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The Western Cape High Court has dismissed an application for leave to appeal brought by businessmen Stefanus van Wyk van der Hoven, Jacobus Reyneke van der Hoven and Neil Frans Roets in a multimillion-rand dispute arising from the sale of shares in a software company.
The ruling effectively upholds an earlier judgment in favour of New Life Holdings, which sought to recover more than R8.3m allegedly owed under a share sale agreement and related guarantee.
The dispute stems from a March 2023 agreement in which New Life Holdings sold its 25% shareholding and loan account in software company Imalisoft to Climealine for a total purchase price of more than R8.6m.
According to court papers, the parties entered into the agreement on March 14 2023 in Pretoria. The purchase price for the shares was R8m, while the loan account was valued at R618,500 and was payable in monthly instalments.
Following the conclusion of the agreement, New Life Holdings transferred its 25% shareholding in Imalisoft to Climealine.
At the same time, the three businessmen, who are respondents, signed a written guarantee agreement in favour of New Life Holdings. In terms of the agreement, they jointly and severally guaranteed the due and timeous performance of Climealine’s obligations under the share sale agreement and bound themselves as co-principal debtors.
New Life Holdings alleged that Climealine defaulted on its payment obligations in December 2023 and failed to make the agreed instalment payments thereafter.
The company subsequently demanded payment of the outstanding amount, which it calculated at R8,376,045.
On August 5 2024, New Life Holdings issued formal demands to the three guarantors, calling on them to settle the outstanding debt together with interest at 15.75% per annum from July 1 2024.
When payment was not forthcoming, the company approached the court for judgment against the guarantors.
The respondents opposed the application and raised two preliminary pleas of lis pendens, arguing that parallel litigation involving Climealine was already before the Limpopo High Court.
They contended that their liability under the guarantee depended entirely on Climealine’s liability under the share sale agreement and argued that New Life Holdings had unlawfully repudiated the agreement by attempting to cancel it.
According to the respondents, Climealine accepted the purported cancellation and tendered the return of the shares and loan account. It also instituted proceedings in the Limpopo High Court seeking repayment of approximately R1.5m already paid to New Life Holdings.
In dismissing the application, the court found there were no reasonable prospects of another court reaching a different conclusion.
The respondents argued that, as a result of the cancellation dispute, Climealine’s obligation to continue paying the purchase price had been suspended.
However, the high court rejected those arguments.
The central issue before the court was whether the guarantee created independent and autonomous payment obligations enforceable on written demand, or whether the guarantors’ liability was merely accessory to Climealine’s obligations under the share sale agreement.
After considering the wording of the guarantee, the court concluded that the agreement created principal and independent obligations that remained enforceable regardless of disputes relating to Climealine’s liability.
The court found that clause 5.10 of the guarantee required the respondents to make payment upon receipt of a written demand from New Life Holdings stating that an amount was due and payable.
Importantly, the clause provided that the respondents’ liability was joint and several and remained enforceable even where they disputed their obligation to pay.
The court further rejected the argument that references to the respondents as “co-principal debtors” made their liability dependent on Climealine’s obligations.
It held that the wording of the guarantee clearly established independent payment obligations and that, in the absence of fraud, the guarantors could not avoid payment once a valid written demand had been issued.
The court found that New Life Holdings had complied with the requirements of the guarantee and was therefore entitled to judgment.
The respondents subsequently sought leave to appeal the ruling to the Supreme Court of Appeal.
In dismissing the application, the court found there were no reasonable prospects of another court reaching a different conclusion.
The respondents were ordered to pay the costs of the application jointly and severally, including the costs of two counsel where employed.
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