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[2020] ZAECPEHC 9
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Gamble Investments (Pty) Ltd v Santam Ltd and Another (2921/2017) [2020] ZAECPEHC 9 (28 April 2020)
IN
THE HIGH COURT OF SOUTH AFRICA
(EASTERN
CAPE LOCAL DIVISION, PORT ELIZABETH)
Case
No: 2921/2017
Date
heard: 17 March 2020
Date
delivered: 28 April 2020
NOT
REPORTABLE
In
the matter between:
GAMBLE
INVESTMENTS (PTY)LTD
Plaintiff
AND
SANTAM
LTD
First
Defendant
PSG
WEALTH FINANCIAL PLANNING (PTY) LTD Second
Defendant
JUDGMENT
Goosen
J:
[1]
The plaintiff claims damages from the second defendant
which it
suffered pursuant to a fire which destroyed a building owned by it.
The claim against the second defendant is premised
upon the fact that
the second defendant, as an insurance intermediary, failed in its
duties to the plaintiff. As a result of these
breaches the property
damaged in the fire was underinsured. In consequence, the first
defendant, being the insurer, paid out an
amount less than the
insured value of the property based on an application of the average
condition contained in the insurance
policy. The plaintiff
accordingly seeks payment of the amount by which the first defendant
reduced the claim, being an amount of
R3 079 224.70.
[2]
The plaintiff instituted action against both the
first and second
defendant. The plaintiff's action against the first defendant was
settled and the trial proceeded only in respect
of the claim against
the second defendant. At the close of the plaintiff's case the second
defendant applied for absolution from
the instance. Full argument was
presented and, on 3 December 2019, I reserved judgment on the
application. A few days later I was
approached by counsel in
chambers. It was indicated to me that the plaintiff intended to bring
an application to re-open its case.
This application would be
opposed. I was, therefore, requested to withhold judgment on the
application for absolution pending finalization
of the application to
re-open.
[3]
The application to re-open was filed on 12 December
2019. A notice of
opposition was filed on 9 January 2020. This was followed, on 5
February 2020, by the filing of the second defendant's
answering
affidavit. The reply was filed on 26 February 2020. By agreement the
application was thereafter argued before me on 17
March 2020.
[4]
The papers filed in the application are quite voluminous.
The essence
of the plaintiff's case however, is that the plaintiff's
representatives were taken by surprise by the second defendant's
argument for absolution since they
bona fide
assumed that the
quantification of the plaintiff's claim was not in dispute. The
application for absolution was based on the argument
that the
plaintiff had failed to adduce sufficient evidence to prove two
elements of its case, namely the quantum of its damages
and
causality.
[5]
Once a party has closed its case it will not generally
be allowed to
lead further evidence save in rebuttal. The court, however, has a
discretion, to be exercised judicially, to allow
a party to re-open
its case and to lead such further evidence. Several considerations
are to be weighed in the exercise of the
discretion.
[6]
In
Mkwanazi
v van der Merwe and Another
[1]
which
dealt with the discretion to permit further evidence to be led in
terms of Rule 28(11) of the Magistrates' Courts Rules, the
court held
that the Supreme Court (as the High Court was then named) has an
inherent discretion to allow a party to re-open its
case. Reference
was made to
Oosthuizen
v Stanley
[2]
where
the following is stated:
"Several
considerations have a bearing on the exercise of such discretion, for
instance, the reason for the plaintiff's failure
to call the witness
before, the danger of prejudice to the opposite party owing to his
being no longer able to bring back his witnesses,
and, of cause the
materiality of the evidence. In an application for leave to lead
fresh evidence in this court the test as to
materiality laid down in
Colman v Dunbar
(1933 AD 141)
is that the evidence tendered and such
that it would be practically conclusive. In a trial court, however,
in my judgment, the
test of materiality should be held to be
satisfied where the evidence tendered, if believed, is material and
likely to be weighty."
[7]
Oosthuizen's
case and that of
Colman
were
both cases in which leave to lead further evidence was sought on
appeal. It is in this context that the test in respect of
materiality
must be viewed. As pointed out in
Oosthuizen
a less
stringent assessment as to materiality applies at the stage of trial.
It is sufficient if the court is satisfied that the
evidence sought
to be tendered is likely to be weighty if believed.
[8]
A reading
of both
Oosthuizen
and
Colman
indicates
that the admission of fresh evidence at the stage of an appeal i.e.
once the case has been tried and decided, will only
be allowed where
special grounds exist and the admission of such evidence would not
unfairly prejudice the other side and would
allow justice to be done
between the parties.
[3]
[9]
The general
considerations which are to be taken into account in the exercise of
the discretion are set out in
Mkwanazi
[4]
as
follows:
"(i)
The reason why the evidence was not led timeously.
(ii)
The degree of materiality of the evidence.
(iii)
The possibility that it may have been shaped to relieve the pinch of
the shoe.
(iv)
The balance of prejudice, i.e. the prejudice to the plaintiff if the
application is refused, and the
prejudice to the defendant if it is
granted. This is a wide field. It may include such factors as the
amount or importance of the
issue at stake; the fact that the
defendant's witnesses may have already dispersed; the question
whether the refusal might result
in a judgment of absolution, in
which event whether it might not be as broad as it is long to let the
plaintiff lead the evidence
rather than to put the parties to the
expense of proceedings de nova.
(v) The
stage which the particular litigation has reached. Where judgment has
been reserved after all
evidence has been led on both sides and, just
before judgment is delivered, the plaintiff asks for leave to
lead further
evidence, it may well be that he will have a harder row
to hoe, because of factors such as the increased possibility of
prejudice
to the defendant, the greater need for finality, and the
undesirability of throwing the whole case into the melting pot again,
and perhaps also the convenience of the court which is usually under
some pressure in its roster of cases. On the other hand, where
a
plaintiff closes his case and, before his opponents have taken any
steps, asks for leave to add some further evidence, the case
is then
still in medias res as it were.
(vi)
The healing balm of ,an appropriate order as to costs.
(vii)
The general need for finality in judicial proceedings. This factor is
usually cited against the applicant
for leave to lead
further evidence. However, depending on the
circumstances, finality might
be sooner achieved by allowing
such evidence and getting on with the case, than by
granting absolution and opening
the intermediate way to litigation de
novo in all its tedious amplitude.
(viii)
The appropriateness, or otherwise, in all the circumstances, of
visiting the remissness of the attorney
upon the head of his client."
[10]
The party seeking the indulgence of re-opening its case must
establish
that the evidence it seeks to present was not available to
it or could not reasonably be acquired. If it was available an
acceptable
explanation must be furnished as to why it was not
presented.
[11]
The plaintiff in the present instance seeks to lead the expert
testimony of a Quantity Surveyor, Mr Elliott relating to the
assessment of the costs of replacement of the damaged property. It
is
not in dispute that the evidence the plaintiff seeks to lead is
material to the issue to be decided. This evidence, it is asserted,
was available to the plaintiff at trial or could have been available
with relative ease. The key question to be considered at the
outset,
therefore, is the plaintiff's explanation for not presenting that
evidence prior to the close of its case.
[12]
The explanation tendered by the plaintiff is that the plaintiff's
legal representatives
bona fide
assumed that the
quantification of the plaintiff's claim was not in dispute. They
accordingly did not lead evidence which it now
wishes to lead to
establish (a) the true value at risk of the buildings which was
damaged in the fire; (b) the actual sum insured
of the building; (c)
the value of the loss suffered by the plaintiff, inclusive of the
costs of demolition; .and (d) the effect
of the application of the
average conditions on the plaintiff's insurance claim.
[13]
The plaintiff states in its founding affidavit that its legal
representatives
were taken by surprise by the argument advanced by
the second defendant in the absolution application. They based their
assumption
upon the fact that the second defendant's plea consists of
a non-admission rather than a specific denial. It is stated also that
in the course of pre-trial engagements which
inter alia
sought
to define the issues for trial, the second defendant did not alert
the plaintiff that it was disputing the quantum of the
plaintiff's
claim.
[14]
Still another explanation for what is now accepted to be an erroneous
assumption is the role that the second defendant, in the person of
Wait, the broker, played in the settlement of the plaintiff's
insurance claim with the first defendant. In this regard the
plaintiff alleges that Wait, who continued to participate as an
insurance
intermediary, facilitated the submission of the insurance
claim and was present at and a party to the negotiated settlement. It
is accordingly asserted that Wait
"represented'
the
plaintiff as an agent and is accordingly precluded from now denying
the quantification of said claim, including the effect of
the
application of the average condition.
[15]
The plaintiff further contends that it was
"led up the garden
path"
so that at the stage of absolution second defendant
could
"deliver its knock-out punch".
The contention
is that by not drawing plaintiff's attention to the dispute; by not
itself qualifying an expert to challenge the
quantification of the
claim; and by constructing its cross-examination of the plaintiff's
witnesses in a manner which enabled it
to make the argument an
absolution, the plaintiff was misled.
[16]
It is appropriate to preface the consideration of the plaintiff's
case for re opening and the position adopted by the second
defendant with some general observations. Civil litigation is
adversarial in character. The conduct of the adversaries is regulated
by procedural rules, codes of practice and professional ethics,
and
by substantive rules of law. The adversarial contest seeks a legally
cognizable result in accordance with law. The conduct
and prosecution
of a party's case, however, is premised upon autonomy. A party is
free to decide how it wishes to prosecute its
case subject only to
the overriding legal and ethical obligations which mediate such
autonomy. In exercising this autonomy the
party and the legal
representatives appointed by it, is responsible. The adjunct to
autonomy is accountability. A party is bound
by the choices it makes
or those which are made on its behalf in the conduct of the
litigation. It is for this reason that a re-opening
of a case is not
there for the asking. An application to re-open invariably raises the
balance between accountability of the legal
representatives and the
interests of justice. It is in the balancing of these that the
considerations set out above came to the
fore.
[17]
The plaintiff's contention that its representatives
bona fide
assumed that the quantification of the claim was not in dispute
must be considered against the backdrop of the pleadings, since these
primarily define the issues to be tried.
[18]
The plaintiff formulated its claim against the second defendant,
having pleaded certain breaches, as follows:
"In so doing the
Second defendant underinsured the plaintiff's immovable property in
particular by failing to advise
that the
Plaintiff's sum insured in respect of property insured
under the policy was equal
. to its replacement
value plus an amount equal to Value Added
Tax, which resulted in the application
of the average condition
to the loss as set out below.
Upon
adjudication of the loss, the First Defendant applied the average
conditions to the claim, resulting in a loss of R3 079 224.77
to the Plaintiff as calculated in paragraph 53
infra."
[19]
The calculation set out in paragraph 53 of the particulars is the
following:
"The
plaintiff's loss of R3 079 224.77 is calculated as follows:
Average
in respect of demolition contract:
Quantum
R867 808.80
Less
Average (1)
R779 968.31
TOTAL
R 87 840.48
Reinstatement
quantum
R19 301
647.41
Less
Average (2)
R 2 299 256.45
TOTAL
R17 002 390.96
Total
average component
R 779
965.32
Average
(1)
R2 299 256.45
TOTAL
R3 079 224.77"
[20]
In regard to the preceding paragraphs, the second defendant pleaded
a
denial. It also pleaded that the plaintiff furnished the second
defendant with specific instructions regarding the insured value
of
the insured property. It denied that the property was underinsured
and further pleaded that in the event that it is found to
be
underinsured, said underinsurance arose as a result of a direct
instruction given to the second defendant.
[21]
In relation to the quantification of the loss (paragraph 53), the
second defendant pleaded that it made no admissions and put the
plaintiff to the proof thereof.
[22]
It is this latter
"non-admission"
which the
plaintiff says induced its representatives to assume that the
quantification was not in dispute. The reasons advanced
are
threefold. Firstly, it is stated that
such
"non-admission"
does not
indicate a "serious" dispute. This, presumably, on the
basis that no countervailing factual averments are made.
There is, in
my view, no substance
to
the contention. A fact is either
disputed or it is not. If it is not disputed no evidence need
be presented at trial to prove
that factual averment. Whether a party
can advance a contrary version or not does not alter the situation.
Evidence must either
be led to prove the averment or it need not be.
In this instance, the plea clearly indicated that evidence would be
required to
be led to prove the factual averments embodied in the
paragraph setting out the calculation.
[23]
The second ground of the assumption is founded on the role played
by
the broker, Wait. As already indicated the allegation is made that
Wait acted as the plaintiff's agent in the negotiations with
the
first defendant at the stage it was adjudicating the plaintiff's
insurance claim. On this basis the plaintiff now contends
for some
form of acquiescence or waiver to be applied.
[24]
This case is not pleaded either in founding its claim against the
second defendant or in replication to the second defendant's plea. Of
particular significance in this regard is the fact that the
plaintiff
pleads the facts relevant to the agreement of loss by which its
insurance claim against the first defendant was settled.
The second
defendant denies that it was a party to or bound by this settlement
agreement. The plaintiff does not, in replication,
set out the
contentions it now seeks to advance against the second defendant.
Accordingly no doubt could have existed as to the
second defendant's
stance in relation to the basis upon which the agreement of loss was
concluded.
[25]
The third basis for the assumption is that, in the pre-trial process,
the second defendant did not
"alert'
the plaintiff to the
fact that the quantification of the claim was a
"materiaf'
dispute. Reference is made to an exchange of correspondence and
the interaction of the parties in telephonic or other pre-trial
discussions. Reliance is also placed on the fact that the second
defendant indicated, prior to the matter being declared trial-ready
at the roll call hearing, that it did not intend to call expert
witnesses. Based on this the plaintiff asserts that it assumed
that
"the calculation of the average as contained in the
settlement agreement was not in issue"
and therefore only
qualified its expert to deal with the loss of rental claim against
the first defendant. The plaintiff further
states that since the
quantum aspect was not addressed in the discussion of
"the
broader issues"
in dispute, namely the mandate and the
duties that attach thereto, it was entitled to assume that the
quantum was not in dispute.
[26]
The principal difficulty with this explanation is that it
ignores not
only the terms of the pleadings but also the recorded definition of
the issues to be tried. The latter records that
the issues in dispute
are those set out in the pleadings.
[27]
In argument before me it was submitted, on behalf of the plaintiff,
that the explanation advanced by the plaintiff must be accepted. It
was pointed out that the second defendant is unable to gainsay
the
assertion by the legal representatives as to their subjectively held
beliefs.
[28]
Counsel for the second defendant, however, argued that, objectively
viewed, the plaintiff's representatives misconstrued the case that
the plaintiff had to prove. It was submitted that there can
have been
no doubt that the plaintiff was required to prove the quantification
of its loss. That did not merely require proof of
the calculation by
which the settlement amount was arrived at but each of its elements.
Thus, it was submitted, the plaintiff was
required upon a plain
reading of the pleadings to prove the value of the property at risk,
the costs of demolition and the value
of reinstatement of the insured
building. These factors together with the insured value would permit
determination of the effect
of the average clause if applied.
[29]
Support for a finding that the plaintiff's representatives
misconstrued
what was required to be proved is to be found in the
argument advanced in opposition to the application for absolution.
That argument
proceeded on the basis that the plaintiff had, at least
prima facie,
proved its loss by presentation of the evidence
relating to the insurance settlement; the insured value together with
provision
for VAT thereon; and the factual evidence of Elliott in
which he confirmed the calculation of the loss. It was argued that
had
the plaintiff been under the mistaken assumption that quantum was
not in dispute ii would have raised that issue in argument. It
was
accordingly argued that the failure to lead such evidence as ft had
available must have been deliberate, on the basis that
it was not
considered necessary, rather than as a consequence of inadvertence or
even a
bona fide
held but mistaken belief.
[30]
There is, in my view, considerable force to the argument that
the objective facts do not accord with the assertion of a reasonably
held subjective belief that the issue of quantum was not in
dispute.
The pleadings and the pre-trial definition of issues do not support
the formulation of such belief.
[31]
The position of the plaintiff, as set out in its replying affidavit
was this:
"As is evident from
my founding affidavit, the
bona fide
assumption of the
Plaintiff and its legal representatives'
bona fide
assumption
that the quantification of the Plaintiff's claim could not be a
material dispute was not based on one single document,
event or
"theme" but on the whole train of events that led up to the
hearing, as well as what occurred at the hearing
itself."
[32]
This is an important qualification of its
"bona fide
assumption"
since it encompasses an appraisal of the conduct
of the litigation as a whole. II marks a shift, as Mr Nepgen argued,
in the plaintiff's
position from that adopted in its founding
affidavit. By the time of the trial hearing, the plaintiff had
already decided that
it was unnecessary to lead expert evidence in
respect of the quantification of its claim other than that relating
to its rental
claim against the first defendant. It is difficult
therefore to understand what, in relation to the hearing, could have
played
a role in
"facilitating"
its
assumption.
[33]
It must be accepted that the plaintiff's representatives considered
that the evidence presented (as also that which they procured for
production) was sufficient to prove the plaintiff's case. Whether
such subjective assessment was induced by a mistaken assumption as to
what was required to be proved or arose because the representatives
misconstrued the case they were required to prove is of little moment
in the present instance. The mistaken assumption or misconstruing
of
the case led to certain evidence not being procured and that evidence
not being led at trial. In my view this does not fall
within the
ambit of what otherwise be considered to be inadvertence.
[34]
I accept, on the basis of the objective facts relied upon by the
second defendant that the error in assessment of the plaintiff's case
could have been avoided. In its founding affidavit the plaintiff
states that in respect of the second defendant's
"non-admission"
in relation to the quantification of the claim, it filed a notice
to remove a complaint preliminary to an exception. A decision by
the
plaintiff to amend its particulars of claim, however, intervened and
the exception was not pursued at that stage. When the
second
defendant retained the
"non-admission"
in its
consequential amended plea, the plaintiff elected not to pursue an
exception. It also did not deal with its uncertainty as
to the ambit
of the dispute by framing an appropriate request for trial
particulars. Had it done so the true nature of the dispute
might have
been properly elucidated.
[35]
The acceptance that the error was as a consequence of deliberation
on
the part of the plaintiff's legal representatives does not,
ipso
facto,
mean that the plaintiff's request to re-open its case
cannot be granted. As indicated earlier in this judgment the exercise
of the
discretion to allow a plaintiff to re-open involves
consideration of numerous factors. The explanation for the default is
but one
of those factors.
[36]
The application to re-open the plaintiff's case was prosecuted on
the
basis of an acceptance, by the plaintiff, that but for the re-opening
of the case the matter would be determined by absolution
of the
defendant. The fact that the court would, if it did not allow the
plaintiff to re-open, grant absolution from the instance
serves to
underscore the prejudice which would be suffered by the plaintiff. To
this was added the fact that, in the circumstances
on this matter,
the granting of absolution would in all probability result in the
plaintiff being unable to further pursue its
claims as a result of
the prescription of the claims.
[37]
In the light of these considerations it was argued that a
refusal of
the application to re-open the plaintiff's case would give rise to
significant and insurmountable prejudice to the plaintiff.
In
contrast, so it was submitted, the prejudice to the second defendant
would be minimal, since it would have the
opportunity to deal with the further evidence to be
tendered and meet such evidence when opening its case.
[38]
Mr Nepgen argued however, that the prejudice to the second
defendant
was very significant. It was submitted that apart from the proposed
evidence of Elliot, which would still need to be
procured, the
plaintiff proposed to introduce an amendment to its particulars of
claim to introduce an entirely new issue, namely
the alleged
acquiescence of the second defendant in the quantification of the
claim or its waiver of a right to dispute same. This,
coupled with
the need to qualify Elliot as an expert would significantly expand
the issues to be tried. It would also, so it was
argued, in all
probability require the recalling of the plaintiff's key witness, Mrs
Kraak, in relation to the nature and extent
of the building as it
existed prior to the fire. The case that the plaintiff would have to
advance in this regard would place the
second defendant in the
invidious position of being unable to deal with such evidence since
the building has subsequently ceased
to exist. At the very least it
would give rise to the need to investigate the matter by way of
extensive discovery processes.
[39]
In the light of this, it was submitted that the prejudice to the
second
defendant is substantial. In essence it would be required to
meet a whole new case.
[40]
It should be stated that there is considerable force in these
submissions.
The re-opening of the plaintiff's case even if confined
to the terms of the order set out in the notice of motion will give
rise
to a broadening of the evidence in dispute. However, as Mr
Beyleveld correctly submitted, the issues in dispute on the pleadings
remain unchanged. By allowing the plaintiff to re-open its case for
the purpose of presenting the expert testimony of Elliott on
the
issues identified will not alter the case that the second defendant
is required to meet.
[41]
Insofar as the proposed amendment of pleadings is concerned, that
is
a matter to be dealt with by this court at an appropriate stage and
in accordance with its assessment of the consequences that
may then
flow from such an amendment. Whilst I accept that the possible
amendment may introduce questions as to the materiality
of the
evidence to be presented, for the present the evidence which the
plaintiff proposes to lead is material. If it is allowed
to re-open
its case to present that evidence it will be confined by the terms of
the order. What may yet arise in the litigation
is a matter to be
addressed at the stage that it arises.
[42]
In my assessment the prejudice that the plaintiff will suffer if
it
is not permitted to re-open its case outweighs the prejudice to be
suffered by the second defendant. The nature of the prejudice
to be
suffered by the plaintiff is, in my view, also decisive in the
balance to be struck between accountability of the legal
representatives and the interests of justice. Mr Nepgen alluded in
argument to that fact that this balance may also be struck on
the
basis of acceptance that the plaintiff may have other remedies
available to it. I do not think that it is appropriate to engage
the
question of other notional remedies. It is in this case that the
balance must be struck and it is in this case that a discretion
must
be judicially exercised.
[43]
In the view I take of the matter the judicial exercise of the
discretion
requires that the plaintiff be granted leave to re-open
its case in the terms sought in the notice of motion.
[44]
What remains to be considered is the aspect of costs. It was accepted
by the plaintiff that what it seeks is an indulgence and that,
ordinarily, it should bear responsibility for the costs of such
application or the wasted costs occasioned thereby. It was argued
however that the opposition was unreasonable and that, accordingly,
the second defendant should be ordered to pay the costs. In the
alternative, it was submitted that the costs should be reserved
for
determination at trial. The second defendant submitted that the
opposition was not unreasonable. Thus, even if the application
succeeds the second defendant should be indemnified regarding costs.
This should include the wasted costs occasioned by the application
for absolution.
[45]
As is apparent from what is stated earlier in the judgment, I
consider
the second defendant's opposition to the application
reasonable in the circumstances. There is no reason why the costs
should be
reserved for later determination. This court will, in due
course, be in no better a position than it presently is to determine
the question of costs. I am also in agreement that such wasted costs
as arose in consequence of the application for absolution from
the
instance ought also to be borne by the plaintiff. I do not think it
appropriate to impose a punitive costs award.
[46]
In the result the following order will issue:
1.
The plaintiff is granted leave to re-open its case.
2.
The plaintiff is granted leave to recall and qualify its expert
witness, Mr D Elliot, and lead his evidence
relating to:
(a)
The true value at risk of the building owned by the plaintiff which
was damaged by the fire which occurred
in June 2016;
(b)
The value of the loss suffered by the plaintiff as a result of the
damage by fire in June 2016, such
value of loss to include the cost
of demolition and debris removal;
(c)
The effect of the application of the average condition on the
plaintiff's claim.
3.
The plaintiff is ordered to pay the costs of the application to
re-open its case.
4.
The plaintiff is ordered to pay the wasted costs occasioned by second
defendant's application for absolution
from the instance.
G.G
GOOSEN
JUDGE
OF THE HIGH COURT
Obo
the Applicant: Adv A. Beylebeld SC
Instructed
by :Schoeman Oosthuizen
Ref:
Mr Oosthuizen
Obo
the Respondent: Adv J.J Nepgen
Instructed
by:Pagdens
Ref:
J J Eksteen
[1]
1970 (1) SA 609
(A) at 616B-E
[2]
1938 AD 322
[3]
Colman v Dunbar
1933 AD 141
at 160
[4]
Ibid at 616G-617D