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[2010] ZAWCHC 133
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Jomovest Twenty Five CC t/a Chas Everitt City Bowl v Engel & Volker Western Cape (Pty) Ltd (10887/2004) [2010] ZAWCHC 133; [2010] 4 All SA 619 (WCC) (17 June 2010)
Republic
of South Africa
REPORTABLE
IN
THE HIGH COURT OF SOUTH AFRICA
(WESTERN
CAPE HIGH COURT, CAPE TOWN)
CASE
No: 10887/2004
the
matter of
JOMOVEST
TWENTY-FIVE CC
t/a
Chas Everitt City Bowl
Applicant
/ Defendant
and
ENGEL
& VOLKER WESTERN CAPE (PTY) LTD Respondent / Plaintiff
JUDGMENT
DELIVERED : 17 JUNE 2010
MATTER
HEARD ON 21 APRIL 2010
On
behalf of Applicant/Defendant : AdvSWalther
Attorney(s) :
Ince Wood & Raubenheimer
On
behalf of Respondent/Plaintiff : Adv P Eia
Attorney(s) :
Rahman Inc
Republic
of South Africa
REPORTABLE
IN
THE HIGH COURT OF SOUTH AFRICA
(WESTERN
CAPE, CAPE TOWN)
CASE
No: 10887/2004
In
the matter between:
JOMOVEST
TWENTY FIVE CC
t/a
Chas Everitt City Bowl
Applicant
/ Defendant
and
ENGEL
& VOLKER WESTERN CAPE (PTY) LTD
Respondent
/ Plaintiff
JUDGMENT
DELIVERED : 17 JUNE 2010
MOOSA,
J
Introduction
[1]
This is an application for leave to amend the plea in which the
Applicant, who is the Defendant in the action, seeks to withdraw
an
admission made therein. The Respondent, who is the Plaintiff in the
action, opposes the application. For the sake of convenience
the
parties will be referred to hereinafter as cited in the action,
namely, the Defendant and the Plaintiff respectively.
[2]
On 15 December 2004, the Plaintiff instituted action against the
Defendant claiming payment of the sum of R111 000.00 being
its share
of the commission arising from the sale of certain immovable property
situate at 8 Theresa Avenue, Camps Bay and owned
by Mr and Mrs
Lasker. The Defendant defended the action and filed a plea in which
it made certain admission that form the subject
matter of this
application.
The
Proposed Amendment
[3]
The Defendant seeks leave to amend paragraphs 2 and 4 of its plea in
the following respects:
(a)
Paragraph 2 by deleting the words:
"and
other than to admit that Defendant had a joint mandate as alleged
(which expired and was replaced by a sole mandate as
from 31 August
2004)"
and
by inserting the following at the end of the paragraph:
"In
amplification of its denial, and without derogating from the
generality thereof, Defendant avers that the joint mandate
and the
sole mandate referred to were held by Retrospective Trading 466 CC
t/a Chas Everitt Atlantic Seaboard, Reg No 2003/074897/23
and not by
Defendant".
(b)
Paragraph 4 by deleting the words:
"Other
than to admit that Defendant had received a sole mandate from the
seller and that Plaintiff was made aware thereof
and
by inserting the following at the end of the paragraph:
"In
amplification of its denial and without derogating from the
generality thereof, Defendant reiterates that the sole mandate
was
received by Retrospective Trading 466 CC t/a Chas Everitt, Atlantic
Seaboard, Reg No 2003/074897/23 and not by Defendant".
The
Unamended Pleadings
[4]
The Plaintiff in its Particulars of Claim to the Summons
alleges: (i) that in or about June 2004, the Defendant was appointed
and/or provided with a joint mandate to sell the immovable property
situated at 8 Theresa Avenue, Camps Bay (the "property"),
by the owners being Mr and Mrs Lasker (the "sellers"); (ii)
that, in or about mid September 2004, Plaintiff introduced
the
purchaser, Jacqueline Clark (the "buyer") to the property;
(iii) that at the time the Defendant informed the Plaintiff
that it
had the sole mandate to sell the property; and (iv) that it was a
term of an oral agreement between the Plaintiff and the
Defendant
that they would share the commission on a 50/50 basis in accordance
with prevailing custom among estate agents.
[5]
The Defendant in its Plea admits: (i) that the Defendant held a joint
mandate to sell the property, which joint mandate was
replaced with a
sole mandate as from 31 August 2004; (ii) that the Plaintiff was made
aware thereof and (iii) that it earned the
commission on the sale of
the property but avers (iv) that there was no oral agreement to share
the commission on a 50/50 basis
as alleged.
[6]
The Plea as it stands, in my opinion, amounts to a confession and
avoidance. The Defendant in clear and unequivocal terms makes
certain
admissions in the Plea, which constitute the confession. The
Defendant in clear and unequivocal terms denies that an oral
agreement was concluded between the Defendant and the Plaintiff to
share the commission and such denial constitutes the avoidance.
In
light of the admissions, it is unnecessary for the Plaintiff to
adduce evidence to prove the admitted facts and it is equally
unnecessary for the Defendant to adduce evidence to contradict those
facts. The only issue the Plaintiff is called upon to prove
is the
oral agreement to share the commission. Should the amendment be
granted, the Plaintiff will also be required to prove that
the
Defendant held the mandate to sell the property.
[7]
The Defendant seeks to withdraw the admissions on the basis that it
was not involved in the transaction, but one of its associated
entities, namely Retrospective Trading 466 CC ("Retrospective"),
had held the mandate to sell the property and had earned
the
commission. It is common cause that the sale of the property was
concluded by Reid using the pro forma deed of sale of the
Defendant
and in terms of the concluded deed of sale, the commission was
payable to the Defendant. It is also common cause that,
at all
material times of the transaction, the same members constituted both
the Defendant and Retrospective.
The
Law
[8]
As a general rule an amendment to any pleadings will be permitted
unless the application to amend, on the one hand, is ma/a
fide
on
the part of the one party and, on the other hand, is prejudicial or
unjust to the opposite party, which cannot be compensated
by way of
postponement and/or order of costs
(Moolman
v Estate Moolman
1927
CPD 27
at 29;
Frenkel
Wise & Co Ltd v Cuthbert
1947
(4) SA 715
(C) and
Caxton
Ltd and Others v Reevas Forman (Pty) Ltd and Another 1
990
(3) SA 547
(A)).
[9]
As a general rule, an amendment to withdraw an admission will not be
allowed unless evidence is tendered to show a reasonable
basis
firstly, for making the original mistaken admission and secondly, for
seeking the withdrawal of such admission
(Gordon
v Tarnow
1947
(3) SA 525
(A) and
Amod
v South African Mutual Fire and General Insurance Co Ltd
1971
(2) SA 611
(N)). The establishment of such threshold is in legal
parlance described as a "jurisdictional fact". The presence
of
the jurisdictional fact is a prerequisite to the court exercising
its discretion whether or not to grant the amendment to withdraw
the
admission.
[10]
Erasmus
on
Superior Court Practice
at
B1 -182/2, to be read with footnotes 8 and
1
respectively, comments as follows:
"...
withdrawal of an admission is usually more difficult to achieve
because
(i)
it involves a change of front which requires full explanation to
convince the court of the bona fides thereof, and (ii) it is
more
likely to prejudice the other party, who had by the admission been
led to believe that he need not prove the relevant fact
and might,
for that reason, have omitted to gather the necessary evidence. The
Court will, therefore, in the exercise of its discretion,
require an
explanation of the circumstances under which the admission was made
and the reasons for now seeking to withdraw it."
[11]
Before the court exercises its discretion whether or not to grant the
amendment to withdraw the admissions, the court is required
to
determine the presence or absence of the jurisdictional fact. The
test to determine the presence or absence of the jurisdictional
fact,
in this matter, is an objective one. Should the court find that the
Defendant has failed to establish the jurisdictional
fact, the
proposed amendment is refused. On the other hand, should the court
find that the Defendant has established the jurisdictional
fact, such
finding triggers the exercise of the court's discretion. In
exercising such discretion, the court considers the question
of
mala
fides
on
the part of the Defendant in seeking the amendment and of the
potential prejudice or injustice that the Plaintiff may suffer
if
such amendment is granted.
[12]
The principle and approach to the exercise of the court's discretion
in such instance, is succinctly set out, albeit with regard
to the
exercise of public power, by
Corbett,
J
(as
he then was) in
S
A Defence & Aid Fund & Another v Minister of Justice
1967
(1) SA 31
(C) at 34F-35D.
Corbett,
J
identified
two broad categories of jurisdictional fact. The existence of one is
objectively assessed and the existence of the other
is subjectively
assessed. The court held that the existence of the one which is
objectively assessed is justiciable in a court
whereas the existence
of the other which is subjectively assessed is not justiciable. In
that regard
Corbett,
J,
states
the following:
“
I
turn
now to the possible grounds upon which the exercise of the power
granted by sec. 2 (2) may be assailed in a Court of law. It
is a
necessary condition to the exercise of this statutory power that the
State President should be satisfied upon one or more
of the matters
listed in paras, (a) to (e) of the sub-section. The content of this
kind of condition is often referred to as a
'jurisdictional fact'
(see
Minister
of the Interior v Bechler and Others,
1948
(3) SA 409
(A.D.) at p.442; Rose-lnnes,
Judicial
Review of Administrative Tribunals in S.A.
pp
.99-100) in the sense that it is a fact the existence of which is
contemplated by the Legislature as a necessary pre-requisite
to the
exercise of the statutory power. The power itself is a discretionary
one. Even though the jurisdictional fact exists, the
authority in
whom the power resides is not bound to exercise it. On the other
hand, if the jurisdictional fact does not exist,
then the power may
not be exercised and any purported exercise of the power would be
invalid.
Upon
a proper construction of the legislation concerned, a jurisdictional
fact may fall into one or other of two broad categories.
It may
consist of a fact, or state of affairs, which, objectively speaking,
must have existed before the statutory power could
validly be
exercised. In such a case, the objective existence of the
jurisdictional fact as a prelude to the exercise of that power
in a
particular case is justiciable in a Court of law. If the Court finds
that objectively the fact did not exist, it may then
declare invalid
the purported exercise of the power (see e.g.
Kellerman
v Minister of Interior,
1945
J.P.O. 179;
Tefu
v Minister of Justice and Another,
1953
(2) SA 61
(T)). On the other hand, it may fall into the category
comprised by instances where the statute itself has entrusted to the
repository
of the power the sole and exclusive function of
determining whether in its opinion the pre-requisite fact, or state
of affairs,
existed prior to the exercise of the power. In that
event, the jurisdictional fact is, in truth, not whether the
prescribed fact,
or state of affairs, existed in an objective sense,
but whether, subjectively speaking, the repository of the power had
decided
that it did. In cases falling into this category the
objective existence of the fact, or state of affairs, is not
justiciable in
a Court of law. The Court can interfere and declare
the exercise of the power invalid on the ground of non-observance of
the jurisdictional
fact only where it is shown that the repository of
the power, in deciding that the pre-requisite fact or state of
affairs existed,
acted
male
fide
or
from ulterior motive or failed to apply his mind to the matter. (See
e.g.
Minister
of the Interior v Bechler and Others
supra;
African
Commercial and Distributive Workers' Union vSchoeman N.O. and
Another,
1951
(4) S.A. 266
(T);
R
v Sachs,
1953
(1) S.A. 392
(A.D.).)"
In
my view the same principle and approach are applicable on the facts
of this case.
[13]
In our matter under consideration, the jurisdictional fact falls
under the first category described above by
Corbett,
J
and
is accordingly justiciable as it calls for evidence to show a
reasonable basis for making the confession and a reasonable basis
for
seeking to withdraw such confession. Such evidence, objectively
speaking, must have existed before the discretion to grant
or refuse
the amendment could validly be exercised.
Evaluation
[14]
I now evaluate the evidence to determine whether the Defendant,
objectively speaking, has crossed the threshold to establish
the
existence of the jurisdictional fact, namely, whether the Defendant
has tendered evidence to show a reasonable basis for making
the
original mistaken admission and for withdrawing such admission. The
evidence tendered is as follows:
(i)
In the first place, Van der Spuy states in the founding affidavit
that Reid used the incorrect Deed of Sale and she did not
apply her
mind to the issue that the incorrect party had been sued. These
statements not only amount to hearsay, but are contradicted
by Reid
in her founding affidavit in support of the application for security.
Van der Spuy goes on to state that Reid is uncooperative
with the
present attorney of the Defendant. This is confirmed by Eugene Nico
Bester ("Bester") in his affidavit dated
1 April 2010. No
explanation is given by them why Reid is uncooperative. The only
plausible inference the court can draw is that
she does not want to
contradict the affidavit filed by her in support of the application
for security for costs and in the circumstances
perjure herself.
Besides the fact that the crucial allegations of both Pienaar and van
der Spuy concerning the mistaken admission
being hearsay, the
founding affidavit of Reid in the application for security for costs
stands uncontradicted and is inconsistent
with the proposed
amendment.
(ii)
In the second place, Reid in her founding affidavit dated 14 June
2005 to the application for security for costs, states:
Firstly,
that the Defendant had a sole mandate, expiring on 30 September
2004, to sell the property. It appears that a joint mandate
was
replaced by a sole mandate after 31 August 2004, which appears to
have lasted only for a month as it expired on 30 September
2004. It
appears further that the property was sold within the period of the
sole mandate and the Defendant earned the commission;
Secondly,
that she (Reid)
was
also
the effective cause of the transaction as she was personally
involved in the transaction as well as in the dealings with
Marion
Taylor, the Plaintiff's agent;
Thirdly,
that no agreement to share commission was concluded between Marion
Taylor and herself.
(iii)
In
the third place, it is not disputed that the cheque for the
commission was made out by the conveyancing attorney to the
Defendant.
Reid confirms under oath that the commission was earned by
the Defendant. This does not detract from the fact that the cheque
was
either endorsed over to Retrospective or the proceeds paid over
to it. Counsel for the Defendant submitted that the probabilities
favour the Defendant's case that at the time of the alleged oral
agreement, Reid was acting on behalf of Retrospective. This is
pure
speculation and flies in the face of a statement under oath by Reid
that she was acting for the Defendant in this transaction.
No
acceptable evidence has been tendered to the contrary.
(iv)
In
the fourth place, the Defendant sought to withdraw the admissions on
the basis that it was not involved in the transaction at
all. The
Defendant avers that another entity namely, Retrospective was the
party who in fact held the mandate to sell the property
and that
Retrospective earned the commission from the sale. It is common cause
that, at the time of the transaction in question,
the same persons
comprised the members of the Defendant and that of Retrospective. It
must be inferred therefrom that constructive,
if not actual,
knowledge must be imputed to the Defendant and to Retrospective in
respect of the particular transaction. In amplification
of the above,
I refer to the case of
Town
Council of Barberton v Ocean Accident and Guarantee Corporation Ltd
1945
TPD 306
at 311 wherein
Malan,
J
states
the following:
"Where
any fact or circumstance, material to any transaction, business, or
matter in respect of which an agent is employed,
comes to his
knowledge in the course of such employment, and is of such a nature
that it is his duty to communicate it to his principal,
the principal
is deemed to have notice thereof as from the time that he would have
received such notice if the agent had performed
his duty, and taken
such steps to communicate the fact or circumstance as he ought
reasonably to have taken."
It
is only at a very late stage of the proceedings and after a number of
years that the Defendant seeks to withdraw the admissions.
(v)
In the fifth place, even if I am wrong in the conclusion that both
the Defendant and Retrospective had constructive, if not
actual
knowledge, of the transaction, in my view, there is an implied
warranty of authority by Reid to contract for the Defendant.
In this
respect
Innes,
CJ
in
Blower
v Van Noorden
1909
TS 890
at 900-901 described the true nature of the transaction, when
the ostensible agent contracts in the name of her "principal"
with a third party, as follows:
"What
takes place is this: the agent in effect represents to the other
contracting party that he has authority to bind his
principal; and
within the limits of that authority he consents to the terms of the
agreement on his principal's behalf. There is
a representation by the
agent personally, and a contract by him in his capacity as agent. The
representation is in respect of a
matter which is peculiarly within
his knowledge, and of which the other party knows nothing at all. But
the latter enters into
the contract on the faith of the
representation and, the agent intends that he shall do so; it forms
the basis of the whole agreement.
Under these circumstances we are
surely justified in implying, on the part of the agent, a personal
undertaking that his principal
shall be bound by the contract, and
that if not, he will place the other party in as good a position as
if the principal were bound."
In
this regard counsel for the Plaintiff referred to the so called
Turquand
Rule
as
contained in
Royal
British Bank v Turquand
(1856)
6 E&B 327
[1856] EngR 470
; ;
119 ER 886
which was accepted as part of our common
law under the
General
Law of Agency
and
incorporated in Section 36 of the Companies Act, No 61 of 1973. (vi)
In the sixth place, according to the founding affidavit
of Heather
Louise van der Spuy ("van der Spuy"), a member of the
Defendant, she only became aware of the error in November
2009, when
a copy of the indemnity dated 26 October 2004, which was presumably
signed by one RA Reid, the husband of Reid, was
brought to her
attention. The indemnity was allegedly given to the Sellers by
Retrospective and indemnified the Sellers against
any claim for
commission by the Plaintiff. The copy of the indemnity is unsigned
and appears on the letterhead of "Chas Everett
International"
and no confirmatory affidavit attesting to its authenticity has been
tendered. Very little, if any, reliance
can be placed on such letter.
(vii)
In
the seventh place, in support of the fact that Respective was the
responsible party, van der Spuy annexed two franchise agreements,
one
allegedly concluded between the Franchisor and the Defendant in
respect of the City Bowl area and the other between the Franchisor
and Retrospective in respect of the Atlantic Seaboard area. A close
scrutiny of the two franchise agreements reflects the following:
(a)
The
Franchise agreement in respect of the City Bowl area reflects:
firstly, that it is not signed by the Franchisor; secondly, that
it
is dated 14 May 2008 and signed on behalf of the Franchisee by van
der Spuy and Antoinette Louisa Britz ("Britz")
and thirdly,
that Reid is not a party to such agreement and neither did she sign
as surety;
The
one in respect of Atlantic Seaboard area shows: firstly, that it was
signed in Cape Town in May 2008 by Reid and her husband,
RA Reid on
behalf of the Franchisee and by the Franchisor in Johannesburg on 11
June 2008; secondly, that van der Spuy and Britz
were not a party to
such agreement and thirdly, that Reid and one RA Reid bound
themselves as sureties in respect of this agreement.
These
franchise agreements do not show what situation prevailed at the
time the sale of the property was concluded and which parties
were
involved. It therefore has very little, if any, evidential value.
(viii)
In
the eighth place, no franchise agreement purporting to show that
Retrospective held a joint or sole mandate in respect of properties
in the Atlantic Seaboard at the time of this transaction, was
tendered as evidence. One of the admissions made by the Defendant,
which it now seeks to withdraw, is that the Defendant held a joint
mandate. There is no explanation what is meant by joint mandate
and
with whom the Defendant held the joint mandate. What is even more
more surprising is the fact firstly, that a joint mandate
was
replaced by a sole mandate after 31 August 2004 and the sole mandate
expired a month later, that is on 30 September 2004; secondly,
that
the transaction was concluded within that month; and thirdly, the
sellers insisted on an indemnity against a possible claim
of
commission by the Plaintiff.
(ix)
In the ninth place, the court cannot exclude the possibility that the
joint mandate was held by the Defendant and Retrospective.
In this
regard, the following facts are compelling: firstly, that both
entities had the same members; secondly, that the joint
mandate
expired on 31 August 2004 and thereafter the sole mandate was
secured; thirdly, that the administrative address of both
entities is
given as 139, Kloof Street, Gardens to which address the banking
statements were sent; fourthly, the sale of the property
was
completed on the Deed of Sale of the Defendant and fifthly, the
commission cheque was made payable to the Defendant, but was
either
endorsed over to, or the proceeds paid over to Retrospective and
lastly but importantly, that the Reids held the franchise
for the
Atlantic Seaboard in accordance with the franchise agreement tendered
as evidence and dated 11 June 2008 and what is significant
is the
fact that Mr Reid purported to have given the indemnity to the
Sellers and dated 26 October 2004 and the transaction was
negotiated
by Mrs Reid and concluded in and during September 2004. The element
of bad faith cannot be excluded. However, for present
purposes I am
not required to make such finding for reason that will become
apparent in due course.
The
Finding
[15]
In the circumstances, I conclude that the admissions made in the Plea
is consistent with the objective facts and inconsistent
with the
allegations contained in the proposed amendment. I accordingly hold
that the Defendant has failed to establish the jurisdictional
fact by
tendering evidence to show a reasonable basis firstly, for making the
mistaken admissions and secondly, for withdrawing
such admissions.
The
Exercise of Discretion
[16]
I have stated earlier that in order for the court to exercise its
discretion to grant or refuse the amendment to withdraw the
admissions, the existence of the jurisdictional fact was a
prerequisite to the exercise of such discretion. The Plaintiff
submitted
that the Defendant was actuated by
mala
fides
to
bring this application. The Plaintiff also contended that it will be
prejudiced and an injustice will result if the amendment
is granted
as the claim against Retrospective will have become prescribed. As
the Defendant has failed to cross the first hurdle,
namely, the
existence of the jurisdictional fact, it is unnecessary for the court
to determine the issues of
mala
fides,
prejudice
or injustice as a prerequisite to the exercise of its discretion to
grant or refuse the proposed amendment.
The
Order
[17]
In the premises the application for the amendment of the Plea to
withdraw the admission is refused with costs.
E. MOOSA