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[2016] ZAWCHC 5
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Potters Mill Investments 14(Pty) Ltd v ABE Swersky & Associates and Others (7218/2006) [2016] ZAWCHC 5; 2016 (5) SA 202 (WCC) (1 January 2016)
THE
REPUBLIC OF SOUTH AFRICA
IN
THE HIGH COURT OF SOUTH AFRICA
(WESTERN
CAPE DIVISION, CAPE TOWN)
Case
No: 7218/2006
In
the matter between:
POTTERS
MILL INVESTMENTS 14 (PTY) LTD
Plaintiff/Respondent
And
ABE
SWERSKY & ASSOCIATES
1
st
Defendant/Applicant
B
B SCHOLSBERG
N.O.
2
nd
Defendant/Applicant
J
S SWERSKY
N.O.
3
rd
Defendant/Applicant
H
L SWERSKY
N.O.
4
th
Defendant/Applicant
Coram
:
KOEN AJ
Heard:
25 January 2016
Delivered:
1 February 2016
JUDGMENT
KOEN
AJ
[1]
During
July 2006 the plaintiff instituted an action for damages against a
firm of attorneys, Abe Swersky and Associates, as first
defendant,
and one of the partners in the firm, Mr Swersky, as second defendant.
Mr Swersky passed away in 2008 and the executors
of his estate have
been substituted as defendants in his stead.
[2]
In
its particulars of claim, framed as a claim in delict, the plaintiff
alleged that Mr Swersky had breached a duty of care owed
to it in
respect of its purchase of a portion of un-subdivided agricultural
land from one of Mr Swersky’s clients. The particulars
of claim
went on to allege that the resultant agreement of sale which the
plaintiff had concluded with Mr Swersky’s client
was void for
want of compliance with the provisions of the Subdivision of
Agricultural Land Act, 70 of 1970 (“the Subdivision
Act”).
Not that it is relevant for the purposes of this judgment but the
duty of care which was said to have been breached
was described in
broad terms as a duty to have warned the plaintiff that the
Subdivision Act was of application, and that any agreement
which was
concluded would be unenforceable if its provisions were not complied
with.
[3]
The
plaintiff alleged that it had intended to develop the property it had
purchased, and claimed that as a result of the breach
of the alleged
duty of care it had not been able to enforce the sale. It claimed
damages in the sum of just over R85 million, being
in respect of the
loss of profit it alleged it could have realised had the intended
development proceeded.
[4]
The
portion of the particulars of claim relating to non-compliance with
the Subdivision Act reads as follows:
“
7.
The
agreement is void as a result of the contravention thereof with the
Subdivision of Agricultural Land Act, 70 of 1970 (“the
Act”)
for the following reasons:
7.1 The
seller purported, in terms of the agreement, to sell to Plaintiff an
as yet undivided portion of
the said portion 24 of the relevant farm.
7.2 The
property purported to be sold in terms of the agreement constituted
“agricultural land”
in terms of the Act.
7.3 The
Minister of Agriculture had not consented to the sale of the said
portion of the farm by the seller
to Plaintiff prior to the agreement
being concluded.
7.4
In
the premises, and pursuant to Section 2(e)(i) of the Act, the
agreement is void ab initio and unenforceable.”
(The
reference to section 2(e)(i) is an obvious typing mistake. It should
be to section 3(e)(i) of the Act.)
[5] In
their plea, also filed during 2006, the defendants admitted these
allegations.
[6] Almost
ten years after the action had commenced, during September 2015, in
the course of preparing for
trial, the defendants’ legal team
consulted with certain experts. The experts drew their attention to
the possibility that
the provisions of the Subdivision Act might not
be of application to the agreement because the property sold fell
within the area
of an urban structure plan, being the Hottentots
Holland Basin Guide Plan (“the Guide Plan”) and because
the property
was thus excluded from the operation of the Subdivision
Act. Subsequent research indicated that this could be the position by
virtue
of section 27(1)(d) of the Physical Planning Act, 125 of 1991
(“the Planning Act”).
[7] This
turn of events caused the defendants to reconsider their admission
that non-compliance with the
Subdivision Act rendered the agreement
void. They promptly gave notice of an intention to amend their plea.
No longer did the defendants
wish their admission of the application
of the Subdivision Act to stand, with the consequent legal conclusion
that the agreement
was void. They now wished to assert that the
Planning Act overrode the provisions of the Subdivision Act, and thus
to deny that
the agreement in question was void. Their proposed new
response to paragraph 7 of the particulars of claim read as follows:
“
4A.1
It
is admitted that in terms of the agreement the seller sold to the
plaintiff an as yet undivided portion of portion 24 (a portion
of
portion 15) of the farm Gustrouw number 918 (“the undivided
portion”).
4A.2 The
defendants admit that the undivided portion so sold was agricultural
land as defined in section
1 of the Act.
4A3. It
is admitted that at the time of the conclusion of the agreement the
Minister of Agriculture had not
consented to the sale of the
undivided portion.
4A.4 It
is denied that the agreement was void as a result of any
contravention of the Act and the Plaintiff
is put to the proof
thereof.
4A.5 In
amplification of such denial, and without detracting from its
generality, the undivided portion was
excluded from the provisions of
the Act by virtue of section 27(1)(d) of the Physical Planning Act,
125 of 1991.
4A.6
It
was so excluded because:
4A.6.1 the
undivided portion fell within the area of an urban structure plan,
being the Cape Metropolitan
Area Guide Plan (Hottentots Holland
basin) (“the Guide Plan”);
4A.6.2 the
date of commencement of the Guide Plan preceded the date of the
agreement;
4A.6.3 in
terms of the Guide Plan, the area of land coincidental with the
undivided portion was not designated
for use for agricultural
purposes only.
4A.7
Save
for these admissions, the allegations are denied.”
[8] The
plaintiff objected to the proposed amendment. The notice of objection
filed in terms of Rule 28(2)
described the basis for the objection as
follows:
“
1.
The
amendments are a withdrawal of an admission, which admission was in
respect of one of the principal issues in the matter.
2. Defendant
is prejudiced by the lateness and materiality of the amendments,
which prejudice cannot be cured
by an order of costs or a
postponement. In particular, Defendant has prepared for trial and has
agreed to orders regarding the
merits of the matter and procedural
aspects on the basis that the issues in dispute are as detailed in
the pleadings”
(the
reference to “defendant” in paragraph 2 is another typing
mistake – it should read plaintiff).
[9] An
application by the defendants for leave to amend the plea then
followed. It was opposed. It is this
application with which this
judgment is concerned. For ease of reading I propose to refer to the
protagonists as the plaintiff
(the respondent in the application) and
the defendants (the applicants in the application).
[10] Before
going further it is necessary to make some observations about the
nature and scope of the admission
in issue. The admission made by the
defendants to the effect that non-compliance with the Subdivision Act
rendered the agreement
void is an admission of nothing more than a
legal conclusion which had been postulated by the plaintiff in its
particulars of claim.
It related to no facts which had been pleaded
by the plaintiff. In essence, the admission is nothing more than an
admission that
the validity of the agreement should be determined
with reference to the Subdivision Act, and that in terms of that Act
the agreement
would be void. That is, of course, quite correct.
[11] Where
a plaintiff alleges in a pleading that a particular law governs the
case, whereas that law may
not, an admission by a defendant that the
law referred to governs the case does not make it so. What the law is
has always been
a matter for the Court to determine, and it is well
established that mistakes about the law which the parties make are
not binding
on a Court. Thus, in
Paddock Motors (Pty) Ltd v
Igesund
1976 (3) SA 16
(AD) the Court observed that it would be
“
an intolerable position if a Court were to be precluded
from giving the right decision on accepted facts, merely because a
party
failed to raise a legal point, as a result of an error of law
on his part”
(at 23 F–G).
[12] Admissions
of fact are not, in my view, quite the same as admissions of law.
They are, as was described
in
Van Der Bijl and Others v Louw and
Another
1974 (2) SA 493
(CPD) “
an unequivocal agreement
by one party with a statement of fact made by the others, and its
effect is to eliminate the production
of evidence by the latter to
prove that fact”
(at 503 D–E).
[13] It
is evident, in my view, that an admission by a defendant that the
applicable law is what the plaintiff
alleges it to be falls to be
treated somewhat differently to the admission of a fact which is
necessary for a plaintiff to prove.
If a fact is admitted by the
defendant the plaintiff need not prove it. Questions of proof do not
arise when it comes to the law.
The relevant case law should be read,
in my opinion, with this in mind.
[14] My
attention was drawn by the parties to
Amod v SA Mutual Fire &
General Insurance Co.
1972 (2) SA 611
(N).
Amod
dealt with
an application to retract an admission made by a defendant, which was
an insurer under the Motor Vehicle Insurance Act,
29 of 1942, that
the “
Plaintiff has duly complied with the provisions of sec
11
bis
of the said Act 29 of 1942 and the plaintiff’s
claim for compensation under sec.11 of the said Act duly set out on
the prescribed
form and in the manner so prescribed and accompanied
by the requisite medical report was delivered to defendant more than
60 days
before the commencement of these proceedings.”
[15] Section
11
bis
of Act 29 of 1942 provided that “
(1) A claim
for compensation under sec. 11 shall be set out on the form
prescribed by regulation in such manner as may be so prescribed
and
shall be accompanied by such medical report or reports as may be so
prescribed, be sent by registered post or delivered by
hand to the
registered company at its registered office or local branch office,
and the registered company shall in the case of
delivery by hand, at
the time of the delivery, acknowledge receipt thereof and of the date
of such receipt in writing.”
[16] The
“
prescribed form”
in issue in
Amod
required
the content of the form to be confirmed on affidavit. This had not
been done in
Amod
. At the time the pleadings were drafted case
authority in the form of
Landsberg v New India Insurance Co. (Pty)
Ltd and Another
1969 (1) SA 110
(D) existed for the proposition
that the requirement that the form be confirmed on affidavit was
ultra vires
and unlawful. On the basis of
Landsberg
the
insurer filed a plea which, in essence, accepted that the law did not
require the content of the “
prescribed form”
to be
confirmed on affidavit. No doubt both parties had relied on
Landsberg
in formulating their pleadings.
[17] However,
about two months after the plea had been filed
Landsberg
was
overruled by a full bench decision. The full bench held that if the
“
prescribed form”
was not confirmed on affidavit
then section 11
bis
had not been complied with. It was in
these circumstances that the application to withdraw the admission by
the defendant that
the plaintiff had complied with the requirements
of section 11
bis
of Act 29 of 1942 was brought.
[18] In
order to understand
Amod
a careful analysis of the un-amended
pleadings and the proposed amendment is required. As set out above,
the plaintiff had stated
in the particulars of claim that
all
of the multiple requirements imposed by section 11
bis
had
been complied with. The insurer admitted this. This much appears from
what is said in
Amod
at 612 B–D.
[19] The
requirements imposed by section 11
bis
included the completion
of a prescribed form, in a prescribed manner; the submission of the
requisite medical report; and the delivery
of the form and report to
the insurer more than 60 days before the action was instituted.
Whether or not these requirements were
complied with were questions
of fact, and not law, in my view. The proposed amendment was one in
which the insurer wished to change
tack completely, and place
all
of those facts in dispute.
[20] It
was submitted on behalf of the insurer that the admission in issue
was an admission of law and that
the Court should not regard itself
as being bound by an incorrect admission of law made by the parties.
Leon J expressed the view
that the admission in question was one
which involved both allegations of fact as well as conclusions of
law. The learned judge
doubted that he was dealing with an admission
of law. Having regard to the broad scope of the admission pleaded, I
think, with
respect, that he was correct. Section 11
bis
of
Act 29 of 1942 required a number of things to be done, and not only
that the content of the prescribed form be confirmed on
affidavit.
The insurer admitted in its original plea that all of the things
enumerated in the section had been done. It did so,
I assume, because
it accepted on the basis of
Landsberg
, at the time the plea
was filed, that it could make nothing of the fact that the prescribed
form had not been confirmed on affidavit,
and because, in fact, all
of the other requirements had been fulfilled by the plaintiff.
[21] When
Landsberg
was overruled the insurer wished to withdraw that
admission, and by way of a broadly framed denial, placed in dispute
that all
of the components of section 11
bis
had been complied
with. In the circumstances it seems to me clear that the withdrawal
of the admission in
Amod
related mainly to admissions of fact,
and only tangentially to a legal conclusion which flowed
automatically if any one of the
requirements of section 11
bis
had not been complied with.
[22] However,
for the purposes of deciding the matter before it the Court in
Amod
assumed, without deciding, to treat the admission as being one of
law. After discussing those cases which establish the proposition
that a Court is not bound by mistakes of law made by the parties the
learned judge went on to say that he did not “
understand
them to hold that a Court is necessarily obliged in all cases to
grant an application for an amendment to a pleading
where the
application involves the withdrawal of an admission of law”
(at 616 H).
[23] As
appears from the judgment, what really happened in
Amod
is
that the law which applied when the plea was drafted changed, and the
Court not only permitted the plea to be amended after
the law had
been changed to take account of this, but it also permitted the
defendant to deny a number of facts which the defendant
had
previously admitted. In
Amod
the Court had assumed, and did
not hold, that what was in issue was a pure question of law.
[24] I
conclude therefore that the facts in
Amod
are quite different
from those in this case.
Amod
is not of direct application to
cases where the withdrawal of an admission about the law only is
sought. In my opinion, because
of the different factual
context, the statement in
Amod
to the effect “
that,
even in the case of the withdrawal of an admission of law, the court
is not relieved of its obligation to consider whether
the granting of
the application will unfairly prejudice the other side”
(at
617 B–C) should not be understood to mean that prejudice is a
consideration where an amendment is sought only so as to
place the
issues before the Court in the correct legal context.
[25] A
party to a case cannot be prejudiced, in my opinion, if the case is
determined with reference to the
correct law. In the same way that
prejudice which might entail a party losing a case has been held not
to be prejudice of the kind
which might result in an amendment being
disallowed, any prejudice which results from an amendment sought for
the purpose of placing
the issues in the correct legal context cannot
be prejudice of the kind which would result in the amendment being
disallowed.
[26] If
prejudice follows upon an amendment which is intended to raise an
overlooked and relevant provision
of the law then it must be
ameliorated by appropriate procedural orders, such as the granting of
postponements and cost orders.
To do otherwise would have the
intolerable result that a Court might be required to ignore
applicable law, and apply inapplicable
law, simply because the
parties, in ignorance, had agreed that the inapplicable law was
applicable.
[27] I
should mention that in argument before me counsel for the plaintiff
submitted that the admission contained
in the plea was an implicit
acknowledgement by the defendants of the fact that a Guide Plan did
not apply to the property. It was
contended, further, that in a loose
sense, the defendants had agreed that this was the position, and that
they should be held to
that agreement. Furthermore, it was submitted,
that whether or not there was a Guide Plan was a fact and thus facts
were also in
issue and questions of prejudice therefore fell to be
taken into account.
[28] I
am not persuaded that there was an acknowledgement by the defendants,
implicit or otherwise, or an
agreement, even in the loose sense
adverted to in argument, to this effect. The facts indicate that the
question whether a Guide
Plan applied or not was simply not
considered at all. Moreover, it seems to me that whether or not a
Guide Plan was applicable
is a matter of law and not fact.
[29] Moreover,
this point, at least in the manner formulated above, was not raised
in the notice of objection
filed by the plaintiff and should not
therefore fall to be considered at this stage.
Squid Packers (Pty)
Ltd v Robberg Trawlers (Pty) Ltd
1999 (1) SA 1153
(SE) makes this
clear.
[30] Be
that as it may, I am satisfied that the failure to make reference to
the provisions of the Planning
Act in the plea originally filed has
been satisfactorily explained. In the founding affidavit filed in
support of the application
it is stated that none of the defendants
or their legal team had been aware of the provisions of the Guide
Plan, or its area of
application. In answer this allegation is met
with a bald denial. This denial, in my view, is not of the kind which
gives rise
to a genuine dispute of fact and I therefore accept that
the provisions of the Planning Act were innocently overlooked by the
defendants’
legal team.
[31] The
affidavits reveal that the defendants’ legal team investigated
the question whether or not
the plaintiff would be able to prove that
it would have undertaken the development of the purchased property,
as it had intended
to do. In the course of these investigations the
plaintiff engaged the services of two experts, both of whom expressed
to the defendants’
legal team the view that the property might
not have been subject to the Subdivision Act on account of the fact
that the property
fell within the area of a Guide Plan. Further legal
research undertaken by the defendants’ legal team revealed,
according
to the affidavit filed in support of the amendment
application, that the provisions of the Planning Act were of
application. The
notice of amendment, which had been prepared in
draft by junior counsel the previous day, was settled and immediately
served on
the plaintiff’s attorneys. No questions of
inexcusable carelessness or delay arise, in these circumstances.
[32] In
Whittaker v Roos and Another; Morant v Roos and Another
1911
TPD 1092
at 1102–3 the approach of our Courts to amendments was
described as follows: “
This court has the greatest latitude
in granting amendments, and it is very necessary that it should have.
The object of the court
is to do justice between the parties. It is
not a game we are playing, in which, if some mistake is made, the
forfeit is claimed.
We are here for the purpose of seeing that we
have a true account of what actually took place, and we are not going
to give a decision
upon what we know to be wrong facts. It is
presumed that when a defendant pleads to a declaration he knows what
he’s doing,
and that, when there is a certain allegation in the
declaration he knows that he ought to deny it, and that, if he does
not do
so, he is taken to admit it. But we all know, at the same
time, that mistakes are made in pleadings, and that it would be a
very
grave injustice, if for a slip of the pen, or error of
judgement, or the misreading of the paragraph in pleadings by
counsel, litigants
were to be mulcted in heavy costs. That would be a
gross scandal. Therefore, the court will not look to technicalities,
but we’ll
see what the real position is between the parties.”
[33] Over
a century later, the general approach of our Courts to amendments to
pleadings remains the same.
It is true that amendments involving the
withdrawal of admissions of fact have the potential to cause
prejudice to the other party.
However, in my view, for the reasons
given above, amendments involving the withdrawal of an incorrectly
admitted legal consequence
are of a different nature. In any event,
in this case I do not think that any prejudice of the kind which
might militate against
the proposed amendment exists. Only the
law is prejudiced if cases must be decided on the basis of what the
parties might
have in ignorance agreed the law to be.
[34] There
is one further issue which I think might require clarification. I
add, therefore, that this judgment
is not intended to constitute a
finding that the Planning Act applies. The task of this Court is only
to decide whether or not
that issue is a triable one as explained in
Commercial Union Assurance Co Ltd v Waymark NO
1995 (2) SA 73
(Tk) at 77 G–H . I am satisfied that it is.
[35] It
follows that I will allow the amendment.
[36] Two
further matters require attention. Firstly, each of the protagonists
brought applications to strike
out various parts of the affidavits
filed by the other. In the applications the issues were that
inadmissible hearsay evidence
had been introduced, and new matter in
reply. None of the matter alleged to be hearsay has played any role
in the determination
of this application. Moreover, none of the new
matter, to the extent that it can be characterised as such, raised in
reply, has
played any role in the determination of the dispute before
me. In the circumstances both applications to strike out are refused.
[37] What
remains is the issue of the costs of the applications to strike out
and the costs of this application.
In regard to the applications to
strike out, because neither had any influence on the resolution of
the dispute, I intend to make
no order as to costs. In regard to the
application for leave to amend I take the view that the trial court,
which will have a better
understanding of the issues and factual
disputes than can be had at this stage will be better placed to make
a ruling. I think
justice will be done in the circumstances, at this
stage of the proceedings, for the question of costs to stand over for
determination
by the trial court.
[38] I
therefore make the following order, in which I refer to the parties
as the applicants and respondent:
A.
The
applicants are granted leave to amend their plea in accordance with
the notice of intention to amend dated 23 September 2015;
B.
The
applicants are ordered to file the amended pages of the plea within 5
days from the date of this order;
C.
The
respondent is given leave, within 10 days of the filing of the
amended plea, to make any consequential amendments to the pleadings
and documents it has filed as envisaged in Rule 28(8);
D.
The
applications to strike out are refused. No order as to costs is made
in regard to these applications;
E.
The
costs of the application for leave to amend stand over for
determination by the trial court.
KOEN
AJ
APPEARANCES
For
the Plaintiff/Respondent:
Ms TA Dicker SC
Instructed
by:
Barnaschone Attorneys
For
the
Defendants/Applicants:
Mr I Jamie SC
Mr M
Edmunds
Instructed
by:
Norton Rose Fulbright