National Scrap Metal (Cape Town) (Pty) Ltd and Another v Murray & Roberts Ltd and Others

The appellants (National Scrap Metal (Cape Town) (Pty) Ltd and Murec Crushing and Milling (Pty) Ltd) leased portions of property in Kuilsrivier owned by the respondent (Murray & Roberts Ltd). The first appellant's written lease expired on 31 October 2010, and the second appellant's lease was purportedly terminated by the respondents in 2011. Both appellants relied upon an oral lease agreement allegedly concluded in 2008, which they claimed entitled them to remain in occupation for at least ten years after the expiry of the first appellant's written lease. This alleged oral agreement occurred at a meeting at Johannesburg airport between representatives of the appellants (Movsas and Kassel) and Noonan (a representative of M&R on NSM's board) following a board resolution that NSM would only purchase a heavy duty shredder (costing approximately R45 million) on condition of securing a long-term lease with CISCO. The respondents denied the existence of such an oral lease and applied for eviction. The Western Cape High Court (Griesel J) granted the eviction order, concluding without oral evidence that the appellants' allegations regarding the oral lease were not sustainable. The appellants appealed.

• Whether disputed allegations of fact in motion proceedings can be rejected on the papers without hearing oral evidence
• What factors are relevant in determining whether an applicant's version is 'so far-fetched or clearly untenable' that it can be rejected merely on the papers
• Whether an oral lease agreement for ten years was concluded between the parties
• Whether Noonan had authority to bind M&R to a long-term lease agreement
• The standard required to establish a genuine and bona fide dispute of fact in motion proceedings

1. The appeal succeeded. 2. The order of the high court was set aside and replaced with an order dismissing the eviction application. 3. The applicants (respondents on appeal) were ordered to pay the respondents' (appellants on appeal) costs jointly and severally, including costs of two counsel where employed. 4. The respondents were ordered to pay the applicants' costs of two interlocutory proceedings (31 August and 13 September 2011) jointly and severally. 5. The respondents were ordered to pay the appellants' costs of the appeal, including costs of two counsel, jointly and severally. 6. The attorney and client costs order made by the high court regarding interlocutory applications was set aside and replaced with a party-and-party costs order.

In motion proceedings, a court may only reject a respondent's version without hearing oral evidence where the allegations are 'so far-fetched or clearly untenable that the court is justified in rejecting them merely on the papers'. This is a stringent test, not easily satisfied. The court must accept the respondent's allegations unless they can be rejected as palpably false on the papers alone. When assessing whether a version can be rejected, courts must be cautious about: (1) relying on perceived improbabilities, as matters often appear different after oral evidence; (2) assuming businessmen will act with meticulous formality, particularly where there are close business relationships; (3) drawing adverse inferences from the absence of specific matters in board minutes, which are not verbatim records; (4) failing to consider the full context and relationship between parties. A bare denial may be sufficient to raise a genuine dispute where the disputing party is not privy to the facts, provided there is some basis for the denial in the surrounding circumstances. The proper approach is not to evaluate which version is more probable, but whether the respondent's version is so far-fetched that it can be rejected without evidence.

The court made several significant observations: (1) Courts should guard against approaching cases on the assumption that businessmen will act in a businesslike manner or with meticulous concern for accurate record-keeping, noting that 'businessmen are often content to conduct their affairs with only vague or incomplete agreements' (quoting Harms JA in Namibian Minerals Corporation). (2) The court quoted with approval the dictum of Megarry J in John v Rees regarding 'open and shut cases which, somehow, were not' and the importance of not prejudging matters before evidence is heard. (3) The court observed that close corporate relationships and overlapping board representation may explain informal business practices that would otherwise appear unusual. (4) Minutes of board meetings should not be treated as comprehensive records of all matters discussed, and absence of specific reference to an issue does not necessarily mean it was not mentioned or considered. (5) Implied admissions can be drawn from failures to deny allegations at critical junctures when a denial would be expected. These observations provide valuable guidance for practitioners and courts dealing with motion proceedings involving commercial disputes.

This case is significant in South African law for its comprehensive restatement and application of the principles governing motion proceedings where there are disputed facts. It reinforces the stringent test established in Plascon-Evans and Wightman for when a court may reject a respondent's version without hearing oral evidence. The judgment emphasizes that courts must guard against being too quick to reject versions as implausible, particularly in commercial contexts where businessmen often conduct affairs informally and without meticulous record-keeping. The case is particularly important for illustrating how courts should approach credibility assessments on the papers, the limited role of probability analysis in such circumstances, and the recognition that matters often appear different after oral evidence is heard. It also addresses issues of ostensible and actual authority in corporate contexts and the appropriate inferences to be drawn from board meeting minutes. The judgment serves as an important reminder of the limitations of motion proceedings in resolving genuine factual disputes.