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[2016] ZAGPJHC 87
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Qantam Risk Assessment (Pty) Ltd v McLoughlin (A3111/2015) [2016] ZAGPJHC 87 (29 April 2016)
REPUBLIC OF SOUTH
AFRICA
IN
THE HIGH COURT OF SOUTH AFRICA
GAUTENG
LOCAL DIVISION, JOHANNESBURG
CASE
NO:
A3111/2015
DATE:
29 APRIL 2016
In
the matter between:
Qantam
Risk Assessment (Pty)
Ltd
.........................................................................................
Appellant
And
McLoughlin,
Cynthia
.............................................................................................................
Respondent
JUDGMENT
Van der Linde, J:
Introduction
[1]
This is an appeal against a judgment of the
magistrates’ court
[1]
given against a defendant who wished to present evidence but was
precluded from doing so on the basis that its plea, even if evidence
supported its assertions, would not avoid judgment in the plaintiff’s
favour. The defendant is now the appellant before us.
[2]
The
respondent’s case was for payment in terms of a written
agreement between the parties. She was first employed by the
appellant but their relationship turned sour and resulted in claims
being made reciprocally. Those claims led ultimately to a written
settlement agreement being concluded between the parties. In terms of
the agreement the appellant was obliged to pay the respondent
the
aggregate amount of R245,670.23.
[3]
Further, the agreement was stated to be a
settlement of all claims arising reciprocally from the termination of
the employment relationship
between the parties, “
and
otherwise”.
When sued for
the balance of R167,928.33
[2]
allegedly owing to her, the respondent was met with a plea of
admission of liability but payment by set-off.
[4]
The set-off raised by the appellant was
said to arise from a decision taken by the appellant to recover from
the respondent all
legal costs disbursed by the appellant on behalf
of the respondent in connection with legal proceedings in which the
respondent
had been involved. That amount, in the aggregate
R162,085.00, was sufficient to extinguish the appellant’s
indebtedness to
the respondent under the settlement agreement.
[3]
[5]
At
the commencement of the trial in the court a quo, the respondent
opened her case by arguing that the matter could be disposed
of
without evidence. The argument was that the appellant in fact
admitted the respondent’s claim; that the set-off claimed
in
the plea was not properly pleaded since all the elements required to
be shown had not been asserted; that the claim relied on
for the
set-off was in any event no sustainable cause of action since it was
reliant simply on a resolution by the appellant; and
finally that in
any event set-off could not successfully be raised without the
appellant instituting a counterclaim for the amount
of the asserted
set-off.
[6]
The
court a quo held in favour of the respondent on the basis that the
amount which the appellant sought to set-off against its
indebtedness
against the respondent was not for a liquidated amount of money. A
counterclaim was necessary to render it liquidated,
and there was
none such. It accordingly gave judgment for the respondent in the
amount claimed. It did not afford the appellant
an opportunity of
leading evidence or of amending its plea.
[7]
On
appeal, the respondent defended the judgment of the court a quo on
the same bases as was argued before it. The appellant in turn
attacked the judgment also on the same bases as was raised in the
court below. In addition, however, it argued that the finding
of the
court a quo was equivalent to the upholding of an exception that the
plea disclosed no defence, and that in those circumstances
the court
a quo should have afforded the appellant an opportunity to amend its
plea as it may have been advised.
The
respondent’s submissions
[8]
The first submission, that all the elements
for a valid set-off had not been averred, is incorrect. Set-off is
successfully invoked
when the reciprocal debts are due and owing
between the same parties, and are for liquidated amounts.
[4]
Nothing further is required. These elements were all averred.
[5]
[9]
The second submission, that the resolution
does not found a cause of action, is only correct as far as it goes.
The appellant’s
claim in the plea was however not founded on
the resolution; the resolution merely conveyed that the appellant had
taken a decision
to claim back moneys that were owed to it by the
respondent.
[6]
[10]The true basis on which the
moneys were owing by the respondent to the appellant, was that the
appellants had paid on the respondent’s
behalf an indebtedness
of hers, being legal fees incurred by the respondent. The sting of
the plea, and the set-off, lay not in
the resolution; the sting lay
in the assertion that the moneys had been expended by the appellant
on the respondent’s behalf;
and the appellant had resolved to
claim it back.
[11]Granted,
the cause of action for repayment could have been pleaded fuller; and
specifically
negotiorum gestio
,
the likely quasi-enrichment claim, should have been pleaded fuller,
as we now hold.
[7]
But the asserted indebtedness is not self-evidently baseless, as the
respondent contended. If the pleading was vague in this respect,
as
in our view it was, the remedy was an exception, as was in fact
employed by the respondent; but successful exceptions lead to
an
opportunity to amend, not automatically to judgment for the
excipient. We return to this matter below.
[12]The third argument, that
there should have been a counter-claim, is not unqualifiedly correct.
Set-off, if successfully invoked,
is no less than an affirmation of a
legal position that will have incepted automatically; if the required
elements are present,
set-off occurs without more, and no further
action on the part of either debtor or creditor is required. No
counter-claim is required.
[13]Of course, if the amount
sought to be set-off is not liquidated, and the court a quo found,
then a judgment on a counterclaim
will render it so. But that
was not the respondent’s case and an opportunity to amend (to
include a counterclaim) was
not afforded.
Not
liquidated?
[14]
The
court a quo held that the amount claimed by the appellant from the
respondent was not liquidated, and for this reason set-off
could not
have been invoked. There are, to my mind, three difficulties in the
way of this reasoning.
[15]
First,
the conclusion was reached without evidence. The court had no way of
knowing whether the amounts expended were not capable
of prompt and
ready ascertainment. These amounts may even have been agreed, in
which event they were clearly liquidated. The point
is, whether or
not they were liquidated depended on their composition, and without
evidence that was not established.
[16]The
second difficulty is that the appellant’s assertion was in fact
that the indebtedness was comprised of the amounts
expended.
[8]
This did not depend on whether or not these amounts were reasonable.
The appellants had, in effect, paid the respondent’s
bills, and
had decided to look to the respondent for reimbursement.
Reasonableness does not come into it.
[17]But
third, even if the reasoning was sound, it is an accepted and firm
principle of our law of procedure that if a court finds
that a
party’s case as pleaded does not afford a case or a defence,
then that party is afforded an opportunity to re-assess
its case. And
it is to this aspect of the appeal that we now turn.
[9]
Opportunity
to amend?
[18]The
argument raised by the respondent at the commencement of the trial
was not formally called an exception. But in substance
it was.
The respondent argued that the case could be decided against the
appellant without evidence, because the plea as it stood,
even if all
the admissible evidence was led, would not afford a successful
defence against the respondent’s claim. That argument
was,
albeit for slightly different reasons, upheld by the magistrate, who
made a costs order commensurate with an exception having
been
taken.
[10]
[19]The
reason underlying the principle that a party is first afforded an
opportunity to amend, is that otherwise a final judgment
issues
against a party without that party having had a reasonable
opportunity to be heard. The principle was expounded as follows
by
the then Chief Justice Corbett in the Supreme Court of Appeal in
Group Five:
[11]
“
An
order dismissing an action puts an end to the proceedings and means
that if the plaintiff wishes to pursue his claim on a different
pleading he must start de novo. This may have drastic consequences
for the plaintiff, particularly where it results in the prescription
of the claim. In my opinion, it would be contrary to the
general policy of the law to attach such drastic consequences
to a
finding that the plaintiff's pleading discloses no cause of action.
Here the analogy of a defective summons springs to mind.
And the
cases of Trans-African Insurance Co Ltd v Maluleka
1956 (2) SA 273
(A) and Prudential Assurance Co Ltd v Crombie
1957 (4) SA 699
(C)
illustrate the reluctance of the Courts to deny the plaintiff the
opportunity to amend his summons, even if fatally defective
by reason
of its failure to state a cause of action.
Moreover,
in my view, in this regard no distinction should be drawn between the
case where action is initiated by way of summons,
followed by a
declaration, and the case where the plaintiff sues out a combined
summons. In the judgment in the case of Natal Fresh
Produce Growers'
Association and Others v Agroserve (Pty) Ltd and Others
1991 (3) SA
795
(N) there are certain dicta (at 800F-801C) which suggest that a
distinction must be drawn between these two cases; that an exception
successfully taken to a declaration may leave the summons standing as
an 'empty husk' to sustain the action; but that in the case
of a
combined summons the setting aside of the particulars of claim as a
consequence of a successful exception causes the whole
action to fall
away because the summons can have no existence independent of the
particulars of claim. It would seem to be a corrollary
to these
propositions that when an exception is successfully taken to the
particulars of claim in a combined summons on the
ground that
no cause of action is disclosed, there is no room for the grant of
leave to amend the particulars. This, in my opinion,
does not
constitute the law and practice of our Courts. As long ago as 1915
Bristowe J put the position thus:
'As
was said by Innes CJ in Coronel v Gordon Estate GM Co Ltd (1902 TS
112 at 115) "the effect of a successful exception
is that the
entire declaration is quashed", meaning as I understand that it
is an absolute bar to any relief being obtained
on that declaration.
But it does not take the declaration off the file or place the case
in the same position as though no declaration
had been delivered.
Otherwise the proper order when an exception is upheld would be to
extend the time for filing a declaration,
not to give leave to amend.
Leave to amend presupposes that there is something which can be
amended. Still less can it be
said that a successful exception
destroys the action. If this were so then the case of Curry v
Germiston Municipality (1910) LLR
122, where an order for absolution
under Rule 41 was granted after a declaration had been successfully
excepted to and had not
been amended, would have been wrongly
decided. It seems to me therefore that the action in the present case
is still on foot and
that there is a declaration in existence.'
Johannesburg
Municipality v Kerr
1915 WLD 35
at 37; see also Berrange v Samuels II
1938 WLD 189
; Santam Insurance Co Ltd v Manqele
1975 (1) SA 607
(D)
at 608B-D, 609G-610D.
And
I would again refer to the cases quoted above in regard to the
amendment of a defective summons. A Circuit Court summons is,
and in
the Cape previously was, similar to a combined summons.
Although the point was not debated in that case, Gillespie
v Toplis
and Another
1951 (1) SA 290
(C) provides an instance of a Circuit
Court summons being set aside on exception on the ground that it
failed to disclose a cause
of action and of leave being granted to
the plaintiff to file an amended summons, if so advised.
For these
reasons I hold that Streicher J erred in dismissing the action. He
should have set aside the particulars of claim and
given leave to
amend or, at any rate, after delivery of judgment given the appellant
the opportunity to apply for leave to amend.”
[20]This reasoning applies, in
our view, with equal force to the case of an exception against a plea
on the basis that it discloses
no defence. As we have indicated, in
our view the quasi-enrichment claim has not been properly pleaded.
The plea is vague and embarrassing
in this regard, because the claim
relied on has not been asserted with appropriate particularity. It
may even be that those disbursements
were incurred pursuant to an
agreement to repay them, in which event the claim would be founded in
contract; but the pleading does
not disclose this.
[21]In this case there is of
course also the argument that the settlement agreement forecloses the
entitlement of the appellant
to recover any money from the
respondent, and that on this basis too the plea is excipiable as
disclosing no defence. We
considered whether the appeal should
be dismissed on this basis, but on reflection this point was not
fully canvassed either before
us or before the court a quo, and it
would be inappropriate as a court sitting on appeal to express a firm
view on this issue,
either way.
[22]We prefer to conclude then
that the exception was well taken; that the plea was vague and
embarrassing for not having pleaded
the cause of the respondent’s
asserted indebtedness with appropriate clarity; but that the court a
quo, having upheld the
respondent’s submissions, should then
have afforded the defendant an opportunity to amend its plea.
[23]In the result the appeal must
succeed. We make the following order:
(a)
The
appeal succeeds, with costs.
(b)
The
order of the court a quo is set aside, and the following order is
substituted for it:
“
(i) The plaintiff’s exception
against the defendant’s plea as disclosing no defence is
upheld, and the plea is set aside.
(ii) The defendant is afforded 15 days within
which to amend its plea.
(iii) The trial of the action is postponed sine die.
(iv) The defendant is directed to pay the costs of
today as on exception.”
WHG van der
Linde
Judge, High
Court
Johannesburg
I
agree.
A Mayet
Acting
Judge, High Court
Johannesburg
For the
Appellant: Adv. M. Nowitz (082 444 9716)
Instructed
by: Larry Dave Attorneys Incorporated
22
Hurlingham Road
Cnr Fricker
Road, Illovo Boulevard
Illovo
Tel: 011 268 6512
Ref:
QAN001/Nicole Purwitsky / Teboho Mokoena
For the respondent:
Adv. T. Lipshitz (083 383 5511)
Instructed by: M Van
Zyl Attorneys
Standard Building
1
st
Floor,
Room 18
304 Oak Avenue
Randburg
Tel: 011 781 2810
Ref: MVZ/bg/M390
Date argued: 18
April, 2016
Date of judgment:
29 April, 2016
[1]
For the district of Johannesburg North, held at
Randburg, by magistrate S Le Roux, on 31 August, 2015.
[2]
The parties were agreed that R8,258.84 had to be
deducted from the appellant’s obligation to the respondent,
pursuant to
a tax directive issued by SARS. This meant that the
respondent’s claim would have to be reduced to R159,669.49.
[3]
By a margin positive for the appellant of
R2,415.51. There was no counterclaim for this amount.
[4]
Mahomed v Nagdee,
1952 (1) SA 410
(A);
Porterstraat 69 Eiendomme (Pty) Ltd v PA Venter Worcester (Pty) Ltd,
2000 (4) SA 598 (C).
[5]
See plea, paragraphs 4.2 to 4.5, p114.
[6]
Or at least that is what certainly one reasonable
reading of the plea conveys.
[7]
Turkstra v Massyn, 1959(1) SA 40 (T) at 47.
[8]
See plea, paragraphs 4.2 and 4.3, p114.
[9]
Group Five Building Ltd v Government of the
Republic of South Africa (Minister of Public Works and Land
Affairs),
[1993] ZASCA 54
;
1993 (3) SA 264
(A) at 269H. See also Rowe v Rowe,
[1997] ZASCA 54
;
1997
(4) SA 160
(SCA) at 167H.
[10]
See Reasons, dated 3 September 2016, p204, sub
nom “
On costs”
.
[11]
Op cit, p602 in fin to p604.