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[2013] ZASCA 24
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Picbel Groep Voorsorgfonds v Somerville; Sable Industries Pension Fund v Nash and Others; Mitchell Cotts Pension Fund and Another v Nedbank Ltd and Another; Datakor Pension Fund and Others v Wynne-Jones & Company Employee Benefits Consultant (Pty) Ltd and Others (405/12) [2013] ZASCA 24; [2013] 2 All SA 692 (SCA); 2013 (5) SA 496 (SCA) (22 March 2013)
Links to summary
THE SUPREME COURT OF
APPEAL OF SOUTH AFRICA
JUDGMENT
Reportable
Case no: 405/12
In
the matter between:
PICBEL
GROEP VOORSORGFONDS (In liquidation)
...........................................
Appellant
and
WILLIAM
VASS GRAHAM SOMERVILLE & THREE
RELATED
MATTERS and CROSS APPEAL
......................................................
Respondent
And
in the matter between:
SABLE
INDUSTRIES PENSION FUND (Under curatorship)
.................................
Appellant
and
SIMON
JOHN NASH
...................................................................................
First
Respondent
MIDMACOR
INDUSTRIES LIMITED
......................................................
Second
Respondent
AUBREY
WYNNE-JONES
.........................................................................
Third
Respondent
WYNNE-JONES
& COMPANY EMPLOYEE
BENEFITS
CONSULTANTS (PTY) LTD
.................................................
Fourth
Respondent
NEDBANK
LIMITED
....................................................................................
Fifth
Respondent
WILLIAM
VASS GRAHAM SOMERVILLE
................................................
Sixth
Respondent
And
in the matter between:
MITCHELL
COTTS PENSION FUND (In liquidation)
....................................
First
Appellant
LUCAS
SOUTH AFRICA PENSION FUND (In liquidation)
......................
Second
Appellant
and
NEDBANK
LIMITED
.
...................................................................................
First
Respondent
WILLIAM
VASS GRAHAM SOMERVILLE
.
...........................................
Second
Respondent
And
in the matter between:
DATAKOR
PENSION FUND (Under curatorship)
.........................................
First
Appellant
DATAKOR
RETIREMENT FUND (Under curatorship)
.............................
Second
Appellant
CORTECH
PENSION FUND (Under curatorship)
........................................
Third Appellant
and
WYNNE-JONES
& COMPANY EMPLOYEE
BENEFITS
CONSULTANTS (PTY) LTD
.....................................................
First
Respondent
AUBREY
WYNNE-JONES
.....................................................................
Second
Respondent
JOHANNES
ROETS
...................................................................................
Third
Respondent
MICHAEL
MCEVOY
.................................................................................
Fourth
Respondent
DERRICK
JOHN PETTITT
..........................................................................
Fifth
Respondent
WILLIAM
VASS GRAHAM SOMERVILLE
.................................................
Sixth
Respondent
Neutral
citation:
Picbel Groep Voorsorgfonds v Somerville
(405/12)
[2013] ZASCA 24
(22 March 2013)
Bench:
PONNAN, CACHALIA and PETSE JJA, PLASKET and MBHA AJJA
Heard: 18 FEBRUARY
2013
Delivered: 22 MARCH
2013
Summary:
Apportionment of Damages Act 34 of 1956 – s 2(2)
(b)
read with s 2(12) – proceedings on exception – whether
upon every interpretation which the particulars of claim and
annexures can reasonably bear no cause of action disclosed.
__________________________________________________________________
ORDER
___________________________________________________________________
On appeal from
:
South Gauteng High Court (Pretoria) (Sutherland J sitting as court of
first instance):
(a) The appeal is
dismissed with costs, including the costs of two counsel.
(b) In SGHC case number
16215/2011(
Mitchell Cotts Pension Fund (in liquidation) &
another v Nedbank Limited & another
), Nedbank Limited is
ordered to pay the costs, including the costs of two counsel, of
Mitchell Cotts Pension Fund (in liquidation)
and of Lucas South
Africa Pension Fund (in liquidation) in respect of Nedbank’s
withdrawn cross-appeal.
___________________________________________________________________
JUDGMENT
___________________________________________________________________
PONNAN JA (PETSE JA
concurring):
[1] The appellants are
all pension funds
1
(the Funds), who suffered
losses totalling some R946 million resulting from the wrongful
removal of surplus assets from each fund
through a scheme known as
the Ghavalas Option, details of which are not material to the present
appeal. It resulted in the Funds
being placed under curatorship or
winding-up. Part of those losses formed the subject matter of
delictual (Aquilian) damages claims
by the Funds (duly represented by
their curators or liquidators as the case may be) instituted against
Alexander Forbes Financial
Services (Pty) Ltd (Alexander Forbes), as
one of several wrongdoers in respect of the harm suffered.
[2] Alexander Forbes gave
notice of the action to the various respondents
2
in terms of s 2(2)
(b)
of the Apportionment of
Damages Act 34 of 1956 (the Act). Section 2(2)
(b)
provides:
'Notice of any action may at any time
before the close of pleadings in that
action be given by any joint wrongdoer who is sued in that action, to
any joint wrongdoer
who is not sued in that action, and such joint
wrongdoer may thereupon intervene as a defendant in that action.'
None of the respondents
intervened in the action.
[3] The damages claims
were settled by Alexander Forbes. The settlement agreement to the
extent here relevant read:
'4. The company [Alexander Forbes]
shall:
4.1 without admission of liability pay
to AL Mostert & Company, the attorneys for the Funds, the sum of
R325 million, plus interest
at prime rate from 21 January 2010 ("the
payment");
and
4.2 cede to Mostert on behalf of the
Funds the claims against all third parties to whom the company has
given notice in terms of
section 2(2)
(b)
of the Apportionment
of Damages Act, arising in terms of the Act as a result of this
settlement or howsoever arising.
. . .
6. The Funds record that the payment
does not reflect the full loss sustained by the Funds resulting from
the Ghavalas option. Consequently
one or more of the Funds are
pursuing other remedies, including the return of assets or their
proceeds. The payment serves to discharge
only that portion of the
loss for which the Funds regard the company liable.
7. The payment, determination and
allocation as aforesaid shall operate in full and final settlement of
the company's share of the
amounts claimed in the action and the
Funds shall thereupon have no further claims against the company and
related entities, and
shall discharge the company and related
entities from all present and future liability to each of the Funds
inclusive of all legal
costs and costs orders.
8. Mostert shall make such
determinations as may be required on behalf of each of the Funds as
to the allocation of the payment
at any time but by no later than 30
days of final judgment or settlement of all claims of any of the
Funds arising from the Ghavalas
option.
9. Upon conclusion of this agreement,
9.1 Mostert shall sign and formally
serve on the company's legal representatives a notice of withdrawal
of the action instituted
by the Funds . . . Mostert shall
simultaneously deliver the served notice to the company;
9.2 Upon signature hereof the company
shall sign and formally serve on Mostert notices of withdrawal of
its:
9.2.1 opposition to the urgent
application and its counter-application in Case No 08/20841;
9.2.2 opposition to the review
applications launched under Case Nos 09/35014, 09/35015, 09/35016,
09/35017, 09/35018, 09/35019 and
09/35020;
9.2.3 application for leave to appeal
against the dismissal of the application for leave to join third
parties; and
9.2.4 The claim lodged against Picardi
Holdings Limited (in liquidation).
9.3 The company shall simultaneously
deliver the served notices to Mostert.
9.4 Upon payment by the company,
Mostert and the company shall become entitled and be obliged to
formally file the notices referred
to above with the office the
Registrar of the South Gauteng High Court.
ASSISTANCE
10. The company undertakes to provide
all reasonable assistance to the Funds for the purpose of enforcing
the claims ceded by the
company to the Funds and the claims referred
to in clause 6 above.'
[4] The Funds thereafter
instituted action in the South Gauteng High Court against the
respondents. The particulars of claim alleged:
'4. The plaintiff seek enforcement of
the ceded rights of contribution in terms of section 2(2)
(b)
read with 2(12) of the Apportionment of Damages Act 34 of 1956 ("the
Apportionment Act") against the defendant jointly
or severally,
the one paying the other to be absolved, for payment of the entire
amount of damages paid to the plaintiffs,
alternatively
such
lesser amount to be determined by the court.
. . .
6. In March 2008 under case number
08/7872 of this Court an action ("the action") was
instituted by the plaintiffs and
five others ("the plaintiff
funds") against [Alexander Forbes] . . . .
7. A copy of the particulars of claim
in the action is attached marked
"POC 1"
and the
contents thereof incorporated herein by reference.
8. In the action the plaintiff claimed
an amount in damages from Alexander Forbes of . . . .
9. Pursuant to the action being
instituted, Alexander Forbes gave notice to the defendant in
accordance with the provisions of section
2(2)
(b)
of the
Apportionment Act 34 of 1956 as joint wrongdoers not having been sued
in the action.
10. A copy of the notice is attached
hereto marked
"POC 2"
and its contents are
incorporated herein by reference.
11. On 22 April 2010 the plaintiffs
and Alexander Forbes entered into a written agreement of settlement
pursuant to which the claims
of each of the plaintiffs in the action
were settled.
12. A copy of the settlement agreement
is attached hereto marked
"POC 3"
("the
settlement").
13. In accordance with clause 4.1 of
the settlement, Alexander Forbes ceded to the plaintiffs, its rights
to contribution against
all third parties to whom it gave notice in
terms of section 2(2)
(b)
of the Apportionment Act arising in
terms of the Apportionment Act as a result of the settlement.
14. In settlement of the plaintiff's
claim Alexander Forbes paid to the plaintiff an amount of ….
Accordingly, pursuant to section 2(12)
read with section 2(6)
(a)
of the Apportionment [Act] the
plaintiff
qua
cessionary of Alexander Forbes' rights to
contribution as aforesaid, is entitled to claim and recover from the
defendant such a
contribution in respect of his responsibility for
the amounts referred to in paragraph 14 as the court may deem just
and equitable.'
[5] The summons was met
with various exceptions, one of which – the only one relevant
for present purposes - was expressed
thus:
‘
(a) the
right in terms of section 2(12) of the Act to recover a contribution
in terms of section 2(6) from any other joint wrongdoer,
is only
afforded to a joint wrongdoer who "
agrees
to pay the plaintiff a sum of money
in
full settlement
of
the plaintiff's claim
";
(b)
ex facie
clause 6 of the
settlement agreement the payment by Alexander Forbes effected in
terms thereof was not in full settlement of the
claims of the
plaintiffs in the Alexander Forbes action, and accordingly neither
section 2(12) nor section 2(6)
(a)
of the Act finds
application, the effect whereof is that Alexander Forbes did not
become entitled to recover a contribution from
[any of the other
alleged joint wrongdoers], and no such right therefor was capable of
being ceded by Alexander Forbes to [the
Funds].'
[6] That exception was
upheld by Sutherland J, who thereafter granted leave to the Funds to
appeal to this court against that order.
The learned Judge, moreover,
granted conditional leave to one of the respondents, Nedbank Limited
(Nedbank), to cross-appeal the
dismissal of two further exceptions
presented and argued by it. By notice dated 22 January 2013 Nedbank
withdrew its cross-appeal
on the basis that the dismissal of those
exceptions was not appealable. In that it was undoubtedly correct
(
Maize
Board v Tiger Oats Ltd & others
2002
(5) SA 365
(SCA)). The notice of withdrawal made no provision for
costs. Before us counsel for Nedbank conceded that it is indeed
liable to
pay such costs (including those of two counsel) as may be
found to have been incurred by the appellant in respect of the
cross-appeal.
[7] 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
&
another
[1992] ZASCA 174
;
1992 (4) SA 811
(A) at 817F-G).
[8]
The Act, when it came
into force, was described as 'the most important piece of law reform
that has been carried out in the field
of Private Law since Union'.
3
For, 'with one clean
surgical cut, [it] excised the rule of the last opportunity (in the
strict sense) from the law'.
4
But, while it may have
set at rest some of the uncertainties that vexed the common law and
'while the passing into Law of the principles
contained in it must be
applauded there is no doubt that many a problem lies hidden in the
folds of its tortuous syntax'.
5
[9] Chapter 2 of the Act
has been described as 'complex and textually involved'.
6
Sections 2(12) and 2(13),
which lie at the heart of the present appeal, read:
'(12) If any joint wrongdoer agrees to
pay to the plaintiff a sum of money in full settlement of the
plaintiff's claim, the provisions
of subsection (6) shall apply
mutatis mutandis
as if judgment had been given by a
competent court against such joint wrongdoer for that sum of money,
or, if the court is satisfied
that the full amount of the damage
actually suffered by the plaintiff is less than that sum of money,
for such sum of money as
the court determines to be equal to the full
amount of the damage actually suffered by the plaintiff, and in the
application of
the provisions of paragraph
(b)
of the said subsection (6), any
reference therein to the date of the judgment shall be construed as a
reference to the date of the
agreement.
(13) Whenever judgment is in any
action given against any joint wrongdoer for the full amount of the
damage suffered by the plaintiff,
or whenever any joint wrongdoer has
agreed to pay to the plaintiff a sum of money in full settlement of
the plaintiff's claim,
and the judgment debt or the said sum of money
has been paid in full, every other joint wrongdoer shall thereby also
be discharged
from any further liability towards the plaintiff.'
And subsection 6 reads:
'
(a)
If judgment is in any action given
against any joint wrongdoer for the full amount of the damage
suffered by the plaintiff, the
said joint wrongdoer may, if the
judgment debt has been paid in full, subject to the provisions of
paragraph
(b)
of
subsection (4), recover from any other joint wrongdoer a contribution
in respect of his responsibility for such damage of such
an amount as
the court may deem just and equitable having regard to the degree in
which that other joint wrongdoer was at fault
in relation to the
damage suffered by the plaintiff, and to the damages awarded:
Provided further that if the court, in determining
the full amount of
the damage suffered by the plaintiff referred to in subsection (1B),
deducts from the estimated value of the
support of which the
plaintiff has been deprived by reason of the death of any person, the
value of any benefit which the plaintiff
has acquired from the estate
of such deceased person no contribution which the said joint
wrongdoer may so recover from the estate
of the said deceased person
shall deprive the plaintiff of the said benefit or any portion
thereof.
(b)
The period of extinctive
prescription in respect of a claim for a contribution shall be twelve
months, calculated from the date
of the judgment in respect of which
a contribution is claimed or, where an appeal is made against such
judgment, the date of the
final judgment on appeal: Provided that if,
in the case of any joint wrongdoer, the period of extinctive
prescription in relation
to any action which may be instituted
against him by the plaintiff, is governed by a law which prescribes a
period of less than
twelve months as the period within which legal
proceedings shall be instituted against him or within which notice
shall be given
that proceedings will be instituted against him, the
provisions of such law shall apply
mutatis mutandis
in
relation to any action for a contribution by a joint wrongdoer, the
period or periods concerned being calculated from the date
of the
judgment as aforesaid instead of from the date of the original cause
of action.
(c)
Any joint wrongdoer from
whom a contribution is claimed may raise against the joint wrongdoer
who claims the contribution any defence
which the latter could have
raised against the plaintiff.'
[10] The high court
concluded:
‘
the
settlement to the victims by Alexander Forbes was not such that it
extinguished the liability of the joint wrongdoers and effected
only
a settlement of the liability of Alexander Forbes itself.'
In arriving at that
conclusion, it reasoned:
'[19] The cessionary's particulars
squarely allege a cause of action that can exist only as between
joint wrongdoers as defined
by the ADA [the Act]. This cause of
action does not exist at common law; it is a creature exclusively of
the ADA. The recovery
of such contributions can occur if the
conditions set out in s 2(13) are met,
ie
the discharge of any
liability of the joint wrongdoers to the victims. Section 2(13)
requires two conditions to discharge the joint
wrongdoers from any
liability to pay damages to the victims. Insofar as this case is
concerned, first there must be
"an agreement to pay a sum of
money in full settlement of the [victims'] claim"
; secondly,
that
"sum of money has been paid in full"
to the
victim.
[20] Both of these conditions are
necessary elements of the cause of action that has to be pleaded by
the cessionary. However, no
such averments appear expressly in the
particulars. Instead, the cessionary asserts simply that it sues
under the provisions of
s 2(12) and annexes the settlement agreement.
The particulars allege that the cessionary is entitled to a
contribution from each
of the defendants because it, the cessionary,
has, in an agreement, settled with the victims and is entitled to a
contribution
towards that settlement from each of the defendants.'
The high court then
asked:
'[21] If the allegations need to be
made because they are absent from the particulars, they must appear
from the annexed agreement.
Do they?'
In endeavouring to answer
that question it then scoured the annexures to the Funds' particulars
of claim. It held that s 2(13) applies;
that it stipulates the
allegations that have to be set out; and, that the Funds’
claims had to fail because they did not
do so. In so doing the high
court lost from sight that reliance on s 2(12) of the Act was
expressly pleaded and not simply asserted.
And that was therefore
sufficient to invoke the
ex lege
effect
of its provisions.
[11] Prior to the coming
into operation of the Act, the law made no provision for joint
liability of wrongdoers. The Act, as a whole,
must be interpreted in
that light, namely, to facilitate the recovery by victims of wrongful
acts of compensation from any or some
or all of their wrongdoers, as
also, to facilitate the adjustment of liability
inter
se
the wrongdoers. It needs to be emphasised
that the wrongdoer's claim is not that of the victim – it is
not Aquilian, nor derived
by extension from the Lex Aquilia, but a
new statutory claim created by the Act inhering in the wrongdoer who
pays the plaintiff's
claim (whether by judgment or settlement). Thus
nothing prevents the victim taking cession of that wrongdoer's right
of recourse.
Indeed, such a course entirely advances the purposes of
the Act. Here the Funds' claims, acquired by cession, are based on
Alexander
Forbes' right to recover a contribution in terms of s 2(12)
read with s 2(6)
(a)
of
the Act. They are not based on any cause of action arising in their
own right against the respondents. Although the Funds could
at the
outset have sued Alexander Forbes and all of the respondents in
delict in the same action (s 2(1)), they chose to proceed
against
only one wrongdoer. Having made that choice it was nonetheless still
open to them, at any time prior to the close of pleadings,
to give
notice to the respondents of that action (s 2(a)). Once again they
chose not to. It was Alexander Forbes - their adversary
in that
litigation - who, as it was entitled to (s 2(2)(b)), gave notice of
that action to the other wrongdoers (the present respondents).
And,
what is more, thereafter agreed to pay to the Funds a sum of money in
settlement of their claim.
[12] Section 2(12) deals
with the right of one joint wrongdoer, X, to recover a contribution
from another joint wrongdoer, Y, where
X agrees to pay the plaintiff
a sum of money in full settlement of the plaintiff's claim. Section
2(12) provides that where this
occurs, section 2(6) then applies
mutatis
mutandis
as
if judgment had been given by a competent court against X for that
sum of money. In terms of s 2(6)(a), X can recover a contribution
from Y where: (a) judgment has been granted against X for the full
amount of the damage suffered by the plaintiff; (b) X has paid
the
judgment debt in full; and, notice has been given to Y by the
plaintiff in terms of section 2(2)(a) or by X in terms of section
2(2)(b). It seems to me that what is envisaged by the legislature is
finality, whether pursuant to judgment or a settlement of
the
‘action’. And action self-evidently refers to the action
in respect of which notice has been given to the wrongdoer
in terms
of s 2(2). Thus notwithstanding the use of the words ‘judgment
for the full amount of the damage suffered by the
plaintiff’ in
s 2(6)(a), a judgment for a lesser amount than that claimed in the
summons by the plaintiff, would obviously
suffice to trigger the
right to recover. So too with a settlement – a settlement for a
lesser amount than that claimed, provided
it brings finality to that
action should also suffice to trigger the right to recover. And so it
seems to me that the question
to be posed in an enquiry such as this
should be: ‘Has the judgment or settlement, as the case may be,
brought finality to
that action?’ If the answer that that
question yields is an affirmative one, then, in my view, that
triggers the right of
recovery.
[13] Of s 2(12),
Professor McKerron writes:
'This is a most useful provision. It
enables a joint wrongdoer who does not dispute his liability to
settle the plaintiff's claim,
and then claim contribution from the
other or other joint wrongdoers. It is to be noted that the effect of
the reference to subsection
(6) is that contribution cannot be
claimed until the settlement has been implemented; in other words,
until the sum agreed upon
has been paid in full to the plaintiff.'
7
Implicitly 'the sum
agreed upon’ contemplates less than payment of the full claim.
That, as I have endeavoured to show, is
exactly what happened here.
[14] What Alexander
Forbes and the Funds did was to effect a final settlement of the
latter's claims against the former. It did
not have the effect of
settling in full the losses they had suffered pursuant to the
Ghavalas fraud. It certainly was not for the
full amount claimed –
R325 million was the Alexander Forbes total settlement figure, this
in relation to claims of some R960
million. In the absence of an
enforceable ceded right of recovery in terms of s 2(12) it is
doubtful that a settlement could possibly
exist as between Alexander
Forbes and the Funds. The settlement between them provided for
Alexander Forbes to pay R325 million
and cede its right of recovery
to the Funds. The settlement agreement (clause 4.2) specifically
embodies in terms the right which
the Act recognises. In argument,
much was made of clauses 6 and 7 of the settlement agreement. It goes
without saying that the
agreement must be read as a whole. It is so
that the agreement is rather clumsy and confusing. But, on a reading
of the agreement
in its entirety it is plain that it sought not just
to put to bed the Aquilian action that had been instituted by the
Funds against
Alexander Forbes, but also to regulate the position of
the Funds in respect of other remedies that may have been available
to them
and to preserve such rights as they may have had to be
enforced against the other wrongdoers not party to that agreement.
Thus
clause 10 for example clearly distinguishes between the claims
ceded by Alexander Forbes to the Funds and those referred to in
clause 6. The ceded claims, as clause 4.2 makes plain, are those in
respect of which the respondents were given notice in terms
of s
2(2)(b) of the Act – in other words those deriving from the
Aquilian action – whilst the claims referred to in
clause 6
include the return of assets, such as shares and the like. In respect
of the Aquilian action: if the question postulated
earlier, namely
whether finality has been reached, is posed, the answer in my view
has to be an unequivocal ‘yes’.
That that is so emerges
from clause 9.1 of the agreement which records that that action
(namely the Aquilian action) has been withdrawn.
Were the Funds,
notwithstanding that settlement, to proceed under the lex Aqulia
against the respondents they would require leave
of the court in
terms of s 2(4) of the Act. Whether leave is granted will depend upon
good cause being shown (
Wapnick
& another v Durban City Garage & others
1984 (2) SA 414
(D);
Lincoln
v Ramsaran & others
1962
(3) SA 374
(N)).
[15] Here judgment was
not granted by a court against Alexander Forbes for the full amount
of the damages suffered by the Funds.
One wrongdoer, Alexander Forbes
paid a sum of money in full settlement of the Funds' claims in the
Aquilian action instituted by
the Funds against it. The payment of
that sum has been received. In other words the settlement was thus
final against Alexander
Forbes but not for the full extent of the
loss suffered by the Funds pursuant to the Ghavalas fraud. The effect
of s 2(13) is thus
to extinguish any further liability towards the
Funds by Alexander Forbes in respect of their delictual claim.
Professor McKerron
observed:
'The subsection would appear to be
merely a restatement of the common-law rule that payment in full by
one co-debtor, or the receipt
of a discharge which is intended to
operate as a complete discharge of the whole obligation, releases the
other or others.'
8
The settlement agreement
here, read with s 2(13), does not dis-entitle the Funds from taking
cession of Alexander Forbes' right
of recourse and suing on that or
for that matter suing the other wrongdoers
ex
contractu
,
ex
condictione
or
by way
vindicatio
or
quasi
vindicatio
.
The Act does not seek to give the other wrongdoers impunity either in
respect of a ceded right of recourse or any other claim
not subject
to the first proceedings or settlement or judgment.
[16] In that way a victim
can settle with a prudent wrongdoer and then proceed against the
other joint wrongdoers. Thus if Alexander
Forbes, in due course (in
the proceedings against the other wrongdoers), is held to be only 20
per cent liable for the harm inflicted
by the Ghavalas scheme, the
Funds ought to be able to retain the Alexander Forbes payment and
recover 80 per cent (in whatever
percentages, depending on the
relative co-liability of each of the other joint wrongdoers) from the
others. If the high court's
approach is to be endorsed it would mean
that a victim may not settle with a decent or prudent wrongdoer in an
amount that may
represent all that the latter can pay, and then
proceed against the other wrongdoers (by means of cession of the
prudent wrongdoer's
right of recourse) on the basis of their
liability to the prudent wrongdoer for the amount capped by the
settlement agreement,
with a view to recovering from each according
to its proportionate liability (perhaps tempered by ability to pay).
It needs to
be added that in terms of s 2(6)(c) any joint wrongdoer
from whom a contribution is claimed may raise against the joint
wrongdoer
who claims the contribution any defence which the latter
could have raised against the plaintiff. The former need obviously
not
actually be a joint wrongdoer – indeed he is entitled to
plead and show that neither he nor the other were in fact wrongdoers
despite whatever conclusion may have been reached in the earlier
action (
South
African Railways and Harbours v South African Stevedores Services Co
Ltd
1983
(1) SA 1066
(A) at 1089H-1090A).
[17] It must follow that
the claims were, as pleaded, in law properly ones within the purview
of s 2(12) read with s 2(6). This
is so because in my view the
settlement agreement is at least capable of an interpretation which
sustains a claim based on s 2(12)
(read with 2(6)). For, as De
Villiers JA put it in
Shill
v Milner
1937
AD 101
at 105:
'The importance of pleadings should
not be unduly magnified. "The object of pleading is to define
the issues; and parties will
be kept strictly to their pleas where
any departure would cause prejudice or would prevent full inquiry.
But within those limits
the Court has a wide discretion. For
pleadings are made for the Court, not the Court for pleadings."
'
It may well be that the
agreement upon which the Funds’ case is based, is, in the words
of Schreiner JA, ‘a wretched
example of the draftsman’s
art’ (
Cairn
(Pty) Ltd v Playdon & Co Ltd
1948
(3) SA 99
(A) at 110). But, it is by no means clear to me that on the
documents standing alone the interpretation of them should favour the
excipients. Indeed, on the view that I take of the matter, the high
court would have been justified in declining to decide the
matter on
exception. Although I have endeavoured to give the documents a
sensible meaning it is neither necessary nor desirable
that I come to
a final conclusion on the matter. It suffices for present purposes to
say that I am driven provisionally to accept
that the Funds have
surpassed the threshold set on exception. It may be that at the trial
stage the court may, from such evidence
as to context (
KPMG
Chartered Accountants (SA) v Securefin Ltd & another
2009
(4) SA 399
(SCA) para 39) as is permissible to be adduced, be in a
better position than I am to finally determine the matter. Moreover,
as
this court held in
Louw
v WP Koöperatief Bpk & andere
[1994] ZASCA 54
;
1994
(3) SA 434
(AA) at 445:
'Uit die stukke blyk dit dat die
Koöperasie en die Landbank dit eens is oor watter vertolking aan
die sessieakte geheg moet
word. In die verband is dit gepas om te let
op wat Stratford AR in
Breed v Van den Berg and Others
1932 AD
283
op 292 gesê het, naamlik:
"If one of two parties to a
contract asserts that it has a certain meaning and the other agrees
that that is the meaning to
be given to it, a court of law will give
effect to that meaning. If this mutually accepted meaning is in
conflict with the clear
construction of the contract, we have all the
requisites for rectification of the document."
Dat 'n hof uitvoering sal gee aan die
betekenis wat partye tot 'n ooreenkoms gesamentlik aan hulle
ooreenkoms heg (al weerspreek
dit die letterlike betekenis van die
woorde wat gebruik is), blyk ook uit die beslissing in
Shill v
Milner
1937 AD 101
op 110-11. (Kyk ook Christie
The Law of
Contract
2de uitg 250-L.)'
[18] In the result I
would allow the appeal with costs and alter the judgment appealed
from to one dismissing the exception with
costs, such costs, in each
instance, to include those consequent upon the employment of two
counsel.
_________________
V PONNAN
JUDGE OF APPEAL
PLASKET AJA (CACHALIA
JA AND MBHA AJA concurring):
[19] I have read the
judgment of my brother Ponnan JA and am unable to agree with the
conclusion reached by him. I am consequently
of the view that the
appeal should fail. These are my reasons for that outcome. I have
found it necessary, for the flow of my judgment,
to repeat certain
matter that is to be found in Ponnan JA’s judgment but I have
endeavoured to keep the repetition to a minimum.
[20] The essential facts
are that seven pension funds – the appellants in this appeal –
sued Alexander Forbes Financial
Services (Pty) Ltd (AF), in a cause
of action founded in delict, for damages arising from an unlawful
scheme – the Ghavalas
option, as it was termed by the parties
9
–
in terms of which
over R900 million in assets had been stripped from the funds,
resulting in them being placed under curatorship
or being wound-up.
(The total amount claimed by the funds was R936 781 216.)
[21] After service of
summons on it, AF gave notice to the various respondents in this
matter in terms of s 2(2)(
b
)
of the Apportionment of Damages Act 34 of 1956 (the ADA). This
section provides that a joint wrongdoer who is sued may, at any
time
before the close of pleadings, give notice of the action to ‘any
joint wrongdoer who is not sued in that action, and
such joint
wrongdoer may thereupon intervene as a defendant in that action’.
None of the parties to whom notice was given
by AF intervened as
defendants as they were entitled to do.
[22] In due course, the
funds settled the matter with AF. I shall return to the terms of the
settlement agreement below. Suffice
it to say that AF paid the funds
R325 million and ceded to the funds a right to proceed against its
co-joint wrongdoers in terms
of the ADA.
[23] On the strength of
the cession, the funds instituted actions against the respondents as
joint wrongdoers for the recovery of
those joint wrongdoers’
individual contributions towards the loss suffered by the funds. The
cause of action was said to
be s 2(12) of the ADA. This section
provides as follows:
‘
If any joint
wrongdoer agrees to pay to the plaintiff a sum of money in full
settlement of the plaintiff's claim, the provisions
of subsection (6)
shall apply
mutatis
mutandis
as
if judgment had been given by a competent court against such joint
wrongdoer for that sum of money, or, if the court is satisfied
that
the full amount of the damage actually suffered by the plaintiff is
less than that sum of money, for such sum of money as
the court
determines to be equal to the full amount of the damage actually
suffered by the plaintiff, and in the application of
the provisions
of paragraph (
b
)
of the said subsection (6), any reference therein to the date of the
judgment shall be construed as a reference to the date of
the
agreement.’
[24] Section 2(6) deals
with the determination of a claim against a joint wrongdoer by a
court, as opposed to settlement by the
parties. Only s 2(6)(
a
)
is relevant for present purposes. Shorn of its proviso, which is not
relevant, it states:
‘
If judgment
is in any action given against any joint wrongdoer for the full
amount of the damage suffered by the plaintiff, the
said joint
wrongdoer may, if the judgment debt has been paid in full, subject to
the provisions of paragraph (
b
)
of subsection
(4), recover from any other joint
wrongdoer a contribution in respect of his responsibility for such
damage of such an amount as
the court may deem just and equitable
having regard to the degree in which that other joint wrongdoer was
at fault in relation
to the damage suffered by the plaintiff, and to
the damages awarded . . . .’
[25] The exception in
this appeal concerns the settlement agreement, its interpretation and
its implications for the right of one
joint wrongdoer to claim a
contribution from other joint wrongdoers in terms of s 2(12) of the
ADA. It boils down to this: because,
in terms of the settlement
agreement, the funds settled only AF’s share of the total
liability arising from the Ghavalas
option, AF did not acquire, on
the basis of s 2(12) of the ADA, a statutory right of recourse
against the other joint wrongdoers
and it consequently had no rights
to cede to the funds. That being so, the funds’ particulars of
claim, predicated as they
are on the cession of a right of recourse
arising from s 2(12) of the ADA, discloses no cause of action.
[26] It is necessary
first to say something about the proper approach to issues such as
these on exception. In
Lewis
v Oneanate (Pty) Ltd & another
10
Nicholas AJA stated that
an excipient bears the burden of persuading the court that ‘upon
every interpretation which the particulars
of claim’ and any
agreement on which they rely ‘can reasonably bear, no cause of
action is disclosed’. And, in
Sun
Packaging (Pty) Ltd v Vreulink
,
11
Nestadt JA confirmed that
there is no hard and fast rule that the interpretation of agreements
is to be avoided on exception. He
said:
‘
As a rule,
Courts are reluctant to decide upon exception questions concerning
the interpretation of a contract. But this is where
its meaning is
uncertain . . .
In
casu
,
the position is different. Difficulty in interpreting a document does
not necessarily imply that it is ambiguous . . . Contracts
are not
rendered uncertain because parties disagree as to their meaning.’
[27] What these
authorities mean in this case is that if the relevant clauses of the
settlement agreement (for it is its terms that
make or break the
funds’ cause of action for purposes of the exceptions) can
reasonably bear any meaning that supports a
cause of action in terms
of s 2(12) of the ADA, the exceptions must fail – and the
appeal must succeed. If, on the other
hand, the relevant clauses of
the settlement agreement can only reasonably bear the meaning
attributed to them by the respondents,
and they are incapable of
sustaining a cause of action based on s 2(12) of the ADA, the
exceptions must be upheld – and the
appeal must fail.
[28] The crisp issue for
determination is therefore simply whether, on any reasonable
interpretation of the relevant clauses of
the settlement agreement,
the jurisdictional requirements of s 2(12) of the ADA have been
activated.
[29] I turn now to a
consideration of the particulars of claim and the settlement
agreement. In so doing, I shall quote from the
pleadings in SGHC case
number 16213/2011,
Picbel-Groep Voorsorgfonds
(in liquidation) v William Vass Graham Somerville
.
(The pleadings in all of the cases are essentially similar.)
[30] Paragraph 4 of the
particulars of claim summarise the nature of the claim as follows:
‘
The
plaintiff seek[s] enforcement of the ceded rights of contribution in
terms of section 2(2)(
b
)
read with 2(12) of the Apportionment of Damages Act 34 of 1956 (“the
Apportionment Act”) against the defendant jointly
or severally,
the one paying the other to be absolved, for payment of the entire
amount of damages paid to the plaintiff,
alternatively
such lesser amount to be determined by the court.’
[31] Having set out the
details of the claim against AF, the fact that AF gave notice to the
defendant in terms of s 2(2)(
b
)
of the ADA, the settlement of the claim, payment by AF to the
plaintiff of the amount agreed and the cession of AF’s right
to
contributions from those to whom it had given notice, the particulars
of claim then state:
‘
Accordingly,
pursuant to section 2(12) read with s 2(6)(
a
)
of the Apportionment [Act] the plaintiff
qua
cessionary of Alexander Forbes’ rights to contribution as
aforesaid, is entitled to claim and recover from the defendant
such a
contribution in respect of his responsibility for the amounts
referred to in paragraph 14 [being the settlement amount]
as the
court may deem just and equitable.’
[32] The particulars of
claim then proceed to detail what is headed the ‘
THE
CEDED CLAIM FOR CONTRIBUTION
’
. It is
not necessary to consider those provisions in this judgment because
they are irrelevant to the anterior question of whether,
on the
pleadings, AF acquired a cause of action through s 2(12) of the ADA
which it was able to cede to the funds. That requires,
in the first
instance, a consideration of the settlement agreement.
[33] The parties to the
settlement agreement were AF, which is referred to as ‘the
company’, and the funds. Clause 4
of the settlement agreement
records that AF would:
‘
4.1 without
admission of liability pay to AL Mostert & Company, the attorneys
for the Funds, the sum of R325 million, plus interest
at prime rate
from 21 January 2010 (“the payment”); and
4.2 cede to Mostert on behalf of the
Funds the claims against all third parties to whom the company has
given notice in terms of
section 2(2)(b) of the Apportionment of
Damages Act, arising in terms of the Act as a result of this
settlement or howsoever arising.’
[34] Clause 5 required
payment of the R325 million to be made within 28 days of the date of
the signing of the agreement. Clauses
6 and 7 then record:
‘
6. The Funds
record that the payment does not reflect the full loss sustained by
the Funds resulting from the Ghavalas option. Consequently
one or
more of the Funds are pursuing other remedies, including the return
of assets or their proceeds. The payment serves to discharge
only
that portion of the loss for which the Funds regard the company
liable.
7. The payment, determination and
allocation as aforesaid shall operate in full and final settlement of
the company’s share
of the amounts claimed in the action and
the Funds shall thereupon have no further claims against the company
and related entities,
and shall discharge the company and related
entities from all present and future liability to each of the Funds
inclusive of all
legal costs and costs orders.’
(The agreement defines
‘related entities’ to mean ‘the company, its
holding company and all subsidiaries of the
holding company, all
current and former employees, directors and non-executive
directors’.)
[35] Finally, for what it
is worth, clause 10 provides that AF undertakes ‘to provide all
reasonable assistance to the Funds
for the purpose of enforcing the
claims ceded by the company to the Funds and the claims referred to
in clause 6 above’.
[36] As is pointed out by
Ponnan JA, the cause of action that the funds rely on is unknown to
the common law and is a creature of
the ADA. The jurisdictional
requirements of the cause of action must, therefore, be determined
from the terms of s 2(12) of the
ADA and s 2(6) to the extent that it
is incorporated by reference into s 2(12).
[37] Section 2(12) read
with s 2(6) requires the following in order for a cause of action to
arise in respect of a claim for a contribution
by one joint wrongdoer
against another: (a) an agreement between a plaintiff and a joint
wrongdoer; (b) in terms of which the joint
wrongdoer agrees to pay a
sum of money to the plaintiff; (c) the payment agreed to is in full
settlement of the plaintiff’s
claim; and (d) payment of the
money is made in full. In other words, when notice has been given in
terms of s 2(2)(
b
), a
right of recourse against a joint wrongdoer in terms of s 2(12) will
only arise if and when these four jurisdictional requirements
have
been satisfied.
[38] The particulars of
claim allege that an agreement was reached between the funds and AF
to the effect that AF would pay an amount
of money to the funds to
settle the funds’ claims and that the money was duly paid to
the funds. Then followed the conclusion
that the plaintiff, as
cessionary, was entitled to ‘claim and recover from the
defendant such a contribution in respect of
his responsibility for
the amounts referred to in paragraph 14 as the court may deem just
and equitable’ and that this entitlement
arose from s 2(12),
read with s 2(6)(
a
)
of the ADA.
[39] The only outstanding
issue is whether the settlement agreement contemplated a full
settlement, as required by s 2(12), as this
is not expressly pleaded.
In order to determine this, it is necessary (and permissible) to
interpret the settlement agreement that
is relied on in the
particulars of claim, and which is ‘a link in the chain of [the
funds’] cause of action’.
12
In
Dettmann
v Goldfain & another
,
13
this court stated that
courts are, in some instances, reluctant to ‘decide upon
exception questions concerning the interpretation
of a contract’.
Those circumstances are, first, where the entire contract is not
before the court; and secondly, where it
appears from the contract or
the pleadings that ‘there may be admissible evidence which, if
placed before the Court, could
influence the Court’s decision
as to the meaning of the contract’, provided that this
possibility is ‘something
more than a notional or remote one’.
[40] In this case, the
entire settlement agreement is before the court and there has been no
suggestion, either in the pleadings
or in argument, of the meaning of
the settlement agreement being influenced by admissible evidence
being led in the trial. Indeed,
the parties are
ad
idem
as
to what the relevant clauses of the agreement mean
14
and I am of the view that
that meaning is the only reasonable meaning that those clauses can
have. The parties differ only in respect
of what the legal
consequences may be as far as a cause of action based on s 2(12) of
the ADA is concerned. As it was put in the
appellants’ heads of
argument, the issue is ‘given the terms of section 2(12), what
ex lege
is the effect of this
settlement agreement?’
[41] Neither in the
particulars of claim nor in the agreement is the settlement described
as a full settlement – the term
used in s 2(12) – of the
funds’ losses resulting from the Ghavalas option. The
particulars of claim simply speak of
a settlement. Clause 6 of the
settlement agreement states that AF’s payment to the funds
‘does not reflect the full
loss sustained by the Funds
resulting from the Ghavalas option’ and that the settlement
discharges ‘only that portion
of the loss for which the Funds
regard the company liable’. Clause 7 describes the payment,
determination and allocation
of the amount of R325 million as only
being ‘in full and final settlement of the company’s
share of the amounts claimed
in the action’.
[42] It was argued by
some of the respondents that a full settlement meant a settlement of
the full amount claimed and that any
compromise of the amount claimed
meant that s 2(12) could not apply. As the funds and AF settled for
far less than was claimed,
so the argument proceeds, there was in
this case no full settlement on this account alone. I am of the view
that this argument
is unsound because I cannot conceive of a reason
why the legislature would wish to discourage the settlement of claims
in this
way, particularly when the settlement works to the advantage
of the joint wrongdoers whose contributions are sought. In the same
way that s 2(6) contemplates a judgment for less than the amount
claimed as one of the requirements to activate a right to claim
a
contribution from joint wrongdoers, so s 2(12), in my view,
postulates the possibility of a settlement of less than the amount
claimed. From a practical point of view, this must be so: very few
settlements in delictual claims involve a complete and unconditional
surrender on the part of a defendant.
[43] When s 2(12) speaks
of a full settlement, it means a complete settlement of the claim –
one that extinguishes it completely.
15
Even allowing for a claim
to be compromised and still be a full settlement, the settlement
contemplated by the settlement agreement
is not a full settlement. It
does not, on its own express terms, settle the claims of the funds
completely. Instead it only settles
a portion of those claims, namely
the portion of the loss for which the funds regarded AF to be liable:
it operates, says clause
7, ‘in full and final settlement’
only of AF’s ‘share of the amounts claimed in the
action’.
[44] The purpose of the
ADA is to allow for the recovery of delictual damages by a plaintiff
from any, some, or all of those responsible
for the harm suffered by
him or her and to allow for the adjustment of liability as between
the joint wrongdoers after a claim
has been finalised by one or more
of them, either by judgment or agreement, and the resultant debt has
been paid in full. That
adjustment is done on the basis of each joint
wrongdoer’s ‘responsibility for such damage’ with
regard to ‘the
degree in which that other joint wrongdoer was
at fault in relation to the damage suffered by the plaintiff, and to
the damages
awarded’.
16
Self-evidently, this
system for the adjustment of liability can only function if the total
claim is settled. What is not contemplated
by it is the settlement by
a joint wrongdoer of only his or her portion of the total liability.
In such an event, the right of
recourse created by s 2(12) is not
activated and s 2(13) will not come into effect to discharge every
joint wrongdoer from liability
towards the plaintiff.
17
[45] It is my conclusion
therefore that because only a portion of the funds’ claims was
settled – being only AF’s
portion of the total liability
– no full settlement of the funds’ claims was reached
with AF. This being so, the jurisdictional
requirement of the right
of action against joint wrongdoers that the claim must have been
settled in full was absent. As a result,
AF did not acquire a right
of recourse, arising from s 2(12), to proceed against the other joint
wrongdoers, and consequently had
no rights to cede to the funds. That
means that the exception was correctly upheld by Sutherland J in the
court below and that
the appeal must fail.
[46] It will be recalled
that Nedbank’s cross-appeal in SGHC case number 16215/2011 was
withdrawn without a tender of costs.
It is therefore necessary also
to make a costs order in that respect.
[47] The following order
is made:
(a) The appeal is
dismissed with costs, including the costs of two counsel.
(b) In SGHC case number
16215/2011(
Mitchell
Cotts Pension Fund (in liquidation) & another v Nedbank Limited &
another
),
Nedbank Limited is ordered to pay the costs, including the costs of
two counsel, of Mitchell Cotts Pension Fund (in liquidation)
and of
Lucas South Africa Pension Fund (in liquidation) in respect of
Nedbank’s withdrawn cross-appeal.
________________________
C PLASKET
ACTING JUDGE OF APPEAL
APPEARANCES:
For
Appellants: J J Gauntlett SC (with him L J van Tonder)
Instructed
by:
A
L Mostert & Company Inc, Johannesburg
Matsepes
Inc, Bloemfontein
For
Appellant in Cross-Appeal P T Rood SC (with him G W Girdwood)
(Nedbank)
Instructed
by:
Cliffe
Dekker Hofmeyr Inc, Sandton
Webbers,
Bloemfontein
For
First Respondent: B Roux SC
(Somerville)
Instructed
by:
Tugendhaft
Wapnick Banchetti & Partners, Johannesburg
Lovius-Block,
Bloemfontein
For
Second Respondents: B Roux SC
(Nash
and Midmacor)
Instructed
by:
Cowan
Harper Attorneys, Johannesburg
Lovius-Block,
Bloemfontein
For
Third & Fourth Respondents: J M A Cane SC
(Wynne-Jones
& Co Employee
Benefits
Consultants and
Aubrey
Wynne-Jones)
Instructed
by:
Rudolph,
Bernstein & Associates, Johannesburg
Phatsoane
Henney, Bloemfontein
For
Sixth Respondent: H B Marais SC (with him S Strydom)
(McEvoy)
Instructed
by:
Kevin
Cross & Affiliates, Randburg
McIntyre
& Van Der Post, Bloemfontein
For
Fifth Respondent: No Appearance
(Roets)
1
Picbel
Groep Voorsorgfonds (in liquidation), Sable Industries Pension Fund
(under curatorship), Mitchell Cotts Pension Fund (in
liquidation),
Lucas South Africa Pension Fund (in liquidation), Datakor Pension
Fund (under curatorship), Datakor Retirement
Fund (under
curatorship) and Cortech Pension Fund (under curatorship).
2
William
Vass Graham Somerville, Simon John Nash, Midmacor Industries
Limited, Aubrey Wynne-Jones,Wynne-Jones & Company Employee
Benefits Consultants (Pty) Ltd, Nedbank Limited, William Vass Graham
Somerville, Johannes Roets, Michael McEvoy and Derrick John
Pettitt.
3
Professor
R G McKerron
The Apportionment of Damages Act
(1956) at 1.
4
M
A Millner 'Notes and comments: the Apportionment of Damages Act'
(1956) 73
SALJ
319
at 320.
5
M
A Millner 'Law of Delict: A. Legislation' (1956)
Annual Survey of
South African Law
188 at 195.
6
M
A Millner 'Law of Delict: A. Legislation' 195.
7
R
G McKerron
Law of Delict
7 ed (1971) at 317.
8
R
G McKerron
Law of Delict
7 ed (1971) at 318.
9
The
name given to the scheme was explained as follows by Sutherland J in
the court below (para 1):
‘
Peter
Ghavalas wrote his name in the history books as the financial wizard
who devised a scheme, with others, to redeploy the
actuarial surplus
from several pension and provident funds to the benefit of persons
other than the beneficiaries of those funds.
In this case, that
scheme has been called the “Ghavalas option” which
involved a series of ruses to simulate certain
ostensibly innocent
transactions to conceal the misappropriation. In due course, when
these schemes were unmasked, a process
to recover the diverted funds
began.’
10
Lewis
v Oneanate (Pty) Ltd & another
[1992] ZASCA 174
;
1992
(4) SA 811
(A) at 817F-G. See too
First
National Bank of Southern Africa Ltd v Perry NO & others
2001 (3) SA 960
(SCA) para 6;
Theunissen & andere v
Transvaalse Lewendehawe Koöp Bpk
1988
(2) SA 493
(A) at 500E-F.
11
Sun
Packaging (Pty) Ltd v Vreulink
[1996] ZASCA 73
;
1996
(4) SA 176
(A) at 186J-187B.
12
Van
Tonder v Western Credit Ltd
1966
(1) SA 189
(C) at 193H;
South
African Railways and Harbours v Deal Enterprises (Pty) Ltd
1975 (3) SA 944
(W) at 953A;
Moosa
& others NNO v Hassam & others NNO
2010
(2) SA 410
(KZP) para 17.
13
Dettmann
v Goldfain & another
1975
(3) SA 385
(A) at 400A-B. See too
Davenport
Corner Tea Room (Pty) Ltd v Joubert
1962
(2) SA 709
(D) at 715G-716E.
14
In
paragraph 28 of the appellants’ heads of argument, the
following is stated:
‘
The
funds and AF palpably did not settle on a basis which resulted in
full payment of the funds’ claims for the losses they
had
suffered through the application to them of the Ghavalas fraud. What
AF and the funds did was to effect a final settlement
of the funds’
claims
against
AF
.
This was not for the full amount claimed . . .”Final
settlement” of the “
plaintiff’s
claim
”
is
expressly evident from clause 7 of the settlement agreement. In
summary, and stated most simply, the settlement was, quite
permissibly under the Act, final against one wrongdoer, and patently
not for the full amount.’
15
Karsen
v Minister of Public Works
1996
(1) SA 887
(E) at 895G.
16
ADA,
s 2(6)(
a
).
17
Section
2(13) provides:
‘
Whenever
judgment is in any action given against any joint wrongdoer for the
full amount of the damage suffered by the plaintiff,
or whenever any
joint wrongdoer has agreed to pay to the plaintiff a sum of money in
full settlement of the plaintiff’s
claim, and the judgment
debt or the said sum of money has been paid in full, every other
joint wrongdoer shall thereby also be
discharged from any further
liability towards the plaintiff.’