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[2021] ZAGPJHC 156
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VFT Automotive (Pty) Ltd v ABSA Bank Limited (28845/2019) [2021] ZAGPJHC 156 (21 May 2021)
REPUBLIC
OF SOUTH AFRICA
IN
THE HIGH COURT OF SOUTH AFRICA,
GAUTENG
LOCAL DIVISION, JOHANNESBURG
CASE
NO: 28845/2019
NOT
REPORTABLE
NOT
OF INTEREST TO OTHER JUDGES
NOT
REVISED
21
May 2021
In
the matter between:
VFT
automotive (Pty) Ltd
Plaintiff
and
ABSA
BANK limited
Defendant
Judgement
1.
This judgment deals
with an application for an amendment of the particulars of claim of
the plaintiff. The plaintiff has instituted
an action against the
defendant. The summons was issued on 16 August 2019. The defendant is
defending the action and has filed
notice of intention to defend on 5
September 2019. The defendant objected to the formulation of the
plaintiff’s cause of
action or of the particulars of claim by
delivering an exception in terms of Rule 23 of the Uniform Rules of
Court. Rule 23 provides
a useful mechanism to a party in the action
to except to a pleading which is vague and embarrassing or which
lacks averments which
are necessary to sustain a cause of action or
defence.
2.
In practice, the
excipient must first give notice to the other party to remove the
cause of complaint within specified number of
days failing which the
exception will be delivered. In this case, the plaintiff reacted to
the notice of exception by attempting
to remove the causes of
complaint and in terms of Rule 28(1) of the Uniform Rules of Court
delivered notice of intention to amend
furnishing the particulars of
the amendment. It appears there was no objection to the amendment in
terms of Rule 28(3) which permits
a party objecting to the proposed
amendment to a notice of objection stating the grounds upon which the
objection is founded. Since
no objection was filed, the plaintiff
acting in terms of Rule 28(2) effected the amendment by delivering
amended pages.
3.
On 14 November 2019,
the defendant delivered a further notice of exception in terms of
Rule 23 raising certain causes of complaint
to the duly amended pages
(amended particulars of claim). In response to the notice of
exception delivered on 14 November 2019,
the plaintiff again acting
in terms of Rule 28(1) of the Uniform Rules, delivered notice of
intention to amend its particulars
of claim (amended particulars of
claim) on 12 December 2019. On 18 December 2019, the defendant,
acting in terms of Rule 28(3)
delivered a notice of objection to the
proposed amendment.
4.
As it is required by
Rule 28(4), which provides that if an objection which complies with
sub-rule (3) is delivered within the period
referred to in sub-rule
(2), the party wishing to amend may, within 10 days, lodge an
application for leave to amend. The plaintiff
lodged an application
for leave to amend which was subsequently argued before me.
5.
I considered the
particulars of claim in their original form, the first amended pages,
and the proposed second amendment which is
the subject of the
objection. I also considered the applicant’s heads of argument
and the applicant’s revised heads
of argument, as well as the
respondent’s heads of argument and authorities relied by both
parties.
6.
Before I deal with the
legal principles that underpin amendments generally, I set out
briefly what the plaintiff’s particulars
of claim in their
amended form state before the proposed amendment was formulated. The
plaintiff is a private company duly registered
in accordance with the
laws of the Republic of South Africa and the defendant is a
registered bank also incorporated in accordance
with the laws of the
Republic of South Africa. On 20 February 2015 the plaintiff and the
defendant entered into a written ABSA
Bank floor plan facility. In
paragraph 4 of the particulars of claim, it is pleaded as follows:
“
(4)
The expressed alternatively implied or tacit terms of POC1 provided
inter alia as follows:
(a)
the floor plan
facility was for the sum of R16 million in respect of used motor
vehicles;
(b)
the interest
rate applicable to the facility was the defendant’s prime rate
from time to time;
(c)
the facility was
renewable annually;
(d)
the payment
frequency was 180 days on used vehicles or on the sale of vehicles;
(e)
the review date
was 29 February 2016;
(f)
the plaintiff
was required to provide the defendant with security to its
satisfaction which security would include tangible security
in the
sum of R1 600 000.00. The nature of this security was to be
discussed between the plaintiff and the defendant;
(g)
the defendant
was entitled to conduct 2 floor plan inspections per month;
(h)
vehicle sold on
the floor plan facility had to be settled by the plaintiff within 48
hours;
(i)
all vehicles had
to be comprehensively insured. The plaintiff was required to supply
the insurance company name being Mutual and
Federal and policy number
18239250.
(j)
the conditions
in the facility letter could change at the discretion of the
defendant;
(k)
all vehicles
placed on the floor plan were to be dealer stocked in the defendant’s
name as titleholder and the plaintiff as
owner;
(l)
on the termination
of the floor plan facility the defendant would pay to the plaintiff
any monitory amount held by the defendant
to the credit of the
plaintiff as security for the floor plan facility.”
7.
In paragraph 8 of the
particulars of claim, the plaintiff has pleaded as follows: “
on
24 August 2015, and at Johannesburg, the defendant represented by E V
Mania and Bronson Colan, in writing offered Fire Wings
Property (Pty)
Ltd (“Fire Wings”) a commercial mortgage backed facility
in respect of banking facilities in the sum
of R6 600 000.00
(“the fire wing facility”)”
.
It is pleaded in paragraph 10 that the express terms of the
commercial mortgage backed facility, which has been attached as POC2,
provided that the defendant would implement the fire wings facility
on the signature by Fire Wings of the relevant documents.
8.
In paragraph 11, the
plaintiff pleads another agreement, in this instance a written
commercial loan agreement concluded on 21 April
2016 between the
defendant and Fire Wings.
9.
The terms of the
agreement aforesaid are pleaded in paragraph 13 of the particulars of
claim as follows:
“
The
expressed alternatively implied or tacit terms of annexure “PO3”
provided inter alia as follows:
13.1
the Fire Wings facility would be for an amount of R6 600 000.00
which was made up of a maximum
aggregate amount of R5 million plus a
retention amount of R1 600 000.00;
13.2
the amount of R1 600 000.00 forming part of the total
R6 600 000.00 Fire Wings facility
(which was to be secured
by the aforementioned security board) was not capable of being drawn
on by Fire Wings and was to remain
a retention (as available as
security) for the amounts due by the plaintiff to the defendant under
its floor plan facility; (Clause
10.2.1)
13.3
the plaintiff was to open a transactional account with the defendant
within three months from the date of
the acceptance of the Fire Wings
facility, failing which the interest rate would increase by a further
200 basis points. (clause
10.2.7)”
10.
It is pleaded further
in paragraph 14 that pursuant to the conclusion of the loan agreement
the defendant caused a mortgage bond
to be registered over the
property. In paragraph 15, the plaintiff pleaded further that on 27
October 2016 the defendant in writing
offered the plaintiff a new
ABSA Bank floor plan facility. The terms are set out in paragraph 16
as follows:
“
(16)
The express alternatively implied terms of the floor plan facility
offered to the plaintiff provided inter
alia as follows:
16.1
the mount of the floor plan facility was R16 million for used motor
vehicles;
16.2
the review date of the facility was 9 August 2017;
16.3
annexure POC5 recorded that the defendant held security in the form
of a reservation of R1 600 000.00
of a registered bond of
R9 million over the property.”
11.
It is pleaded in
paragraph 17 that the plaintiff accepted the new floor plan facility
on 20 December 2016. The plaintiff made use
of the floor plan
facility and annexure POC5 is attached as evidencing the floor plan
facility. It is pleaded in paragraph 19 that
the express terms of
POC5 provided that the reservation of R1 600 00.00 in respect of
the mortgage bond registered over the
property would constitute
security in respect of the ABSA floor plan facility that would become
reviewable on 9 August 2017.
12.
In paragraph 20, the
plaintiff pleaded that:
“
(20)
At the time of approval of the ABSA floor plan facility evidenced by
annexure POC5:
20.1
the plaintiff held the sum of R1 600 000.00 in a bank
account in the plaintiff’s name in
the circumstances referred
to in paragraph 6 supra;
20.2
the defendant had granted Fire Wings a loan facility duly secured by
a mortgage bond over the property in
the sum of R6 600 000.00;
20.3
the terms of the loan facility provided that Fire Wings would only be
allowed to draw down on the facility
in the sum of R5 million and
that the balance of R1 600 000.00 was to be retained as
security for the plaintiff’s
floor plan facility granted to it
by the defendant from time to time;
20.4
the mortgage bond was registered over the property on 12 February
2016 of which an amount of R1 600 000.00
was retained
(reserved) by the defendant as security for the amount owed by the
plaintiff to the defendant under the floor plan
facility conducted by
it with the defendant.
20.5
the ABSA Bank floor plan facility was reviewable by the defendant on
9 August 2017.”
13.
It is pleaded in
paragraph 21 that the ABSA floor plan facility as evidenced by POC5
included the following terms:
“
21.1
That the R1 600 000.00 held by the defendant in the
plaintiff's name in the circumstances referred to
in paragraph 6
supra will be paid by the defendant to the plaintiff on termination
or cancellation of the ABSA floor plan facility
for whatever reason.”
14.
It is averred further
that plaintiff continued to use the ABSA floor plan facility until 2
January 2019 on which the plaintiff by
way of email notified the
defendant that the plaintiff was cancelling the facility and the
plaintiff’s access to the facility
was forthwith terminated by
the defendant. The plaintiff does not owe any money on the ABSA floor
plan facility and it is pleaded
that despite the termination of the
ABSA floor plan facility the defendant has failed to repay the
plaintiff the sum of R1.6 million
that it holds as security for the
ABSA floor plan facility that was previously conducted by the
plaintiff. The plaintiff seeks
a declaratory order that the defendant
holds the sum of R1 600 000.00 in the name of and to the
credit of the plaintiff,
payment by the defendant to the plaintiff of
the sum of R1 600 000.00 with interest a tempore mora at
the rate of 10%
per annum until date of final payment and costs.
15.
What is before me for
consideration is the objection to the proposed amendment that I have
referred to above. For easy reference
for me, the amended particulars
of claim for which leave of the Court is sought have been submitted
and the portions that sort
to be amended have been underlined for the
Court’s convenience. This indeed has made it easy for the Court
to follow and
to identify with ease those portions which are sought
to be introduced as amendments or further amendments to the
particulars of
claim in order to deal with the objections raised by
the defendant. I will not reproduce the underlined portions in the
proposed
amendment but I would rather deal with them in the context
of the objection filed by the defendant.
16.
In its notice of
objection dated 18 December 2019, two objections have been raised by
the defendant. The first objection essentially
is to the effect that
the plaintiff seeks to introduce Fire Wings on the basis that it
provided security in favour of the plaintiff
for the latter’s
indebtedness owed to defendant. It is stated that nowhere in the
proposed amendment does the plaintiff plead
the basis upon which the
security in the Fire Wings facility could and would be used as
security and or an investment in favour
of the plaintiff. Instead,
and in the proposed amendments to paragraphs 13 and 14 of the
particulars, the plaintiff has pleaded
the registration of a mortgage
bond over a property owned by Fire Wings 21 (Pty) Ltd. It is
contended that that renders the particulars
of claim in the proposed
amendment vague and embarrassing. The plaintiff has attached annexure
“X” to his proposed
amendment which the defendant
contends that presumably it is a cession agreement between itself and
Automaniac CC, whereby the
latter allegedly ceded all rights, title
and interest in the sum of R1 600 000.00 which was
allegedly invested by the
latter with the defendant (the cession).
Despite pleading the cession in the notice of amendment at paragraph
5(B) to 5(D), the
plaintiff fails to rely on it for return of the
R1 600 000.00 but instead relies upon annexures POC3 and
POC5 which documents
demonstrate that the R1 600 000.00 was
not a deposit but rather a portion of unutilised credit advanced. The
defendant
avers that there are contradictions between the current
reliance upon cession and the retention sum and that this will render
the
particulars of claimant expiable and therefore objectionable.
17.
The second objection is
that the plaintiff’s cause of action pleaded in the notice of
intention to amend (proposed amendment)
lacks the averments necessary
to sustain a cause of action. The reasons advanced are that, in order
to support the contention that
the sum of R1 600 000.00
shall be returned to the plaintiff, the plaintiff relies upon the
cession; the Fire Wings facility;
the October 2016 facility. The
defendant states that the plaintiff pleads at paragraph 21.1 that the
sum of R1 600 000.00
would be returned on termination of
the October 2016 floor plan facility thereby implying that it
constitutes a deposit or investment
made. The defendant states that
the documentation relied upon by the plaintiff in the notice of
amendment expressly provides that
the R1 600 000.00 was a
retention amount that formed part of the R6.6 million credit advanced
to Fire Wings. It is alleged
that nowhere in the Fire Wings facility
agreement, nor in the mortgage bond registered in favour of the
defendant as security by
Fire Wings to the defendant, is it extant
that Automaniac, Fire Wings and or the plaintiff would become
entitled to the sum of
R1 600 000.00 upon expiration of
their respective contractual relationships with the defendant nor is
any plausible event
pleaded that could be interpreted as a trigger to
such entitlement.
18.
It is stated that on
the contrary, it appears that R1 600 000.00 was part and
parcel of the R6.6 million drawdown facility
that was available to
Fire Wings and that the latter was only permitted to draw down to a
maximum some of R5 million so as to ensure
that the full facility sum
was not utilised. The defendant states that there is a disconnect
between that which has been pleaded
by the plaintiff and the
prescribed terms of the document relied upon is indicative of the
lack of the cause of action contended
for. And the defendant
submission is that permitting the proposed amendment would therefore
render the particulars of claim excipiable
for want of any averments
necessary to sustain a cause of action against the defendant and that
the objection should be upheld.
19.
In their
respective heads of argument, counsel of both parties are not at odds
with authorities that underpin the principles applicable
to amendment
of the pleadings. The principles underpinning amendment of pleadings
in terms of Rule 28 are set out in the plethora
of case law. In
essence, a party to action is permitted to amend its pleadings at any
stage before judgment. This is however not
a blanket right given to a
litigant. The consideration as to whether an amendment should be
granted when it is objected to is one
of prejudice that cannot be
cured by an order of costs, or that the proposed amendment would
render the pleading excipiable for
want of cause of action or render
it vague and embarrassing. Primarily the question is whether the
other party would be prejudiced
at the trial by the amendment or the
amendment would make it impossible for the other party to plead for
the vagueness or lack
of coherence and lucidity of the pleading.
20.
In
Trope
vs South African Reserve Bank
[1993] ZASCA 54
;
1993 (3) SA 264
(A) at 272 (A)
,
the trite principles for amendment of pleadings was set out. In
essence, pleadings must be drafted in a lucid, logical and
intelligible
manner. The cause of action shall appear clearly from
the factual allegations made. The plaintiff has dealt with the two
objections
raised by the defendant in its heads of argument. The
plaintiff has correctly set out the law and reference to
Moolman
vs Estate Moolman
1927 CPD 27
,
and
Trans
Drakensberg Bank Ltd vs Combined Engineering (Pty) Ltd
1967 (3) SA
632
(D)
. I agree
with the principles underlined in the judgments and as correctly
postulated by the plaintiff in the heads of argument.
However, it is
not only
mala fide
that determines whether an amendment should not be allowed, but
prejudice to the other party is a relevant consideration. The
prejudice must be manifest and not capable of being cured by an
adverse costs order.
21.
It is correct
that an amendment will be allowed if it raises a triable issue. An
amendment will also be allowed if it would provide
a full ventilation
of the issues that are sought to be ventilated before the Court. An
amendment which would render the pleading
excipiable, to be vague and
embarrassing or to lack cause of action is prejudicial to the other
party.
22.
The plaintiff’s
submission is that the first objection should not be sustained
because the pleading of the Fire Wings transaction
forms part of a
chronological narrative. With regard to the cession by Automaniac CC
to the plaintiff of Automaniac CC’s
R1.6 million investment the
plaintiff submits that the defendant's complaint fails to recognise
certain fundamental principles
of law and that it ignored the facts
expressly pleaded in paragraph 6.
23.
In respect of the
second objection, the plaintiff submits that objection is unclear.
That the objection is premised on an interpretation
of the
plaintiff’s cause of action which is incorrect. The Court
considering whether an amendment should be allowed is in
the same
position as a Court that considers an exception to a pleading. The
Court should not take into account extraneous factors.
The Court
should read the pleading particularly where the only pleading filed
is the particulars of claim, as if the averments
in the particulars
of claim are true. Inherent contradictions in a pleading render the
pleading vague and embarrassing, and in
certain instances not to have
a cause of action.
24.
The defendant’s
objection is that the proposed amendment would render the pleading
excipiable. With regard to the introduction
of Fire Wings facility,
the plaintiff has first pleaded that it concluded a floor plan
facility in 2015 with the defendant and
that in terms of such
facility, tangible security in the sum of R1.6 million was required.
The plaintiff refers to Automaniac CC
which retained an investment
with the defendant which was ceded to the plaintiff for purpose of
complying with the security provision
in the 2015 floor plan
agreement.
25.
In paragraphs 8 to 14
the plaintiff pleaded that the agreement was concluded with a
different entity namely Fire Wings and that
it was in terms of this
latter facility with an unknown third party (Fire Wings who is
discreet from the plaintiff) that an amount
of R1.6 million was
retained as security for the purposes of the 2015 floor plan
facility. The defendant submits that these allegations
are mutually
destructive because on the one hand, it was pleaded that the security
for the 2015 floor plan facility was secured
through the cession
proffered by Automaniac CC and on the other hand it is pleaded that
it was the Fire Wings facility that begets
the security of R1.6
million
visa vis
the prescribed requirement in terms of the 2015 floor plan facility.
26.
The defendant
submits that there is no link pleaded between the plaintiff and the
Fire Wings facility at all. The defendant’s
submission is that
the link was necessary for a logical and lucid flow of allegations in
order for the applicant to transit from
the security ceded by
Automaniac to Fire Wings. The defendant submits that this lack of
coherence and flow, renders the pleading
contradictory.
27.
With regard to lack of
the trigger event, the submission of the defendant is that although
the applicant pleads that the October
2016 agreement replaced the
February 2015 floor plan facility the basis for entitlement of the
R1.6 million security does not flow
from the prescribed terms and
conditions contained in annexure POC5.
28.
With regard to the
disconnect between the terms and conditions and the particulars of
claim, the submission of the defendant is
that the plaintiff does not
have a cause of action to the return of the alleged sum claimed
because although it has been inexplicably
pleaded that the terms
reference the retention of an investment, no such provision is
actually contained in annexure POC5.
29.
In consideration of the
issues raised, and the contentions advanced by the plaintiff and the
defendant respectively, the Court should
not take over technical
approach and refuse an amendment in circumstances where to refuse an
amendment will cause intolerable injustice
to the party seeking an
amendment. In
Trans
Drakensburg Bank Ltd vs Combined Engineering (Pty) Ltd
the Court recognised the right of the party to change or add to his
or her case in a pleading but emphasised that he or she must
explain
the reason and show
prima
facie
that he or
she has something deserving of consideration, a triable issue,
otherwise he or she cannot be allowed to harass his or
her opponent
by an amendment which has no foundation.
30.
I have considered the
plaintiff’s particulars of claim, the amended pages, and the
proposed amendment, and applied the legal
principles that underpin
amendments. Even on a generous reading of the proposed amendment, I
had difficulty in following what the
cause of action is and its
formulation. The proposed amendment is confusing, it is difficult to
understand the cause of action,
and the proposed amendment is not
drafted in a lucid, coherent and logical manner nor does it properly
identifies the cause of
action triable by Court.
31.
I am of the view that
if this amendment were to be allowed, it would prejudice the
defendant and as such the defendant would not
be able to plead
thereto. I am satisfied that the two objections raised by the
defendant to the proposed amendment should be sustained.
32.
I agree with the
defendant that the proposed amendment should not be allowed as
allowing it will render the pleading excipiable.
33.
As to costs, the party
that seeks to amend seeks an indulgence. Ordinarily such party shall
bear the costs. In this case, an objection
has been raised to the
proposed amendment. I have found the objection to be a valid
objection. The Plaintiff was accordingly required
in terms of Rule
28(4) to approach Court for leave to amend. The defendant was not
unreasonable in opposing the proposed amendment,
and it has been
substantially successful in doing so. I find no reason why costs
should not follow the result.
34.
Accordingly, I make the
following order:
34.1
The application for an
amendment is dismissed with costs.
MMP
Mdalana-Mayisela
Judge
of the High Court
Gauteng
Local Division
(
Digitally
submitted by uploading on Caselines and emailing to the parties)
Date
of delivery: 21 May 2021
Appearances:
On
behalf of the Plaintiff: Adv W Pye
Instructed
by: Farah & Parker Attorneys
On
behalf of the Defendant: Adv N Alli
Instructed
by: Jay Mothibi Inc