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[2016] ZAGPJHC 98
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Cronimet Chrome SA (Pty) Ltd v ICM Clearing and Forwarding (Pty) Ltd and Others; In re: ICM Clearing and Forwarding (Pty) Ltd v Cronimet Chrome SA (Pty) Ltd (2014/24817) [2016] ZAGPJHC 98 (13 May 2016)
THE HIGH COURT OF
SOUTH AFRICA
GAUTENG LOCAL
DIVISION, JOHANNESBURG
CASE NO:
2014/24817
NOT REPORTABLE
NOT OF INTEREST TO
OTHER JUDGES
REVISED
In the matter between:
CRONIMET
CHROME SA (PTY) LTD
Excipient
and
ICM
CLEARING AND FORWARDING (PTY) LTD
First
Respondent
KNOOP
N.O. KURT ROBERT
Second
Respondent
TAKALO
N.O PATIENCE FORTUNE DIHEDILE
Third
Respondent
In
Re:
ICM
CLEARING AND FORWARDING (PTY) LTD
First
Plaintiff
KNOOP
N.O. KURT ROBERT
Second
Plaintiff
TAKALO
N.O PATIENCE FORTUNE DIHEDILE
Third
Plaintiff
and
CRONIMET
CHROME SA (PTY) LTD
Defendant
JUDGMENT
RATSHIBVUMO
AJ
:
1.
Introduction:
The
Plaintiffs (hereinafter “Respondents”), instituted action
proceedings against the Defendant (herein after “Excipient”),
to recover amounts owing in terms of an agreement between the First
Respondent and the Excipient. The Excipient filed a plea to
the claim
denying the existence of the agreement. In response, the Respondents
filed a replication to the plea and sought to raise
an estoppel on
the basis of representations made by Mr. Smith, an agent or servant
of the Excipient who testified during the inquiry
held by the
Respondents into the dealings, trade, affairs and property of the
First Respondent in terms of sec 418 of the Companies
Act 61 of 1973
(the Act). The exception is based on submissions that sec 418 read
with sec 417 (2) (b) & (c) of the Act provide
that evidence given
at such inquiry is only admissible against the person who gave it (in
this case, Mr. Smith) and is as such
inadmissible against the
Excipient.
2.
Background
: The
First Respondent is the company that has been finally liquidated and
it is being represented by the Second and the Third Respondent
as its
liquidators. According to the particulars of claim, in July 2011 the
First Respondent entered into an agreement in terms
of which the
First Respondent would provide storage, transport, handling, packing,
loading, unloading and warehousing of goods
to the defendant for a
reward. Following that agreement and performance on the part of the
First Respondent, the outstanding balance
owing to the First
Respondent is an amount of R232 951.41. The existence of this
agreement was denied by the Excipient in a plea.
In a replication
dated 27 February 2015, the Respondents referred to the inquiry
conducted in terms of sec 418 of the Act and averred
that they relied
upon the representations made by Mr. Smith, to their detriments and
instituted the action against the Excipient
in reliance thereupon.
For these reasons, the Respondents sought to estop the Excipient from
denying liability. The Excipient served
an exception arguing that the
evidence in support of the estoppel is inadmissible against it and
that the same should be struck
out.
3.
Exception:
It is
trite that the proper approach to be adopted by the court is to
adjudicate the validity or otherwise of the exception on the
basis of
the facts alleged by the plaintiff being regarded as correct. The
court must look at the pleading excepted to, as it stands.
No facts
outside those stated in the pleading can be brought into contention
and no reference may be made to any other documents.
In order to
succeed, the Excipient has the duty to persuade the court that upon
every interpretation which the pleading in question
can reasonably
bear, no cause of action is disclosed
[1]
.
4.
In
Nxumalo
v First Link Insurance Brokers (Pty) Ltd
[2]
Moseneke
J (as he then was) said the following in regard to the grounds of an
exception,
“
The
onus is of course on the excipient to show both vagueness amounting
to embarrassment and to embarrassment amounting to prejudice.
Where
the excipient relies on embarrassment, such must be demonstrated by
having regard to the pleadings only. The attack must
arise from
within the four walls of the pleadings which is the source of the
complaint and what is more, such embarrassment must
not be frivolous,
it must be substantial . . . Therefore, the ultimate test
on whether an exception should be upheld
is whether the excipient is
prejudiced.”
5.
Rule
23 provides for the exception if the plea, particulars of claim or
replication as the case may be, lacks averments that are
necessary to
sustain an action. It was held that a plea (or replication) that
relies on allegations that cannot be proved by admissible
evidence
discloses no cause of action.
[3]
It is therefore a basic principle that particulars of claim should be
so phrased that a defendant may reasonably and fairly be
required to
plead thereto. This must be seen against the background of the
further requirement that the pleadings are to enable
each side to
come to trial prepared to meet the case of the other and not be taken
by surprise. Pleadings must therefore be lucid,
logical and in
intelligible form.
[4]
6.
Inadmissible Evidence:
Sec
417 (2) provides,
“
(2)
(
a
)
The
Master
or
the
Court
may
examine
any
person
summoned
under
subsection (1) on
oath
or
affirmation concerning any matter referred to in that subsection,
either orally or on written interrogatories, and may reduce
his
answers to writing and require him to sign them.
(
b
)
Any
such
person
may
be
required
to
answer
any
question
put
to
him
or
her
at
the
examination, notwithstanding that the answer might
tend to incriminate him or her and shall, if he or she does so refuse
on that
ground, be obliged to so answer at the instance of the Master
or the Court: Provided that the Master or the Court may only oblige
the person in question to so answer after the Master or the Court has
consulted with the Director of Public Prosecutions who has
jurisdiction.
(
c
)
An incriminating answer or information directly
obtained, or incriminating evidence directly derived from, an
examination in terms
of this section shall not be admissible as
evidence in criminal proceedings in a court of law against the person
concerned or the
body corporate of which he or she is or was an
officer, except in criminal proceedings where the person concerned is
charged with
an offence…”
7.
Just
as Binns-Ward J observed in
Van
Zyl and Another NNO v Kaye N.O. and Others
[5]
I also find nothing in these provisions, save as expressly provided
in sec 417 (2), that militates in principle against the use
of the
evidence adduced at such enquiries in other proceedings to the extent
that the ordinary rules of evidence would allow. This
approach also
finds support in
Bernstein
and Others v Bester and Others NNO
[6]
where
the Constitutional Court found that t
here
is no indication that the use of compelled testimony in civil
proceedings is prohibited or held to be unconstitutional in other
open and democratic societies based on freedom and equality.
8.
However,
in
O’shea
NO v Van Zyl and Others NNO,
[7]
the
Supreme Court of Appeal held that evidence led in liquidation
inquiries is not admissible against any third party including
the
employer, unless such evidence is given by the said person as an
agent of the employer in representative capacity and with
the
necessary authority. The court referred to Harcott J’s judgment
in
Simmons
NO v Gilbert Hamer & Co Ltd
[8]
with
approval where the following is stated:
“
In
general it may be said that a person who testifies as a witness
speaks for himself; he tells of what he, himself, knows and by
his
oath vouches for its truth. If he is an employee or agent in any
respect of another and gives evidence in litigation to which
that
other is a party, he does so, not as an employee or agent, unless his
admissions bind that party, but as a person speaking
on oath to the
facts in regard to which he testifies, and this is so whether he is
called as a witness by his employer or principal
or by the opposing
litigant. Similarly, if he gives evidence proceedings to which his
employer or principal is not a party, although
in relation to matters
in which the latter has been or is concerned, he speaks as an
individual; he is giving evidence, not taking
part in the making of a
contract or the giving of an undertaking on behalf of his employer or
principal. His evidence in that case
is not admissible against his
employer or principal in a later case in proof of the facts stated in
it. If called by his employer
or principal, his evidence may, as that
of any other witness called by that party, be regarded as evidence
for that litigant and,
so far as adverse to him, redound to his
disadvantage, but that is because it is accepted as true, not because
the witness is the
employee or agent of the litigant.”
The
persons against whom statements are made in such proceedings do not
generally have a right to be present during such testimony
nor are
they afforded the right to cross-examine the deponent. To allow a
liquidator to rely on such statements without calling
the witness
would be inimical to the law of evidence (at 916G – 918B).
The
evidence given by an examinee at a private examination is not
admissible against any person other than the examinee himself
(at
918B – E).
[22]
The learned judge (at 918E – 919C) rightly, I consider, found
support for the inadmissibility of reliance on statements
made in
private proceedings in
Yorkshire Insurance Co Ltd v Standard
Bank of SA Ltd
1928 WLD 223
at 225 – 226:
'There
is a well-known rule of evidence that the admission of an agent may
be evidence against his principal when made on the
principal's behalf
in the ordinary course of some business or transaction in which the
agent acted as his representative (see
Halsbury,
vol.
13 sec. 638).
9.
However
,in
Engelbrecht
NO and Others v Van Staden
and
Others
[9]
Rogers AJ (as he then was) expressed a view that the reason for the
Supreme Court of Appeal found the evidence led in liquidation
inquiries inadmissible in
O’shea
NO v Van Zyl and Others NNO
[10]
was
because such evidence is hearsay in nature. He proceeded to state
“
what
is less clear is whether they also decide that such statements may
never be received into evidence against a third party, for
example
under the modern law regarding the admissibility of hearsay evidence
as regulated by s 3 of the Law of Evidence Act 45
of 1988 (the
Hearsay Evidence Act). The latter Act was not in force when Gilbert
Hamer was decided. In O'Shea the possibility of
receiving the
evidence as hearsay in terms of Act 45 of 1988 appears not to have
been raised.”
It
is noteworthy that the court of appeal had steered away from
expressing that such evidence is hearsay. Again, in
Van
Zyl and Another NNO v Kaye N.O. and Others
and
in
Engelbrecht
NO and Others v Van Staden
and
Others;
while
a softer stance is taken against the total inadmissibility of
evidence tendered in terms of sec 417 of the Act, they all found
no
basis to rule evidence in their respective cases admissible.
10.
Counsel
for the Respondents conceded that the evidence it sought to rely on
in estopping the Excipient is inadmissible. He however
avers that he
should be afforded an opportunity to apply for its admissibility
based on the Hearsay Evidence Act at the time of
trial. What he fails
to explain is what happens to the replication containing the
inadmissible evidence pending the trial stage
where he may launch the
application for the inadmissible evidence to be admissible. One thing
certain though is that if this is
granted, the Excipient would not
know until the trial stage as to what evidence would be allowed. This
defeats the very purpose
of Rule 23. Once the pleadings are closed,
exception can no longer be raised, no matter how well founded, this
is an appropriate
stage to raise it.
[11]
The Respondents did not attempt to apply for the contested evidence
to be ruled admissible in this application, not even provisionally.
They instead suggest that they will do so at a later stage before the
trial court.
11.
There is therefore no basis upon which I can rule
this evidence to be admissible without an application to that effect.
Save for
what is in the replication and the heads of argument the
court has no idea as to the nature of evidence that was led in the
liquidation
inquiry. It is not even clear as to whether Mr. Smith was
mandated by his employer to represent it in that inquiry. It would be
prejudicial to the Excipient in my view to allow inadmissible
evidence to be used to estop it without affording it an opportunity
to challenge the basis upon which it is submitted to be admissible;
for there is no such submission before the court.
12.
Once the application based on Hearsay Evidence Act
is made, if it shall be, then the Defendant would have the
opportunity to respond
before a ruling is made. In so doing, the
Respondents would have the opportunity to knock from the outside so
the door is opened,
as opposed to knocking while already indoors.
Upholding the exception does not stop the action unless the pleading
so excepted
was the only cause of action. According to the
particulars of claim, the Respondents allege that the claim is
inter
alia
based on a contract between them
and the Excipient.
13.
For the reasons stated above, the following order
is made:
13.1
The exception is upheld
.
The Respondent’s replication is
struck out.
13.2
The
Respondents are ordered to pay the costs of this application, jointly
and severally, the one paying the other to be absolved.
T.V.
RATSHIBVUMO
ACTING
JUDGE OF THE HIGH COURT
Date Heard: 04 May
2016
Judgment Delivered: 13
May 2016
For
the Excipient:
Adv.
E Eksteen
Instructed
by:
Vassev
Attorneys
Sandton
For
the Respondents:
Adv.
LE Combrink
Instructed
by:
Venns
Attorneys
C/O
Couzyns Incorporated
Johannesburg
[1]
See
Erasmus Superior Court Practice page B1–151. See also
Dilworth
v Reichard
[2002]
JOL 10342
(W) p. 5 para 9 (also cited as [2002] 4 All SA 677 (W)).
[2]
2003
(2) SA 620 (T)
[3]
See
SA
Defence and Aid Fund v Minister of Justice
1967
(1) SA 31
(C) at p. 37; McKelvey v Cowan NO 1980 (4) SA 525 (Z)
[4]
See Trope v South
African Reserve Bank and Another and Two Other Cases
1992 (3) SA 208
(T) at p. 210 para G.
[5]
2014
(4) SA 452 (WCC)
[6]
[1996] ZACC 2
;
1996 (2) SA 751
(CC) at
para 120.
[7]
2012
(1) SA 90 (SCA).
[8]
1963
(1) SA 897 (N)
[9]
(2011) ZAWCHC 447
(06
December 2011).
[10]
Supra
.
[11]
Stockdale
Motors Ltd v Mostert
1958 (1) SA 270 (O)
at 270 and
Felix
and Another v Nortier NO and Others
(2)
1994 (4) 502 (SE).