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[2012] ZAGPJHC 278
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Momentum Group Ltd v De Waal In re: Momentum v De Waal (9952/2012) [2012] ZAGPJHC 278 (29 November 2012)
SOUTH GAUTENG HIGH COURT
(JOHANNESBURG)
CASE NO: 19952/2012
DATE:29/11/2012
In the matter between:
MOMENTUM
GROUP LIMITED
...........................................
Excipient
and
DE
WAAL,
MARIUS
................................................................
Respondent
In re:
MOMENTUM
GROUP LIMITED
..........................................
Plaintiff
and
DE
WAAL,
MARIUS
...............................................................
Defendant
JUDGMENT
DODSON AJ:
The plaintiff in this matter excepts to
certain
paragraphs of the defendant’s plea on the grounds that they do
not disclose a defence.
The exception pertains to the first of two claims pursued by the
plaintiff against the defendant, each arising from separate
agreements. The second claim is not relevant to the exception.
In respect of the first claim, the plaintiff sues
the defendant for repayment of certain commissions
.
The commissions were allegedly advanced to the defendant before
they fell due to him. The defendant allegedly became liable
to
repay them to the plaintiff on account of the lapse or termination
of the policies in respect of which the commission was
to become
payable.
In the particulars of claim it is alleged that
the plaintiff and the defendant entered into a “financial
planner agreement”.
In terms of the agreement the defendant
was appointed by the plaintiff as an independent contractor to
canvass and procure applications
for policies and products and to
maintain and service such policies and products.
1
The plaintiff pleaded further that the following
were express terms of the
financial
planner agreement:
commission would be paid by the plaintiff to the
defendant in respect of such premiums as were actually paid to and
received by
the plaintiff from policies that the plaintiff issued
following upon applications that the defendant had procured and
submitted;
such commission would be earned and would become payable as and when
the plaintiff received and accepted such premiums;
notwithstanding the above terms of the agreement,
the plaintiff was entitled in its discretion to advance to the
defendant “
first year commission
or renewal commission for any policy before it receives any
premiums”
;
any amount repayable by the defendant to the plaintiff would be
repayable on demand;
the plaintiff would be entitled to set off
against any liability of the plaintiff to the defendant (whether or
not due), any amounts
due by the defendant to the plaintiff;
the agreement could be cancelled by either party giving the other 14
days written notice;
the agreement could be terminated summarily by the plaintiff in the
event of material breach by the defendant;
in the event of termination of the agreement as a
result of a material breach, no further commission would be due or
payable by
the plaintiff to the defendant.
The plaintiff aver
s
further that –
pursuant to the financial planner agreement, and
during its currency, the plaintiff advanced to the defendant first
year commission
and renewal commission for certain policies and
products procured and submitted by the defendant before it received
any premiums
in respect of those policies and products;
on 23 May 2011 the defendant notified the
plaintiff of his intention to terminate the agreement on 14 days’
notice, effective
from 7 June 2011;
on or about 23 May 2011 and prior to the
termination of the financial planner agreement, the defendant
materially breached the
agreement by entering into an agreement with
Discovery Holdings Limited in terms of which he was appointed as an
intermediary
of Discovery with effect from 1 June 2011;
acting pursuant
to such
breach, on 18 July 2011 the plaintiff summarily terminated the
agreement.
Against that background, the core of the plaintiff’s claim is
then pleaded as follows:
“
10. During
the currency of the Agreement and subsequent to the termination
thereof, policies and/or products in respect of which
Plaintiff
advanced commissions and/or fees as aforesaid lapsed for whatever
reason. As a result of such lapse or termination of
the policies
and/or products the Plaintiff was obliged to recalculate the
commission and/or fees advanced in terms of the provisions
of the
regulations promulgated in terms of the Long-Term Insurance Act. As
a result of such recalculation the Defendant became
indebted to the
Plaintiff for commissions and/or fees which were advanced and which
had not vested in the Defendant at date of
cancellation or
termination of the policies and/or products.
11. As a
result of the recalculation of the commissions and/or fees advanced
the Defendant became liable to the Plaintiff for the
amount of
R282 844,97 as calculated on 26
th
March 2012. The reconciliation of the Defendant’s commission
account from the inception of the agreement in March 2008 until
the
26
th
of March 2012 is annexed hereto marked Annexure ‘B’.
12. The reconciliation
indicates commissions and/or bonuses and/or fees advanced, statutory
deductions and agreed deductions in
respect of insurance, pension,
medical aid contributions, actual payments made to the Defendant and
commissions and/or fees that
were reversed as a result of the
cancellation and/or termination of the policies and products.”
It is this amount of R282 844,97 which then
forms the subject matter of the first claim, less an amount of R28
715,04 admitted
to be due by the plaintiff to the defendant in
respect of legal costs. The net amount of the first claim is
accordingly R254
129,93.
The defendant pleaded to the core paragraphs of the plaintiff’s
particulars of claim as follows:
“
4.1 These paragraphs
are denied.
4.2 In elaboration of this
denial, the defendant pleads as follows:
4.2.1 It is denied that the
reconciliation annexed as ‘B’ to the plaintiff’s
particulars of claim constitutes
an accurate and reliable basis for
the calculation of the defendant’s purported indebtedness to
the plaintiff (such indebtedness
which, in any event, is denied).
4.2.2 The
plaintiff’s interpretation of the agreement (and the
reconciliation upon which it relies) fails to take account
of the
defendant’s entitlement to earn commissions on policies in
respect of which he has been appointed as financial advisor.
4.2.3 The
agreement, as interpreted by the plaintiff, entitles the plaintiff to
recover from the defendant commissions paid in the
circumstances
described in the particulars of claim without obliging the plaintiff
to give the defendant credit for commissions
earned. If that
interpretation is upheld, then the relevant clauses of the agreement
relied upon by the plaintiff (but which are
not listed in the
particulars of claim) constitute penalty clauses as envisaged in
section 1 of the Conventional Penalties Act
15 of 1962. The clauses
in question provide to the plaintiff a benefit out of proportion to
any prejudice suffered by the plaintiff
by the termination of the
agreement. In the event of the claim not being dismissed, therefore,
the sum claimed ought to be reduced
in terms of section 3 of the
Conventional Penalties Act 15 of 1962.
4.2.4 If
the plaintiff’s interpretation of the agreement as described in
paragraph 4.2.3 immediately above is upheld, then
the agreement is
contrary to public policy and unenforceable.”
It is these paragraphs of the plea which are
targeted by the plaintiff’s exception.
The amounts claimed, says the plaintiff, are expressly recoverable
in terms of the Regulations under the Long-Term Insurance
Act No.52
of 1998.
2
In particular the plaintiff relies on regulation 3.5(2)(a)(i)(cc).
The plaintiff avers in the exception (but not in the particulars
of
claim) that regulation 3.5(2)(i)(cc) forms an implied term of the
financial planner agreement. Regulation 3.5(2)(i)(cc) reads
as
follows:
“
3.5
Adjustment and refund of commission.
(1)
…
(2)(a)
If
a premium or any part thereof is
–
(i)
for
any reason
refunded
by the long term
insurer or, in the case of a multiple
premium policy which is not –
(aa) …
(cc)
a
policy in respect of which commission has been paid only after each
premium in respect of which it has been received by the long
term
insurer concerned (including but not limited to a replacement
policy),
for any
reason not paid on its due date, including that the policy has been
made paid-up or surrendered, but excluding termination
upon a health
event, a disability event or the death of the life insured, during
the first two premium periods in the case of a
policy referred to in
items 1.1, 2.1, 3.1 and 5.1 of the Table, the commission payable in
terms of this Part shall be recalculated
by reference to the scaIe
and shall not exceed the percentage of maximum commission in column A
or B, respectively, and any amount
of commission which has already
been paid in excess of the commission as so recalculated, shall be
reversed by the long term insurer
and refunded to it by the person to
whom it was paid: [then follows the Table]
"
In these circumstances,
argues
the plaintiff, there being no forfeiture of any commission actually
vested in the defendant and the claim being authorised
by the
regulation, there can be no suggestion that there is any penalty as
contemplated in the Conventional Penalties Act, nor
can there be any
suggestion that the agreement is contrary to public policy.
The plaintiff alleges further in its exception
that “
the Defendant’s
contention that the Plaintiff’s failure and/or refusal to give
credit to the Defendant for commissions
earned or the Defendant’s
entitlement to such commissions cannot and does not affect the
Defendant’s obligation to
repay commissions advanced to the
Defendant prior to receipt of the premiums in respect thereof in
accordance with the regulations
as set out above, which regulations
constitute implied terms of the financial planner agreement.”
As its starting point in opposing the exception,
the defendant argues that the exception is entirely based on it
being accepted
that the regulation is an implied term of the
financial planner agreement. He goes on to argue that it is
inappropriate for
a court to decide questions of contractual
interpretation on exception
.
3
He argues that on this basis alone, the exception should be
dismissed. However, the last of the authorities relied on by the
defendant shows that courts are not invariably averse to deciding on
exception whether a contract incorporates an implied term.
In my view there is an anterior difficulty with
the plaintiff’s reliance in the exception
,
on the regulations. The only reference to the regulations in the
particulars of claim is that contained in paragraph 10.
4
There, they are not pleaded as an implied term of the agreement.
The only express reference to there being an implied term
is in the
exception. At the time that the defendant pleaded to the
particulars of claim, there was no averment that the regulations
formed an implied term of the agreement.
It seems to me that before the plaintiff can
except
to a plea on the basis that it does
not raise a defence to a claim based on an implied term, the implied
term must have been pleaded
as such in the particulars of claim, not
in the exception.
The second basis upon which the defendant resists
the exception is the principle which was stated by Van Winsen J in
Miller & Others v Bellville
Municipality
5
as follows:
“
An exception founded
upon the contention that a plea lacks the averments necessary to
sustain a defence is designed to obtain a
decision on a point of law
which will dispose of the case in whole or in part. If it is not to
have that effect the exception
should not be entertained…”
To assess this argument, it is necessary to
analyse the pleadings. In this regard it is significant that,
through the denials
contained in paragraphs 4.1 and 4.2.1 of the
defendant’s plea, the defendant places the following averments
by the plaintiff
in issue:
that during the currency of the agreement and
subsequent to its termination, policies in respect of which the
plaintiff had advanced
commissions to the defendant had lapsed;
that as a result of such lapse the plaintiff was
obliged in terms of the regulations to recalculate the commission
advanced;
that as a result of such recalculation, the defendant became
indebted to the plaintiff for repayment of the commissions advanced;
that the reconciliation annexed to the plaintiff’s particulars
of claim as annexure “B” was accurate; and
that the defendant was indebted to the plaintiff.
O
n the basis of those
denials, the defendant has done enough to join issue with the
plaintiff and require it to lead the necessary
evidence to prove its
claim in all the above respects in which the averments in the
particulars of claim are denied.
The pleas
based on the
Conventional Penalties Act and public policy that follow in
paragraphs 4.2.3 and 4.2.4 are supplementary to the denials
contained in paragraph 4.1 and 4.2.1 of the plea. They are not
pleaded in the form of a confession and avoidance. If the defendant
had admitted that policies or products in respect of which
commission had been advanced had lapsed and that the reconciliation
was accurate, the defendant would have been reliant on the defences
based on the Conventional Penalties Act and on public policy
as its
sole bases for resisting the plaintiff’s claim. Then an
exception would clearly have been appropriate. However,
this is not
the case. They will therefore not dispose of the case.
The test for determining whether or not the
exception will dispose of a part of the case is apparent from the
decision of Botha
J in
Marais v Steyn
en ‘n Ander
6
where the court held as follows:
“…
die
basiese doel en funksie van 'n eksepsie in ons prosesreg … is
om 'n einde te maak aan die saak, of 'n afsonderlike deel
van die
saak, wat die aanbieding van onnodige getuienis sal uitskakel.”
The defences in respect of
which the exception is raised, will in my view largely be founded
upon legal argument flowing from the evidence led in support
of and
against the defendant’s alleged indebtedness in terms of the
reconciliation. That evidence will have to be led
regardless of the
impugned defences. For this reason too, I am not satisfied that the
exception will dispose of a substantial
part of the case.
In any event, even if the exception is to be
construed as potentially disposing of a substantial part of the
case, I am not persuaded
that it does so. If a pleading is
ambiguous,
an exception (on the grounds of
failure to disclose a defence) will succeed only if the pleading is
excipiable on any of its possible
interpretations.
7
The plaintiff’s criticism of the impugned defences is that
they are directed at resisting repayment of amounts which have
not
vested in the defendant and could therefore not constitute a penalty
or a forfeiture, nor could they be contrary to public
policy. That
is certainly one meaning which can be ascribed to the relevant
paragraphs of the plea and may well render them
excipiable.
However, the relevant paragraphs are in my view
open to another interpretation. The defendant pleads –
in paragraph 4.2.2 that both the plaintiff’s
interpretation of the agreement and, importantly, the
reconciliation,
“fail to take
account of the defendant’s entitlement to earn commissions on
policies in respect of which he has been
appointed as financial
advisor”
; and
in paragraph 4.2.3 that
“[t]he
agreement as interpreted by the plaintiff, entitles the plaintiff to
recover from the defendant commissions paid
in the circumstances
described in the particulars of claim
without
obliging the plaintiff to give the defendant credit for commissions
earned
.”
(emphasis added)
There is indeed a clause in the agreement which
is relied on in the particulars of claim
and which allows the plaintiff to decline to take into account in
the reconciliation
on which its claim is based, commissions which
would otherwise have been payable to the defendant. That is clause
9.3 which
requires the defendant to forfeit commissions which would
otherwise have been payable to him in circumstances where the
plaintiff
terminates the agreement summarily on account of a
material breach by the defendant.
In my view the plea is also open to the interpretation that the
impugned defences are directed at clause 9.3 and commissions
excluded from the reconciliation in terms of that clause, rather
than at repayments of advances on commission. On that
interpretation,
the impugned paragraphs are not excipiable on the
grounds complained of by the plaintiff.
The plaintiff conceded in its heads of argument
that
“[t]he forfeiture of the
right to earn further commission may be construed as a penalty”
but goes on to say,
“[h]owever, the obligation to repay commissions advanced and
not earned can never be regarded as a penalty.”
The
difficulty for the plaintiff is that on the second interpretation of
the ambiguous paragraphs of the plea, the impugned defences
are
directed at that very forfeiture and not at the obligation to repay
commissions advanced but not due.
I accordingly make the following order:
The exception is dismissed with costs.
________________
AC DODSON AJ
COUNSEL FOR
THE PLAINTIFF/EXCIPIENT:
ADV
JF STEYN
INSTRUCTED
BY:
GEIRINGS ATTORNEYS, 79 HAMLYN
STREET, HIGHLANDS NORTH EXT, JOHANNESBURG
COUNSEL
FOR
THE RESPONDENT/DEFENDANT: ADV A FRIEDMAN
INSTRUCTED
BY:
BRIAN BLEAZARD ATTORNEYS, 5
ANNERLEY ROAD, PARKTOWN, JOHANNESBURG
C/O BOTHA,
KRUGER & DU PLESSIS, 4
TH
FLOOR, 84 MARKET STREET, JOHANNESBURG
HEARD:
24 OCTOBER 2012
JUDGMENT
DELIVERED: 29 November 2012
1
I will refer to them simply as policies.
2
Government Notice R1492 of 27 November 1998
contained in Government Gazette No. 19495, as amended by GNR.197
dated 1/3/2000 contained
in GG20934, GNR.164 dated 15/2/2002
contained in GG23105, GNR.1209 dated 29/7/2003 contained in GG25370,
GNR.1218 dated 1/12/2006
contained in GG29446, GNR.186 dated
1/3/2007 contained in GG29681; GNR.952 dated 5/9/2008 contained in
GG31395 and GNR.1077 dated
23/12/2011 contained in GG34877.
3
See
Sun Packaging
(Pty) Ltd v Vreulink
[1996] ZASCA 73
;
1996 (4) SA 176
(A) at 186J;
Francis v Sharp &
Others
2004 (3) SA 230
(C) at 237F –
G;
Pete’s Warehousing and Sales
CC v Bowsink Investments CC
[2000] 2
All SA 266
at para 14.
4
See para 7 above.
5
1971 (4) SA 544
(C) at 546D.
6
1975 (3) SA 479
(T) at 486H – 487A.
7
Callender-Easby v
Grahamstown Municipality
1981 (2) SA
810
(E);
Wilson v SAR&H
1981 (3) SA 1016
(C).