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[2016] ZAWCHC 67
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Kriel N.O v Oaker and Another (5417/2014) [2016] ZAWCHC 67 (3 June 2016)
REPUBLIC OF SOUTH AFRICA
IN THE HIGH COURT OF SOUTH AFRICA
[WESTERN CAPE DIVISION, CAPE TOWN]
Case No.: 5417/2014
DATE: 3 JUNE 2016
PIERRE DU PLESSIS KRIEL
N.O
........................................................................................
Applicant
And
WENTZEL LINDSAY
OAKER
..................................................................................
First
Respondent
ROCKLAND GROUP HOLDINGS (PTY)
LIMITED
.........................................
Second
Respondent
JUDGMENT: 3 JUNE 2016
MEERJ
[1] The Applicant, in his capacity as curator of
Rockland Asset Management and Consulting (Pty) Ltd ("RAM"),
has instituted
action against the Second Respondent, Rockland Group
Holdings (Pty) Ltd ("Holdings") for repayment of a loan of
R31 282
886,46. The Applicant seeks to join the First Respondent
Wentzel Lindsay Oaker ("Oaker") as Second Defendant in the
action.
In so doing, the Applicant seeks also to amend his
particulars of claim by introducing a claim against Oaker in the
alternative
for the same amount. Such claim is conditional upon the
existing claim against Holdings as First Defendant, failing.
[2] The joinder application is brought under the
common law on grounds of convenience, equity, the saving of costs and
the avoidance
of a multiplicity of actions. It is also brought in
terms of Uniform Rule 10 (3) on the basis that both the existing
claim and
the claim in the alternative, which is sought to be
introduced, depend upon the determination of substantially the same
question
of law or fact which, if the Respondents were sued
separately, would arise in each separate action.
[3] The Applicant's cause of action in the existing
claim against Holdings arises from a loan agreement between RAM and
Holdings.
The terms of the loan agreement are disputed. According to
the particulars of claim the terms are that the loan is repayable on
demand and owed. Holdings, in its plea, has denied this to be the
case. Instead, the plea avers that in terms of the loan agreement,
the loan was only payable when RAM was possessed of sufficient
retained income and it was tax efficient to do so. Furthermore,
RAM
would declare dividends, which dividends would be due to Holdings as
a sole shareholder of RAM, and that such dividends would
be paid, not
by way of a cash distribution, but by crediting Holding's loan
account with RAM, and setting off the amount of the
dividends against
Holding's indebtedness to RAM. The plea avers also that Oaker as the
sole director of both RAM and Holdings,
concluded the agreement of
loan between them.
[4] Accordingly, the issue for determination in the
action, as presently pleaded, is a determination of the terms of the
loan agreement
between RAM and Holdings.
[5] The claim in the alternative, which the Applicant
seeks to introduce and which has led to this joinder application, is
against
Oaker for payment of the loan amount on the basis of the
breach of Oaker's fiduciary duties as director, an alleged delict.
The
claim in the alternative and the joinder application arose in
response to the aforementioned averments in the plea pertaining to
the terms of the agreement. It is the Applicant's contention that if
those averments are correct, Oaker, would have breached the
fiduciary
duties owed by him, as a director of RAM to act in good faith and in
the best interests of RAM, and not to place himself
in a position in
which his personal interests conflict with his duties to RAM. In
regard to this latter duty, it is pointed out
that Oaker was a
trustee of the Johnny Bravo Trust, which was the sole shareholder in
Holdings, and of which Oaker's wife and children
are beneficiaries.
[6] The Applicant contends that if the averments in
the plea regarding the terms of the loan agreement are correct, and
the Applicant
cannot succeed with a claim in contract against
Holdings by virtue of those terms having been agreed, then the
Applicant has a
claim for the same amount against Oaker on the basis
of his breach of fiduciary duties.
[7] It is in my view apparent that whilst the
existing claim and the claim in the alternative which is sought to be
introduced,
both arise from a common loan, they are inherently
different. The one concerns the determination of the terms of the
loan agreement,
no more no less. The other derives from sections 76
and 77 of the Companies Act, No 71 of 2008, ("the
Companies
Act"
;), and raises issues of fact and law pertaining, inter alia,
to whether Oaker as a director of a company performed his functions
in good faith, for a proper purpose and in the best interests of the
company.
[8] I agree with the submission on behalf of the
Respondents that the proposed amendment to the particulars of claim
to accommodate
the alternative claim and the joinder, introduce an
entirely new cause of action against Oaker to that pleaded in respect
of Holdings.
It would, as Respondents contend, call for evidence not
required in relation to the existing claim and argument on matters of
law,
that do not arise from the present pleadings, concerned as they
are solely with evidence of a loan agreement, and whether it is
due
and payable.
[9] Oaker, in his answering affidavit, states that
the cause of action pleaded against him in the alternative claim, is
entirely
different to that pleaded in respect of Holdings. He says he
has a number of defences to the claim against him, defences which do
not impinge upon the main claim against Holdings. These include,
inter alia, his entitlement to rely on advice furnished to him
in his
capacity as a director of RAM as set out in
section 76
(5) of the
Companies Act. It
follows, he avers, that his conduct as a director
of RAM will constitute a discrete issue to be enquired into by the
Court and
which has nothing to do with the issues in the existing
claim.
Uniform
Rule 10
(3)
[10] A joinder of defendants under Uniform
Rule 10
(3) is permitted whenever the question arising between them and the
plaintiff depends upon the determination of substantially the
same
question of law or fact, which, if such defendants were sued
separately, would arise in each separate action. That is not
the case
in the present matter. Substantially the same questions of fact or
law do not arise in the existing claim against Holdings
and the claim
in the alternative against Oaker. The two claims are inherently
different, notwithstanding that the alleged breach
of fiduciary
duties arises from the terms of the loan agreement that has been
pleaded by Holdings. It follows therefore that the
Applicant does not
meet the threshold test in Uniform
Rule 10
(3) that the two claims
involve determination of "substantially the same question of law
or fact". The application therefore
cannot succeed under Uniform
Rule 10
(3).
The Common Law
[11] Arguing for the application to succeed under the
common law, Mr Fagan for the Applicant submitted that Oaker, if not
joined
in the existing action, would not be bound by the Court's
judgment, if the Court were to find in favour of Holdings, that the
terms
of the loan agreement were as contained in the latter's plea.
Such a judgment, so the argument went, would not be res judicata
against Oaker. In these circumstances, if the alternative claim were
brought as a separate action, there is the possibility, he
contended,
that Oaker could challenge the terms of the agreement as contained in
the judgment. This
could give rise to evidence having to be lead afresh
on the terms of the agreement and potentially to conflicting
judgments. Two
trials would moreover increase costs, he submitted.
The application should succeed under the common law on grounds of
convenience,
the saving of costs and the avoidance of multiplicity of
actions and conflicting judgments.
[12] Mr Manca for the Respondents countered that it
was far-fetched to suggest that Oaker would challenge a judgment
which found
the terms of the agreement were as contained in the plea.
Oaker, he suggested, in annexing the plea to his answering affidavit,
has confirmed that the terms of the contract are as contained in the
plea and had pinned his colours to the mast as to what these
terms
were. If needs be, he submitted, Oaker could sign an agreement to the
effect that he was bound by the terms of the agreement
as contained
in the plea. It was, he submitted, unlikely in the extreme that there
would be two conflicting judgments on the terms
of the agreement.
[13] I am inclined to agree. For, even though Oaker
has not sworn in an affidavit that the terms of the agreement are as
contained
in the plea, Oaker, it must be borne in mind is the sole
director of the company from whom the plea emanates. The plea
moreover
states that Oaker concluded the agreement of loan between
RAM and Holdings. It would, I believe, be far-fetched for a litigant
in his position, ably represented, to aver different terms. It cannot
in the circumstances be said that there is a reasonable prospect
of
an overlap on this aspect or of conflicting judgments, were the two
claims to be brought separately. In Dendv v University of
the
Witwatersrand and Others
[2005] ZAGPHC 39
;
2005 (5) SA 357
(W) at paragraph 73
Boruchowitz J said,
"At common law a number of defendants may be
joined whenever convenience so requires. There is a reasonable
prospect of an
overlap of factual issues. Convenience dictates that
it would be inappropriate to run the risk of conflicting judgments by
different
Judges in different trials on issues that are common to all
three actions."
That is not the scenario
at hand.
[14] As to the saving of costs, given that the case
against Oaker is entirely conditional upon the failure of the
existing claim
against Holdings, there is, as is contended on behalf
of the Respondents, no reason why Oaker should be drawn into the
existing
litigation between the Applicant and Holdings in
circumstances where no claim may ever eventuate against Oaker. He
will be obliged
to incur costs in the existing proceedings, which as
the Respondents contend, may be wasted if the claim against Holdings
is successful.
I agree also that there is no reason why Holdings
should be drawn into litigation against Oaker, at further cost to
itself.
[15] If the claim in the alternative does not arise
there will certainly be no saving of costs. Given that it is unknown
whether
such claim will arise, the question concerning saving of
costs can at this stage only be speculative.
[16] I am in the circumstances also unable to find
that the joinder application is supported by the common law on the
grounds, inter
alia, of convenience. The fact that Oaker might be the
common witness in both contemplated claims or that both claims
emanate from
the loan agreement, does not detract from this.
[17] In the light of all of the above, the
application cannot, in my view, succeed.
[18] I accordingly grant the following order:
The application is dismissed with costs such to
include the costs of two counsel.
YSMEER
Judge of the High Court