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[2016] ZAGPJHC 37
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Kingdom Films and Others v Kaplan NO (14/43457) [2016] ZAGPJHC 37 (7 March 2016)
REPUBLIC
OF SOUTH AFRICA
IN THE HIGH COURT
OF SOUTH AFRICA
GAUTENG
LOCAL DIVISION, JOHANNESBURG
Case
number:
14/43457
DATE:
07 MARCH 2016
In
the matter between:
Kingdom
Films
.....................................................................................................
First
Excipient
Mandy
Richardson
..........................................................................................
Second
Excipient
Kevin
Rene
Richardson
.....................................................................................
Third
Excipient
Kevin
Richardson Wildlife Sanctuary (Pty)
Ltd
...........................................
Fourth
Excipient
The
Lion
Whisperer
.............................................................................................
Fifth
Excipient
Sid
Howell Investments (Pty)
Ltd
......................................................................
Sixth
Excipient
Gerald
Howell
.................................................................................................
Seventh
Excipient
Lynne
Robertson
...............................................................................................
Eighth
Excipient
Kevin
Rene Richardson
NO
...............................................................................
Ninth
Excipient
Mandy
Richardson
.............................................................................................
Tenth
Excipient
Craig
Rossel
NO
............................................................................................
Eleventh
Excipient
Deadly
Predator Challenge (Pty)
Ltd
............................................................
Twelfth
Excipient
And
Harry
Kaplan
NO
...........................................................................................
First
Respondent
Mmatlou
Hellen
Phaleng
............................................................................
Second
Respondent
JUDGMENT
Introduction
[1]
Kingdom
Wildlife Sanctuary (Pty) Ltd (KWS) is a company presently in
liquidation. It was placed under final liquidation by the Gauteng
High Court, Provincial Division on 30 May 2013. Pursuant thereto, the
two respondents in this matter were appointed the joint final
liquidators of KWS. They continue to hold this position. Acting in
that capacity they brought an
Aquilian
action against eleven defendants in this court. Having delivered
their particulars of claim (POC) against the eleven defendants
they
were served with a notice of exception from all the defendants,
indicating that it is a firmly held opinion of all the defendants
the
POC failed to disclose a cause of action. They were offered an
opportunity to reconsider the POC and amend it appropriately.
The
respondents do not share that opinion and therefore declined the
invitation to amend their POC. They informed the defendants
accordingly. Consequently, the defendants raised an exception to the
POC. This judgment is the outcome of that exception.
[1]
The
facts
[2]
Prior to being placed under final
liquidation KWS primarily conducted the business of tourism venture.
The third excipient, Kevin
Richardson (Richardson), was a director of
KWS. He held fifty percent (50%) of the issued share capital of KWS.
The other fifty
percent (50%) was held by Alan Friedland (Friedland).
[3]
The excipients all stand accused of acting
unlawfully, or unlawfully failing to act, with fault and thereby
causing harm to KWS,
which harm is identified as prospective
financial loss. This potential financial loss is the “
damage
”
they seek to recover from the excipients. They seek other relief too.
However, while the claim for monetary compensation
for the damages is
by no means the only relief they seek, it is a crucial aspect of the
relief claimed. It is this aspect of the
claim, as reflected in the
POC,that forms the subject matter of the exception. To understand the
POC as well as the exception it
is necessary to have regard to
details of the excipients.
[4]
Richardson,
a.
is married to the second excipient, Mandy
Richardson (Mandy);
b.
accepted appointment as the sole director
of the first excipient, Kingdom Films (Pty) Ltd, as from 27 August
2012 or thereabouts;
c.
is employed by Kevin Richardson Wildlife
Sanctuary (Pty) Ltd, the fourth excipient, (KRWS) as from 17 May
2013;
d.
is a trustee of the Kevin and Mandy
Richardson Family Trust (the family trust).
[5]
Mandy was, at all material times,
a.
the sole director of the fifth excipient,
the Lion Whisperer (Pty) Ltd (the Lion Whisperer) as from about 26
July 2013;
b.
the sole director of KRWS as from 17 May
2013 (the same date that her husband, Richardson, became an employee
of this company);
c.
a director of Deadly Predator Challenge
(Pty) Ltd (Predator), the twelfth excipient;
d.
providing services to KWS prior to its
liquidation pursuant to a contract between her and KWS;
e.
together with Richardson and Craig Rossel
(Rossel) a trustee of the family trust.
[6]
Richardson N.O. Mandy N.O. and Rossel N.O.
are, by virtue of their appointments as trustees of the family trust,
the ninth, tenth
and eleventh excipients in this matter. During 2013
the family trust was the sole shareholder of the entire issued share
capital
of KRWS.
[7]
Those then are the first, second, third,
fourth, fifth, ninth, tenth, eleventh and twelfth excipients.
Together they form one cluster
of excipients. They were all
represented by the same firm of attorneys and the same counsel. The
other cluster of excipients are
the sixth, seventh and eighth
excipients. The sixth excipient, Sid Howell Investments (Pty) Ltd
(SHI), is a company that concluded
a contract with KWS. SHI and KWS
were represented by Gerald Howell, the seventh excipient (Howell) and
Richardson respectively.
The sixth, seventh and eighth excipients,
too, were all represented by a single firm of attorneys and the same
counsel. As
can be seen from the above account of the
excipients the main defendants in the principal case are Richardson
and his wife Mandy.
With the exception of the sixth, seventh and
eighth excipients their role and involvement in the affairs of the
other excipients
is so significant as to be overwhelmingly
influential, if not determinative, of those affairs. The sixth,
seventh and eighth excipients
have no role to play in the other
affairs of all the other excipients, and
vice
versa
. They are completely independent
of the other excipients. They are cited because of certain commercial
transactions they concluded
with one or more of the other excipients,
which commercial transactions lie at the core of the delictual action
brought by the
respondents. The details of the delictual action are
spelt out in the POC, to which I now turn.
The
relevant portions of the POC
[8]
Having
identified the parties to the litigation in the POC, the respondents
proceed to explain what their cause of action is. According
to them
KWS, represented by Richardson, concluded a written agreement with
SHI represented by Howell. SHI was at the time trading
as the
Welgedacht Game Reserve. In essence, the agreement provided for SHI
to provide services to KWS in return for a certain sum
of money, and
to lease certain property to KWS also in return for a certain sum of
money.
[2]
This agreement (the
Welgedacht agreement) provided Richardson with an opportunity to
extricate himself from his co-shareholder,
Friedland, by destroying
the business of KWS while at the same time diverting all its business
and business opportunities to some
of the other excipients. In
particular diverting to KRWS, The Lion Whisperer (the fifth
excipient), Predator (the twelfth
excipient), and thus affording them
an opportunity to enjoy all the income and profits that would have
been due to KWS. The manner
in which this was done was,
inter
alia
as follows:
a.
Richardson misappropriated monies and other
assets belonging to KWS;
b.
Richardson misappropriated income or other
benefits of KWS and essentially had these transmitted to Kingdom
Films, KRWS, The Lion
Whisperer and Predator;
c.
Richardson fraudulently orchestrated the
cancellation of the Welgedacht agreement;
d.
Richardson engineered a situation where KWS
found itself unable to pay its debts so that KWS is liquidated;
e.
Richardson and/or Kingdom Films, KWRS, The
Lion Whisperer and Predator unlawfully and improperly competed with
KWS;
f.
On or about 1 March 2013, SHI served a
letter of demand on KWS for payment of R26 257.61. Richardson
deliberately failed to
pay this amount to SHI even though KWS was in
a financial position to do so. As a result of his deliberate unlawful
omission to
pay this amount, KWS was placed in final liquidation.
[9]
Much of the above, and especially the
contrived cancellation of the Welgedacht agreement, was done by
Richardson with the connivance
or collusion of Mandy, Howell, SHI,
and Robertson. This cancellation, as mentioned above, resulted from
a.
an unlawful intentional misrepresentation
made by Richardson and these four excipients, which had the potential
of causing KWS harm;
and,
b.
an unlawful intentional interference in the
contractual relationship between KWS and SHI.
[10]
It is then alleged that “
had
Richardson and one or more or all of Mandy, SHI, Howell and Robertson
not conducted themselves as set out above, the value of
the business
owned by KWS would be R68 402 797.00 (Sixty Eight Million,
Four Hundred and Two Thousand, Seven Hundred
and Ninety Seven Rand).
As a result of such conduct, the business of KWS was irreparably
damaged and the value of KWS’ business
has been reduced to nil.
KWS has, in the result, suffered damages in the aforesaid amount of
R68 402 797.00 (Sixty Eight
Million, Four Hundred and Two
Thousand, Seven Hundred and Ninety Seven Rand).
”
The alleged loss of R68 402 797.00 reflects the “
potential
value of the business of KWS
”. It
is not an actual loss incurred by KWS. It is a loss of profits for
twenty (20) years from the date the Welgedacht agreement
was
cancelled. The amount of R 68 402 797.00 represents the
present-day monetary value of the profits. The amount, at
this stage,
is arrived at by utilising a simplistic accounting tool of firstly,
projecting sales for a year, then subtracting the
projected cost of
sales, other projected expenses, projected taxation and then a
projected amount for depreciation of assets, thus
arriving at a
projected net annual profit. The calculation is done for each year of
the twenty (20) year period. Finally, the projected
net profit for
each of the years is summed up to arrive at R 68 402 797.00.
This is the loss they claim KWS suffered.
It is a pure economic
loss.
[11]
The respondents claim this amount from
Richardson, Mandy, Howell and Robertson (the second, third, seventh
and eighth excipients,
respectively). It is their main claim and
referred in the POC as Claim A. It is their contention that the facts
averred by them,
(the material ones are captured above and are at
this stage accepted as having been proven), sufficiently establishes
a cause of
action in their favour against the four excipients.
[12]
The respondents proceed to claim in the
alternative against the SHI (the sixth excipient) on the basis that
it unlawfully repudiated
the Welgedacht agreement. The amount claimed
is identical to that claimed in Claim A. It, to repeat, is
R68 402 797.00.
It is the amount by which the alleged
“
potential value of the business
of KWS
” was diminished. This is
referred to as Claim B in the POC. The respondents do not, in the POC
as it is presently constructed,
claim that, as at the date when the
Welgedacht agreement was cancelled, the existing patrimony of KWS was
diminished as a result
of the said cancellation.
[13]
There are further claims brought in the
alternative to Claim A and Claim B, but which for the purposes of
this exception are not
relevant, save to say that they too are
founded upon the factual averments identified above, and they are
brought against all the
other excipients as well. By virtue of the
inclusion of these claims, the respondents have ensured that relief
is sought against
all the excipients.
[14]
As noted above all the excipients have
challenged the respondents to either amend their POC or demonstrate
that on the facts as
averred in the POC they are entitled to the
relief claimed, be it the primary or the alternative relief. The
challenge is based
on the contention that even if those facts are
established at trial they do not disclose a cause of action.
The exception
[15]
Before
detailing with the exception it is necessary to remind ourselves that
it is the excipients who bear the onus to show that
the respondents
have failed to disclose a cause of action in their POC. And, they
will only discharge this onus if they are able
to demonstrate on
every possible interpretation that the POC, read as a whole, fails to
disclose a cause of action.
[3]
Of necessity this finding would have to be made on the basis that all
the factual averments in the POC are true.
[4]
[16]
The essence of the exception is that the
law of delict only recognises a claim for damages if the plaintiff
had suffered at least
some of the damages as at the date when the POC
are delivered. As at that date the plaintiff must show that its
patrimony has been
diminished. Until its patrimony has actually been
diminished there is no claim recognisable in law. The excipients
point out that
the POC shows no diminution in the patrimony of KWS as
at the date of the alleged unlawful culpable conduct or unlawful
culpable
omission of the excipients. No part of Claim A or Claim B
represents a diminution in the patrimony of KWS as at the date of the
unlawful conduct or omission of any of the excipients. Put
differently, no part of the claim for R68 402 797.00
represents
an actual loss suffered by KWS. On the respondents’
own version, the loss suffered by KWS is purely “
a
potential loss
”: it is no more
than a future or prospective loss, not an actual loss. As a result,
the respondents have failed to establish
a claim recognisable in law.
The claim for potential or prospective loss without any concomitant
claim for actual loss is legally
untenable. On this basis and in
these terms the exception revolves solely around a substantive point
of law. It is an issue ideally
suited for determination on exception.
The law regarding
a claim for damages in delict
[17]
Damage
or loss is one element of an
Aquilian
action. The other four are act or omission, unlawfulness, fault and
causation. Each element has to be proven on a balance of
probabilities
by the plaintiff for the claimant to succeed in its
claim. An
Aquilian
action is incomplete if one of the elements of the action is absent
from the claim. In other words, a cause of action only arises
when
every element is present.
[5]
Whether a plaintiff has suffered damage or not is part of the
facta
probanda
that has to be proven by the plaintiff. The proof required does not
have to meet the scientific standard of precision or exactness.
Once
it is shown to be present, the court will, if necessary, do its best
to quantify it, even if it is required to draw on estimates.
However,
failure to prove any damage or loss already suffered will doubtlessly
result in the claim failing, and should the element
be absent
ab
initio
then the claim is legally untenable
ab
initio
:
there is no cause of action because the entire set of facts which
gives rise to an enforceable claim is not, as yet, present.
[18]
The question posed here is this: can KWS’s
claim for solely prospective damage in the form of pure economic loss
suffice for
purposes of establishing that the KWS suffered damage as
a result of the unlawful culpable conduct of the excipients? If not,
the
respondent’s POC, according to the excipients, fails to
disclose a cause of action.
[19]
Our
law has no difficulty with recognising prospective pure economic loss
as part of the damages sustained by a plaintiff that calls
for
compensation. At least not since
Administrateur,
Natal v Trust Bank van Afrika Bpk.
[6]
Pure economic loss “…
connotes
loss that does not arise directly from damage to the plaintiff's
person or property but rather in consequence of the negligent
act
itself, such as a loss of profit, being put to extra expenses, or the
diminution in the value of property.
”
[7]
The respondents here only claim a potential loss of profits. They do
not claim that KWS was put to extra expenses or that it suffered
a
diminution in the value of its property.
[20]
It
bears reminding what the concept “
cause
of action
”
means in the legal sense. It is “
every
fact which it would be necessary for the plaintiff to prove, if
traversed, in order to support his right to the judgment of
the
Court.
”
[8]
Watermeyer J in
Abrahamse
& Sons,
explains the concept in slightly more detail:
“
The
proper legal meaning of the expression 'cause of action' is the
entire set of facts which gives rise to an enforceable claim
and
includes every fact which is material to be proved to entitle a
plaintiff to succeed in his claim. It includes all that a plaintiff
must set out in his declaration in order to disclose a cause of
action. Such cause of action does not 'arise' or 'accrue' until
the
occurrence of the last of such facts and consequently the last of
such facts is sometimes loosely spoken of as the cause of
action.
”
[9]
[21]
Relying
on this understanding of the concept, Gardiner JP in the case of
Coetzee
v SA Railways and Harbours
[10]
came to the conclusion that a claim for prospective damage as the
only form of damage in an
Aquilian
action
is legally incompetent. His reasoning is based on the principle that
unless the last of all facts that make up the action
occurs, no cause
of action arises or accrues. The reasoning is clear and simple:
assuming all the other factual elements of the
action are present
but, as the damage has yet to occur, the last of the factual elements
is absent, therefore, no cause of action
accrues. The
dicta
of Gardiner JP is worth repeating:
“
It
seems to me that the award of prospective damages in an action based
primarily on accrued damages is an exception to the rule
that in an
action one can recover only what one can prove. The exception is
grafted on this rule to avoid multiplicity of actions.
The cases, as
far as I have ascertained, go only to this extent, that if a person
sues for accrued damages, he must also claim
prospective damages, or
forfeit them. But I know of no case which goes so far as to say that
a person, who has as yet sustained
no damage, can sue for damages
which may possibly be sustained in the future. Prospective damages
may be awarded as ancillary to
accrued damages, but they have no
separate, independent force as ground for action.
”
[11]
[22]
That
is, and for centuries has been, our common law. The principle has
been the subject of some trenchant criticism by academic
writers, but
has received the endorsement, albeit in an
obiter
dictum
,
of the SCA in
Jowell
v Bramwell-Jones and others.
[12]
It is, in any event, a rule of the common law and unless it can
be shown that it is in conflict with a right in in the Bill
of
Rights, and therefore requires to be developed in order to be
consistent with or, to put it differently, in order that it “
promotes
the spirit, purport and objects of the Bill of Rights,
”
[13]
it should be applied. In this case there is no suggestion that this
common law rule conflicts with any right in the Bill of Rights.
[23]
The rule is consistent with the principle
that the date for determining the extent of the damages concerned is
the date on which
the impugned conduct caused the plaintiff’s
damage. In terms of this principle the damage must be caused before a
claim can
be brought. Once damage has been caused, there is no reason
to deprive the plaintiff of any other damage that may arise in the
future, but which is caused by the same unlawful culpable conduct or
omission of the defendant. This is because:
“…
in
an action at common law for damages for injuries sustained by an
accident the plaintiff is only entitled to sue once and for
all …
It may be that after he has recovered damages, it may transpire that
the injuries are far more severe than appeared
at the date of trial,
but he is nevertheless precluded from claiming further damages in a
subsequent action. As Lord Halsbury said,
in the case of Darley Main
Colliery Co. v Mitchell
(11 A.C. 132):
“No one will think of
disputing the proposition that for one cause of action you must
recover all damages incident to it
by law once and for ever.
”
[14]
[24]
Thus, our law, by virtue of the ‘once
and for all’ rule requires the plaintiff to bring the claim for
the latter damages
simultaneously with her claim for the former
damages: all damages, past present and future, caused by the same
unlawful culpable
conduct or omission must be raised in a single
action.
[25]
In
this case the respondents’ claim that the date at which they
calculate the damages suffered by KWS is the date of the impugned
conduct of the excipients. This is manifest in the POC and, as a
result, they submit, the POC as it stands most certainly discloses
a
cause of action. I am unable to agree with this submission. It fails
to appreciate that the requirement to prove damages already
suffered
has to be shown before any future damages can be claimed for. These
damages may occur at a date much later than the date
when the
impugned unlawful conduct or omission took place. As soon as those
damages arise, a cause of action is born
[15]
and only from that moment would prescription begin to run. Until then
there is none. At present the respondents do not prove (the
facts
alleged in the POC are for the present purposes taken as proven) that
KWS has suffered any damage, and therefore a significant
element of
their Aquilian action is absent. It has to be remembered that, in
terms of the Aquilian action, damages have to be suffered
(not, as
yet to be suffered) for a cause of action to be complete. The
allowance of prospective damages by the ‘once and
for all rule’
is an exception to this principle. It was only introduced in order to
prevent plaintiffs and defendants from
having to face a multiplicity
of actions for damages caused by the same unlawful culpable act or
omission and to ensure that a
single judgment on the issues is
rendered. Further it carries the advantage of bringing both certainty
and finality to disputes
brought to court for resolution. Certainty
and finality are two important structures upon which the edifice of
the rule of law
is constructed. In a sentence, the ‘once and
for all rule’ has not amended the
lex
Aquiliae,
which has as one of its elements the requirement that some damage has
already been caused to the plaintiff by the unlawful culpable
conduct
or omission of the defendant, and that like every other element its
absence deprives the plaintiff of a cause of action,
for “(t)
he
element of damage or loss is fundamental to the Aquilian action and
the right of action is incomplete until damage is caused
to the
plaintiff by reason of the defendant's wrongful conduct.
”
[16]
Conclusion
[26]
As KWS has yet to suffer any damage, it
does not have a cause of action. The exception, therefore, is
well-taken. It may be that
KWS has already suffered damages, but has
failed or neglected to identify these in the POC. For this reason it
would be inappropriate
to non-suit the respondents. Rather, they
should be given an opportunity to remedy this failing or negligence.
Finally, having
failed to defend the POC, the respondents should bear
the costs of the exception.
Order
[17]
[27]
The following order is made:
1.
The exceptions to Claim A and Claim B are
upheld.
2.
The plaintiffs are afforded a period of ten
(10) days from the date of this order to initiate such amendment to
their Particulars
of Claim as they deem fit in order to remove the
grounds of the exceptions.
3.
Should the plaintiffs fail to initiate an
amendment to remove the grounds of the exceptions the defendants may
enrol the matter
on the same papers with appropriate amplifications,
if necessary, to have Claim A and Claim B dismissed.
4.
The plaintiffs are to pay the costs of the
exception, which costs are to include those of two counsel where two
counsel were employed.
VALLY
J
Counsel
for 1
st
to 5
th
and 9
th
to 12
th
excipients: S Wagener SC assisted by W Gibbs
Instructed
by Weavind & Weavind Inc
Counsel
for 6
th
to 8
th
excipients F Dippenaar SC
assisted by N Dandadzi
Instructed
by Ric Martin Inc
Counsel
for respondents J Brett SC
Instructed
by Schindlers Attorneys
Date of hearing
28 January 2016
Date
of judgment 7 March 2016
[1]
Accordingly,
the defendants in the principal case are the “excipients”
here, and the plaintiffs there are the “respondents”
here.
[2]
The
payment for the services as well as for the right to use the
property of SHI is calculated as a share of profits. For purposes
of
this judgment those calculations are not relevant.
[3]
Theunissen
v Transvaalse Lewendehawe Koőp Bpk
1988 (2) SA 493
(A) at 500D;
Lewis
v Oneanate (Pty) Ltd and Another
[1992] ZASCA 174
;
1992 (4) SA 811
(A) at 817F
[4]
Living
Hands (Pty) Ltd v Ditz and Others
2013 (2) SA 368
(GSJ) at [15](a)
[5]
Evins
v Shield Insurance Co Ltd
1980 (2) SA 814
(A) at 838H-839C
[6]
1979
(3) SA (A) 824
[7]
Telematrix
(Pty) Ltd t/a Matrix Vehicle Tracking v Advertising Standards
Authority
SA
2006 (1) SA 461
(SCA) at [1]
[8]
Cook
v Gill
(L.R., 8 C.P. 107)
quoted with approval by Maasdorp JA in
Mckenzie
v Farmers’ Co-operative Meat Industries
1922 A.D. at 23
[9]
Abrahamse
& Sons v S A Railways and Harbours
1933 CPD 626
at 637. See also,
Evins
(
supra
)
at 838F-G and 839F
[10]
1933
CPD 565
at 576
[11]
Id
.
[12]
2000
(3) SA 274
(SCA) at [22]. The sources of the criticism are listed in
this paragraph.
[13]
Section
39(2) of the
Constitution
of the Republic of South Africa, Act 108 of 1996
[14]
Cape
Town Council v Jacobs
1917 (A.D.) 615 at 620
[15]
Assuming,
of course, that the elements of fault and causation, too, are
present.
[16]
Jowell
v Bramwell-Jones and others
(
supra
)
at [22]
[17]
In
this order, for purposes of avoiding any confusion, I will describe
the parties as they are reflected in the principal case