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[2023] ZAGPJHC 619
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E.M.V v C(...) (Pty) Ltd and Another (21010/2016) [2023] ZAGPJHC 619 (2 June 2023)
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REPUBLIC OF SOUTH
AFRICA
IN THE HIGH COURT OF
SOUTH AFRICA
GAUTENG DIVISION,
JOHANNESBURG
CASE NO: 21010/2016
NOT REPORTABLE
NOT OF INTEREST TO OTHER
JUDGES
NOT REVISED
02.07.23
In the application
between:
E.M.V
Applicant/Defendant
And
C[...]
(PTY) LIMITED
First
Respondent
G.V
Second
Respondent
Neutral
Citation
:
V
v C(...) Pty Ltd and another
(Case
No:21010/2016) [2023] ZAGPJHC 619 (2 June 2023)
This
judgment was handed down electronically by circulation to the
parties’ legal representatives by email and by being uploaded
to Caselines. The date and time for hand-down is deemed to be
10h00 on 3 June 2023
SUMMARY
Joinder of third party –
Uniform Rule 13 – prescription
Joinder of third party –
Uniform Rule 13 – exception taken to Annexure
ORDER
1.
The defendant is granted leave to serve a
third-party notice on Mr V, the second respondent.
2.
The costs of the opposition in this application
are to be paid by the third party, Mr V, in his personal capacity.
JUDGMENT
TURNER AJ
[1]
This is an application to join the second
respondent as a third party to an action instituted by the first
respondent against the
applicant. For ease of reference, I will refer
to the parties as they are cited in the action: C[...] as “the
plaintiff”;
Mrs V as “the defendant”; and Mr
V, by his name.
[2]
When the plaintiff was registered in about 1998
and for a period thereafter, Mr V was the sole director and
shareholder of the plaintiff,
Mr V and the defendant were married and
they had three minor children. During these early years, the
defendant spent her time primarily
as a housewife and assisted Mr V
in the business of the plaintiff, to create a family business. Later,
she was appointed as a director
with Mr V and a trustee in the
“G[...] Trust” which was registered in August 2004 and
acquired the shares in the company
from Mr V.
[3]
The plaintiff’s business was a success.
However, by 2013, acrimony had increased between the defendant and Mr
V to the extent
that they split and the defendant left both the
household and the business. Divorce proceedings were instituted by
the defendant
in 2014 and in 2017, a decree of divorce was finally
granted.
[4]
After the divorce proceedings were instituted, but
before the divorce was finalised, the plaintiff, still under the
control of Mr
V, instituted the current action against the defendant
for payment of an amount of R8,551,524.50. This amount is the
aggregate
of amounts which are alleged to have been paid out from the
plaintiff’s accounts on the instructions of the defendant in
breach of various allegations owed by the defendant
inter
alia
as a director of the plaintiff.
The plaintiff’
s claim is based on the assertion that the
defendant was “the director responsible for all duties
associated with the financial
affairs of the Plaintiff.” The
defendant’s duties are described as including: (i) the safe
custody and control
of cash received by
the
plaintiff
and control of bank accounts; (ii) payment of
creditors and employees; and (iii) management and administrative
functions relating
to the accounting records of
the
plaintiff
.
[5]
The particulars of claim also allege that: (i) the defendant
collected cash from
the plaintiff
’s
customers (pursuant to cash sales) which she recorded in the cashbook
but failed to reflect in its accounting records;
(ii) the defendant
drew cheques on
the plaintiff
’s
account and paid the amounts drawn into her personal bank account;
(iii) the defendant made payments from
the
plaintiff
’s online banking facility into her personal
bank account. The plaintiff alleges that the defendant breached
common law and
statutory fiduciary duties owed to
the
plaintiff
in that she: (i) failed to keep safe custody and
control of cash received by
the plaintiff
;
(ii) failed to keep proper accounting records; and (iii) either
retained funds belonging to
the plaintiff
for herself, alternatively expended these funds for reasons unrelated
to the business and interests of
the plaintiff.
The particulars of claim rely on a report prepared by a firm of
chartered accountants who reported on withdrawals
from the
plaintiff’s accounts during the period February 2011 to August
2014.
[6]
In response to these allegations, the defendant
first raises a special plea of non-joinder, asserting that the
plaintiff was obliged
to join Mr V as, she alleges, he was also a
director, aware of the withdrawals and a beneficiary of the funds
withdrawn. On the
merits, the defendant denies liability to the
plaintiff and sets out the following pertinent allegations:
6.1
That she and Mr V are (or were) the only directors of the company;
6.2
All extra income that was derived from their
successful company maintained a great lifestyle for Mr V, the
defendant and the children
born from the marriage;
6.3
After the defendant vacated the joint household, a
meeting was held to discuss the defendant’s future in the
company and Mr
V offered the defendant a demoted position in the
company as a forklift driver. During this period, Mr V did not accuse
the defendant
of having stolen funds from the company. These
allegations were only made after the divorce proceedings were
launched.
6.4
All decisions regarding the company were made
jointly by Mr V and the defendant as the plaintiff was at all
material times a family
business. This included decisions made in
respect of all amounts withdrawn from the company.
6.5
That the action against her was vindictive and
launched in the name of the plaintiff at the instance of Mr V,
against the backdrop
of the divorce proceedings.
6.6
That funds withdrawn from the family business were
used for family expenses and business expenses from time to time, and
for the
benefit of Mr V.
[7]
In her affidavit supporting the joinder
application, the defendant has provided further detail to support
these allegations in the
plea. The defendant alleges that there were
agreements between her and Mr V on monies that should be drawn out of
the business
to pay for various expenses, for Mr V personally, for
each of their children and for the household.
[8]
As I understand the defendant’s contentions,
she denies any wrongdoing vis-à-vis the plaintiff company as
she alleges
that all payments made from the business were authorised
by her and Mr V and were consequently legitimate. She goes further,
however,
to state that if it were found that she was not entitled to
have made any of these withdrawals from the plaintiff for the benefit
of the V family, then Mr V is equally liable with her in respect of
those amounts withdrawn.
[9]
Uniform Rule 13(1) permits a party to deliver a
third-party notice where a party in the action (the defendant in this
case) claims
as against any other person not a party to the action,
that such party is entitled, in respect of any relief claimed against
her,
to a contribution or indemnification from such third party. A
notice can also be delivered where a question or issue in the action
is substantially the same as a question or issue which has arisen or
will arise between such party and the third party. A third-party
notice can be delivered as of right before the close of pleadings in
the action. After the close of pleadings, Uniform Rule 13(3)(b)
states that such notice may be served only with the leave of the
court.
[10]
As pleadings have closed in the action, the
defendant has made this application in terms of Uniform Rule
13(3)(b). Mr V has opposed
the joinder application on a number of
grounds. I deal with these below.
[11]
His first point relies on the Prescription Act. He
alleges that the third-party notice was only delivered in March 2021,
many years
after the facts on which he says the debt arises. In
support of his argument, Mr V relies on a judgment of this court
(Pretoria)
in
Mativa Manufacturing (Pty)
Ltd v Keymax Investments 125 (Pty) Ltd and others
2020
(1) SA 235
(GP). However, that case is distinguishable from the
current one. In that case, the plaintiff sought to join an additional
defendant
(Marce) in an action for damages which it had instituted
against the first and second defendants. It was not an application
for
joinder of a third party.
[12]
As matters currently stand, the defendant in the
current matter does not allege that she has suffered a loss at the
hands of Mr
V and so she does not have an independent claim for a
debt against him. All that has occurred is that the defendant
has received
a claim against her by the plaintiff alleging that it
has suffered a loss.
Prima facie,
there
appears to be a good argument in favour of the defendant that the
claim for a contribution or an indemnity using the third-party
joinder procedure is not a claim to recover a “debt” for
purposes of the Prescription Act. In the circumstances, the
first point
in limine
falls
to be dismissed. Any dispute of the application of the Prescription
Act can be resolved at trial.
[13]
The second point
in
limine
contends that the third-party
notice is excipiable. In his heads of argument, Mr V’s counsel
contends that the defendant’s
allegations that Mr V had access
to the bank accounts of the plaintiff, was a co-director of the
plaintiff and that he was a beneficiary
of the funds disbursed from
the plaintiff, are inadequate allegations to sustain a cause of
action for a contribution. In my view,
this approach is too
formalistic and ignores the thrust of what is asserted in the
third-party notice, which must be interpreted
in a manner most
favourable to the defendant when deciding whether or not it is
excipiable. If the defendant can prove the allegations
pleaded in the
third-party notice, then the facts will establish
inter
alia
that all the funds claimed from
her by the plaintiff were amounts which had been withdrawn with the
consent and knowledge of Mr
V and all amounts had been used for the
benefit of Mr V and his family. In my view, these facts would
disclose a cause of action
to support a claim for a contribution.
[14]
Once Mr V has been joined as a third party and has
pleaded to these allegations of fact, he will be entitled to request
particulars
and obtain any additional particularity required.
[15]
Third, Mr V alleges that the defendant did not set
out a satisfactory explanation for her failure to give notice before
the close
of pleadings. This requirement was noted in
Wapnick
and Another v Durban City Garage and others
1984
(2) SA 414
(D) at 424 B-C. In her founding affidavit, the defendant
has explained that her previous attorneys believed that the special
plea
of non-joinder (discussed above) was sufficient to deal with the
co-liability of Mr V. She says that her current attorneys
had
advised her that the better procedure was to serve a third-party
notice and join Mr V as a third party. In my view, this is
a
satisfactory explanation, particularly considering the allegations
made in the special plea which support this version, recording
that
Mr V should bear equal responsibility with the defendant.
[16]
The final defence raised by Mr V is recorded under
the heading “The application has no merit and no
prima
facie
case was made out against the
second respondent”. In making this case, Mr V argues that the
allegations in the third-party
notice do not set out how he “as
a co-director was in any manner whatsoever responsible for the
financial affairs of the
first respondent”. He goes on to argue
that he did not sign cheques or pay creditors, that was done by the
defendant. Not
that it would necessarily assist him in this
application, but it is noteworthy that, in his answering affidavit,
Mr V does not
pertinently deny that the monies withdrawn from the
plaintiff were used for his personal benefit or for the benefit of
the household.
Instead, the essence of his allegations is that the
defendant did all the work involving handling the cash, cheques and
payments
in the business and consequently, she should be the one
solely responsible for repaying those amounts, even if they were used
for
his benefit and the benefit of the household.
[17]
To the extent that there may be a dispute of fact
over the manner in which financial records were kept and how the
money was distributed,
these are factual disputes that should be
resolved at trial. In my view, they do not provide a basis on which
to justify refusing
the joinder of Mr V.
[18]
In the circumstances, I do not find merit in any
of the grounds relied on by Mr V to resist the delivery of the
third-party notice
and consequently, I find that a case has been made
out to justify the delivery of the third-party notice after the close
of pleadings.
[19]
There is no reason why costs should not be
awarded. The application was self-contained and the entitlement to
join Mr V will not
be addressed again at trial. While the costs
of the joinder application should be costs in the cause in the main
action,
I find that the opposition by Mr V was unreasonable and
consequently, Mr V is liable, in his personal capacity, for the costs
of
opposing this application, including the costs of the hearing.
[20]
In the circumstances I make the following order:
(1)
The defendant is granted leave to serve a
third-party notice on the second respondent, Mr V.
(2)
The costs of the joinder application that would
have been incurred on an unopposed basis are to be costs in the cause
in the action
proceedings.
(3)
The costs of the opposition in this joinder
application, including the costs of the hearing, are to be paid by Mr
V in his personal
capacity.
TURNER AJ
Counsel
for the applicant:
M
Kohn
Instructed
by:
Tracy
Sischy Attorneys
Counsel
for the respondent:
AC
Roestorf
Instructed
by:
Faber
Goertz Ellis Austen Inc
Date of hearing: 19
January 2023
Date of Judgment:
2 June 2023