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[2015] ZAGPJHC 100
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Moloto v Amani African Spas (Pty) Limited and Another (2014/31136) [2015] ZAGPJHC 100 (27 May 2015)
REPUBLIC
OF SOUTH AFRICA
GAUTENG
LOCAL DIVISION
JOHANNESBURG
CASE
NO. :
2014/31136
DATE:
27 MAY 2015
In
the matter between:
MERAFE
MOLOTO
.............................................................................................
Plaintiff
/Respondent
And
AMANI
AFRICAN SPAS (PTY)
LIMITED
...............................................
First
Defendant/Excipient
MARK
LAWRENCE
GORDON
..............................................................
Second
Defendant/Excipient
JUDGMENT
OPPERMAN
AJ
INTRODUCTION
[1] The plaintiff
(‘the respondent’) has advanced three claims in her
particulars of claim.
[2]
The defendants (‘the excipients’) contend that claims 1
and 3 are vague and embarrassing, alternatively, fail to
disclose a
cause of action.
EXCEPTION - VAGUE
AND EMBARRASSING – LEGAL PRINCIPLES
[3]
Rule
23(1) provides that an exception may be taken against a pleading on
the grounds that it is vague and embarrassing. Such an
exception
strikes at the formulation of the cause of action and not its legal
validity.
[1]
[4]
This
type of exception involves a twofold consideration:
4.1.
First, whether the pleading lacks particularity to
the extent that it is vague; and
4.2.
Second, whether the vagueness causes prejudice.
[5]
A
pleading may be vague if it fails to provide the degree of detail
necessary in a particular case properly to inform the other
party of
the case being advanced.
[2]
The typical prejudice which justifies an exception is if the
allegations in the particulars of claim are such that the defendant
is unable to plead properly.
[3]
[6]
The
question is whether “
the
embarrassment is, or is not, so serious as to cause prejudice to the
excipient if he is compelled to plead to the paragraph
in the form to
which he objects”
.
In order to answer this question, the Court is “
obliged
to undertake a quantitative analysis of such embarrassment as the
excipient can show is caused to him, in his efforts to
plead to the
offending paragraph, by the vagueness complained of”
.
[4]
[7]
The
valuation of prejudice is a factual enquiry, and is a question of
degree. The decision must necessarily be influenced by the
nature of
the allegations, their content, the nature of the claim and the
relationship between the parties.
[5]
[8]
In
Jowell
v Bramwell-Jones
[6]
this Court referred to the following general principles insofar as
exceptions are concerned:
“
a.
Minor blemishes are irrelevant: pleadings must be read as a whole; no
paragraph can be read in isolation;
b.
...
c.
a distinction must be drawn between the facta probanda or primary
factual allegations which every plaintiff must make, and the
facta
probantia which are the secondary allegations upon which the
plaintiff will rely in support of his primary factual allegations.
Generally speaking, the latter are matters for particulars for trial
and even then are limited. For the rest, they are matters
for
evidence;
d. only facts
need be pleaded; conclusion of law need not be pleaded; ...”
[9]
In
Jowell
v Bramwell-Jones
,
[7]
it was also held that:
“
an
exception that a pleading is vague and embarrassing cannot be
directed at a particular paragraph within a cause of action”
.
An exception “
must go to the whole cause of action”
.
EXCEPTION –
NO CAUSE OF ACTION – LEGAL PRINCIPLES
[10]
As
stated in
McKelvey v Cowan NO
1980 (4) SA 525
(Z) at 526D-E:
“
It
is a first principle in dealing with matters of exception that, if
evidence can be led which can disclose a cause of action alleged
in
the pleadings, that particular pleading is not excipiable. A pleading
is only excipiable on the basis that no possible evidence
led on the
pleading can disclose a cause of action.”
[11]
In
Frank v
Premier Hangers CC
2008 (3) SA 594
(C)
Griesel J stated as follows at para [11] page 600 :
“
[11]
In order to succeed in its exception, the plaintiff has the onus to
persuade the court that, upon every interpretation which
the
defendant's plea and counterclaim can reasonably bear, no defence or
cause of action is disclosed. Failing this, the exception
ought not
to be upheld.”
[12]
In
Vermeulen v Goose Valley Investments (Pty) Ltd
2001 (3) SA
986
(SCA) Marais JA stated as follows at para [7] page 997 :
“
[7]
It is trite law that an exception that a cause of action is not
disclosed by a pleading cannot succeed unless it be shown that
ex
facie the allegations made by a plaintiff and any document upon which
his or her cause of action may be based, the claim is
(not may be)
bad in law.”
[8]
THE
BASIS OF RESPONDENT’S CLAIMS
Fraud
inducing a contract: Legal principles
[13]
A
party who has been induced to enter into a contract by a fraudulent
misrepresentation is entitled to rescind the contract.
[9]
Such a claim is based in delict.
[10]
The party seeking to avoid the contract is required to plead and
prove a false and material representation of fact made to him
with
the intention that the representation would, and indeed did, induce
the conclusion of a contract.
[11]
Where reliance is placed upon a fraudulent non-disclosure, a duty to
disclose should be set out.
[12]
Parties cannot contract out of liability for a fraudulent
misrepresentation.
Claim
1
[14]
In claim 1, the respondent seeks the rescission, ab initio, of the
agreement that she had concluded with the excipients. In
this regard,
it has been pleaded that:
14.1.
The parties concluded a subscription agreement on 29 November 2012
(“the agreement”).
14.2.
In terms of the agreement, the plaintiff subscribed for 30 ordinary
shares of R1.00 each in the authorised share capital of
the company
(“the subscription shares”).
14.3.
The purchase consideration payable in respect of the subscription
shares would be an aggregate price of R2 million (“the
subscription price”).
14.4.
The second excipient provided the following warranties to the
respondent, which she has defined as “the representations”,
all of which he contended to be true as at 29 November 2012 –
being the signature date:
14.4.1.
The audited financial statements of the company for the period 1
November 2010 to 31 October 2011 were drawn up in accordance
with
accounting principles and standards generally accepted in South
Africa to fairly reflect the financial position, affairs,
operations,
assets and liabilities (actual and contingent) and results of the
company for the period to which they relate;
14.4.2.
In respect of the period between 31 October 2011 and the closing
date, being 7 December 2012, there had not been any material
change
in the assets or liabilities of the company; the company would not
have incurred any liabilities or undertaken any commitments
other
than in the ordinary and regular course of its business; the second
excipient was not aware of any facts or circumstances
relating to the
affairs of the company’s business and its liabilities and
obligations which ought to be known to him which
were not disclosed
to the respondent in writing and which were of such a nature that had
they been disclosed to any person in the
position of the respondent,
that person would not have concluded the agreement or would have
concluded the agreement on materially
different terms.
14.5.
The representations formed an integral part of the agreement.
14.6.
The second excipient made the representations in his capacity as
director of the company.
14.7.
The representations were material and were to the knowledge of
the excipients false in that, as at 31 October 2012:
14.7.1.
the Company’s total current liabilities had increased
from R3 221 590 as at 31 October 2011, to R4 599 795
as at
31 October 2012;
14.7.2.
the Company’s overdraft had increased from R483 309 as at
31 October 2011 to R1 081 232 as at 31 October 2012;
14.7.3.
the Company incurred new loan liabilities in an amount of R1 375
000 and R1 066 684 in the period between 31
October 2011 and 31
October 2012;
14.7.4.
the Company’s net working capital position had changed between
31 October 2011 and 31 October 2012; and
14.7.5.
the net profit position of the Company had changed over the period
between 31 October 2011 and 31 October 2012.
14.8.
In the face of the representations, the excipients had a duty to
disclose the true financial position to the respondent prior
to the
conclusion of the agreement.
14.9.
The excipients intentionally failed to disclose the true financial
position to the respondent, their failure thereby constituting
a
fraudulent non-disclosure of material facts.
14.10.
As a result of the excipients’ fraudulent non-disclosure, the
respondent relied on the representations and concluded
the agreement.
Had the excipients disclosed the true financial position to the
respondent and not intentionally omitted its disclosure,
the
respondent would not have concluded the agreement.
Claim
3
[15]
In respect of claim 3, the respondent seeks damages, in the
alternative, against the second excipient as a consequence of his
fraudulent, alternatively negligent representation, which induced the
respondent to conclude the agreement.
[16]
As a result of concluding the agreement, the respondent alleges that
she had suffered damages in the amount of R1.4 million
made up by the
amount she had paid to the company in partial discharge of the
subscription price.
THE
EXCEPTIONS
The
first exception
[17]
The excipients take issue with the fact that the respondent has
defined the warranties provided in the agreement as “the
representations”.
[18]
The excipients contend that clause 8 of the agreement prescribes a
specific mechanism for dealing with the breach of any contractually
provided warranty. Accordingly, so contend the excipients, the
respondent is confined to a remedy provided for in clause 8 of the
agreement if the conditions prescribed in that clause are met.
[19]
The excipients conclude that the averments pleaded in respect of
claim 1 do not support the relief sought under claim 1 and
do not
disclose a valid cause of action, alternatively, are vague and
embarrassing.
[20]
On the argument that claim 1 does not disclose a valid cause of
action, the first exception fails for at least two reasons:
[21]
First,
the defendants cannot confine the respondent to a contractual claim.
Where the same facts give rise to more than one cause
of action, it
is for the aggrieved party to elect which cause she wishes to
advance.
[13]
The respondent has
elected to advance a claim premised in delict. The excipients cannot
object to her election. The shortcoming
in their attempt to do
so is exposed in the case of
Prima
Toys Holdings (Pty) Ltd v Rosenberg
1974 (2) SA 477
(CPD). In
Prima
Toys Holdings
,
the plaintiff purchased the total issued share capital from the
defendant in two companies. The plaintiff claimed against the
defendant damages on the ground of certain alleged fraudulent
misrepresentations made by the defendant prior to the conclusion
of
the contract alternatively a similar amount of damages on the basis
of the defendant’s fraudulent non-disclosure of certain
facts
to the plaintiff and an amount by way of a reduction of the purchase
price. The excipients excepted to the first and
third claims.
The basis of the exception was directed at the plaintiff’s
first claim for damages founded on the excipient’s
alleged
fraudulent misrepresentation. The representations relied upon were
incorporated into the contract as warranties. Accordingly,
so
contended the defendant in
Prima
Toys Holdings
,
the plaintiff was confined to a remedy on the contract and was not
entitled to found his action on representations embodied in
the
agreement as warranties.
[14]
[22]
After considering various authorities, including English authorities,
Van Winsen AJP (as he then was) held the following of
significance:
“
As
to the position in South Africa, neither authority, precedent, logic
nor the requirements of public policy lead to the conclusion
that
merely by embodying a prior representation as a warranty in the
contract the aggrieved party loses his right to a remedy in
delict
should it appear that the representation was fraudulently made. If
the law affords a party alternative remedies and does
not restrict
him in the exercise of his choice I can see no reason why this Court
should do so – even if in the circumstances
of the particular
case the measure of relief between the two remedies may well not
differ.”
[15]
[23]
Second, the excipients misconstrue claim 1. In their heads the
excipients formulate the crux of their argument as follows:
10.
Gordon and the Company except to the claim by Moloto on the basis
that the pleaded case is that the allegedly fraudulent
representations
are ‘linked’ or undermine only the
warranties provided for in the agreement.
11.
Accordingly, if Moloto’s complaint is that the alleged
fraudulent failure to disclose is tantamount to the breach of the
warranties provided in the agreement (as the pleading suggests) then
the provisions of the agreement must prevail and the relevant
excipient was to be placed in mora. On the other hand, if there
existed some other duty to inform regarding the state of affairs
of
the Company specifically as at 31 October 2012, then this is not
pleaded, appropriately or at all.‘
[24]
During argument, Adv Milovanovic, counsel for the excipients, argued
that the respondent cannot use the warranties as a spring
board to
establish a duty to disclose and thereby found delictual liability.
She argued that there was no nexus pleaded between
the warranties
(being the representations) and the duty to disclose the correct
financial position. I disagree. The cause of action
is not a
rescission of the agreement solely as a result of the representations
(or warranties) being false. Instead, the cause
of action is premised
upon the representations, which gave rise to a duty to disclose the
true financial position of the company.
It is that failure by the
defendants to disclose the true financial position within the factual
matrix of the warranties, which
amounts to a fraudulent
non-disclosure and which entitles a rescission of the agreement.
Counsel argued that all three exceptions
hinged on a finding on this
aspect. In my view, the respondent has pleaded the
facta probanda
to sustain a claim for the rescission of the agreement.
[25]
I also find that the pleading is not vague and embarrassing. It is
incumbent on a plaintiff to plead only a complete cause
of action
that identifies the issues on which the plaintiff seeks to rely, and
on which evidence will be led, in intelligible and
lucid form and
which allows the defendant to plead to it. An attack mounted by a
defendant that particulars of claim are vague
and embarrassing cannot
be found on the mere averment that they are lacking in particularity,
and where the complaint is one of
a lack of particularity the remedy
is to request discovery or particulars for trial. See
Nel
and Others NNO V McArthur and Others
2003 (4) SA 142
(T) at
147A/B - B, E/F - F/G and H/I, 148H - I/J, 148D/E – F, 149E/F -
G/H,
Jowell v Bramwell-Jones and Others
supra at 902B-D, H - I
and
Koth Property Consultants
supra para [17], [18] at 30, 31.
Furthermore (as per
Jowell v Bramwell-Jones and Others
supra
at 902I-903E), a distinction must be drawn between the
facta
probanda
, or primary factual allegations which every plaintiff
must make, and the
facta probantia
, which are the secondary
allegations upon which the plaintiff will rely in support of his or
her primary factual allegations. Generally
speaking, the latter are
matters for particulars for trial and even then are limited. For the
rest, they are matters for evidence.
Having found against the
excipients on this front, it becomes unnecessary to deal with the
other exceptions. I nonetheless address
the arguments as advanced in
their heads of argument.
The
second exception
[26] The second
exception is directed at claim 3.
[27] Its
introductory paragraphs are almost identical to the first exception.
[28]
As with the first exception, the excipients seek to confine the
respondent to the contractual remedies prescribed in clause
8 as
against the second exception and comply with the conditions
prescribed in that clause.
[29]
For the same reasons set out above in response to the first
exception, the excipients cannot confine the respondent to a
contractual
remedy where the same facts give rise to a delictual
cause of action.
[30]
If the respondent had elected to sue the second excipient in terms of
clause 8 of the agreement, only then would the respondent
have been
required to plead that the requirements in the sub-clauses to clause
8 of the agreement have been met.
[31] This is not the
respondent’s cause of action.
[32]
The
excipients also contend that “
it
is not possible to provide a warranty negligently”
.
It does not appear that this contention is a self-standing exception.
If it were, it fails for the simple reason that fraud and
negligence
are pleaded in the alternative to each other and an exception is
required to be taken to the entire cause of action,
not to an
alternative aspect thereof.
[16]
The
third exception
[33] The excipients’
third exception appears to be directed at claim 1.
[34]
The excipients contend that the true financial position of the
company – which the respondent contends was the
non-disclosure of material facts – “
could not have
been known to either of the defendants until the audited financial
statements of the first defendant in respect of
the relevant period
were finalised – well after the signature and closing dates of
the subscription agreement.”
[35]
The excipients continue that they could not have failed to disclose
facts of which they had no knowledge, during the pre-contractual
stage.
[36]
This is not a ground for an exception. It does not expose a defect in
the pleading or the unsustainability of the cause of
action. On
the contrary, it is a factual averment – a defence that the
excipientss are required to plead and prove
at a trial in due course.
[37]
In any event, it does not appear
ex facie
the particulars of
claim that the excipients could not have known of the true financial
position as at 31 October 2012 when they
signed the agreement a month
later. The converse would
prima facie
appear to be true.
[38]
Consequently, the third exception, to the extent that it advances
these contentions, are rejected.
[39]
The excipients further contend that the respondent failed to make the
allegation that the true financial position constitutes
a material
change in liabilities or that the liabilities incurred were incurred
outside of the ordinary course of the company’s
business.
[40]
As such, the excipients contend that the respondent has failed to
aver that any of the warranties have in fact been breached
and
consequently, the averments pleaded do not support the relief sought
under claim 1 of the particulars of claim and fail to
disclose a
cause of action, alternatively are vague and embarrassing.
[41]
The excipients conflate what the respondent needs to plead for a
cause of action founded in delict with a cause of action based
on
contract. The respondent is only required to make the averments
contended for by the excipients in their exception if the respondent
had elected to advance a cause of action premised on a breach of a
warranty.
CONCLUSION
AND ORDER
[42] I accordingly
make the following order : The exception is dismissed with costs.
I Opperman
Acting Judge
of the High Court
Heard: 11 May
2015
Judgment
delivered: 27 May 2015
Appearances:
For
Excipients: Adv A Milovanovic
Attorneys:
Adams Attorneys
For
Respondent: Adv J Babamia
Attorneys:
Bowman Gilfillan
[1]
Trope
v South African Reserve Bank
[1993] ZASCA 54
;
1993
(3) SA 264
(A) at 269I
[2]
Lockhat
v Minister of Interior
1960
(3) SA 765
(D) at 777D;
Nasionale
Aartappelkoöperasie Bpk v PriceWaterhouseCoopers
2001
(2) SA 790
(T) at 797J–798A
[3]
Lockhat
supra
at 777E
[4]
Quinlan
v McGregor
1960
(4) SA 383
(D) at 393F-G
[5]
ABSA
Bank Ltd v Boksburg Transitional Local Council
1997
(2) SA 415
(W) at 422A
[6]
1998
(1) SA 836
at 902J – 903B
[7]
Supra
at
899D
[8]
See
also Koth Property Consultants CC v Lepelle-Nkumpi Local
Municipality Ltd
2006 (2) SA 25
(T) para [9] at 28, 29; FNB of SA
Ltd v Perry NO
2001 (3) SA 960
(SCA) para [6] at 965; Klokow v
Sullivan
2006 (1) SA 259
(SCA) para [15] at 265.
[9]
Novick
v Comair Holdings Ltd
1979
(2) SA 116
(W) at 149-150
[10]
Prima
Toys Holdings (Pty) Ltd v Rosenberg
1974
(2) SA 477
(CPD) at 483A-B
[11]
See
Novick
supra
at
149-150
[12]
Gollagh
& Gomperts (1967) (Pty) Ltd v Universal Moulds & Produce Co
(Pty) Ltd
1978
(1) SA 914
(A) at 924
[13]
Sea
Harvest Corporation (Pty) Ltd v Duncan Dock Cold Storage (Pty) Ltd
2000
(1) SA 827
(SCA) at 19 ; See particularly
Lillicrap,
Wassenaar & Partners v Pilkington Bros SA (Pty) Ltd
1985 (1) SA 475
(A) at 496 where the then AD held the following of
significance:
“
Roman Law
recognise the possibility of a
concursus actionum
, i.e. the
possibility that different actions could arise from the same set of
facts. More particularly, the facts giving rise
to a claim for
damages under the
lex Aquilia
could overlap with those
founding an action under certain types of contract such as deposit,
commodatum
, lease, partnership, pledge, etc. In such a
case a plaintiff was in general entitled to elect which
actio
to employ (although he could of course not receive compensation
under both).”
[14]
At
482C-D/E
[15]
At
484G-I
[16]
See
Saffer
Clothing Industries (Pty) Ltd v Worcester Textiles Ltd
1965 (2) SA 424
(C) at 429