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[2015] ZAGPJHC 168
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Morgan Stanley Capital Group Inc v Strategic Fuel Fund Association (28167/2012) [2015] ZAGPJHC 168 (16 July 2015)
REPUBLIC
OF
SOUTH AFRICA
IN THE
HIGH COURT OF SOUTH AFRICA
GAUTENG
LOCAL DIVISION, JOHANNESBURG
CASE
NO: 28167/2012
DATE:
16 JULY 2015
In the matter
between:
MORGAN
STANLEY CAPITAL GROUP
INC
.......................................................................
Plaintiff
And
STRATEGIC
FUEL FUND
ASSOCIATION
.........................................................................
Defendant
SUMMARY
Civil
proceedings – exception based on allegations that plaintiff’s
alternative claim premised on delict not alleging
adequate facts to
establish the elements of wrongfulness and legal causation necessary
to sustain the pleaded cause of action –
main claim for damages
based on breach of contract and alternative claim premised on
negligent misstatement contained in a tank
warrant on exact quantity
of crude oil issued by defendant – duty of care owed by
defendant to plaintiff – purpose
of exception – issues
raised in exception falling pre-eminently within purview of trial –
exception dismissed with
costs.
J
U D G M E N T
MOSHIDI,
J
:
[1]
This is an exception taken by the defendant in regard to part of the
plaintiff’s particulars of claim under circumstances
described
immediately below.
THE
PLAINTIFF’S ACTION
[2]
The plaintiff has instituted action against the defendant, seeking
damages under Claim A and Claim B. The relief sought under
Claim B is
in the alternative to that sought under Claim A. The latter
claim, as will be seen below, is premised on alleged
breach of
contract by the defendant in regard to the contents and warrantees in
a tank warrant. However, the present exception
is directed at
plaintiff’s alternative Claim B which is founded in delict
premised on allegations of a wrongful misstatement
that caused the
plaintiff to suffer patrimonial loss.
THE
IMPORT OF THE EXCEPTION
[3]
In the notice of exception, the defendant contended as follows:
“
The
alternative Claim B is one for delictual damages, purportedly based
on the extended lex Aquilia of which wrongfulness and legal
causation
are elements. It is incumbent on the plaintiff to plead adequate
facts from which it can be deduced that the defendant’s
alleged
act or omission
was wrongful
and legally caused
the
alleged damages. The defendant contends that the plaintiff has
failed to plead adequate facts to establish the elements
of
wrongfulness and legal causation, and accordingly that Claim B is
excipiable in that it lacks averments necessary to sustain
the
pleaded cause of action.
”
(emphasis
added)
THE
INSEPARABILITY OF THE CLAIMS
[4] It appears to me that, upon close scrutiny, Claims A and B of
the amended particulars of claim, at this stage, although based
on
separate legal principles, remain intertwined. For this reason,
limited reference to Claim A in deciding the fate of the
exception,
is inevitable. The relevant portions of Claim A are paragraphs 3 to
6, in which it is alleged as follows:
“
3.
On 27 November 2009, and at Cape Town, the Defendant, represented by
the Petroleum and Gas Corporation of South Africa (Proprietary)
Limited (‘PetroSA’) and Masefield (South Africa)
(‘Masefield SA’) concluded a written agreement styled
‘Storage Agreement’ (‘the storage agreement’).
4.
A
copy of the storage agreement is annexed hereto marked ‘POC 1’
and the terms thereof are to be read as if incorporated
herein.
5. The storage
agreement:
5.1
related
to and provided for the hire, by Masefield SA from the Defendant, of
five storage tanks (‘the storage tanks’)
– being
tanks CT
5, CT 6
, CT
13, CT 17
and CT 23 – situated at the
Defendant’s Milnerton, Cape Town, Storage Facility (‘the
storage facility’),
for the purposes of storing crude oil; and
5.2
would
in its terms expire on 31 March 2010.
…
6.
6.1
On 14 December 2009, Masefield SA transferred its rights under,
inter alia the storage agreement as amended from time to time
to
Masefield AG in terms of Deeds of Assignment with the consent of
PetroSA as agent for the Defendant.
6.2
On
8 June 2010 the Defendant and Masefield SA concluded a new crude oil
storage agreement in terms of which Masefield SA hired from
the
Defendant the storage tank CT
5, CT 6
, CT
13, CT 17
and CT 23
situated at the storage facility from 1 April 2010 to 31 March 2011.
The terms of such storage agreement were recorded
in a letter from
the Defendant to Masefield AG dated 8 June 2010 contemplating the
replacement of that letter with a formal storage
agreement. A copy of
such letter is annexed marked ‘POC 2’.
6.3
The formal storage agreement contemplated in annexure ‘POC 2’
and referred
to in paragraph 6.2 above is annexure ‘POC 5’
hereto.
6.4
On 8 June 2010, and in terms of a written assignment agreement (‘the
written assignment agreement’) concluded between
Masefield SA,
Masefield AG and the Plaintiff, the Plaintiff took cession and
assignment of all of Masefield AG’s and Masefield
SA’s
rights and obligations in terms, inter alia, of the various storage
agreements to which reference is made in these particulars
of claim.
6.5
A copy of the written assignment agreement is annexed hereto marked
‘POC 3’ and the terms thereof are to be read
as if
incorporated herein.
6.6
On 11 June 2010, the Plaintiff concluded an umbrella purchase
agreement with Masefield AG in terms of which the Plaintiff purchased
from Masefield AG certain crude oil and agreed, moreover, to take
cession and assignment of Masefield AG’s rights and obligations
in terms , inter alia, of the various storage agreements to which
reference is made in these particulars of claim. …
”
[5]
In the balance of the particulars of claim in regard to the
contract,
[1]
the plaintiff alleged that the defendant has breached the contract,
including the various addenda in certain respects. As a consequence,
the plaintiff claims damages for breach of contract, which subject is
not entirely pertinent to the present exception proceedings.
THE
PLAINTIFF’S ALTERNATIVE CLAIM B
[6]
What, however, are relevant are the contents of paras 17 to 32 of
plaintiff’s particulars of claim, dealing with a tank
warrant
and the alleged representation in regard to the contents of the tank
warrant on the part of the defendant, these paragraphs
alleged as
follows:
“
17. On or about 25 May 2010 the
Defendant issued a written tank warrant (‘the tank warrant’).
18.
A
copy of the tank warrant is annexed hereto marked ‘POC 7’.
19.
The
tank warrant:
19.1
records
the following against the letter A under the heading ‘PREAMBLE’:
‘
WHEREAS
a storage agreement was entered into between PetroSA, on behalf of
SFF,
[Strategic
Fuel Fund Assocation]
as
lessor and MASEFIELD SA as lessee on 1
st
April 2007 as amended from time to time, for the storage of a maximum
of 990,000 bbls of Crude oil in Tanks CT
13, CT 17
, CT
23, CT 5
and
CT 6 of the Milnerton Storage Terminal, Cape Town (‘Milnerton’),
(hereinafter referred to as the ‘Storage
Agreement’);’
19.2
at
clause 2 thereof, confirms that, as at 25 May 2010, the Defendant
held 991 646 bbls of crude oil in Milnerton solely on behalf
of BNP
Paribus and at its sole disposal;
19.3
at
clause 3 thereof, confirms that the tank warrant was issued in Cape
Town, South Africa, on 25 May 2010, by the Defendant.
20.
Moreover,
and in any event, the quantity of the Plaintiff’s crude oil
stored by the Defendant at its storage facility was
confirmed by:
20.1
the
stock reconciliation figure provided by the Defendant to the
Plaintiff, a copy of which is annexed hereto marked ‘POC
8’;
and
20.2
the
reconciliation performed by the Plaintiff, derived, in turn, from
figures provided to it by the Defendant, and which is reflected
on
the spreadsheet annexed hereto marked ‘POC 9’.
21.
In
the premises, and as at 25 May 2010, 991 646 bbls of crude oil were
stored by the Defendant in the storage tanks at the storage
facility.
21A The tank warrant
records at clause 4(b) thereof:
‘
SFF is
and will continue to hold the Crude Oil in Milnerton exclusively on
behalf of at the disposal of and to the order of the
Secured Party or
of any third party to which the Secured Party may elect to endorse
this Tank Warrant. Any such endorsement
shall be in writing and
signed by the relevant parties thereto and a duly signed copy shall
be provided to SFF.’
21B
On or about 7 June 2010, BNP Paribas irrevocably endorsed the tank
warrant to the Plaintiff with all terms and conditions
of the Tank
Warrant remaining in force and effect. A copy of the endorsement
bearing the signature of a duly authorised representative
of BNP
Paribas as annexed hereto marked ‘POC9A’.
”
SFF
refers to the defendant, whilst BNP Paribus is the secured party.
I
hereafter paraphrase the contents of paras 22 to 25 of the
particulars of claim. The plaintiff gave notice to the
defendant
on 24 August 2011 to effect the final pump-over of the
crude oil remaining in storage tanks at the storage facility.
The
plaintiff also by letter of 11 October 2011, addressed to the
defendant, confirmed, and as recorded in the tank warrant, that the
defendant, as at 25 May 2010, held 991 646 bbls of oil in the storage
tanks. At the same time, the plaintiff confirmed that
it had
since received 939 985 bbls of such oil, leaving a balance of 50 596
bbls of oil due to it by the defendant; and the plaintiff
gave notice
to the defendant to complete the re-delivery of the outstanding
quantity of oil, i.e. 50 596 bbls, within ten days
of receipt of the
letter. In para 25 the plaintiff alleged that notwithstanding
the above confirmation and notification,
the defendant failed and/or
was unable to re-deliver or permit the plaintiff to remove the
outstanding quantity of 50 596 bbls
of oil at the Milnerton Storage
Tanks. The plaintiff further alleged,
[2]
that before the institution of the present proceedings, the defendant
purportedly tendered only 33 559 bbls of oil to the plaintiff.
The plaintiff, however, rejected the tender since it did not
constitute a valid tender to restore to the plaintiff 33 559 bbls
of
oil of the same quality and standard as the oil stored by the
plaintiff at the storage facility. The plaintiff persisted
in
is rejection of the defendant’s tender. In regard to the
alleged damages suffered by the plaintiff, paras 26 and
27,
[3]
the plaintiff alleged that the value of the shortfall of 50 596 bbls
of oil, as at 30 September 2011, being the date on which the
plaintiff would remove the total quantity of its crude oil from the
storage facility, was US $5 865 240.10. The removal of
the oil
would be facilitated by the defendant, to the plaintiff, by
cross-pumping such oil from the storage tanks to one of plaintiff’s
customers, Chevron.
[7]
In support of its Claim B, (in the alternative to Claim A), the
plaintiff relied on the contents of paras 17 to 21 quoted partly
above, and proceeded to allege in paras 29 to 32,
[4]
as follows:
“
29. The tank warrant annexure ‘POC7’
constituted a representation by the Defendant that 991 646 bbls of
crude oil were
held in storage at Milnerton as at 25 May 2010 (‘the
Defendant’s representation’).
30.
In
the event and to the extent that the Defendant is not bound by the
contents of the tank warrant and/or in the event that the
Defendant
is entitled to contest the contents thereof for the purpose of this
action (which is denied), then in such event the
Plaintiff avers:
30.1
in
issuing the tank warrant annexure ‘POC7’ the Defendant
was aware alternatively ought reasonably to have been aware
that it
would be relied upon by third parties including, but not limited to
financiers, bankers and/or successors-in-title to Masefield;
30.2
the
Defendant accordingly owed a duty of care to any person or entity
relying upon such tank warrant to ensure the accuracy of its
contents.
31.
The
Defendant’s representation was recorded in monthly reporting
and invoicing undertaken by the Defendant to Masefield and
was
repeated by the Defendant to the Plaintiff after issue of the tank
warrant through monthly reporting and invoicing undertaken
by the
Defendant.
32.
In
the event that the contents of the tank warrant and the
representations referred to in paragraph 31 above were incorrect,
then
in such event the Plaintiff avers:
32.1
Masefield
and the Plaintiff as its successor at all material times relied upon
the correctness and accuracy of the contents of the
tank warrant and
of the representations referred to in paragraph 31 above;
32.2
in
placing reliance upon the correctness of such tank warrant and
representations the Plaintiff made payment to Masefield calculated
on
the basis of the correctness of the tank warrant and representations
and more particularly the quantity of 991 646 bbls of crude
oil held
in storage at Milnerton;
32.3
the
consideration attributed to such crude oil was US $76 477 623.97;
32.4
but
for the Defendant’s misrepresentation/s the Plaintiff would
have made payment to Masefield in an amount of US $74 562
610.06;
32.5
the
Plaintiff accordingly suffered loss in consequence of its overpayment
in an amount of US $1 915 013.91;
32.6
As
aforesaid, the Defendant’s tender of 335559 bbls of oil has
been rejected by the Plaintiff (‘the tendered barrels’).
The basis for the Plaintiff’s rejection is pleaded above.
32.7
The
value of the tendered barrels as at 30 September 2011 (i.e. the date
referred to in paragraph 14.2 above) was US $3 890 259.95.
32.8
The
Plaintiff has accordingly suffered further damages in the sum of US
$3 890 259.95.
”
[8]
In paragraph 32.9 of the particulars of claim, the plaintiff alleged
that the defendant charged it for storage of the oil,
from June 2010
to September 2011, at a monthly charge of 17.5 United States cents
per barrel until April 2011, and thereafter at
a reduced monthly
charge of 12 United States cents per barrel. The plaintiff then
proceeded to set out the respective dates and
quantities for the
period June 2010, commencing with 991 356 barrels, to September 2011,
ending with 48 558 barrels.
[9] In paras 32.10 to 32.12, the plaintiff alleged that:
“
32.10
In fact, and calculated on the basis on the Defendant’s
allegations as to the number of barrels of oil stored by it,
the
Defendant ought to have charged the Plaintiff based on the schedule
attached hereto marked ‘POC13’;
32.11
In
making payment of the amount set out in paragraph 32.9 above the
Plaintiff made such payments in the bona fide and reasonable
but
mistaken belief that the amounts invoiced were correct whereas in
fact they were incorrect in the event that the quantity of
oil was
not as recorded in the tank warrant and represented by the Defendant
in its invoices;
32.12
The overpayment by the Plaintiff in such circumstances aggregated US
$72 713.65 calculated as set out annexure ‘POC13’.
”
[10]
The prayer under the impugned Claim B then proceeded to claim for
loss:
“
(c)
Payment in the amount of US $1 915 013.91 alternatively the South
African Rand currency equivalent thereof as at the date of
payment;
(d)
Interest on the aforesaid amount of US $1 915 013.91 at the legal
rate from 10 June 2010 until date of payment;
(e)
Payment in the amount of US $3 890 259.95
alternatively
the
South African Rand currency equivalent thereof as at the date of
payment;
(f)
Interest on the aforesaid amount of US $3 890 259.95 at the legal
rate, from 1 October 2011 until date of payment;
(g)
Payment in the amount of US $72 713.65 alternatively the South
African Rand currency equivalent thereof as at the date of payment
(h) Interest on the aforesaid amount of US $72
713.65 a tempore morae;
(i) Costs of suit, including the costs
occasioned by the employment of two counsel.
(j)
Further and/or alternative relief.
”
THE
DEFENDANT’S PLEA AND COUNTER-CLAIMS
[11]
In its plea, in regard to plaintiff’s Claim A, the defendant
admitted,
inter
alia,
that the contractual rights and obligations of Masefield SA and
Masefield AG,
vis-à-vis
the defendant, have been assigned to the plaintiff, and that the
defendant was obliged to transfer the volume of the product that
it
held for the plaintiff in the Milnerton tanks on, and in accordance
with, the plaintiff’s instructions. The defendant
further
admitted that the document attached to the particulars of claim “
POC
7
”
purports to be a tank warrant. However, the defendant pleaded
that it did not hold the quantity of product referred
to in paragraph
2 of “
POC
7
”
on behalf of Masefield SA, Masefield AG or the secured party.
As at 25 May 2010, the defendant pleaded, that there
was no more than
971 547 barrels of oil held by it for Masefield SA, Masefield AG or
the secured party reflected in “
POC
7
”.
The defendant tendered to the plaintiff the balance of the oil held
in the storage tank in the quantity of 33 559
barrels, which tender
was rejected. The tender was repeated in the plea. The defendant also
filed what appeared to be two counter-claims.
[5]
However, the contents and consideration of these counter-claims do
not warrant adjudication for present purposes.
SOME
APPLICABLE LEGAL PRINCIPLES
[12]
The principles of adjudicating an exception and the approach of the
courts are trite. These include that, for the purposes
of the
exception, the facts pleaded must be accepted as correct, as was
stated in
Marney
v Watson and Another.
[6]
In
Amler’s
Precedents
of Pleadings
,
[7]
the following is stated:
“
The
purpose of an exception alleging that a pleading lacks averments,
which are necessary to sustain an action or defence, is to
dispose of
the leading of evidence at the trial. Such an exception must go
to the root of the claim or defence. An
exception cannot be
taken to a declaration or particulars of claim on the ground that it
does not support one of several prayers
arising out of one cause of
action because the unjustifiable prayer amounts to a plus petitio and
its deletion cannot affect the
amount of evidence to be led.
”
Later
on, and on the same page, and with reference to
Murray
& Roberts Construction Ltd v Finat Properties (Pty) Ltd
:
[8]
“
An
exception is generally not the appropriate procedure to settle
questions of interpretation because, in cases of doubt, evidence
may
be admissible at the trial stage relating to surrounding
circumstances which evidence may clear up the difficulties.
”
(
Cf
also
Du
Preez v Boetstap Stores (Pty) Ltd.
[9]
)
[13]
The legal principles also enjoin the Court ‘
to
defer consideration of an exception to the trial
’.
See in this regard
Hudson
v
Hudson and Another
,
[10]
and
Du
Preez v Boetstap Stores (Pty) Ltd, supra
.
This approach, in my view, is a particularly attractive one in the
circumstances of the present matter, and in the light
of the issues
raised by the exception. However, in the light of the view I
take in the matter, i.e. that the exception is
misplaced, it is as
well to determine it.
[14]
As stated above, the remedy of an exception is appropriate when the
objection goes to the root of the opponent’s claim
or defence.
In
Glaser
v Heller
,
[11]
the Court said:
“
The
true object of an exception is either, if possible, to settle the
case, or at least part of it, in a cheap and easy fashion,
or protect
oneself against an embarrassment which is so serious as to merit the
costs of an exception.
”
Some
two years later, in
Kahn
v Stuart
,
[12]
the Court said:
“…
It
is the duty of the court, when an exception is taken to the pleading,
first to see if there is a point of law to be decided which
will
dispose of the case in whole or in part. If there is any
embarrassment, which is real and such cannot be met by the
asking of
particulars, as the result of the faults in the pleading to which
exception is taken. And, unless the excipient
can satisfy the
court that there is such a point of law or such real embarrassment,
then the exception should be dismissed.
”
[15]
In addition, the Courts have accepted that in order to succeed, the
excipient has to demonstrate that the pleading is excipiable
on every
reasonable interpretation that could reasonably be placed on it.
This principle was more recently articulated in
Picbel
Groep Voorsorgfonds (In Liquidation) v Somerville, and Related
Matters
,
[13]
as follows:
“
At the
outset it may be as well to remind ourselves that we are concerned
with proceedings on exception. That being so, the
respondents
have the duty as excipients to persuade the court that upon every
interpretation which the particulars of claim (including
the
annexures) can reasonably bear, no cause of action is disclosed
(Lewis v Oneanate (Pty) Ltd and Another
[1992] ZASCA 174
;
1992 (4) SA 811
(A) at
817F-G).
”
See
also
Maize
Board v Tiger Oats Ltd and Others
,
[14]
where the Court said:
“…
When
it has to be decided whether a declaration or particulars of claim
disclose a cause of action or whether a plea discloses a
defence the
issue often is whether in law that is the case. A decision on
that point of law is not final. Blaauwbosch
is clear authority
to that effect. The point may be re-argued at the trial in the
event of the exception being dismissed.
…
”
APPLYING
THE LEGAL PRINCIPLES
[16]
In applying the above legal principles to the facts of the instant
matter, it must be borne in mind, at the risk of repetition,
that the
crux of the defendant’s gripe is that the plaintiff has failed
to plead adequate facts in order to establish the
elements of
wrongfulness, and legal causation. As a consequence, so the
complaint extended, the plaintiff’s Claim B
is bereft of
allegations sufficient to sustain the pleaded cause of action.
The assertions, when regard is had to the legal
principles, are
plainly without merit. There is room for evidence to be led at
the trial on the allegations made in Claim
B. The issues raised
by the exception in connection therewith are truly legal issues. For
these reasons only, the exception
cannot and ought not to be upheld.
There are other obvious reasons which show undoubtedly that the
exception is either misconceived,
ill-founded or that the defendant
has misconstrued the actual basis of the plaintiff’s Claim B.
THE
ISSUES OF WRONGFULNESS AND LEGAL CAUSATION
[17]
In any event, even if I am incorrect in the above finding, the
issues of wrongfulness and causation raised by the defendant,
require
some mention. As I understand it, the plaintiff’s Claim B
is premised as an alternative on the basis of a misstatement
before
the conclusion of the transaction between the plaintiff and
Masefield. The claim under discussion is not intended
to
enforce the contractual obligations on the part of the defendant.
In addition to the alleged misstatement contained in
the tank warrant
issued by the defendant, the plaintiff, at this stage, at least,
relies on the ongoing misstatements in the monthly
reporting and
invoicing given by the defendant subsequently. A trial court is
likely to find that, on the evidence to be
led, the issuing of the
patently misleading tank warrant, and indeed, the subsequent
perpetuation thereof, as pleaded, was wrongful.
In this regard,
as argued by the plaintiff, the Constitutional Court, in dealing with
wrongfulness, in
Country
Cloud Trading CC v MEC, Department of Infrastructure Development,
Gauteng
,
[15]
said:
“
[20] Wrongfulness is an
element of delictual liability. It functions to determine
whether the infliction of culpably
caused harm demands the imposition
of liability or, conversely, whether ‘the social, economic and
others costs are just too
high to justify the use of the law of
delict for the resolution of the particular issue’.
Wrongfulness typically acts
as a brake on liability, particularly in
areas of the law of delict where it is undesirable or overly
burdensome to impose liability.
[21]
Previously, it was contentious what the wrongfulness enquiry
entailed, but this is no longer the case. The growing coherence
in
this area of our law is due in large part to decisions of the Supreme
Court of Appeal over the last decade. Endorsing
these
developments, this Court in Loureiro recently articulated that the
wrongfulness enquiry focuses on –
‘
the
[harm-causing]
conduct
and goes to whether the policy and legal convictions of the
community, constitutionally understood, regard it as acceptable.
It is based on the duty not to cause harm – indeed to respect
rights – and questions the reasonableness of imposing
liability.’
”
(footnotes
omitted)
[18]
The plaintiff’s pleaded contents of paras [31] and [32] have
left it wide open for a trial court subsequently finding
(on the
pleadings as they stand, supplemented by the required evidence if
led), that the defendant’s alleged conduct, is
actionable.
The same applies to the community at large. This is so bearing
in mind that we are presently dealing with
exception proceedings, and
plainly not argument at the end of the trial. The defendant’s
contentions that, the plaintiff
is not capable of adducing evidence
on Claim B that will disclose a cause of action; that the
plaintiff cannot possibly prove
that the defendant owed it a legal
duty not to be negligent; that on the interpretation of the plaintiff
of the tank warrant and
the defendant’s subsequent conduct,
altogether, do not support the extension of the Aquilian liability;
and that on
the interpretation contended for by the plaintiff, the
defendant was likely to face unlimited claims seemingly caused by the
plaintiff’s
own conduct, etc, are collectively, either
premature or without merit, at this stage. It also appears to
me that the over-reliance
by the defendant on case law such as
Lillicrap
Wassenaar and Partners v Pilkington Brothers (SA) (Pty) Ltd
,
[16]
and
Two
Oceans Aquarium Trusts v Kantey and Templer (Pty) Ltd
,
[17]
was somewhat misplaced, on the pleadings under discussion. As argued
by the plaintiff, the circumstances that would probably render
the
misstatement wrongful include knowledge on the part of the defendant
that an entity in the position of the plaintiff, as
successor-in-title
to Masefield, would rely on the statement (which
was perpetuated), and therefore owed a duty to ensure the accuracy of
the statement.
It was also argued that the defendant’s
reported expertise, and the fact that it holds itself out as issuing
tank warrants
upon which reliance can be placed by third parties, are
some of the factors that could and should influence the assessment of
wrongfulness.
The pleadings of the plaintiff at this stage,
suggest, rather strongly too, that there was a duty of care towards
the plaintiff.
See for example, in this regard,
Axiam
Holdings Ltd v Deloitte & Touche,
[18]
and
Standard
Chartered Bank of Canada v Nedperm Bank.
[19]
In
Axiam
Holdings Ltd
at
paras [23] and [24], it was acknowledged that:
“
It
cannot therefore be found on exception that the defendant’s
alleged omission to speak was not wrongful (cf Indac Electronics
(Pty) Ltd v Volkskas Bank Ltd at 801D). The Court below was
faced with an exception to a claim that on the face of it was
sustainable. It was premature to decide whether a legal duty could be
said to exist.
”
In
my view, in many ways, save for what is stated above, the same
applies to the instant matter. The duty of care as pleaded
currently, is not such that it would give rise to limitless liability
owing to unforeseen plaintiffs in circumstances where such
plaintiffs
could and should protect their contractual rights and obligations, as
contended for on behalf of the defendant in this
matter. It is
rather simply that this aspect cannot be properly determined at this
stage without evidence. To do so,
would be speculative in the
extreme. The defendant has plainly conflated the plaintiff’s
Claims A and B. For
these reasons too, and on the issue of
wrongfulness, the exception cannot succeed.
[19]
I deal briefly with the question of causation. The defendant
in the exception alleged,
inter
alia
,
that it is incumbent on the plaintiff in a case such as the present
to allege such facts and circumstances as would allow for
a finding
that the defendant legally caused the plaintiff’s alleged loss
of damage. The plaintiff has failed to make
out any or adequate
allegations in this regard.
[20]
In paragraph 11 of the exception, the defendant contended that, ‘
from
the allegations made by the plaintiff, it does not appear why the
defendant should be held liable for loss that was caused
to the
plaintiff by the plaintiff’s own conduct
’.
These assertions, including those in paragraph 14 of the exception,
regrettably, ignored a number of pertinent considerations,
and what
is actually pleaded, as pointed out immediately below.
[20]
For starters, in Christie’s
The
Law of Contract in South Africa
,
[21]
and in regard to the inquiry into whether damages were caused by an
alleged breach, the following is stated:
“
It so
happens that this inquiry has engaged the attention of the courts
more frequently in the law of delict than in the law of
contract, but
in both types of case the inquiry is basically the same, and Corbett
CJ’s restatement of the relevant principles
in International
Shipping Co (Pty) Ltd v Bentley
1990 (1) SA 608
(A) 700E-701A is as
authoritative in contract as in delict. These principles call for a
two-stage inquiry, first into factual causation
and then into legal
causation. To establish factual causation it must be shown that
the breach was the causa sine qua non
of the loss. This quaint
Latin phrase is best understood by applying the but-for test:
would the plaintiff have suffered
a loss but for the defendant’s
breach? As noted by Nugent JA in Minister of Safety and
Security v Van Duivenbodem
2002 (6) SA 431
(SCA) 449 (a delict case),
there were conceptual hurdles to be crossed when reasoning along
these lines, but they can be crossed
by remembering that a plaintiff
‘is not required to establish the causal link with certainty,
but only to establish that
the wrongful conduct
[or
breach of contract]
was probably a cause
of the loss, which calls for a sensible retrospective analysis of
what would probably have occurred, based
upon the evidence and what
can be expected to occur in the ordinary course of human affairs
rather than an exercise in metaphysics.
”
(footnotes omitted)
[21]
In
Holtzhausen
v Absa Bank Ltd
,
[22]
the Court said:
“
In the
present matter, the pleadings cover a claim for damages for negligent
misstatement. The plaintiff does not rely on
the breach of any
contractual obligation which the defendant or its servants may have
owed him, as constituting the negligence
for his claim. The
plaintiff’s case as it was presented in evidence was that a
right which he had independently of
any such contract, was
infringed. The decision in Lillicrap is accordingly of no
application.
”
See
also
Minister
of Safety and Security and Another
v
Scott and Another
,
[23]
in which the plaintiff also relied for the proposition of knowledge
of a contract as an important policy consideration to create
a duty
of care, and for when loss suffered is considered to be too remote to
attract liability.
[22]
The above principles make it plain that, in determining factual
causation it must be shown that the breach was the cause
sine
qua non
(a matter that is absolutely
essential) of the loss; that the plaintiff is not expected to
establish the causal link with
any certainty; and that a
plaintiff’s case (as in the current Claim B), which will be
premised on evidence to show
that its right, which it had
independently of the contract, has been infringed. These are matters
which fall pre-eminently within
the purview of the trial, not in
exception proceedings.
THE
ARGUMENT THAT THE TANK WARRANT EXCLUDES THE PLAINTIFF
[23]
In closing argument, it was submitted, rather strongly too, on behalf
of the defendant that, the fact that the tank warrant
nowhere
mentions the name of the plaintiff, is indicative of the fact that
the plaintiff does not have the rights which it presently
wishes to
enforce. This was, of course, with reference to plaintiff’s
Claim B. In my view, the submission overlooked
entirely the
rights and obligations attained by the plaintiff through the
Assignment Agreement, concluded between Masefield (South
Africa),
(“
MSA
”),
Masefield AG (“
MAG
”)
and the plaintiff on 8 June 2010. Clause 3, in
particular, clauses 3.1.2, 3.1.3 and 3.1.4 thereof, make
it clear
that MSA delegated and ceded all its obligations, rights under the
Storage Agreement to the plaintiff. Clause 3.1.3 provides
that:
“
The
effect of the cession and delegation of rights and obligations in
terms of clauses 3.1.1 and 3.1.2 is that all rights and obligations
of MAG and/or MSA under the Storage Agreements are assigned to MSCG
[the plaintiff]
.
The plaintiff duly accepted the
cession
.” (my insertions)
The
argument advanced therefor has no merit at all. Indeed, a document
such as a tank warrant, by its nature, is not only a contract,
but
also a very important document.
[24]
The arguments presented on behalf of the defendant also ignored or
misunderstood the contents of what the plaintiff pleaded
in paras
32.1 to 32.5 of the amended particulars of claim, as quoted earlier
above. These paragraphs alleged,
inter
alia
, that, if the contents of the tank
warrant and representations were incorrect, the plaintiff as
successor of Mansefield, relied
upon the correctness and accuracy
thereof, in placing reliance on the correctness of the tank warrant
and representations, the
plaintiff made payments to Masefield,
calculated on the basis of the correctness of the tank warrant. The
payments so made are
mentioned by the plaintiff. As mentioned
already, in paras 30 and 31, the plaintiff pleaded a duty of care
owed by the defendant
to any person or entity relying upon the
contents of the tank warrant, including the plaintiff. All the
relevant allegations
had therefore been made in the amended
particulars of claim.
[25]
The appeal matter of
Western
Alarm System (Pty) Ltd v Coini and Co
,
[24]
concerned the duty of care in the installation of a burglar alarm
system at the plaintiff’s premises. When it became
apparent that the alarm system would not function in the plaintiff’s
premises, the defendant company (appellant installer)
alleged that
the reason for the non-functioning was due solely to the fact that
the electrical light wiring in plaintiff’s
premises was faulty
and advised the plaintiff that such wiring had to be renewed entirely
before the alarm system could function
effectively. The
plaintiff, accepting such statement as correct, had the electric
wires of his premises renewed at his own
cost, but thereafter, the
burglar alarm system still failed to operate effectively and useless
for the purpose for which it was
installed. The plaintiff
successfully instituted action in the lower court for damages based
on the installer’s (appellant’s)
duty of care. In finally
dismissing the appeal, the Court said:
“
For
the negligent statement made was intended to be acted upon, was acted
upon and being so acted upon occasioned pecuniary loss
to plaintiff,
and defendant company was under a duty to observe that degree of care
which a reasonable man would have observed.
I say was ‘under
a duty’, because of the contractual relationship existing
between plaintiff and defendant company,
and the fact that the
misstatement was made to plaintiff in relation to a matter arising
out of the contract and intimately associated
with its fulfilment,
which was to provide and keep in good working order an alarm system
in plaintiff’s premises.
”
[25]
In
my view, the above principles apply with equal force to the facts of
the present matter.
CONCLUSION
[26]
Based on the above, I conclude that the amended particulars of
claim, as pleaded currently, are reasonably sufficient for
the
defendant to plead thereto in regard to plaintiff’s Claim B
without allowing the exception. The trial court will
be in a
position to determine whether the defendant owed the plaintiff a duty
of care, and breached that duty of care, in issuing
the tank warrant,
as it did. The defendant’s arguments in regard to policy
considerations, in cases of pure economic
loss and the reason why the
plaintiff rejected its offer, are negated by case law cited and have
no merit at all and the exception
is premature and must also fail for
this reason.
COSTS
[27]
The costs should follow the result, which is a discretionary matter.
Both parties enjoined the services of two counsel,
in what appears to
be a complex matter.
ORDER
[28] In the result the following order is made:
1.
The
exception, aimed at plaintiff’s Claim B, is dismissed with
costs.
2.
The
costs shall include the costs occasioned by the employment of two
counsel.
D
S S MOSHIDI
JUDGE
OF THE HIGH COURT OF SOUTH AFRICA
GAUTENG
LOCAL DIVISION, JOHANNESBURG
COUNSEL
FOR THE EXCIPIENT P F LOUW SC
ASSISTED
BY R MASTENBROOK
INSTRUCTED
BY HOGAN LOVELLS (SA) INC AS
ROUTLEDGE
MODISE ATTORNEYS
COUNSEL
FOR THE PLAINTIFF
A SUBEL
SC
ASSISTED
BY
A M SMALBERGER
INSTRUCTED
BY WERKSMANS ATTORNEYS
DATE
OF HEARING
6 FEBRUARY 2015
DATE
OF JUDGMENT
16 JULY 2015
[1]
See pp
5 to 12.
[2]
See
paras 25A to 25C of POC.
[3]
See
pleadings bundle 16.
[4]
See
pleadings bundle 16 to 22.
[5]
See
pleadings bundle pp 79 to 83.
[6]
1978
(4) SA 140
(CPD) at 144F.
[7]
6
th
ed at 174.
[8]
1991
(1) SA 508
(A).
[9]
1978
(2) SA 177
(NCD) at 182.
[10]
1927
AD 259
at 269.
[11]
1940
(2) PH F119 (C).
[12]
1942
CPD 386
at 392.
[13]
2013
(5) SA 496
(SCA) para [7].
[14]
2002
(5) SA 365
(SCA) para [12].
[15]
2015
(1) SA 1
paras [20] to [21].
[16]
1985
(4) SA 475
(A).
[17]
2006
(3) SA 138
(SCA).
[18]
2006
(1) SA 237
(SCA) at 244D.
[19]
[1994] ZASCA 146
;
1994
(4) SA 747
(AD).
[20]
See
para 10 of the exception.
[21]
6
th
ed pp 565 to 566.
[22]
2008
(5) SA 630
(SCA) para [8].
[23]
2014
(6) SA 1
(SCA).
[24]
1944
CPD 271.
[25]
At
276.