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[2011] ZAGPJHC 188
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De Wet and Others v Memor (Pty) Ltd (2009/44153) [2011] ZAGPJHC 188 (29 April 2011)
NOT
REPORTABLE
SOUTH GAUTENG HIGH COURT, JOHANNESBURG
CASE NO
:
2009/44153
DATE:29/04/2011
In the matter between:
JOHAN
HENDRIK DE WET
...........................................
First
Applicant/Plaintiff
JAMES
MOTODZI NESONGOZWI
...........................
Second
Applicant/Plaintiff
ILONKA
VAN BREDA
...................................................
Third
Applicant/Plaintiff
and
MEMOR
(PTY)
LTD
…...................................................
Respondent/Defendant
J U D G M E N T
TSOKA, J
:
[1] This is an application in terms of Rule 33(4) of the Uniform
Rules of Court. Rule 33(4) reads –
“
(4) If, in any pending
action, it appears to the court
mero
motu
that there is
a question of law or fact which may conveniently be decided either
before any evidence is led or separately from any
other question, the
court may make an order directing the disposal of such question in
such manner as it may deem fit and may order
that all further
proceedings be stayed until such question has been disposed of, and
the court shall on the application of any
party make such order
unless it appears that the questions cannot conveniently be decided
separately.”
[2] It is common cause that there
is a pending action which is set down for trial on 14 March 2011.
The application is on the instance
of the Plaintiffs who are of the
view that the defence of fraudulent misrepresentation, pleaded by the
Defendant, may conveniently
be decided separately from any other
issues raised in the pleadings.
[3] The function of the Court, in
an application in terms of Rule 33(4) such as the present, was stated
in
Minister of
Agriculture v Tongaat Group Ltd
1976 (2) SA 357
(D) at 364D-E as follows –
“…
the function of
the Court in an application of this nature is to gauge to the best of
its ability the nature and extent of the advantages
which would flow
from the grant of the order sought and of the disadvantages. If,
overall, and with due regard to the divergent
interests and
considerations of convenience (in the wide sense I have indicated)
affecting the parties, it appears that such advantages
would outweigh
the disadvantages, it would normally grant the application.”
[4] In
Tudoric-Ghemo
v Tudoric-Ghemo
1997
(2) SA 246
(WLD) it was held that the word ‘convenient’
in the context of Rule 33(4) was used to convey not only the notion
of
facility or ease or expedience but also the notion of
appropriateness: The procedure as contemplated in Rule 33(4) would be
‘convenient’
if, in all the circumstances, it appeared to
be fitting and fair to the parties concerned.
[5] In
African
Bank v Soodhoo
2008
(6) SA 46
(D) at 51B-D the Court said the following –
“
The general principle
in law would appear to be that notwithstanding the wide powers
conferred on a court under rule 33(4) of the
Uniform Rules of Court
it is ordinarily desirable, in the interests of expedition and
finality of litigation, to have one hearing
only at which all issues
are canvassed so that the court, at the conclusion of the case, may
dispose of the entire matter.
Minister
of Agriculture v Tongaat Group Ltd
1976
(2) SA 357 (D)
at
362G - H, and
Denel
(Edms) Bpk v Vorster
2004
(4) SA 481
(SCA)
((2004)
25
ILJ
659)
at 485B - C have reference. In some instances, however, the interests
of the parties and the ends of justice are better served
by disposing
of a particular issue or issues before considering other issues
which, depending on the result of the issue singled
out, may fall
away. (
Minister of
Agriculture
(supra)
at 362H.)”
[6] The general principles
gleaned from the abovementioned cases may briefly be summarised as
follows. The Court has a discretion
to grant or refuse an
application in terms of Rule 33(4). The overriding consideration in
such applications is convenience, in
a wide sense, that is to say,
the separation must not only be convenient to the person applying for
such separation, but must also
be convenient to all the parties in
the matter inclusive of the court. The determination of such an
application requires of the
court to make a value judgment in
weighing up the advantages and the disadvantages in granting such
separation. If the advantages
outweigh the disadvantages,
invariably, the court should grant the application for separation.
The notion of appropriateness and
fairness to the parties also comes
into the equation,
[7] Having briefly set out the
general principles to be adopted in an application for separation of
issues in terms of Rule 33(4),
the question to be answered in this
matter is the following: Is it convenient for this Court to grant the
application for separation?
To answer this question it is essential
to establish the issues defined in the pleadings.
[8] The plaintiffs’ claims
against the defendant are based upon a written Sale Agreement (“
the
Agreement
”) in
terms whereof the defendant purchased from the plaintiffs the entire
shareholding in a company known as Gundo Resources
(Pty) Limited
(“
Gundo
”)
for R23 million, The agreement was preceded by an option dated 16
October 2008. In terms of the option, Gundo confirmed
that it was
the holder of valid prospecting rights for chrome over certain
properties in Palmietfontein. The defendant was to
carry out due
diligence. If the defendant was satisfied with the exercise, it
would pay the plaintiffs an exclusive fee of R2,5
million. The
option period would then commence running. During this option
period, the defendant would have the right to acquire
plaintiffs’
entire shareholding in Gundo for R23 million. The defendant
exercised the option on 12 December 2008 and agreed
to pay the
purchase price. It paid the exclusive fee of R2,5 million.
[9] In February 2009 the parties
concluded a written Sale of Shares and Claims Agreement (“
the
sale agreement
”).
In fact the merx that was sold was not shares and claims, but the
prospecting rights, the sole asset of Gundo. The sale
agreement was
subject to suspensive conditions defined in Clause 11 of the sale
agreement. The plaintiffs gave the defendant various
warranties.
[10] According to the plaintiffs,
the suspensive conditions were fulfilled and despite the fulfilment,
and demand for payment of
the deposit and the purchase price, the
defendant, on 4 September 2009, repudiated the sale agreement.
[11] In its plea, the defendant
admits the option and the sale agreement but pleads that both were
validly cancelled. The defendant
further pleads that the purchase
price of R23 million was induced by misrepresentation made by the
first plaintiff acting on behalf
of all the plaintiffs that there
were approximately 23 million resource tons of minable chrome located
on Portion 6 and Remaining
Extent of Portion 5 of the farm
Palmietfontein No. 208JP. The defendant further pleads that the
clause of the sale agreement that
denies it the right to raise
deliberate misrepresentation as a defence to cancel the sale
agreements is contra bonos mores, unlawful
and unenforceable. It is
further pleaded by the defendant that the plaintiffs gave the
defendant various warranties with regard
to Gundo and the prospecting
rights, which warranties were breached by the plaintiffs.
[12] The defendant pleads further
that the sale agreement was induced by deliberate and fraudulent
misrepresentation with the result
that on 4 September 2009, in a
letter addressed by its attorneys of record to the plaintiffs’
attorneys of record, it cancelled
the sale agreement and demanded
repayment of the exclusive fee in the sum of R2.5 million.
[13] The plaintiffs contend that
fraud is defendant’s main complaint and defence. They further
contend that the resolution
of the defence of fraud would curtail the
duration of the trial, save costs and reduce the number of witnesses
to be called, eliminating
the leading of unnecessary evidence. The
Plaintiffs contend further that, although in terms of clause 20.5 of
the sale agreement,
the defendant is precluded from relying on
innocent, negligent or deliberate misrepresentation, they abandon
their reliance on
deliberate misrepresentation as precluding the
defendant from raising such misrepresentation as a defence. See
Wells v SA Alumenate
Co
. 1927 AD at 73.
They, however, insist that the defendant is precluded from relying on
innocent or negligent misrepresentation
in order to avoid the sale
agreement.
[14] According to the plaintiffs,
if the defendant proves fraud on their part, such fraud will be
dispositive of the entire dispute
between the parties.
[15] According to the defendant,
fraud is not the only defence raised in the pleadings. In fact in
the plea several defences, such
as non-fulfilment of the suspensive
conditions, breach of the agreement and breach of good faith,
warranties and finally, breach
of the sale agreement by the
plaintiffs, are raised which led to the defendant cancelling the sale
agreement.
[16] At the heart of the dispute
between the parties, are the prospecting rights that the defendant
purchased from the plaintiffs.
It is correct that the defendant, in
its plea, raises fraudulent misrepresentation in the way the
prospecting rights were awarded
to the plaintiffs, fraudulent
misrepresentation regarding the quantity of the chrome on the
property as well as falsification of
the geological report furnished
to the defendant, which report materially differed from the one
submitted to the Department of
Minerals and Energy. According to the
defendant, the prospecting rights have their own relevant conditions
and provisions which
have been breached by the plaintiffs. The
defendant contends that it is simplistic to characterize fraud as
dispositive of the
entire dispute between the parties.
[17] It is so, in my view, that
the issue of fraud may dispose of part of the dispute between the
parties. It is further so that
the duration of the trial and some
witnesses, in particular the first plaintiff, may be done away with.
This is, in the context
of this matter, a pyrrhic victory for the
plaintiffs. The bigger picture reveals that even if fraud is decided
separately from
the other issues raised in the pleadings, the first
plaintiff still has to appear again in court to testify as to whether
the suspensive
conditions were fulfilled or not. The three
Plaintiffs’ bona fides in dealing with the defendant still
needs to be tested
in court. The issue whether the warranties given
to the defendant regarding Gundo’s liabilities and Gundo’s
maintenance
of the validity of the prospecting rights, in terms of
the
Mineral and Petroleum Resources Development Act No 28 of 2002
,
have been breached or not, still has to be determined by the court.
[18] That the entire dispute
between the parties would not be disposed of by separating the issue
of fraud from the other issues,
is obvious. It is also obvious that
this matter would have to come before court for all the other issues
to be decided. The testimony
of the geologist that led to two
different reports being submitted to the Department of Minerals and
Energy in support of the application
for the prospecting right, and
to the defendant, may still be required.
[19] The law frowns upon
multiplicity of actions. It would not be convenient to the court,
with its overstretched resources, to
be engaged in this matter twice.
Courts further discourage piecemeal hearing of issues. What would
happen should the finding
of the court hearing the issue of fraud be
the subject of an appeal? The remaining issues would necessarily be
held over until
the disposal of the appeal. This cannot be in the
interest of justice. Fairness to the parties and their respective
witnesses
dictates that litigation should commence and be finalized
expeditiously. This, in my view, would enhance the administration of
justice. The granting of this application, although convenient to
the plaintiffs, in particular with regard to the onus of proof,
is
undoubtedly inconvenient to the court and the defendant.
[20] In
Denel
referred to above at 484 paragraph [3], the Court said the following
–
“…
.Rule 33(4) of
the Uniform Rules - which entitles a Court to try issues separately
in appropriate circumstances - is aimed
at
facilitating the convenient and expeditious disposal of litigation.
It should not be assumed that that result is always achieved
by
separating the issues. In many cases, once properly considered, the
issues will be found to be inextricably linked, even though,
at first
sight, they might appear to be discrete. And even where the issues
are discrete, the expeditious disposal of the litigation
is often
best served by ventilating all the issues at one hearing,
particularly where
there is
more than one issue that might be readily dispositive of the matter.
It is only after careful thought has been given to
the anticipated
course of the litigation as a whole that it will be possible properly
to determine whether it is convenient to
try an issue separately.”
[21] The issue of fraud is the
common thread that runs through the defence raised in defendant’s
plea. It does not only relate
to the misrepresentation regarding the
status, and liabilities of Gundo but relates also to the fraud that
the defendant contends
was perpetrated by either the plaintiffs or
the geologist in applying for the prospecting rights on the property.
The beach of
the bona fides and the warranties may be the product of
the alleged fraud. Other than the fraud, there is also more than one
issue
raised in the plea that would still require determination by
the court in order to dispose of the matter.
[22] In the circumstances of this matter, the conclusion reached is
that it is not convenient to separate the issue of fraud from
the
other issues raised in defendant’s plea. The application
deserves to be dismissed.
[23] Both parties engaged the
services of Senior Counsel. Any order of costs made shall include
costs of Senior Counsel.
[24] In the result the application is dismissed with costs, which
costs include costs of Senior Counsel.
_____________________________
M TSOKA
JUDGE OF THE SOUTH GAUTENG
HIGH COURT, JOHANNESBURG
COUNSEL
FOR PLAINTIFF : ADV BE LEECH SC
INSTRUCTED
BY : WERKSMANS INC
COUNSEL
FOR DEFENDANT : ADV B BERRIDGE SC
INSTRUCTED
BY : WEBBER WENTZEL ATTORNEYS