Tricor International (Pty) Ltd v New Mall ( 59/2012) [2013] SZSC 41 (31 May 2013);

group

Full judgment

IN THE SUPREME COURT OF APPEAL OF SWAZILAND

JUDGMENT

Appeal Case No.59/2012

In the matter between:-

TRICOR INTERNATIONAL (PTY) Appellant

LIMITED

and

THE NEW MALL Respondent

Neutral citation: Tricor International (PTY) Limited vThe New Mall (59/2012) [2013] SZSC 41 (31 May 2013)

Coram: M. M. RAMODIBEDI CJ, S. A. MOORE JA, and B. J. ODOKI JA

Heard: 9 May 2013

Delivered: 31 May 2013

Summary: Interlocutory order – No leave to appeal granted – Appeal struck out – Contract of agency – Notice of breach given to appellant – Failure to remedy breach – Contract lawfully cancelled –– Appeal dismissed.

JUDGMENT

ODOKI J.A.

[1] The appellant filed two appeals against two decisions of the High Court (Dlamini J) which were heard together on appeal as they arose from the same case.

[2] In the first appeal, the appellant appeals against the decision of the court a quo dated 24 August 2012 in an interlocutory urgent application which was brought by the respondent and granted by the court a quo.

[3] In the second appeal, the appellant appeals against the decision of the court a quo delivered on 14 September 2012, granting the respondent’s main application.

[4] The background to the case is that the respondent is the owner of a Shopping Centre in Mbabane Central District known as “The New Mall”.

[5] In September 1993, the respondent entered into a Management –Agreement (annexure “TNM 1”) with Plaza Park (PTY) Ltd, in which the latter was to act as the respondent’s agents, in the management of the New Mall Shopping Centre.

[6] It was a special condition of the Management Agreement that Plaza Park (PTY) Ltd would cede its rights, obligations and interests in respect of the Management Agreement to another company, that would be formed and would be under the directorship of Robert Colin Foster. In accordance with this special condition, therefore, the appellant, Tricor International (Pty) Ltd took over the management of The New Mall Shopping Centre from Plaza Park (Pty) Ltd and assumed all the responsibilities and obligations formerly vested on Plaza Park (Pty) Ltd, under the Management Agreement.

[7] The appellant was required to manage the affairs of the respondent in accordance with the terms of the Management Agreement. For instance, the recruitment of the tenants, conclusion and cancellation of contracts between the respondent and the tenants were totally left to the discretion of the appellant.

[8] The appellant was also to manage the shopping complex in terms of ensuring its maintenance and cleanliness. It was also an express term of the agreement that the respondent would keep and maintain proper records of accounting.

[9] These records were to be made available to the respondent and its auditors whenever called upon. In the day to day running of the affairs, the appellant was to open a current account where all rentals collected were to be deposited.

[10] Expenses and disbursements reasonably incurred were to be paid from the said current account. Signatories to the bank account were to be appointed by the appellant subject to approval by the respondent. Mr. Robert Colin Foster and Mrs. L. Foster (the Foster Family) were the signatories to the account. The two held 50% of shares of the appellant at inception. These shares were later sold by the appellant to a company which was subsequently engaged to manage the respondent. This company is known as Interneuron. However, the appellant continued to manage the respondent under the same agreement.

[11] The terms of the agreement further stated that any surplus was to be deposited into a separate account but kept for the purchases of maintaining the respondent. The respondent was to provide sufficient funds to the appellant for the purpose of managing the respondent. Furthermore the appellant was to be remunerated at 5% of the rentals.

[12] Later on the appellant reported suspicious transactions in its operation of the respondent. The respondent decided to solicit the services of an auditor, one Kobla Quashie and Associates to launch a forensic investigation. This auditor was the auditor for the appellant.

[13] Following the findings of the forensic investigation which recommended inter alia a refund of the sum of E195, 061.60 by the appellant to the respondent as a result of fraudulent activities by the appellant’s employees, the appellant paid a sum of E195 061.60 to the respondent. The sum was paid on the following condition stated by the appellant,

“5.2 However, entirely without prejudice to all our rights all of which are reserved without admitting liability in any way whatsoever and merely for the sake of continuing the cordial relationship which we have enjoyed with yourselves for many years, we will forthwith make payment of the sum concerned naturally less our commission in the sum of 5% (as provided for in the agreement) into the account of the company.”

[14] The Forensic Audit Report (annexure “TNM 3”) revealed inter alia that the tenants receipt books were printed in triplicates, but each of the three copies had the same colour and outlook. It was therefore impossible for the tenants or independent parties to clearly distinguish an original copy from a duplicate triplicate copy. The tenants’ receipts were occasionally and intentionally co-mingled and issued to other tenants leasing other shopping complexes owned by the Foster Family such as the Mall in Mbabane.

[15] The tenants receipts were not properly safeguarded and secured to ensure that they were only available for use by the officials entrusted with the responsibility of issuing receipts.

[16] Proper segregation of duties was not enforced and as a result individuals could issue a receipt, deposit the funds into the New Mall’s bank account, update the tenants register and records and also dispatch monthly statements to the tenants.

[17] Apparently there was over reliance on trust and integrity of the employees, which compromised the effectiveness of supervision by management and those charged with governance responsibilities. This condition provided an opportunity and possible windows for fraud to be perpetuated and go undetected for a long time.

[18] There were indications of short comings in Tricor’s Management and systems which, if they were more robust, would have enabled the fraudulent practices to have been either prevented or detected timely.

[19] The report found that although substantial amounts in rentals were collected, they were not deposited into the bank account. In some instances where the money was banked, it was less than what was collected. On the available evidence, the report estimated the loss that had been suffered by the New Mall to be in the region of E195 061.60.

[20] The report recommended that the existing signing arrangement regarding The New Mall’s bank accounts with the First National Bank Limited should be reviewed.

[21] It was also recommended that The New Mall should demand a refund of the amount of E195 061.60 from Tricor.

[22] The report finally recommended that The New Mall should compel its external auditors to send debtors circularization letters to the tenants during the audit of the year ending 30 June 2011. Any disputed amount therefrom should be investigated and any additional fraud uncovered and attributable to the ex – employees of Tricor, on the basis of questionable reports, should be refunded by Tricor to the New Mall.

[23] Following the findings of the Forensic Audit Report, the respondent, by letter dated 23 August 2011 (annexure “TNM 4”) advised the appellant of the anomalies unearthed by the report in the management of the appellant. The latter gave notice of breach in terms of clause 11 of the Management Agreement. The details of the breach appear later in this judgment.

[24] In response to the respondent’s notice, the appellant sent a letter dated 9^th September 2011 where it stated inter alia as follows:

“3. We categorically deny that we are in breach of any provision of the Management Agreement. On the contrary, we are satisfied that we are in full compliance with all of the provisions of the Management Agreement and have, in the performance of our obligation, fully exercised the standard of care and skill fairly and reasonably expected of experienced shopping centre managers, which we are.

6. We are satisfied that our systems are more than adequate and in compliance with our obligations and as such that you have no purported right or reason to cancel the Management Agreement and we trust that we will continue to enjoy a mutually beneficial relationship going forward during the remainder of the contract period and beyond.”

[25] On 23 September 2011, the respondent wrote a letter to the appellant giving notice in terms of clause 11 of the Management Agreement, terminating the said Agreement between the parties. The letter stated in part as follows:

“1. We refer to our Notice of Breach dated 23 August 2011.

2. We regret to advise that on account of your failure to remedy the material breaches of the Agreement, which have resulted in a total breakdown of trust and confidence, we are left with no option but to cancel the agreement.

3. We hereby give notice of cancellation of the Agreement with effect from today’s date. You are requested to hand over all company property to our representative (Interneuron/Nicholas Balcomb) who will be taking over management of the Mall.

4. We take this opportunity to thank you for reimbursing the company of all the monies that were misappropriated by your employees and for the assistance you have rendered in managing the Mall.”

[26] On 10February 2012 the respondent lodged an application in the High Court claiming for the following orders:

“1. Compelling the appellant to deliver to the respondent all lease agreements for tenants, rentals collection receipt books, bank statements together with other relevant document and information relating to the New Mall Shopping Centre for the period the appellant acted as managers of The New Mall Shopping Centre at the respondent’s purchase.

2. To stop the appellant from carrying out the function of manager of The New Mall Shopping Centre and that the appellant should desist from conducting itself as though it were manager of the shopping complex since its mandate was terminated by the applicant on the 23 September 2011.”

[27] The appellant denied the allegation or findings made in the Forensic Audit Report regarding financial mismanagement of the respondent and rejected the report in its entirety. On the contrary the appellant maintained that it had implemented financial systems and maintained proper records in accordance with accounting principles.

[28] The learned judge in the court a quo found that the appellant was in breach of the material terms of the Management Agreement. The learned judge also found that there was no unequivocal intention by the respondent to repudiate the contract, and therefore the letter in annexure “TNM 4” amounted to proper notice in terms of clause 11 of the Agreement. The learned judge granted the application. Hence this appeal.

[29] However, before the main application was heard, the respondent brought an urgent application No. 302/2012 on 6 August 2012. The respondent sought orders to direct the appellant to desist from and or interdicting it from depositing any monies collected as rentals on behalf of the respondent from tenants of The New Mall Shopping Centre into any account not expressly authorized by the respondent.

[30] The respondent also sought an order directing the respondent to deposit all monies collected as rentals from tenants of The New Mall Shopping Centre into the business account that was duly authorized by the respondent and held with The First National Bank of Swaziland Limited, Mbabane Branch namely Commercial Cheque Account No. 57711185184.

[31] The third order sought by the respondent was to direct the appellant to account for and to remit to the respondent all rentals collected by the appellant from tenants of The New Mall Shopping Centre from October 2011 to date of final payment together with accrued interest thereon.

[32] The application was supported by the founding affidavit of Cleopas S. Dlamini, Chairman of the Board of Directors of the respondent.

[33] The appellant opposed the application on several grounds. It denied that the purported termination was lawful. It also denied that it had committed any material breach of the agreement. It contended that the respondent’s letter of 23 August 2011 constituted a repudiation of the agreement which repudiation the appellant did not accept.

[34] The appellant contended further that the agreement was still in force and it intended to seek specific performance of the agreement in proceedings to be instituted.

[35] The appellant admitted declining to hand over all the respondent’s property to Interneuron/Nicholas Balcomb as the repudiation was not accepted.

[36] The learned judge in the court a quo allowed the application and granted the order prayed for by the respondent.

[37] On 13 September 2012, the appellant filed a notice of appeal against the judgment of the court a quo dated 24 August 2012, granting an urgent application.

[38] On 10 October the appellant filed a notice of appeal against the judgment of the court a quo dated 14 September 2012.

[39] In the judgment of 24 August 2012 the court a quo made an order confirming the orders granted on 10 August 2012 and ordered the appellant’s Counsel to pay costs de bonis propriis.

[40] The orders which the court a quo made on 10 August 2012 were as follows:

“[30] In light of the authorities cited herein, having dismissed respondent’s point in limine, I order respondent to pay costs on attorney and own client scale.

[31] It follows therefore that prayers 1, 2, 3, 4 and 5 of the applicant’s notice of motion are granted as an interim order to operate with immediate effect. A rule nisi is hereby issued, returnable on 16 August 2012. Respondent is ordered to file its answering affidavit on or not later than 12.00 noon on 14 August 2012 and applicant to file its replying affidavit not later than 10.00am on 16 August 2012, should either party be so inclined. The matter is enrolled for 2.00pm on 16 August 2012.”

[41] In the notice of appeal dated 13 September 2012 the appellant contends inter alia that the court a quo erred in finding that the application was urgent and in so doing erred in permitting the respondent to seek a final order on two days notice to the appellant. The appellant also contended that the court a quo erred in holding that the appellant’s objection to the urgency amounted to a reliance on technicalities.

[42] The appellant maintains further that the court a quo erred in granting the prayers of the respondent in the Notice of Motion as an interim order with immediate effect. It was contended that the court a quo erred in granting a final order which it held to be rule nisi.

[43] The interlocutory application was brought as an urgent application to secure certain orders pending the determination of the main application. I have already stated above the orders which the respondent sought and was granted by the court a quo.

[44] The main issue canvassed is whether the order granted by the court a quo was an interlocutory one thus requiring leave to appeal, in accordance with section 14 (1) of the Court of Appeal Act.

[45] Section 14 (1) of the Court of Appeal provides for the right of appeal in civil cases as follows:

“14 (1) An appeal shall lie to the Court of Appeal –

from all final judgments of the High Court; and

by leave of the Court of Appeal from an interlocutory order, an order made ex parte, or an order as to costs only.”

[46] It was argued by the appellant that the order was not an interlocutory but a final one because it directed the appellant to remit to the respondent the money collected from tenants as rentals from October 2011 to date of final payment, together with accrued interest.

[47] The appellant also submitted that the order of costs was not sought and the court a quo erred in awarding costs against the attorney without having been given an opportunity to be heard.

[48] The respondent submitted that the appeal against the interlocutory order does not lie because leave to appeal was not obtained.

[49] With regards to the order for costs against the attorney Counsel for the appellant to pay costs de bonis propriis, the respondent conceded that the Counsel was not given an opportunity to defend himself. It was also conceded that the respondent did not ask for costs and that costs should follow the event.

[50] Since it is conceded by the respondent that the order for costs should not have been made against the attorney, it is set aside and instead it is substituted with an order that costs shall follow the event.

[51] With regards to the issue whether the main order of the court a quo was interlocutory or final, it is necessary to examine the law and the order itself.

[52] In the decision of this court in Minister of Housing and Urban Development v Dlamini and Others (consolidated with 2 others) Case No. 32/2008 [2008]SZCH 7 Ramodibedi JA (as he then was) (with whom Zietsman JA and Magid AJA agreed) dealt with a similar case in this manner:

“[14] On 19 June 2008, Maphalala J granted the second application as prayed in the notice of motion referred to in paragraph [12] above. As will be recalled that application was one “pending the finalization of the main application” referred to in paragraph [10] above. Despite this clear statement by the learned judge a quo, all the appellants except the Minister filed a notice of appeal on 19 June 208. The Minister in turn filed his appeal on 20 June 2008.

[15] The crisp question which arises for determination in the foregoing circumstances is whether Maphalala J’s order was final and therefore appealable without leave of this court, or whether it was merely interlocutory? Put it bluntly, was it proper for the appellants to seek to appeal without leave of this court?”

[53] The learned Justice of Appeal quoted the provisions of section 14 (1) of the Court of Appeal which the learned Chief Justice had referred to and continued,

“[26] After examining the relevant authorities including the leading case of Pretoria Garrison Institute v Danish Variety Products (PTY) Ltd 1948 (1) SA 839 (A), The court a quo came to the following conclusion:

‘There can be no doubt in my judgment on the basis of these authorities that the judgment of Maphalala J in the court below was a decision which is definitive of the rights of parties and has the effect of disposing of the major portion of the relief that was sought.’

With respect I regret that I am unable to agree with this statement on the facts of this case. It will be recalled from paragraph [14] above that Maphalala J’s order was made specifically “pending the finalization of the main application.” Quite plainly, therefore, it was not meant to be final in effect. Indeed the latter could hardly be the case because Maphalala J did not dispose of the merits of the main application which remain outstanding to date. It is true prayers 3 and 4 of the notice of motion did not mention the magic words “pending the finalization of the main application.” Read in context however, there can be no doubt in my view, that the respondents simply prayed for the restoration of the status quo pending the finalization of the main application. It must be remembered from paragraph [22] above, however, that those prayers fell away when the rule was subsequently issued on 13 August 2008. They no longer became part of the rule nisi. It follows that the order was purely preparatory or incidental to the main application. See for example Jerry Nhlapho and 24 Others v Lucky Howe N.O. (in his capacity as liquidator of VIP Ltd in Liquidation) Civil Appeal No. 37/07.”

[54] In the present case the urgent application was made pending the hearing of the main application. In the following affidavit of Cleapas S. Dlamini it was stated:

“9. The purpose of instituting these proceedings is to seek an urgent relief from this court to stop and/or to interdict the Respondent from depositing rentals collected from tenants of The New Mall Shopping Centre into any account that has not been authorized by the Applicant.

10. In the same vein the Applicant seeks an order compelling Respondent to account for all rentals collected from October 2011 and to deposit same into the Applicant’s official business account held with The First National Bank of Swaziland Ltd Mbabane being commercial Cheque Account No. 57711185184 (the designated account).”

[55] The purpose of the urgent application appears to have been to preserve the assets of the respondent and prevent further loss of funds collected by the appellant on behalf of the respondent. The respondent sought a relief in the form of an interdict which is an interim relief.

[56] The words used in the order in the court a quo are clear and unequivocal. The order reads as follows:

“It follows that prayers 1, 2, 3, 4 and 5 of the applicant’s notice of motion are granted as an interim order to operate with immediate effect. A rule nisi is hereby issued, returnable on 16 August 2012. Respondent is ordered to file its answering affidavit on or not later than 12.00 noon on 14 August 2012 and applicant to file its replying affidavit not later than 10.00am on 16 August 2012, should either party be so inclined. The matter is enrolled for 2.00pm on 16 August 2012.”

[57] Therefore, the matter had not yet been determined on the merits nor was the order having final effect. It was essentially an interlocutory order which was confirmed when the application was finally determined and the rule nisi was confirmed.

[58] Accordingly, since the appellant did not obtain leave to appeal against the interlocutory order the appeal against that order is incompetent and must be struck out with costs.

[59] In its notice of appeal dated 10 October 2012 against the judgment of 14 September 2012, the appellant contends that the court a quo erred in finding that the appellant was in breach of a material term of the contract which entitled the respondent to cancel the contract. It was also contended that the court a quo erred in finding that the letter of 23 August 2011 “TNM 4” constituted a proper notice in terms of clause 11 of the contract in that the said letter indicates that the respondent had already decided to terminate the contract.

[60] The appellant further maintains that the court a quo erred in failing to hold that the letter “TNM 4” amounted to the repudiation of the contract which was not accepted by the appellant. The court also erred in failing to hold that the respondent should not therefore be granted the orders it sought.

[61] Finally the appellant contends that the court a quo erred in finding that the appellant had not remedied the alleged breach.

[62] The main issue contested in the appeal is whether the management agreement was lawfully terminated by the respondent. This raises sub issues whether the appellant was in breach of the agreement, whether the appellant was given proper notice in accordance with the agreement, whether it failed to remedy the breach, and finally whether it is the respondent who repudiated the contract.

[63] In the court a quo, the learned judge correctly identified two issues that emerged from the averments of both applicant and respondent, namely, “is there a breach of contract by the respondent and was the letter annexure “TNM 4” a proper notice for the respondent to remedy the breach, if any, or was it merely repudiation of the contract by the applicant.”

[64] The appellant submitted that it was the respondent who repudiated the contract by its letter “TNM 4” which letter did not constitute proper notice to remedy breaches in terms of clause 11 of the contract. It was contended that the respondent was not entitled to cancel the agreement due to the alleged breach which had been remedied.

[65] Clause 11 of the Management Agreement provided for either party to give notice in case of material breach of any provisions of the agreement. It stated:

“Should either party commit a material breach of any provision of this Agreement and fail to remedy such material breach within fourteen (14)days of receiving written notice from either party requiring it to do so, or such an extended period as may be reasonably be necessary in the circumstances, then such other party shall be entitled without prejudice to its other rights in law to cancel this Agreement or to claim specific performance, in either event without prejudice to the aggrieved party’s right to claim damages.”

[66] On 23 August 2011, the respondent wrote a letter to the appellant entitled “Notice of Breach in terms of clause 11 of the Management Agreement between yourselves and the Plaza Park (PTY) Ltd (now) The New Mall (PTY) Ltd.” The notice clearly indicated that the respondent was giving notice of breach in terms of clause 11 of the Agreement.

[67] The notice then set out the list of breaches of the Agreement. It is necessary to set it out in some detail because it forms the crux of this appeal. The notice stated inter alia.

“2.1 You have failed to exercise due care in the performance of your duties as manager as required in terms of clause 9.1 of the Agreement;

2.2 You failed to comply with your obligation to implement and administer financial control systems and techniques appropriate for the running of a shopping centre as required in terms of clause 4.4 of the Agreement.

2.3 You failed to maintain financial records for the shopping centre in accordance with generally accepted accounting principles and to the satisfaction of Auditors as required in terms of clause 4.5 of the Agreement.

5. As a result of your failure to exercise due care in the execution of your functions and to implement and administer sound financial control systems, some of your staff members misappropriated a sum of E195 061.60.

6. Additionally and more importantly, you have breached obligations that are so vital or material to the performance of the agreement that the foundation of the contract has been completely destroyed.

7. The breach of the agreement has resulted in the irretrievable breakdown of trust and confidence. The New Mall Board of Directors no longer have confidence in you as managers.

8. You are to reimburse The New Mall for the loss of the sum of E 195 061.60 which arose as a result of your failure to comply with your obligations in terms of the Agreement.

9. We demand as we hereby do that you remedy the above stated breaches of the Agreement and you make payment of the sum of the Agreement and you make payment of the sum of E195 061.60 within 14 days from the date of receipt of this notice, failing which we will forthwith cancel the Management Agreement with you.”

[68] In a letter dated 9 September 2011 “RCF 2” addressed to the respondent the appellant denied that they had committed any breach of the agreement. In the letter appellant stated:

“3. We categorically deny that we are in breach of any provision of the Management Agreement. On the contrary we are satisfied that we are in full compliance with all the provisions of the Management Agreement and have in the performance of our obligations fully exercised the standard of care and skill fairly and reasonably expected of experienced shopping centre managers which we are.”

4. We fully participated in and cooperated in the purported “forensic audit” and totally disagree with the so called findings.

6. We are satisfied that our systems are more than adequate and in compliance with our obligations and as such that you have no purported right or reason to cancel the Management Agreement and we trust that we will continue to enjoy a mutually beneficial relationship going forward during the remainder of the contract period and beyond.”

[69] The first issue to consider is whether there was a breach of the Management Agreement. The breach was identified by the Forensic Audit and Investigation Report “TNM 3” dated May 2011 which was carried out by a fIrm of auditors of the appellant called Kobla Quashie and Associates, Chartered Accountants (SD).

[70] It is common cause that the Audit Report was carried out after the respondent had been advised of certain questionable transactions that gave ground for suspicion of impropriety on the part of certain employees of the appellant. Following receipt of the fraud overview report submitted by the appellant to the respondent, Kobla Quashie and Associates were requested by the Board of respondent to carry out a forensic audit to investigate the allegations of fraud and mismanagement of funds by the appellant’s employees, and if possible, determine the extent of any potential financial loss to the respondent.

[71] The findings in the report identified areas of financial mismanagement and estimated loss to the respondent. These findings were the basis of the list of breaches specified by the respondent in its letter notifying the appellant of the breach of the agreement.

[72] It is significant to note that although the appellant rejected the audit report, it admitted its findings on fraud when it stated in annexure “RCF 2” paragraph 4.6.

“The fraud was immediately brought to your attention. Further safeguards have subsequently been put in place to prevent as far as possible, bearing in mind what is set out above.”

[73] The appellant also admitted in its answering affidavit that one of the key findings of the forensic audit was that the receipt books were printed in triplicate but all were in the same colour but stated that the matter had since been attended to by stamping the second and third copies with the word “copy”.

[74] I agree with the learned judge in the court a quo when she observed, “In the (final) analysis, therefore, the respondent cannot on one hand insist that the report be rejected while on the other admitting its findings. The respondent cannot, as it is often put it our legal parlance, “approbate and reprobate” at the same time.”

[75] In my view, the grave shortcomings or weaknesses revealed in the Audit Report in the financial management of the appellant constituted a material breach of the Management Agreement and the respondent was entitled to give notice of the breach to the appellant.

[76] The appellant was in breach of clause 4.4 of the Agreement which required it to observe “the implementation and administration of financial (including accounting and costs) control systems and techniques most appropriate for the running of the shopping centre. The appellant also failed to maintain financial records for the shopping center in accordance with generally accepted accounting principles and to the satisfaction of the auditors required by clause 4.5 of the agreement.

[77] The appellant submits that it remedied the breach. After denying that it was in breach of the agreement, it is difficult to believe that it complied with the request of the respondent to remedy the breach.

[78] The appellant claims that the audit report showed that some financial controls had been put in place and the question of duplicate receipts had been addressed. The appellant also argues that because it refunded the sum of E195 061.60 demanded by the respondent, therefore it remedied the breach.

[79] The appellant never wrote a letter to the respondent setting out the aspects of the breach that it had remedied as a result of the notice of the breach within 14 days. The appellant does not seem to have taken the notice to remedy the breach seriously having denied any breach of the agreement. I accept the submission of the respondent that the appellant failed to remedy the breach notified to it in the letter.

[80] It was argued for the appellant that the respondent repudiated the contract by the words used in the notice of breach, annexure “TNM 4”. The words complained of include, “the foundation of the contract has been completely destroyed” and “there has been irretrievable breakdown of trust.” However in the last paragraph of the notice the respondent made clear its intention when it wrote:

“9. We demand as we hereby do that you remedy the above stated breaches of the agreement, and you make payment of the sum of E195 061.60 within 14 days from the date of receipt of this notice failing of which, we will forthwith cancel the Management Agreement with you.”

[81] It is true that the words complained of were strong but they did not detract from the subsistence of the letter, its title and conclusion, that it was a notice to remedy the breaches specified therein. The last paragraph indeed stated that the cancellation of the contract would take place only if appellant failed to remedy the breach of the contract. As the learned judge in the court a quo held there was no unequivocal intention by the respondent to repudiate the contract. The burden was on the appellant to prove repudiation of the contract and it failed to do so. See Schlinkmann v Van De Walt and Others 1947 (2) SA 900 (E).

[82] In conclusion, it is my view that the respondent was entitled to cancel the Management Agreement since the appellant breached the agreement and failed to remedy the breach when duly notified of the breach.

[83] In the result, I make the following order: