J:

[1] On 03 December 2013 the first applicant and the respondent entered into a Memorandum of Understanding (“the MOU”) in terms of which the respondent undertook to purchase the first applicant’s shareholding in the second applicant. Pursuant thereto the respondent made payment of R1 000 000-00 to the first applicant and conducted a due diligence on the second applicant.

[2] On 10 June 2014 the first applicant and the respondent entered into an agreement of sale in respect of the entire issued share capital of the second applicant for a purchase consideration of R6 000 000-00 (“the agreement”). The balance of the purchase price was payable in two tranches, the first tranche of R2 500 000-00 on or before 23 June 2014 and the second one of R2 500 000-00 on or before 04 August 2014.

[3] The first applicant warranted that the shares were free of any encumbrances, that it was able to deliver to the respondent good title in the shares.

[4] In the event of a breach of the agreement by the respondent and it failing to remedy such breach within a period of five days after receipt of written notice from the applicant calling upon it to remedy the breach, the first applicant would be entitled to either claim specific performance of the agreement or cancel the agreement forthwith without further notice.

[5] The agreement constituted the entire agreement between the parties with regard to the matters dealt with therein and no representations, terms, conditions or warranties express or implied not contained in the agreement would be binding on the parties. Further no indulgences granted by any party to the other would constitute a waiver of any of that party’s rights under the agreement. 

[6] The first applicant contends that on 04 August 2014 it placed the respondent on terms to make payment within five days of that letter. This, it is submitted was due to the respondent’s failure to make the payments as agreed upon despite several demands and indulgences granted. The first applicant elected to cancel the agreement and on 20 August 2014 notified the respondent of the cancellation. 

[7] The respondent concedes non-payment of the purchase price but denies breach of the agreement. It contends that the alleged breach of the agreement is due to the first applicant’s misrepresentation of the fact that the shareholding in the second applicant is not without encumbrances.  

[8] The respondent has apparently since discovered that immovable property owned by the second applicant’s and situate at portion 32 of Varkfontein 169IR held under the title deed T036069/695 (“the property”),is subject to a mortgage bond. The respondent then served the first applicant with notice of referral of the alleged dispute to arbitration as provided for in the agreement. In this notice, the respondent requests that this application be stayed pending the outcome of the arbitration process. The first applicant challenges the formulation of the alleged dispute referred for arbitration. 

[9] The first applicant maintains that the obstacle placed in the way of the respondent’s due and timeous performance of its obligations in terms of the agreement is spurious. It submits that the subject of the sale agreement was not the property but rather the shares. Nevertheless the first applicant submits that the mortgage bond over the property was settled and duly cancelled on 09 October 2007 but the registrar of deeds has apparently failed to amend its records. The original title deed of the property is missing and as proof of the cancellation of the mortgage bond the first applicant furnished the respondent with a copy of the title deed endorsed with a confirmation of the cancellation of the bond by the registrar of deeds. This is unacceptable to the respondent. The first applicant is unable to provide the original title deed as it claims that it is missing.

[10] The issue to be decided is whether or not a disputed claim has been properly referred to arbitration for determination as provided for in the agreement. The respondent referred its dissatisfaction concerning the first applicant’s failure to produce an acceptable proof of the cancellation of the mortgage bond to arbitration. The referral is not properly couched to disclose a dispute that is subject to arbitration in terms of the agreement between the parties. A dispute must be properly formulated before an arbitrator can be appointed. [See: Telecall (Pty) Ltd v Logan 2000 (2) SA 782 (SCA) at 786I-787A].

[11] In the present case the matter that the respondent seeks to refer for arbitration is merely a dissatisfaction concerning failure by the first applicant to provide the original copy of the tittle deed. This is a matter that can be easily resolved by either of the parties obtaining a certified copy of the lost title deed or a letter confirming cancellation of the mortgage bond from the registrar of deeds. There is clearly no arbitral dispute to be referred for determination. I am therefore of the view that the agreement has been validly cancelled by the first applicant in terms of the termination provisions of the agreement. 

[12] On 15 August 2014 the first and/or the second applicants put the third applicant in possession of the property. It is submitted that on 18 August 2014 a group of men led by van den Berg of the respondent unlawfully gained entry into the property by cutting the locks off the gates. The respondent’s representatives further assaulted Herbst of the third applicant and the security guards employed to secure the perimeter and forcibly removed them from the property. The assailants, including van den Berg warned Herbst that should he or any other person in the third applicant’s employ approach the property, enter it or purport to prepare the plant for the purposes of processing ore or otherwise that they would again be beaten and forcefully removed from the property. The respondent has ostensibly failed to deal with these allegations save to deny that the third applicant was not in possession of the property as mentioned. 

[13] I, therefore make the draft order annexed hereto marked “X” an order of this court.

                  _____________________________________
		 S S MPHAHLELE
                                       JUDGE OF THE HIGH COURT OF SOUTH AFRICA 
                                          GAUTENG LOCAL DIVISION, JOHANNESBURG

Counsel for the Applicant: Mr. Pullinger 
Instructed by: Attorneys: Edward Nathan Sonnenberg Attorneys
Counsel for Respondent: Ms. Strydom
Instructed by:  Strydom Attorneys
Date of hearing:  02 September 2014
Date of judgment: 08 September 2014