THE SUPREME COURT OF APPEAL
OF SOUTH AFRICA

Reportable
Case no:
477/2002

In the matter between:

MICHAEL DE VILLIERS, N.O.

First Appellant
BRIAN BASIL NEL, N.O.

Second Appellant
and
BOE BANK LIMITED

Respondent
_______________________________________________________

Coram:
Howie P, Streicher, Navsa, Heher JJA and Van Heerden AJA

Date of hearing: 29 August 2003
Date of delivery: 26 September 2003

Summary:
Claim based on three loan agreements ─ lack of formal resolution

by company ─ whether in prevailing circumstances agreements

authorised ─ whether provision that waiver of suspensive

conditions be in writing only enforceable.

_______________________________________________________
JUDGMENT
_______________________________________________________

NAVSA JA:
[1] During December 2000 the respondent company, BOE Bank
Limited (‘the bank’), instituted action in the South Eastern Cape Local
Division of the High Court against the appellants in their capacity as
joint liquidators of Intramed (Pty) Ltd (in liquidation). The claim which
is the subject of this appeal is for payment of a total amount of
R101 458 341-07 plus interest. The claim is based on three separate
but similar written loan agreements (‘the loan agreements’),
concluded on 17 June 1999 (less than six months before the winding-
up), in terms of which amounts of R40 million, R20 million and R40
million respectively would be lent and advanced to Intramed (Pty) Ltd
(‘Intramed’) against a number of securities namely, a notarial bond
over Intramed’s moveable assets, a continuing covering mortgage
bond over fixed property, a cession of book debts and deeds of
suretyship. The amounts outstanding on the loan agreements
became due and payable on the winding-up of the borrower.
[2] On 3 June 2002, Ludorf J, who heard the matter, held in favour
of the bank. The full extent of the order made by him is as follows:

‘A.
The Defendants are ordered to pay to Plaintiff:

(i)
The sum of R 20 489 275-47 plus interest thereon at 17.25% per annum
from 29 November 1999 to 12 September 2000;
(ii)
The sum of R 40 926 423-88 plus interest thereon at 17.2% per annum
from 29 November 1999 to 12 September 2000.
(iii)
The sum of R 40 042 641-72 plus interest at 17.2% per annum from 29
November 1999 to 12 September 2000.
B.
I declare that the claims by the Plaintiff are secured by the securities

which are annexures “G”, “I” and “J” to the Plaintiff’s particulars of claim.
C.
The Defendants are ordered to pay the costs of suit including the costs of

two Counsel on the scale as between attorney and client.’
[3] Ludorf J subsequently granted the appellants leave to appeal to
this Court. The three questions posed in the appeal are as follows:
(i)
whether the loan agreements, the cession of book debts and
the registration of the notarial and mortgage bonds on which the
learned judge in the Court below based his order were duly
authorised by Intramed;
(ii)
whether the total of R100 million advanced in terms of the loan
agreements was received by Intramed; and
(iii)
whether the non-fulfilment of a suspensive condition in each of
the loan agreements caused them to lapse.
[4] I will for the sake of convenience refer to the appellants as the
liquidators.

[5] The liquidators contend that Alan Stanley Hiscock (‘Hiscock’),
who signed the loan agreements on behalf of Intramed, could not
bind it as he purported to because he was not a director of Intramed
and was not authorised by Intramed by way of a formal resolution or
in any other acceptable manner. They contend further, that since the
R100 million advanced in terms of the loan agreements was paid to
Macmed Health Care Limited (‘Macmed’) without Intramed’s
authorisation, the latter had not received the money and was under
no obligation to repay the loans in question. They submit that the
Court below erred in concluding that they were liable to pay the
amounts in question.
[6] The background against which this appeal is to be decided is
set out hereafter.
[7] Macmed was a company listed on the Johannesburg Securities
Exchange, operating almost entirely through subsidiary companies
and joint ventures in the health care industry. The loan agreements
were negotiated and concluded against the background of a decision
by Macmed to acquire from Aspen Healthcare Holdings Limited
(‘Aspen’) parts of the business of South African Druggists Limited
(SAD) conducted under the style of ‘Intramed’ and ‘Serevac’, as well

as the shares and loan accounts held by SAD in Fine Chemicals (Pty)
Limited, for a total of R500 million (‘the acquisition’).
[8] On 2 March 1999, whilst Aspen was in the process of
purchasing the businesses from SAD, a document embodying heads
of agreement was signed on behalf of Aspen and Macmed, the terms
of which ultimately regulated the acquisition.
[9] The purchase price of R500 million was to be raised by way of
a rights offer of R200 million, plus R200 million from Macmed’s own
cash resources and bank facilities of R100 million.
[10] To raise the last mentioned R100 million Macmed entered into
negotiations with the bank, which agreed to advance the money to
Macmed or its nominated subsidiary. The nominated subsidiary was
ultimately Intramed.
[11] Intramed was formerly known as Zenith Medical and Surgical
Supplies (Pty) Ltd (‘Zenith’), but Macmed caused its name to be
changed so that it could be used as a vehicle for the acquisition and
operation of the established business known as ‘Intramed’. Zenith
was a shelf company and was intended to be a receptacle for the
Intramed business to be acquired from SAD. Intramed was thus

brought into being by Macmed for the specific purpose of housing the
business to be acquired.
[12] In accordance with Macmed’s modus operandi of conducting its
business, mainly through subsidiaries which it controlled, the shares
in Intramed were transferred to Macmed Investments (Pty) Limited
(Macmed Investments), which was wholly owned by Macmed. Thus,
Macmed became Intramed’s ultimate holding company.
[13] On 17 June 1999 Mr Gregory James Heron (‘Heron’), the
bank’s general manager (structured finance), authorised by the bank,
signed each of the loan agreements on its behalf. On the same date,
Hiscock signed these agreements ‘for’ Intramed and Macmed.
[14] In accordance with the facility letter dated 24 May 1999 sent by
BOE to Macmed confirming approval of the R100 million loan to
Macmed ‘and for its nominated subsidiary’, the loan agreements
identified Intramed as the borrower.
[15] Each of the loan agreements contain similar terms concerning
repayments, interest and default by the borrower. They each make
provision for security to be furnished in one or more of the forms
referred to earlier.

[16] The first covering notarial bond hypothecating movable assets
which was in terms of one of the loan agreements to be executed by
Intramed in favour of the bank, was registered on 16 August 1999;
the first continuing covering mortgage bond over specific fixed
property (the Intramed factory) which was in terms of another of the
loan agreements to be executed by Intramed in favour of the bank
was registered on 16 August 1999; and the cession of book debts
required in terms of the third loan agreement, was signed by Hiscock,
purporting to act on behalf of Intramed, on 17 June 1999. On this last
mentioned date, Hiscock also signed a deed of suretyship in terms of
which Macmed bound itself as surety in favour of the bank for all the
debts owed by Intramed to the bank, as was required in terms of
each of the three loan agreements.
[17] It is common cause that:
(i)
on 18 June 1999, pursuant to the loan agreements and
acting on the instructions of Hiscock, the bank paid R100
million into an account held at Standard Bank, called
SCMB Macmed Rights Offer, Customer no. 68802,
Account no. 278037;

(ii)
three instalments as provided for in the loan agreements
totalling R5 962 153-74 were paid by Intramed to the
bank during July, August and September of 1999;
(iii)
after September 1999 Intramed discontinued making
payments and was placed in provisional winding-up on 29
November 1999, which order was confirmed on 16
February 2000;
(iv)
on 31 March 2000 the liquidators sold the Intramed
business for R153 million;
(v)
on 12 September 2000 the liquidators paid the bank an
amount of R100 million subject to the outcome of the
action instituted in the Court below.
[18] The Court below in coming to the conclusion that the loan
agreements and the underlying securities were duly authorised had
regard to the fact that, at the time of the conclusion of the loan
agreements, Hiscock was the principal figure behind the Macmed
group’s business success and growth. The acquisition was his
brainchild. Ludorf J had regard to the importance of the acquisition to
the group in general and to Macmed in particular, and concluded from

the evidence that the directors of Macmed and its members were well
aware of and in favour of the acquisition.
[19] The learned judge also had regard to a resolution by Macmed
ratifying the acquisition (ordinary resolution number 1) and a second
resolution (ordinary resolution number 2) passed by its members on
18 June 1999 at a general meeting of shareholders in the following
terms:

‘It was agreed that any director of the Company be and is hereby
authorised to sign all such documents and do all such other acts as may be
necessary to implement Ordinary Resolution Number One.’
(emphasis added)
[20] Ludorf J took into account that at some stage prior to the
passing of the resolutions it was common knowledge that the majority
of the members of Macmed were in favour of passing the resolutions
so that the actual passing thereof was a foregone conclusion. He
reasoned that the directors were authorised to act not only on behalf
of Macmed but also on behalf of Intramed because the latter was a
wholly owned subsidiary of Macmed through Macmed Investments.
He considered that the terms of the second resolution, particularly the
last emphasised part in the preceding paragraph, warranted the

conclusion that a delegation by a director or directors of Macmed to
Hiscock was authorised.
[21] Although the said resolution was passed the day after the loan
agreements were signed, Ludorf J reasoned that the resolution was
no more than the formal embodiment of the pre-existing unanimous
assent on the part of members of Macmed to do something intra vires
the company.
[22] In considering the correctness of the conclusions reached by
the Court below it is necessary to have regard to:
(a) the role played by Hiscock within the Macmed group and its
subsidiaries;
(b) material events leading up to the conclusion of the loan
agreements, including events in which Hiscock and the
directors and shareholders of Macmed and of Intramed played
a role;
(c) events subsequent to the conclusion of the loan agreements,
including those in which the actors described in (b) played a
role.
[23] The evidence shows that there were three leading figures in the
Macmed group of companies: Donald Ian McArthur (‘McArthur’), the

managing director and chairman of the board of directors of Macmed,
Robin Frank Maguire (‘Maguire’), an executive director of Macmed
Consumables, the division in which Intramed was housed, and
Hiscock, the Macmed company secretary and its de facto financial
director. Maguire and McArthur were the only directors of Macmed
Investments which, as stated earlier, held all the shares in Intramed.
[24] Hiscock was an unrehabilitated insolvent and thus statutorily
barred from taking up any directorships within the group. His official
designation was that of Macmed’s company secretary. Within the
Macmed group Hiscock was regarded as the ultimate financial
authority and his authority over subsidiaries was unquestioned.
[25] McArthur himself considered that Hiscock was the powerhouse
of the group and largely responsible for its then growing success.
[26] Over a number of years during which he exercised overall
financial authority within the group Hiscock negotiated, concluded
and executed numerous contracts on behalf of Macmed and its
subsidiaries. It appears that there was never in this regard a
challenge to his authority by any of the directors of either Macmed or
of its subsidiaries or by any shareholders of Macmed.

[27] I turn to deal with the involvement of shareholders and directors
of Macmed and Intramed in events surrounding the conclusion of the
loan agreements.
[28] On 4 March 1999 there was a report by Hiscock to the Macmed
board on developments in the acquisition. It appears from the
minutes of the relevant meeting that Aspen had agreed to a due
diligence enquiry and that the acquisition was being pursued.
[29] On 30 April 1999 a circular to Macmed shareholders was
issued concerning the rights offer that was an integral part of the
financing of the acquisition.
[30] Before the loan agreements were signed Hiscock was hard at
work to ensure that Macmed and Intramed complied with their
obligations in terms of the heads of agreement signed in March 1999.
He negotiated and secured the loan facility with the bank. He visited
the Intramed factory to ensure that the assets were properly
catalogued and valued. As described earlier, the necessary steps
were taken to locate Intramed within a stand-alone wholly-owned
subsidiary company. Hiscock also recruited Intramed’s financial
director, Albertus Petrus Marais (‘Marais’) from its predecessor.

[31] All the activity and the underlying transactions generated
excitement within Macmed. The group was abuzz with anticipation
that the acquisition would be the most important transaction of its
existence.
[32] Legislation
required
that
the
managing
director
of
a
pharmaceutical company, such as Intramed, be a registered
pharamacist. To that end Macmed appointed John Kok managing
director of Intramed on 19 May 1999, with effect from 11 June 1999.
The letter of appointment was written by McArthur in his capacity as
Chief Executive Officer of Macmed and records that Kok’s
appointment is at the instance of Macmed’s board of directors.
[33] On 26 May 1999 McArthur, Maguire, Kok and Marais were
appointed directors of Intramed. This appointment is somewhat
strange as the relevant resolution suggests that they appointed
themselves. However, it has not been suggested that they were
disqualified from acting as directors of Intramed or that that they
lacked authority to act on its behalf. On the contrary, the liquidators
adopt the position that these directors of Intramed ought to have been
formally consulted before the loan agreements were signed and that
a specific formal resolution by them authorising the loans in question

was required. They submit that this was required because Intramed
was a distinct legal persona which had to act in its own name and in
terms of its articles of association.
[34] On 26 May 1999 Hiscock reported to the Macmed Board that
the acquisition was almost finalised and would add meaningfully to
the group’s stature and earnings potential.
[35] On 3 June 1999 a circular was distributed to Macmed
shareholders incorporating a notice of a general meeting formally to
approve the acquisition.
[36] On 14 June 1999 the directors of Macmed passed a resolution
authorising Hiscock to sign the deed of suretyship (by Macmed) in
favour of the bank (as required by the loan agreements) which he
then duly did on the same day.
[37] Extracts of minutes of an Intramed directors’ meeting on
14 June 1999 reflect resolutions authorising:
(a)
the borrowing of R60 million against the security of a mortgage
bond over immovable property and a cession of book debts;
(b)
the borrowing of R40 million against the security of a special
notarial covering bond over moveable property;

(c)
Hiscock to sign the necessary documents in respect of the acts
referred to in (a) and (b).
Maguire signed the extracts of the minutes. There is a dispute about
the second signatory to the minutes, which, for reasons that will
become apparent, it is not necessary to resolve.
[38] On 14 June 1999 Hiscock signed a power of attorney on behalf
of Intramed authorising the registration of the mortgage bond in
favour of the bank.
[39] On 17 June 1999, the day on which the loan agreements were
signed, Hiscock signed a cession of book debts to the bank on behalf
of Intramed as required by one of the loan agreements. On the same
day, Marais and Gayronisa Rahim, an accountant employed by
Intramed as a financial manager, signed debit order instructions on
the Intramed bank account for repayment of each of the three loans.
[40] On 18 June 1999 Macmed shareholders adopted the two
resolutions referred to in paragraph [19]. On the same day Hiscock
instructed the bank to pay the R100 million into the rights offer
account referred to earlier in this judgment. The bank complied.
[41] On 18 July 1999 Intramed paid instalments to the bank on each
of the three loans totalling R1 972 604-24.

[42] On 20 July 1999 Hiscock signed a power of attorney on behalf
of Intramed for the registration of the special notarial bond in favour of
the bank.
[43] On 16 August 1999 the mortgage bond over immovable
property was registered in favour of the bank. On the same day the
notarial bond by Intramed was registered in favour of the bank.
[44] On 18 August 1999 Intramed paid instalments to the bank on
each of the three loans totalling R1 995 985-76.
[45] On 18 September 1999 Intramed paid instalments to the bank
on each of the three loans totalling R1 993 563-74.
[46] It is clear from Marais’ testimony that he was employed in
management at SAD at the time that the acquisition was being
negotiated. He became aware of the implications of the acquisition
towards the end of March 1999. He understood how Macmed would
structure the acquisition and knew how Intramed would function
within the Macmed group. He was actively involved in setting up
Intramed and in starting up its operations. Testifying about his
interaction with Kok about the acquisition and its implementation he

said the following:

‘Mr Kok and myself had daily discussions, and I would inform him, as a
colleague I would inform him of what was happening, and on some issues
obviously he did not have maybe the technical financial experience, but
nevertheless he was informed, and we would discuss issues around the
company and the formation, and also what administration was happening at that
stage, that he was kept up to date.’
[47] At the beginning of June 1999 Marais became aware of the fact
that Intramed’s assets were being used as security to obtain a loan
from the bank. He was also aware of the revaluation of the
immovable property on which the Intramed factory was situated.
According to Marais he discovered later in June 1999 that Intramed
was borrowing the R100 million from the bank.  Although he was the
financial
director
of
Intramed,
Marais
unquestioningly
took
instructions from Hiscock but he was somewhat disappointed by the
fact that Intramed, the company he had just joined, was borrowing a
substantial amount of money. He informed Kok about the loan. Kok
apparently registered some protest but Maguire explained that it was
necessary. It is clear that Kok and Marais decided to abide the
decisions to conclude the loan agreements, albeit perhaps
grudgingly.

[48] Marais conceded that a formal resolution authorising or ratifying
the loan agreements was never passed by Intramed’s four directors.
As far as he was concerned, Hiscock, as the financial head of
Macmed, had the authority to sign the loan agreements. As was the
case with the other subsidiaries of Macmed, Intramed was an
operational arm within the group and operated under instructions
from corporate headquarters. In June 1999 Intramed required an
overdraft facility at the bank and could only acquire one with
Hiscock’s approval.
[49] It is true that at one stage under cross-examination Marais
stated that Macmed had borrowed R100 million against the Intramed
assets. However, Marais later testified that he provided for the R100
million loan in Intramed’s budget, made calculations and concluded
that Intramed could repay the loan. In August 1999 he received the
three loan agreements and reflected the R100 million as a loan by
Intramed from the bank in Intramed’s accounting records. Up until
that time the total paid for the Intramed business was reflected in
Intramed’s books of account as an amount of R425 million, owing to
Macmed. From August 1999 onwards that amount was reduced to

R325 million, with the remaining R100 million recorded as being
owed to the bank by Intramed.
[50] I will now have regard to the relevant section of Intramed’s
articles of association before considering, against the factual matrix
set out in the preceding paragraphs, whether the conclusion of the
Court below in respect of the primary issue were correct.
[51] Article 57 of Intramed’s articles of association provides:

‘Unless otherwise determined by the company in general meeting, or by a
meeting of the directors (at which all directors are present), the quorum
necessary for the transaction of the business of the directors shall be a majority
of the directors for the time being in office. A resolution of directors shall be
passed by a majority of the votes of the directors present at the meeting at which
it is proposed.’
[52] Of course, principles of good governance of companies dictate
that resolutions should be properly taken at general meetings or
meetings of directors after due and proper deliberation. This does not
mean, however, that in instances where this course is not strictly
followed the directors cannot otherwise bind a company.
[53] It has never been suggested that the loan agreements or the
underlying securities were not intra vires Intramed. It is abundantly
clear that the directors of Intramed, both before and after the

conclusion of the loan agreements, knew about them. McArthur, the
Chief Executive Officer of Macmed which was aggressively pursuing
the acquisition, was also a member of the board of Intramed and of
Macmed Investments. His assent to the loan agreements and the
underlying securities can hardly be questioned. As shown earlier the
Macmed board was kept apprised of developments in the acquisition
and its execution. Maguire, a Macmed director and a director of
Macmed Investments, signed the relevant extracts of the minutes of
Intramed recording the resolutions flowing from the acquisition.
Maguire was also a member of the Intramed board and was actively
involved in the acquisition. His approval of the loan agreements can
also not be questioned. On Marais’ uncontested evidence he and Kok
both knew about the loans and decided to abide by them.
[54] In these circumstances the lack of a formal resolution by the
directors of Intramed, either authorising the conclusion of the loan
agreements or ratifying it, is not fatal to the bank’s claim. See Alpha
Bank Bpk en Andere v Registrateur van Banke en Andere 1996 (1)
SA 330 (A) 348G-I where the following appears:

‘Ook is daar geen meriete in die punt dat daar nie ‘n skriftelike resolusie
was van Alpha Bank se direksie dat Van der Walt die relevante toestemming

mag teken nie. . . . Die direksie van ‘n maatskappy kan deur eenparige
toestemming afstand doen van die formele vereistes wat resolusies betref
(Gohlke and Schneider and Another v Westies Minerale (Edms) Bpk and Another
1970 (2) SA 685 (A) op 693E-694F). Insoverre een direkteur nie vooraf sy
toestemming gegee het nie omdat hy oorsee was, is dit duidelik dat hy na sy
terugkeer in die direksie-besluit berus het (sien Robinson v Randfontein Estates
Gold Mining Co Ltd 1921 AD 168 te 217-18; Dickson v Acrow Engineers (Pty) Ltd
1954 (2) SA 63 (W) te 65B, 69D-E). Vir twee-en-‘n-half jaar na die in-kuratele-
stelling het geen lid van die direksie daarteen beswaar gemaak nie. Die
waarskynlikhede is oorweldigend dat die direksiebesluit geratifiseer en tans
onaanvegbaar is.’
[55] In Randcoal Services Ltd and Others v Randgold and
Exploration Co Ltd 1998 (4) SA 825 (SCA) at 840G-H the following
appears:

‘I am therefore of the view that all the respondent’s directors had at least
impliedly resolved to authorise the conclusion of the substitution agreement as
amplified by Heyns’ letter. I am not unmindful of the fact that this resolution was
not adopted at a properly convened board meeting. But the doctrine of
unanimous assent does not require that all the directors should meet together. . .’
[56] In the present case the acquisition was at the instance of
Macmed. Intramed was brought into life to serve Macmed’s purpose.
All the subsidiaries in the group were subjected to control from

headquarters. The directors of Intramed accepted this method of
operation and acquiesced in the decisions made by Macmed in
respect of the acquisition. From a logistical point of view one can
understand why the acquisition and the loan agreements were
negotiated before Intramed came into existence.
[57] Not only did all the directors of Intramed acquiesce in the
transactions in question, but the directors of their immediate holding
company, Macmed Investments (Maguire and McArthur) consented
to and were actively involved in finalising the acquisition. This
included the conclusion of the loan agreements. The shareholders of
Macmed, Intramed’s ultimate holding company, passed formal
resolutions authorising the acquisition including all such acts as were
necessary to ensure that it was finalised. To sum up, shareholders
and directors of Intramed all authorised the loan agreements and the
underlying securities.
[58] Even though Ludorf J’s reasoning is not entirely consonant with
what is contained in the preceding paragraphs, his conclusion that
the loan agreements and the underlying securities were authorised is
in my view correct.

[59] At this point it is necessary to deal with the second issue in this
appeal, namely, whether the R100 million was received by Intramed.
There is no merit in the submission that, because the R100 million
was required by Macmed as part of the financing of the acquisition
and because it received the R100 million in its ‘rights offer’ account, it
was the borrower and should be liable for the repayment. A borrower
is entitled to nominate the person to whom money it has borrowed
should be paid. This does not mean that the borrower ceases to be
the borrower. Against the facts spelt out earlier in this judgment it is
clear that Intramed borrowed the money from the bank, nominated
the Macmed rights offer account as the payee, paid three instalments
and in all the circumstances can rightly be considered to have
received the R100 million.
[60] I now turn to deal with the question whether the agreement
lapsed because of the non-fulfilment of a suspensive condition. Each
of the loan agreements contains the following suspensive conditions:
‘2.1
This agreement is subject to the fulfilment of the following suspensive

conditions to the satisfaction of BOE by no later than 17 June 1999.
2.1.1 final unconditional duly completed agreements satisfactory to BOE, being
duly signed by all parties thereto recording the purchase and sale of the
business from Aspen Healthcare Holdings Limited to the borrower.

2.1.2 BOE being placed in possession of, and approving, the final audited
annual financial statements of Macmed for the year ended 31 March 1999;
2.1.3 the loan agreements to finance the acquisition by the borrower of the
immovable and movable assets of the business are signed by all parties
and become unconditional;
2.1.4 the guarantee issued by BOE to Standard Corporate and Merchant Bank
on behalf of Macmed in the amount of R30 000 000,00 (thirty million
Rand) being cancelled and returned to BOE without having been
presented for payment;
2.1.5 the provision of the security required in terms of 7.’
The suspensive condition in question is contained in clause 2.1.1. It is
common cause that no final agreement as contemplated therein was
submitted to the bank for scrutiny and that the condition was not
waived in writing by the bank. Aspen and Macmed were ultimately
content to have the acquisition regulated by the heads of agreement
referred to earlier. The conditions contained in clauses 2.1.2 to 2.1.5
were fulfilled after a number of written extensions by the bank.
[61] Clause 2.2 of each of the loan agreements provides:

‘The suspensive conditions referred to in 2.1 are stipulated for the benefit
of BOE which shall be entitled, in writing only, to waive any or all such conditions
or to extend the date by which any or all of them must be fulfilled. If any of the
above conditions are not waived or fulfilled by the date set out in 2.1 or such later

date as agreed by BOE, then this loan agreement shall lapse and be of no further
force or effect.’
[62] Clause 9.7 of the one loan agreement and clause 11.7 of the
other two provide:

‘No contract varying, adding to, deleting from or cancelling this agreement,
and no waiver of any right under this agreement, shall be effective unless
reduced to writing and signed by or on behalf of the parties.’
[63] The submission in the alternative on behalf of the liquidators is
that, in terms of clause 2.2, the loan agreements had lapsed with the
result that restitution should occur.
[64] It was contended on behalf of the bank that, since clause 2.2
was stipulated for its benefit, the requirement that waiver could only
be effected in writing could also be waived by it. It was submitted
further that it is clear from the evidence that the bank in fact waived
the condition in question.
[65] The Court below held that the requirement that waiver be in
writing was a condition solely for the benefit of the bank which it could
waive. The Court found that on the evidence an oral waiver by the
bank had been proved and that the loan agreements were of full force
and effect despite the non-fulfilment of the condition.

[66] The material facts against which the dispute concerning the
interpretation and application of clauses 2.1.1, 2.2, 9.7 and 11.7 is to
be decided are set out in paragraphs [67] to [72] hereafter.
[67] In respect of two loan agreements, the bank, on 17 June 1999,
in writing, extended until 18 June 1999 the period within which
condition 2.1.1 had to be met. In respect of the remaining loan
agreement the bank extended the period until 25 June 1999. On 18
June 1999 the period in respect of the first two loan agreements was
further extended by the bank in writing to 25 June 1999.
[68] On 18 June 1999, the day on which the R100 million was paid
into the Macmed’s rights offer account, an internal bank e-mail written
by Heron recorded the following:
‘. . . Paul Leaf-Wright and Clive Whittaker have agreed to payout the Macmed
loans today.
Condition 2.1.1 still however needs to be met in the next week. Notwithstanding
this payout can still take place.’
[69] On 19 July 1999 an internal bank memo from Clive Whittaker,
the bank’s regional manager for Gauteng, to Roland Cooper
(‘Cooper’), a corporate branch manager in Johannesburg ─ copied to
Ingrid De Villiers, a bank employee involved in its medical services

department ─ recorded the following:

‘Dear Roland
I refer to the outstanding condition relating to the Intramed acquisition and after
discussions with Alan Hiscock and Alan Rubin of Bernadt Vukic Potash & Getz, I
am totally satisfied that we can request Advances to amend the conditions of the
agreement by removing the clause: “Final, unconditional duly completed
agreements satisfactory to BOE, being duly signed by all parties thereto
recording the purchase of the sale of the business of Aspen Healthcare Holdings
Limited to the borrower”.
My reason for this is that:
1.
I have been satisfactorily convinced by Alan Rubin that the “Heads of
Agreement” between Macmed and Aspen is a binding document (in
this regard refer to clause 2 of the Heads of Agreement).
2.
Macmed has taken possession of the businesses.
3.
The attached document, signed by Werksmans and Investec Bank,
confirms that the condition precedents of the agreement have been
fulfilled and specifically indicates that ownership and risk in the
business had lawfully passed to Macmed.
In view of the above, we should urgently request Advances to amend the
conditions of approval to replace the clause referred to in paragraph 1 above,
with the requirement that we obtain the attached document from Werksmans and
Investec Bank Limited.’

[70] On 22 July 1999 (after the apparent expiry of the previous
extension period on 25 June 1999), the bank in writing once more
purported to extend the period for the fulfilment of clause 2.1.1 in
respect of the loan agreements, this time to 20 August 1999.
[71] On 23 July 1999 Ingrid De Villiers responded by e-mail to Clive
Whittaker’s memorandum as follows:

‘Dear Clive
Thank you for your memo dated the 19th July 1999 with regard to our meeting on
the 14th July 1999 re: the Clause 2.1.1 issue.
As this still seems to be an issue I would like to point out the following.
1.
The content of Clause 2.1.1 in the Loan Agreements was not a condition

of Approval and therefore we are all satisfied that all the conditions of the

approval of the above facility have been met.
2.
The Facility letter was drawn up by Regional Office and signed by yourself

and Roland Cooper. Clause 2.1.1 came about because of one of the

Conditions Precedent that was added in by Regional Office i.e. The

Facility letter.
3.
Daryn Brown has only acted on our instruction to draw up the Loan

Agreements, where Clause 2.1.1 was brought in.
This is not a credit issue but a Regional Office one and according to the Memo I
have received from yourself it is clear that you are satisfied that clause 2.1.1 has

now been met. However, Roland needs to sign this off as well to enable us to
record this in our files.
I feel that we should now stop sending reminders to Alan Hiscock to meet the
suspensive conditions as I feel this issue has now been finalised.’
[72] Cooper testified that Whittaker told him that he had telephoned
Hiscock during August 1999 and informed him that the bank was now
satisfied that ‘the agreements and the transaction were completed’. It
is this evidence on which the Court below relied in coming to its
conclusion that an oral waiver was sufficient.
[73] The opening sentence in each of the three loan agreements
introducing the suspensive conditions states that they have to be
fulfilled ‘to the satisfaction’ of the bank, presupposing, in respect of
clause 2.1.1, that the bank would consider whether the agreement is
to its satisfaction. It is common cause that no such agreement was
submitted to the bank.
[74] The bank in extending in writing on three occasions the period
within which the condition in question had to be fulfilled recognised
that the conditions could only be waived in writing as stipulated in
clause 2.2. Whittaker’s memorandum dated 19 July 1999 set out in
paragraph [69] is not a written waiver. In that memo, Whittaker clearly
contemplates written amendments to the loan agreements which

would exclude clause 2.1.1. It was in any event never communicated
to the other parties to the loan agreements and it was written after the
most recent extension period (until 25 June 1999) had apparently
already expired. Ingrid De Villiers’ memo, in response, confused as it
is, nevertheless recognises that Cooper has to ‘sign off’ in respect of
clause 2.1.1. After the third written extension there was no further
written communication by the bank to Intramed concerning
compliance with clause 2.1.1. It should be reiterated that the third
written extension was given after the second one had apparently
already expired causing the agreements to lapse in terms of clause
2.2 (see Christie The Law of Contract 4th ed 2001 at 167).
[75] Clause 2.2 records that the conditions in 2.1 are suspensive
conditions stipulated for the bank’s benefit. The bank has rights
flowing from the suspensive conditions and has the right to waive
compliance with any of the conditions. Clause 2.2, however,
stipulates that the entitlement to waive can be exercised in writing
only. It should be borne in mind that the bank was the stipulans.
[76] The validity and binding nature of an entrenchment clause in a
written contract, providing that amendments to an agreement have to
comply with specified formalities, were reaffirmed by this Court in

Brisley v Drotsky 2002 (4) SA 1 SCA. Dealing with the motivations for
such clauses this Court said the following at 11 C-F:
‘Partye doen dit deur vooraf ooreen te kom dat ‘n kontrak alleen dan tot stand
kom wanneer aan sekere formaliteite voldoen is. Die oogmerk is om geskille te
beperk of uit te skakel. Natuurlik staan die partye vry om die formaliteite te
ignoreer en te handel asof ‘n bepaalde Wet nie bestaan nie. Ontstaan ‘n dispuut,
is enigeen geregtig ─ en die Hof verplig ─ om die strikte reg toe te pas. En
hoekom moet dit anders wees in vrye kontraksverband? Daar is ook ‘n algemeen
heersende mite dat hierdie tipe bepaling slegs ten bate van die ekonomies
magtige bestaan en dat dit tot ongelykheid in kontraksverband aanleiding gee.
Dit is waarskynlik waarom daar ‘n beroep op die grondwetlike gelykheidsbeginsel
gemaak word. Hierdie bepaling dien ter beskerming van beide partye . . .’
A few lines further down (at 11F-G) the following appears:

‘Die Shifren-beginsel is “trite” en die vraag ontstaan waarom dit, na
bykans 40 jaar omvergewerp moet word? Mens kan jou beswaarlik die
handelsgevolge, regsonsekerheid en bewysprobleme wat gaan ontstaan
indink. . .’
(emphasis added)
The same reasoning applies with equal force to the clauses in the
loan agreements that stipulate in clear and emphatic terms that the
entitlement to waive can only be exercised in writing. This is

particularly so against the provisions of clauses 9.7 and 11.7 of the
respective loan agreements as set out in paragraph [62].
[77] Whilst it is recorded in clause 2.2 that the suspensive
conditions are for the benefit of the bank it can hardly be contended
that Macmed and Intramed had no interest in the certainty of a written
waiver. The bank could, if it chose, after the conclusion of the loan
agreements and the payment of the R100 million, claim the return of
the money based on the non-fulfilment of condition 2.1.1, particularly
since it had repeatedly (as the evidence shows) called on the other
parties to the loan agreements to fulfil that condition.
[78] It may appear odd that agreements which were ostensibly
executed should now be held to have lapsed. The proper approach,
however, is to consider the terms of the agreement and to hold the
parties to such obligations and formalities as agreed to. In the present
case all that was required from the bank was a one-sentence letter in
terms of which it waived compliance with the requirements of clause
2.1.1 in order for the waiver to be effective. It is precisely to avoid the
kind of disputes and uncertainties referred to in the highlighted parts
of the dicta of the Brisley judgment referred to in paragraph [77]
above that the validity and binding nature of clauses 2.2 and 9.7 and

11.7 of the loan agreements should be observed and enforced. The
dispute in the present case arose because waiver was not exercised
as set out in the loan agreements.
[79] The suggestion that because the rationale for the suspensive
conditions had ceased to exist and the money had been paid over the
question of waiver falls away is, in my view, fallacious. It ignores the
express provisions of the agreements and leaves scope for the kind
of uncertainty and disputes which entrenchment clauses by their very
nature are designed to obviate.
[80] The application of clause 2.2 of the loan agreements results in
the lapsing of the loan agreements with the consequence that the
total amount which the bank is now entitled to recover, as opposed to
what it would have been able to obtain in terms of the agreement, is
relatively smaller, because the interest that would have accrued in
terms of the loan agreement is not recoverable. However, interest a
tempora morae would be payable from the time of the lapsing of the
agreement.
[81] A calculation supplied by the respondents showing the amount
which would be due to the bank upon restitution was not challenged.
The amount is R113 177 568-51.

[82] The cost order made by the Court below was based on the
terms of the loan agreements which provided for attorney client costs
against the party in breach. The lapsing of the agreements render the
provisions in question inoperative.
[83] It has not been suggested that, in the event that the underlying
securities were held to be authorised, the liquidators would not be
bound by them.
[84] The degree of success attained by the appellants is insufficient
in the overall picture to carry costs of appeal. It was not argued that it
should. In light of the foregoing conclusions the following order is
made:
1.
The appeal is upheld only to the extent reflected in the
difference between the amounts set out in the order of the Court
below and in paragraph [81] above;
2.
The appellants are to pay the respondent’s costs of appeal
including the costs of two counsel;
3.
The order of the Court below is amended as follows:
‘A.
The Defendants are ordered to pay to the plaintiff the amount of R113 177
568-51.
B.
It is declared that the claims by the Plaintiff are secured by the securities
which are annexures “G”, “I” and “J” to the Plaintiff’s particulars of claim.

C.
The defendants are ordered to pay the plaintiff’s costs of suit including the
costs of two counsel.’

________________
MS NAVSA
Judge of Appeal

CONCUR:

HOWIE

P
STREICHER
JA
VAN HEERDEN
AJA

STREICHER JA:

[1] I have read the judgments by Navsa JA and Heher JA. I agree with the judgment
of Navsa JA to which I would like to add the following comments in respect of the
finding by Heher JA that the suspensive condition in clause 2.1.1 of the agreements of
loan was fulfilled.
The clause reads as follows:
‘2.1
This agreement is subject to the fulfilment of the following suspensive conditions
to the satisfaction of BOE by not later than 17 June 1999.
2.1.1 Final unconditional duly completed agreements satisfactory to BOE signed by all
parties thereto recording the purchase and sale of the business from Aspen . . . to
[Intramed].’
(‘The suspensive condition.’)

[2] It is common cause that no such agreement was ever concluded. It follows
logically that the suspensive condition could not have been fulfilled.
[3] The respondent alleged in its particulars of claim that the suspensive conditions
referred to in clause 2.1 of each of the agreements of loan were fulfilled alternatively
waived by it. However, in its reply to a request for particulars for trial it replied that the
suspensive condition in clause 2.1.1 of each of the loan agreements was not fulfilled.
During his cross-examination of Cooper counsel for the appellants stated that it was
common cause that the condition had not been fulfilled. The statement was repeated in
the appellants’ heads of argument. Counsel for the respondent also stated in their heads of
argument that it was common cause that the suspensive condition was not fulfilled in that
there were no ‘final unconditional duly completed agreements . . . recording the purchase
and sale of the business from Aspen . . . to [Intramed].’
[4] In the circumstances it is not open to this court to find that the suspensive
conditions had in fact been fulfilled and to fill factual gaps in the evidence by way of
inferences drawn as a matter of probability from statements made by counsel for the
respondent in his opening address, the evidence of the respondent’s witnesses and the
‘failure’ of the appellants’ counsel to follow what may be considered to be an obvious
line of attack if the common cause facts are ignored.
[5] In any event, the evidence was not to the effect that the suspensive condition had
been fulfilled. Cooper testified that Mr Whittaker told him that he had telephonically
advised Mr Hiscock that the respondent ‘was now satisfied that the agreements and the
transaction were completed’. Cooper understood him to mean that the deal was finalised
but did not know whether the suspensive conditions had been fulfilled. It was at this stage

that it was put to him by counsel for the appellants that it was common cause that the
condition had not been fulfilled. He did not dispute the statement and counsel for the
respondent did not object thereto.
[6] In the light of the fact that there was no agreement between Aspen and Intramed,
Whittaker could not have intended to say that he was satisfied that the suspensive
conditions had been fulfilled, he could only have meant to say that fulfilment of the
condition was no longer necessary as far as the respondent was concerned. That is to say
he could only have meant to say that the respondent had waived fulfilment of the
suspensive condition.
[7] But, even if Whittaker had in terms told Hiscock that the respondent was satisfied
that the suspensive condition had been fulfilled and that the transaction was for that
reason complete he would, in the light of the fact that there was no agreement between
Aspen and Intramed, in fact have been telling him that the respondent was waiving
compliance with the condition.
[8] I, therefore, disagree with the finding of Heher JA that the suspensive condition
was fulfilled.

_________________
STREICHER JA

HOWIE P)

NAVSA JA)

CONCUR
VAN HEERDEN AJA)

HEHER JA:
[1] I have read the judgment of Navsa JA.  I agree with his conclusions on
the issues of authorisation and the recipient in law of the money advanced by
the respondent.
[2] As to whether the agreements lapsed I regret that I see the matter
somewhat differently.  For the reasons which follow, I think that Ludorf J was
correct in the order he made.
[3] Of course the respondent could at any time during the validity of the
agreements have notified the borrower in writing that it did not require
compliance with any specified aspect of any of the suspensive conditions,
thereby formally waiving its right to rely on non-fulfilment.  However, because
of the particular terms of clause 2.1 of each agreement, this was not the only
option open to the respondent.
[4] Clause 2.1 laid down a minimum measure for the assessment of whether
the suspensive conditions had been fulfilled.  That measure was the satisfaction
of the respondent.  In addition, lest any doubt should remain, clause 2.2

provided that the conditions were stipulated for the benefit of the respondent.
Because the unrestricted satisfaction of the respondent was to be decisive it was
entitled to regard any degree of performance from 0% to 100% as fulfilment.
The only, implied, requirement was that the expression of its satisfaction should
be communicated to the borrower before the agreements lapsed in order to
render the fulfilment effective.
[5] Such an expression of satisfaction in relation to any of the conditions was
a right conferred on the respondent and the communication was its exercise.
The agreements did not require that it be exercised in writing.
[6] The evidence established that the respondent did communicate its
satisfaction with regard to the fulfilment of clause 2.1.1 while the agreements
were still in esse.  In these circumstances, waiver, ie an abandonment of a right
to rely on the non-fulfilment of the condition in question, is irrelevant.
[7] The respondent extended the date by which clause 2.1.1 had to be
fulfilled in writing from time to time from 17 June 1999, the last extension
expiring on 20 August 1999.
[8] That there were effective extensions of the agreements seems to me an
overwhelming inference derived from the way in which the case was presented
by the respondent and fought by both sides:

(a)
In opening the case for the respondent in the trial Court senior
counsel, Mr Wallis, informed the Court that there had been seven
letters extending the agreements.
(b)
In fact, the bundle of documents placed before that Court (and
included in the appeal record) included only three such letters,
dated 17 and 18 June and 22 July.  The respective letters each dealt
with all the conditions which had not at the time of writing been
fulfilled.  The first extended the date for fulfilment of clause 2.1.1
to 18 June, the second extended that date to 25 June and the last
extended it to 22 August.
(c)
Mr Wallis, in leading his witness Mr Heron of the respondent and
referring to the extension letters, said
‘Now I do not propose to take you to all of them . . . but there were a number
of extension letters?’  ─ ‘That is correct.’
Heron confirmed that his colleague Cooper was responsible for
attending to the fulfilment of the agreements.
(d)
In the evidence in chief of Mr Cooper the witness confirmed that
the letter of 22 July was ‘the last letter’ which he wrote.
He said:
‘We kept sending the letters [of extension] . . .  You will see they were weekly
or fourteen day extensions and then I pushed it up to three or four weeks to

cover the period while I was away on leave.  I went away at the beginning of
August.’
(e)
The evidence of Cooper and the correspondence leaves no doubt
that the question of fulfilment was a matter constantly at the
forefront of the minds of himself and other officials of the
respondent.  He was very aware of the requirement that the
agreements needed to be extended before they lapsed by the
sending of timeous notices to the borrower.  It is very probable that
the letters not produced in evidence had the necessary effect.  In
cross-examination of Cooper senior counsel for the appellants
suggested to him that clause 2.1.1 had, notwithstanding the
respondent’s satisfaction with the alternative performance, not
been fulfilled according to its terms. Counsel did not suggest that
the letter of 22 July had not been preceded by others in a chain of
extensions or that that letter would not in any event have been
effective in extending the time for fulfilment of clause 2.1.1
because the agreements had already lapsed which, if the facts bore
him out, would have been the obvious line of attack.
[9] No agreement was signed between the parties to the sale from Aspen to
the borrower.  By the end of July internal correspondence of the respondent

leaves no doubt that the responsible officials, Messrs Steensma, Corey,
Whittaker, Heron and Cooper, were satisfied that fulfilment of clause 2.1.1
according to its terms was unnecessary as ‘the requirements of that clause have
been satisfied via other means’ (memo from Steensma to Cory dated 26 July
1999).  When Cooper returned from leave in the middle of August he was told
by his senior Whittaker that the latter had notified Hiscock (who possessed
authority to represent the borrower) telephonically that the respondent was
satisfied and regarded the agreements and the transaction as completed.  The
respondent decided for this reason, correctly, in my view, that it was
unnecessary to extend the agreements once again.  (It was common cause that
Whittaker was disabled by a fatal illness from testifying and there is no reason
why reference to his conversations and correspondence with Cooper and
Hiscock should be excluded from consideration.)  The evidence was
substantially adduced by appellant’s counsel in cross-examination of Cooper,
its correctness was not placed in issue and Hiscock was not called to rebut it.  It
is true that the respondent did not plead such fulfilment but Mr Wallis stated
unequivocally in his opening address to the Court a quo that he would rely on
the satisfaction of Whittaker for the fulfilment of clause 2.1.1.  There was not
then or thereafter objection from the appellant’s side.  Although he did not refer
to the oral communication of that satisfaction to the borrower that critical gap

was filled by the cross-examination of Cooper. There is no suggestion that the
matter was not fully canvassed by the evidence or that anything further could
have been said or done to dilute its effect.  I conclude, therefore, that the
evidence proved that clause 2.1.1 of each agreement was fulfilled to the
satisfaction of the respondent although no final or unconditional agreements
were produced or signed as provided in the clause.
[10] I would, therefore, dismiss the appeal with costs, including the costs
of two counsel, on the scale as between attorney and client.

___________________

J A HEHER

JUDGE OF APPEAL