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[2023] ZAECQBHC 48
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Zimbabwe Consolidated Diamond Company v Smit Investment Holdings SA (Pty) Ltd t/a Gecko Projects (3105/2022) [2023] ZAECQBHC 48 (5 September 2023)
SAFLII
Note: Certain personal/private details of parties or witnesses
have been redacted from this document in compliance
with the law
and
SAFLII
Policy
IN
THE HIGH COURT OF SOUTH AFRICA
(EASTERN
CAPE DIVISION – GQEBERHA)
CASE
NO.: 3105/2022
Matter
heard on: 20 July 2023
Judgment
delivered on: 5 September 2023
REPORTABLE: NO
OF INTEREST TO OTHER
JUDGES: YES
REVISED
In
the matter between: -
ZIMBABWE
CONSOLIDATED DIAMOND COMPANY
Plaintiff
(Registration
No. 4943[…])
and
SMIT
INVESTMENT HOLDINGS SA (PTY) LTD
T/A
GECKO PROJECTS
Defendant
(Registration
No. 2007[…])
JUDGMENT ON EXCEPTION
ELLIS AJ:
[1]
This judgment deals with two exceptions that were raised against the
particulars of claim delivered
by the plaintiff in the action.
The excipient (“the defendant”) raised two grounds of
complaint alleging that
the particulars of claim do not contain the
averments necessary to disclose the cause of action alternatively
that they are vague
and embarrassing. The plaintiff contends that
there is no merit in either of the grounds advanced and seeks the
dismissal of the
exceptions, with costs.
BACKGROUND
[2]
The plaintiff, Zimbabwe Consolidated Diamond Company, instituted
action against Smit Investment
Holdings SA (Pty) Limited t/a Gecko
Projects as defendant, seeking payment of USD800 000 being for
the restoration of monies
paid by it pursuant to a contract of sale
which failed and was rendered
void ab initio
due to the
non-fulfilment of a suspensive condition. The contract was
subject to the following suspensive condition at clause
4.1:
“
This
agreement (other than the provisions of clauses 1 to 4 and 9 to 13,
all of which will become effective on the signature date)
is subject
to the fulfilment of the condition precedent that on or before the
30
th
day after the signature date, the purchaser paid the deposit into the
seller’s designated bank account.”
[3]
After the expiry of the performance date, and in a purported attempt
to fulfil the suspensive
condition, the plaintiff made partial
payment of the deposit by paying the sum of USD800 000.
[4]
The plaintiff seeks repayment of its money due to the contract having
been rendered
void ab initio
and pleads that it has made
restitution of the sale assets. The plaintiff further pleads that
despite the defendant receiving the
USD800 000 and the
plaintiff’s restitution of the sale assets, the defendant has
not made restitution of the USD800 000
to the plaintiff.
At first glance the plaintiff’s claim against the defendant
appears to have been framed in contract.
THE GROUNDS OF
EXCEPTION
[5]
The defendant raises two grounds of complaint in is exception to the
plaintiff’s particulars
of claim. For purposes of the
first complaint, the defendant assumed that the proper law of the
contract is the South African
law of contract. The defendant
alleges that no cause of action in South African law is disclosed by
the particulars of claim
as the particulars of claim are pleaded
squarely within the law of contract and in respect of which
restitution of its performance
to the defendant is claimed.
Restitution of performance is appropriate only where there has been a
cancellation of a valid
contract pursuant to a breach of that
contract, because “restitution” is to be regarded as a
distinct contractual remedy.
[1]
As such the defendant avers that no cause of action in terms of the
South African law of contract is disclosed in the particulars
of
claim.
[6]
The second complaint lies in that the contract on which the plaintiff
relies is an international
one, however, the contract contains
mutually destructive provisions concerning what the proper law of the
contract is, which would
govern the dispute between the parties.
On the one hand clause 12.10 of the contract provides that an
arbitration, being
the preferred method of dispute resolution, shall
decide any dispute between the parties in accordance with Zimbabwean
law.
On the other hand, clause 13.8 provides that the agreement
shall in all respects, including its existence, validity,
interpretation,
implementation, termination, and enforcement be
governed by and construed under the laws of Namibia. Furthermore,
the plaintiff’s
claim as formulated in the particulars of claim
relies on the law of South Africa, which reliance is in contradiction
to the choice
of law expressed by the parties in clauses 12.10 and
13.8, respectively. Accordingly, the defendant contends that
the particulars
of claim do not disclose a cause of action
alternatively are vague and embarrassing.
LEGAL PRINCIPLES
AND DISCUSSION
[7]
The principles applicable in the adjudication of exceptions are
well-established, and it is therefore
not necessary for the purposes
of this judgment to rehash them at any length. Suffice to say that a
pragmatic approach is called
for, bearing in mind the purposes of an
exception: being to weed out claims that should not proceed to
trial because a cognisable
claim or defence, as the case may be, has
not been made out on the pleadings, or to prevent a claim or defence
being persisted
with on pleadings that are vague and embarrassing.
As Harms JA remarked in
Telematrix
(Pty) Limited t/a Matrix Vehicle Tacking v Advertising Standards
Authority
[2]
“
[a]n
over-technical approach destroys their utility”.
[8]
In the same vein, Ponnan JA observed in
Luke
M Thembani and Others v President of the Republic of South Africa and
Another
[3]
that:
“
[w]hilst
exceptions provide a useful mechanism “
to
weed out cases without legal merit
”,
it is nonetheless necessary that they be dealt with sensibly.
It is where pleadings are so vague that it is impossible
to determine
the nature of the claim or where pleadings are bad in law in that
their contents do not support a discernible and
legally recognised
cause of action, that an exception is competent. The burden
rests on an excipient, who must establish
that on every
interpretation that can reasonably attach to it, the pleading is
excipiable. The test is whether on all possible
readings of the
facts no cause of action may be made out; it being for the excipient
to satisfy the court that the conclusion of
law for which the
plaintiff contends cannot be supported on very interpretation that
can be put upon the facts.” (Footnotes
omitted).
[9]
An exception based on the allegation that the pleading is vague and
embarrassing is one that is
directed to some defect in the manner in
which a cause of action is formulated which is of such a nature as to
cause the party
excepting thereto embarrassment.
[4]
[10]
In deciding an exception on the basis that the pleading is vague and
embarrassing, the first question involves
deciding whether the
pleading is indeed vague inasmuch as it is not possible to distil
from it a single clear meaning
[5]
.
If this question is answered positively the court is then required to
determine whether embarrassment is occasioned by such
vagueness
[6]
and whether such embarrassment is prejudicial to the party excepting
to the pleading
[7]
.
[11] An
exception is always decided with reference only to the pleadings.
DISCUSSION
[12]
The central issue in this exception concerns the applicability of
foreign law, due to the plaintiff suing
in terms of on an
international contract.
[13]
The importance of this is that the appropriate legal system which
governs the international contract under
consideration must be
identified as being the “proper law of the contract”.
[14]
As was held in
Harnischfeger
Corporation and Another v Appleton and Another
[8]
,
to a South African court each aspect of foreign law is a factual
question, and any evidence of that aspect must emanate from someone
with the necessary expertise. It is assumed that on any
relevant point there is no difference between our law and the law
in
the foreign country. The result is that the party who wants the
court to find that there is a difference, the party who
in that sense
relies upon the foreign law to assist him to a point where South
African Law would not bring him, must produce such
evidence.
[15] It
is common cause that clause 12.10 provides that an arbitration shall
be in accordance with Zimbabwean
law and that clause 13.8 provides
that the agreement shall be governed and construed under the laws of
Namibia.
[16]
Mr
Rorke
on behalf of the defendant argued that the plaintiff’s
case is pleaded in terms of the law of contract and that it is
fundamental
that the proper law of the contract is pleaded in the
particulars of claim. Even if an alternative cause of action is
pleaded (which
he argued is not the case) it still has international
features and it is still relevant to identify the law of that
country.
[17]
Further, the authorities are clear on the right to restitution being
a distinct contractual remedy.
See
inter
alia
Laco
Parts (Pty) Limited t/a ACA Clutch v Turners Shipping (Pty)
Limited
[9]
:
“
In
Baker
v Probert
the Appellate Division (as it then was) finally settled the vexed
question whether a claim for restitution following cancellation
of a
contract was contractual or enrichment. Its view that such
claim was contractual was recently reaffirmed in
Kudu
Granite Operations (Pty) Limited v Caterna Limited
.”
(Footnotes omitted).
[18]
With reference to the matter of
Kudu
Granite Operations (Pty) Limited v Caterna Limited
[10]
Mr
Rorke
specifically referred me to paragraphs 14 and 15 of this judgment,
wherein the Supreme Court of Appeal held that there is a material
difference between suing on a contract for damages following upon
cancellation for breach by the other party (as in
Baker
)
and having to concede that a contract in which the claim had its
foundation, which has not been pre-breached by either party,
is of no
force and effect. The second situation has been recognised
since Roman times as one in which the contract gives
rise to no
rights of action and such remedy as exists is to be sought in unjust
enrichment, an equitable remedy in which the contractual
provisions
are largely irrelevant.
Mr
Rorke
argued further that in the current matter, although the contract does
not give rise to rights of action, the clauses dealing with
the
foreign law will remain, and in conclusion that the plaintiff did not
plead its case on the particulars of claim as one of
unjust
enrichment.
[19]
The argument advanced by
Ms Rossi
, for the plaintiff, can be
summarised as follows. The plaintiff has pleaded in its amended
form the
locus contractus
which alerts the defendant and court
to the existence of a foreign element. Whichever law is
ultimately applicable to the
dispute cannot be dealt with on
exception. It is not contended in the exception that the
grounds pleaded to sustain the plaintiff’s
cause of action are
any different in either Zimbabwean or Nambian law. The court’s
selection of the law applicable
to this case cannot be fairly
determined at this preliminary stage especially having regard to the
benevolent approach endorsed
by our courts and until the introduction
of the Law of Evidence Amendment Act, Act 45 of 1988 (“the
Act”), the content
of foreign law was proved in terms of common
law approach. Section 1 of the Act now provides guidance and
has markedly changed
the position and provides that a court may take
judicial notice of the law of a foreign state insofar as such law can
be determined
readily and with sufficient certainty. Section
(1) 2 provides that the provisions of section 1(1) shall not preclude
any
party of adducing evidence of the substance of a legal rule
contemplated in that subsection which is in issue at the proceedings
concerned.
Ms Rossi
therefore contended that the aspect
of foreign law is squarely before the court and pleaded, and the
plaintiff can in due course
proceed to prove the foreign law
applicable in terms of the provisions of the Act.
[20] As
to the second ground of complaint, the argument advanced on the day
of hearing is a departure from the
heads of argument and
Ms Rossi
accepted that a claim based on restitution is a distinct contractual
remedy and considering the contract being rendered
void ab initio
the plaintiff cannot rely on this contractual restitution as a
remedy.
[21]
Instead, it was argued that the plaintiff’s claim is in fact a
claim based on unjustified enrichment,
more specifically, the
condictio
indebiti
,
and if the particulars of claim is read with due consideration of the
material allegations as per
Amler
[11]
,
the particulars of claim cannot be faulted.
[22] In
further support of her argument she also relied on the matter of
Kudu
,
specifically paragraphs 16 and 17, which
read as follows:
“
[16]
Except that the
condictio
causa data causa non secuta
appears to apply to cases where a suspensive condition or the like
was not fulfilled, the identification of the cause of the action
is
not of importance since there appears to be no difference in the
requirements of proof of the two
conditiones
.
The essential point is that Caterna’s claim is covered by one
or the other remedy for unjust enrichment.
[17] It
follows that to assess that claim one has to consider whether the
following general enrichment elements
are present:
(i)
whether
Kudu had been enriched by its nominee’s receipt of the granite;
(ii)
whether
Caterna had been impoverished by procuring that Ruenya delivered the
blocks from its stock;
(iii)
whether
Kudu’s enrichment was at the expense of Caterna; and
(iv)
whether
the enrichment was unjustified.”
[23]
Ms
Rossi
therefore argued that considering the plaintiff’s
particulars of claim against the backdrop of factors set out in (i)
to
(iv) above, the general enrichment elements are all present and
the plaintiff’s cause of action is sustainable.
[24]
The obvious response to this argument advanced is that it is a
radical departure from the heads of argument
and in any event
Mr
Rorke
argued there are no averments of the enrichment of the
defendant or to the impoverishment of the plaintiff. Also absent are
allegations
relating to the value of the equipment tendered back.
What further exacerbates the plaintiff’s difficulty is that the
proper
law of the contract is not pleaded. He stressed that
even though the contract has failed, certain portions survived,
including
the portion dealing with the foreign law, and it is
uncertain how the applicable foreign law deals with unjust
enrichment.
[25]
Our law provides for various enrichment remedies, and although
Kudu
supports the contention that the identification of a cause of action
is not of importance since there appeared to be no difference
in the
requirements of proof of the two
condictiones,
the essential
point is that the claim is covered by one or the other remedy for
unjustified enrichment. If
Ms Rossi
’s argument is
to be upheld, then the court must make leaps of inference to accept
the existence of general enrichment elements,
beyond what can be
expected, even in following a benevolent approach in interpreting the
pleading. The defendant’s
assertion that the plaintiff’s
cause of action is based on the contractual remedy of restitution is
not unreasonable, as
the plaintiff only on the day of hearing
advanced the argument that its claim is based on the
condictio
indebiti
. I agree with
Mr Rorke
that the claim as pleaded
in contract for restitution is not recognised by our law, as such the
particulars of claim does not disclose
a sustainable cause of action.
As such, the second ground of exception must succeed.
[26]
This brings me back to the aspect of foreign law. Although the
plaintiff can in due course proceed
to prove the foreign law
applicable whereafter the onus will rest on the party who wants the
court to find a difference between
our law and that foreign law to
produce evidence to that effect, the defendant must at least be
placed in the position to properly
identify the
condictiones
relied upon as well as consider whether the foreign law in
respect of that
condictione
differs from ours. The
defendant can only be placed in that position if the applicable
foreign law is properly pleaded, which
it is not.
[27] In
my view, this amounts to vagueness, which vagueness causes prejudice
as the defendant does not know the
claim he has to meet. As a
result, the first ground of the exception must also succeed.
In the circumstances the
following order will issue:
1.
The
exception is upheld with costs.
2.
The
particulars of claim are set aside and the plaintiff is granted
twenty (20) days from the date of this order to file an amended
particulars of claim.
L ELLIS
ACTING JUDGE OF THE
HIGH COURT
Appearances:
Counsel
for the plaintiff:
Adv.
T Rossi
Instructed
by Maphosa Attorneys
C/o
Kaplan Blumberg Attorneys
70
Second Avenue
Newton
Park
Gqeberha
Counsel
for the defendant:
Adv.
SC Rorke SC
Instructed
by Pagdens Attorneys
18
Castle Hill
Central
Gqeberha
[1]
Baker
v Probert
1985 (3) SA 429
(AD) at 438 I – 439 B.
[2]
SA
2006 (1) SA 461
(SCA) at para 3.
[3]
2023
(1) SA 432
(SCA) (20 May 2022) at para 14.
[4]
Trope
v South African Reserve Bank
[1993] ZASCA 54
;
1993 (3) SA 264
(A) at 269 I; Venter
and Others N.N.O. v Barritt; Venter and Others N.N.O. v Wulfsburg
Arch Investments (2) (Pty) Limited
2008 (4) SA 639
C at 643 I –
644 A.
[5]
see
Venter
supra
at 644 A – B
[6]
International
Tobacco Company of SA Limited v Wollheim
1953 (2) SA 603
(A) at 613
B.
[7]
Venter
supra
at 645 C – D; Francis v Sharp
2004 (3) SA 230
(C) at 240 F –
G
[8]
1993
(4) SA 479
WLD
at
para 485 H
[9]
[2007] ZAGPHC 200
;
2008
(1) SA 279
(W) at para 17
[10]
2003
(5) SA 193
SCA.
[11]
Amler’s
Precedents of Pleadings 9
th
Edition Harms “
Condictio
indebiti
”
pg 89.