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[2023] ZAFSHC 237
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Joubert v Kramer Weihmann Incorporated (3645/2022) [2023] ZAFSHC 237 (13 June 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,
FREE STATE
DIVISION, BLOEMFONTEIN
Case number: 3645/2022
REPORTABLE:
YES/NO
OF
INTEREST TO OTHER JUDGES: YES/NO
CIRCULATE TO MAGISTRATES:
YES/NO
In the matter between:
PETRUS
JOHANNES JOUBERT
Applicant
and
KRAMER
WEIHMANN INCORPORATED
Respondent
In
re
KRAMER
WEIHMANN INCORPORATED
Plaintiff
and
PETRUS
JOHANNES JOUBERT
First
Defendant
CW
AUDITORS INCORPORATED
Second
Defendant
CHRISTIAAN
WAGENAAR
Third
Defendant
THE
HOLLARD INSURANCE COMPANY LTD
Fourth
Defendant
JAQUELINE
SYNTHIA FREDERICKS
Fifth
Defendant
HEARD
ON:
27
JANUARY 2023
JUDGMENT
BY:
RANTHO, AJ
DELIVERED
ON:
This judgment
was handed down electronically by circulation to the parties'
representatives by email and by release to SAFLII. The
date and time
for hand-down is deemed to be 13 JUNE 2023 at 08:30.
INTRODUCTION
[1]
The applicant (“first defendant”
in the main action) is a former director of the respondent
(“plaintiff”
in the main action), a firm of attorneys
carrying out its business under the name and style of “Kramer
Weihmann Incorporated
(“KW”).
[2]
On 02 August 2022 the respondent instituted
the summons against the applicant for alleged breach of the duty of
care and/or fiduciary
duties whilst he was a director of the
respondent during the period 1998 until his resignation on 01 April
2020.
[3]
On
07 October 2022 the applicant filed a notice of exception, calling
upon the respondent to remove ‘
the
grounds of exception, causes of complaint, grounds of objection and
striking-out grounds
’
as raised in the said notice within 15 days.
[1]
[4]
Following the respondent’s refusal to
remove the causes of complaints raised by the applicant, the latter
proceeded to note
an exception asking this Court to find that
:
“
(a)
Claim 1 in relation to the first defendant is bad in law, excipiable,
fails to disclose a cause of action,
lacks averments necessary to
sustain a valid cause of action, lacks sufficient particularity to
enable him to reply thereto, vague
and embarrassing.
[2]
”
[5]
In
addition to the aforesaid exception, the applicant further brought an
application in the following terms:
[3]
“
(a)
Paragraphs 16 and 19.2 of the plaintiff’s particulars of claim
and annexure POC1 thereto are struck
out in terms of uniform rule
23(2); and
(b)
That the plaintiff’s claim(s) be struck out in terms of Uniform
Rule 30 and/or 30A because of
the plaintiff’s non-compliance
with Uniform Rules 18(4) and 18(10).”
GROUNDS
FOR COMPLAINTS
First
ground
[6]
The
applicant’s first ground of complaint is directed at paragraph
1 of the particulars of claim stating as follows:
[4]
“
The
Plaintiff is KRAMER WEIHMANN INCORPORATED (previously Kramer Weihmann
Joubert Incorporated) Registration Number 199[…],
a personal
liability company duly registered in terms of the Laws and Statutes
of the Republic of South Africa, with registered
address and/or
principal place of business at 2[…] B[…] Street,
Westdene, Bloemfontein, Free State…”
[7]
This
applicant’s complaint is that:
[5]
“
(a)
The plaintiff fails to plead a cause of action that is capable of
being sustained in law, alternatively, the
plaintiff’s claim 1
is excipiable in that it lacks the necessary essential averments, is
vague and embarrassing, confusing
and prejudicial to him.
(b)
In paragraph 1 of the particulars of claim, the plaintiff is cited
and alleges that it is a personal
liability company.
(c)
The co-directors of the plaintiff are not cited as plaintiffs in the
action, and they do not sue, as
plaintiffs, the defendant in the
action despite alleging that the plaintiff had a duty of care and/or
fiduciary duty towards his
co-directors of the plaintiff.
(d)
By virtue of its pleaded claim, the plaintiff does not have the
requisite locus standi to pursue and
obtain relief that it seeks
against the first defendant.
(e)
Despite the plaintiff alleging that the first defendant owed a legal
duty to the plaintiff’s “co-directors”,
the
plaintiff (impermissibly) sues the first defendant in his capacity as
an erstwhile director of the plaintiff personal liability
company.”
[8]
In essence the applicant contended that the
respondent is a personal liability company and therefore cannot
invoke personal liability
provisions for which it is (and its
erstwhile directors are) jointly and severally liable.
[9]
The respondent submitted that it is the
company (i.e. KW) that is suing its director and the objection by the
applicant conflates
the position of a third party creditor doing
business with an incorporated company and the rights legislatively
bestowed upon such
a creditor present loss, with a director causing
direct loss to the company itself. It further submitted that KW is
not a creditor
to itself and neither are those third parties affected
by applicant’s actions and inactions are suing him at the
moment.
This, in my view, is the correct legal approach.
[10]
The
Supreme Court of Appeal (“SCA”) held in
Hlumisa
Investment Holdings (RF) Ltd and Another v Kirkinis and Others
[6]
that:
“
[21]
... Where a wrong is done to a company, only the company may sue for
damage caused to it. This does not mean that
the shareholders of a
company do not consequently suffer any loss, for any negative impact
the wrongdoing may have on the company
is likely also to affect its
net
asset value and thus the value of its shares. The shareholders,
however, do not have a direct cause of action against the wrongdoer.
The company alone has a right of action
…”
[11]
In
De
Bruyn v Steinhoff International Holdings N.V. and Others
the court stated that:
[7]
“
136.
In
general, directors of a company owe fiduciary duties to the company
and not to its members. This is an incident of the
Salomon
principle
that a company is distinct from its members. Directors control and
manage the affairs and assets of the company. They
do not control or
manage the affairs or assets of the members. It is this legal
relationship between the directors and the company
that requires that
the fiduciary duties of directors are owed to the company. That this
is so is a matter of high and durable authority.
A director is a
trustee for the company and is required as a result to show the
utmost good faith towards the company
…”
[12]
I therefore agree with the respondent’s
submission that there is no merit in this complaint because KW is the
correct plaintiff
in reliance upon section 76 and 77of the Companies
Act. In the circumstances, this ground of complaint should be
dismissed.
Second
ground
:
[14]
This ground is directed at paragraph 8.3 of
the respondent’s particulars of claim wherein it is alleged
that the applicant
“
Served and
practiced as director of the plaintiff…at all relevant times
for purposes of this action, and more specifically,
from 1998 until
his resignation on 1 April 2020”
.
[15]
The applicant argued that,
ex
facie
the respondent’s
particulars of claim, the “
relevant
time for purposes of the plaintiff’s action”
is the period 1998 until 1 April 2020. On that basis, he argued that
the respondent pleads facts requiring reliance on statutory
provisions which did not operate for the duration of the pleaded
“
relevant period”.
As
such, the respondent is disentitled from relying on such statutory
provisions and the pleading is rendered bad in law. He contends
that
at best for the respondent, the
Legal Practice Act, 2014
and its
accompanying regulations and code of conduct only came into operation
on or after 1 November 2018.
[16]
The applicant further submitted that
if
the afore set out argument cannot be sustained, then the respondent
fails to specifically indicate what the “
relevant
”
time is for purposes of this action; which failure, in and of itself,
renders the particulars of claim lacking in averments
necessary to
sustain a valid cause of action, lacking sufficient particularity to
enable the applicant to reply thereto and vague
and embarrassing.
[17]
The applicant also raised an issue that he
cannot be the subject matter, at the same time, of both “
all
applicable ethical rules and/or rules of conduct or practice of the
Legal Practice Council”
and the
erstwhile Law Society.
[18]
A further complaint is directed at the
following paragraphs of the respondent’s particulars:
“…
9.1
Was obliged to comply with all applicable and ethical rules and/or
rules of conduct or practice of the Legal Practice Council
and
erstwhile Law Society, including specifically, all rules relating to
the management of Trust accounts and trust funds;
9.2
Had a duty of care and/or fiduciary duty towards his co-directors of
the plaintiff to carry out his
responsibilities within the plaintiff,
including all mandates received from clients:
(a)
In compliance with all aforesaid
applicable ethical rules and/or rules of conduct of practice;
(b)
In compliance with all applicable
provisions of the
Companies Act,
No. 71 of 2008
, the
Deeds Registries Act, No.47 of 1937
and the
Legal Practice Act, No.
28 of 2014
;…
14.2…
…
(b)
Accepting deposits and receiving and making payments related to
property transactions in accordance with all applicable
statutory
duties, ethical rules and/or rules of conduct or practice of the
Legal Practice Council and erstwhile Law Society, including
specifically, rules relating to the management of trust accounts and
trust funds;…”
[19]
He also attacked the allegations made in
paragraphs 10,11,12 and 13 of the particulars of claim, wherein
certain obligations were
allegedly owed by the applicant “
at
all relevant times for purpose of this action”
.
Specific allegations as contained in those paragraphs are that:
“…
10
In terms of
Section
76(2)
of the
Companies Act, No. 71 of 2008
, the 1
st
defendant was,
in his capacity as
director of the plaintiff, and at all relevant times for purposes of
this action:”
11.
“
In
terms of
Section 76(3)
of the
Companies Act, No. 71 of 2008
, the 1
st
defendant was, in his capacity as director of the plaintiff, and at
all relevant times for purposes of this action:..
12.
In terms of
Section
77(2)
of the
Companies Act, No. 71 of 2008
, the 1
st
defendant may be held liable:..”
[20]
The applicant contends that he could not,
and did not, owe any of the obligations as alleged above prior to the
commencement of
the
Companies Act, 2008
in May 2011 and as such, any
alleged conduct on his part prior to the commencement of the
Companies Act, 2008
in May 2011, affords the respondent no relief
under the
Companies Act, 2008
.
[21]
The respondent’s argument is that the
period 1998 until April 2020 flows from its pleading that the
applicant was a director
“
at all
relevant times”
, and the entire
tenure of his directorship was for this period. It submitted
that nowhere in the whole of the particulars
of claim does it state
that the applicant has misconducted himself during the entire period.
[22]
The respondent also argued that the
forensic report annexed as “
POC1
”
to its particulars of claim sets out the exact period forming the
subject of the investigation and that the whole of the
report,
inclusive of appendices and the documents later provided to the first
defendant, speak to a very specific period in relation
to misconduct
performed as pleaded, in relation to specific files and actions (and
inactions) performed.
[23]
The difficulty posed by the respondent’s
submission on this point is that, firstly, the applicant is saddled
with having to
guess as to what exactly ‘
relevant
time for purposes of this action
’
is. This is clearly prejudicial to the applicant. Secondly, the
respondent seeks to rely on the
Companies Act of 2008
and the
Legal
Practice Act of 2014
as the basis upon which the applicant should
held liable for having failed to carry out his fiduciary duties. It
is common cause
that these two pieces of legislation came into
operation in 2011 and 2018 respectively. The particulars of claim
should therefore
be particular as to the relevant period within which
the applicant should answer in relation the alleged breach of the
fiduciary
duties.
[24]
The respondent also submitted that the
report and the documents provided under
Rule 35(12)
and (14)) to the
applicant dealt with very specific instances in clarification of the
period in question. I do not agree with the
respondent on this point
because the particulars of claim should be a starting point to enable
the applicant to reply thereto.
Where a
pleading does not comply with the provisions of
Rule 18
, the other
party is entitled to either invoke
Rule 23
or
30
and/or 30A to
address the cause(s) of
complaint against
offending allegations
.
[25]
The
principle that a court is obliged to take pleadings as they stand for
the purpose of determining whether an exception to them
should be
upheld is limited in operation to allegations of fact, and cannot be
extended to inferences and conclusions not warranted
by the
allegations of fact. This principle does not oblige a court to
satisfy itself by accepting facts which are manifestly and
so
divorced from reality that they cannot possibly be proved.
[8]
If
the facts pleaded by a respondent could not, on any basis, as a
matter of law, result in a judgment being granted against the
cited
defendant, an exception should succeed.
[9]
[26]
As explained by the
court in
Jowell
v Bramwell-Jones and Others
1998
(1) SA 836
(W) at 913B-G:
“…
(T)he
plaintiff is required to furnish an outline of its case. This does
not mean that the defendant is entitled to a framework
like a
crossword puzzle in which every gap can be filled by logical
deduction. The outline may be asymmetrical and possess rough
edges
not obvious until actually explored by evidence. Provided the
defendant is given a clear idea of the material facts which
are
necessary to make the cause of action intelligible, the plaintiff
will have satisfied the requirements
.”
[27]
I therefore find that the second ground of
exception as raised by the applicant in this regard should succeed.
Third
ground
:
[28]
This complaint is directed at paragraphs
9.1, 9.2 on the basis that the respondent fails, in its particulars
of claim, to allege
or assert any of the following necessary relevant
and material allegations:
(a) the
specific “applicable statutory duties” together with the
applicable statutes; and
(b) the
specifically applicable ethical rules and/or rules of conduct or
practice of (i) the erstwhile (Law) Society
and (ii) the Legal
Practice Council; and
(c)
more specifically, those specific rules “relating to the
management of trust account and trust funds”,
which the
plaintiff relies on for its cause of action; and
(d) the
relationship, association and/or interplay, if any, between:
(i)
the aforesaid unidentified “applicable statutory duties”
and unidentified “rules”
(whatever their origin); and
(ii)
the alleged failure by the first defendant to “comply with his
duties as conveyancer” as asserted
in paragraph 15 of the
plaintiff’s particulars of claim.
[29]
Further to the aforesaid, applicant submits
that neither the court nor the applicant are able to identify, infer,
or determine which:
(a)
Unidentified and unlisted statues and accompanying “
applicable
statutory duties
”; and
(b)
Unidentified and unlisted ethical rules and/or rules of conduct or
practice, the plaintiff specifically relies
upon for purposes of its
claim(s) and/or cause(s) of action against the first defendant and in
respect of which the plaintiff subsequently
alleges, in paragraph 15
of its particulars of claim, the first defendant has failed to comply
with.
[30]
Separately
and cumulatively with the submission made above, the applicant
submitted that the respondent’s use of the adverbial
phrase
“
inter
alia”
in paragraph 14.2 of its particulars of claim is open-ended, ill
defined, broad, ambiguous, vague and embarrassing because it asserts
or infers the apparent existence of additional and/or other
un-pleaded and unidentified responsibilities owed by the applicant
as
conveyancer.
I
do not find the usage of the words ‘
inter
alia
’
in paragraph 14.2 to be vague and embarrassing within the context of
Rule 23.
It has been held that in interpreting a pleading,
the
Court should not look at a pleading with a magnifying glass of too
high power and that the pleadings must be read as a whole;
no
paragraph can be read in isolation.
[10]
[31]
The
respondent argued that it was not necessary to particularise what is
being raised by the applicant because the applicant, being
an
experienced attorney, does not require to be told with reference to
statutory duties as to what the relevant rules of the Law
Society and
the Legal practice are.
[11]
I
find this approach by the respondent quite problematic. The applicant
is hauled before this court as a ‘
defendant
’
in action proceedings and nothing else. What is afforded in terms of
the rules to any other party before this court is equally
applicable
to the applicant in this matter.
[32]
As
was explained by the Appellate Division in
Fundstrust
(Pty) Ltd (in Liquidation) v Van Deventer
[12]
,
if reliance is placed on an implied provision of a statute, that fact
as well as the contents of the implied provision must be
pleaded to
clearly bring that issue to the notice of the court and the other
parties and to avoid vagueness and embarrassment.
[33]
In the circumstances, I find that this ground of complaint
should be upheld only on the basis of exception taken in respect of
paragraphs
9.1 and 9.2 of the plaintiff’s particulars of claim
.
Fourth
ground
:
[34]
This complaint is directed at paragraph 15
of the particulars of claim which reads as follows:
“
15.
The 1
st
defendant, however, failed to comply with his duties as conveyancer
in that he:
15.1
Signed requisition forms (whether provided to him by the 5
th
defendant, other employees of the plaintiff and/or based on his own
instructions) authorising:
(a).
Advance payments to various estate
agents prior to registration of transfer;
(b).
Payments to estate agents not
reflected in the underlying deeds of sale or which exceeded the
amount specified therein;
(c).
Advance payments to various sellers
of properties prior to registration of transfer;
(d).
Payments to various sellers of
properties prior to registration of transfer;
(e).
Payments to sellers and/or buyers
from files not related to the seller or buyer or the specific
property transaction;
(f).
Payments to sellers involving the
Fiesta Trust and/or the Bridge Trust, without the knowledge and/or
permission of the plaintiff
and without the Fiesta Trust and/or the
Bridge Trust being registered credit providers;
(g).
Payments to and from the Fiesta
Trust and/or the Bridge Trust in which the 1
st
defendant was a trustee and/or income beneficiary, and/or;
(h).
Payments to entities or individuals
not reflected in the underlying deed of sale and who did not have any
known relationship to
the specific property transaction;
15.2 failed to
conduct the necessary due diligence on files before signing the
aforesaid requisition forms, alternatively,
signed the aforesaid
requisition forms whilst knowing or whilst he ought reasonable to
have known that the advances, payments and/or
transactions were
irregular or otherwise impermissible;
15.3 failed to
comply with the necessary standards of practice in a conveyancing
department, particularly the conveyancing
department of the
plaintiff, of which he was in charge;
15.4 Breached
the provisions of Chapter 7 of the
Legal Practice Act, No. 28 of 2014
and/or the Accounting Rules under Part XIII of the Rules of the South
African Legal Practice Council promulgated under the
Legal Practice
Act and/or
the provisions of the erstwhile Attorney’s Act, No.
53 of 1979 and/or the Rules promulgated under the erstwhile Attorneys
Act by inter alia:
(a).
Receiving deposits in connection
with the conveyancing transactions with instructions to invest the
funds, but failing to make any
investment;
(b).
Transferring amounts received in
connection with conveyancing transactions into entities or trusts in
which the 1
st
defendant was a trustee and/or beneficiary;
(c).
Recording amounts received in files
that do not relate to the specific file; and/or
(d).
Instructing and/or signing
requisition forms authorising payments and/or transfers of trust
money between unrelated files without
the knowledge or permission of
the relevant clients.”
[35]
The
applicant argued that the respondent fails to assert, in the
particulars of claim, any of the following necessary and material
allegations and/or identify any of the following in respect of his
failure ‘
to
comply with his duties as a conveyancer’
as alleged in the paragraphs:
[13]
“
(a)
Each relevant and specific file, transaction and/or requisition form
in issue and in respect of which the
plaintiff asserts that the first
defendant “failed to comply with his duties as conveyancer”;
(b)
When specifically – relevant to each and specific file,
transaction and/or requisition form in
issue – the plaintiff
asserts that the first defendant “failed to comply with his
duties as conveyancer”; and
(c)
How specifically – relevant to each and specific file,
transaction and/or requisition form in
issue – the plaintiff
asserts that the first defendant “failed to comply with his
duties as conveyancer”.”
[36]
Furthermore, because of what is set out
above and given the “
relevant time
for purposes of the respondent’s action”
is
the period 1998 until 1 April 2020, the applicant is unable to
identify which of the debts in issue in the respondent’s
particulars of claim have, or may have, prescribed (i.e., being those
specific debts that arose on a date more than three years
prior to
the respondent’s institution of its action during July 2022).
[37]
In the circumstances, apart from the
abolition of the request for further particulars for purposes of
pleading and the deliberate
introduction of Uniform Rule 18(4), the
necessity to plead primary facts, in essence, framing the due date of
a debt is demanded
by Section 17 of the Prescription Act 68 of 1969
(“
Prescription Act&rdquo
;), which states the following:
“
Prescription
to be raised by in pleadings. (1) A court shall not of its own motion
take notice of prescription.
(2) A party to
litigation who invokes prescription, shall do so in the relevant
document filed of record in the proceedings…”
[38]
As such, the proper way of raising
prescription in action proceedings is by way of plea or special plea;
and in respect of which
the defendant bears the onus of alleging and
proving.
[39]
As such the applicant is prejudiced as a
result of his inability to determine whether or not prescription
should be raised in the
plea. He further argued that in circumstances
which the pleading is so vague:
(a) He
cannot be expected to raise a special plea of prescription in a
factual vacuum. To do so, without knowing
what case is to be met,
would be reckless; and
(b) A
failure to do so would be potentially prejudicial in circumstances in
which the claim may have prescribed
(this is so especially in light
of the pleading onus placed on a defendant in terms of
Section 17
of
the
Prescription Act).
[40
]
In addition to the aforesaid the applicant
submitted that:
(a) In
respect of paragraphs 15.1 (a) to (h) of the particulars of claim
relating to the signing of “requisition
forms”, the
plaintiff alleges eight separate instances which it asserts
constitute(s) an underlying failure on the part of
the first
defendant as conveyancer.
(b)
Notwithstanding the aforesaid, the plaintiff fails in its particulars
of claim to:
(i)
identify, list or cross-reference the specific file, transaction
and/or “requisition form” in
issue in respect of each of
the eight instances; and
(ii)
assert why the first defendant’s signing of the (unidentified)
requisition forms were unauthorised,
irregular, unlawful or
impermissible in respect of each specific file, transaction and/or
“requisition form” –
the unsubstantiated and bald
allegation that the signing of the requisition form was,
unauthorised, irregular, unlawful or impermissible
are nothing other
than factual conclusions [unsupported by the plaintiff failing to
allege the relevant primary facts (facta probanda)
upon which it
relies for drawing the aforesaid factual conclusions].
[41]
In reference to paragraph 15.1(f) of the
respondent’s particulars of claim, the applicant argues that
the respondent similarly
fails to allege, list and/or identify the
specific material factual allegations and/or legal reasons:
(a) For
the plaintiff alleging, asserting and/or implying that “the
knowledge and/or permission of the plaintiff”
was required for
purposes of the alleged payments; and
(b) For
alleging, asserting and/or implying that “the Fiesta Trust
and/or the Bridge Trust” were required
to be “registered
credit providers”.
[42]
He further argued that the respondent
alleges in paragraph 15.3 of the particulars of claim that he is in
breach of his duties as
a conveyancer but failed to list, identify
and/or allege (i) each or any of the relevant “necessary
standard of practice”
in issue; and (ii) the respects in which
the respondent failed to comply with each or any such “necessary
standard of practice”.
[43]
In respect of what is contained in
paragraph 15.4 of the particulars of claim the applicant argued that
the respondent broadly,
and without any specificity, alleges that he
breached:
(a)
(unidentified) provisions of Chapter 7 of the Legal Practice Act,
2014;
(b)
(unidentified) accounting rules under part XIII of the Rules of the
South African Legal Practice Council;
(c)
(unidentified) provisions of the erstwhile Attorneys Act, 1973;
and/or
(d)
(Unidentified) rules “promulgated under the erstwhile Attorneys
Act”.
(e) As
similarly asserted above in respect of the second cause of complaint,
the plaintiff fails to allege, list
and/or identify – in its
particulars of claim – the specific and/or particular;
(f)
Provisions of Chapter 7 of the Legal Practice Act, 2014;
(g)
accounting rules under part XIII of the Rules of the South African
Legal Council;
(h)
provisions of the erstwhile Attorneys Act, 1973; and/or
(i)
rules “promulgated under the erstwhile Attorneys Act”.
[44]
Furthermore, the applicant submitted that
the respondent fails to identify the particular deposits, amounts,
trusts, files, transactions,
instructions, requisition forms and
clients in issue in respect that alleged in each of the paragraphs
15.4(a) to 15.4(d) of the
respondent’s particulars of claim.
[45]
The respondent submitted that the applicant
superficially attributes the ‘relevant time for purposes of
respondent’s
action’ to being 1998 to 2020. It further
submitted that as to the specificity, the basis for its assertion in
support of
its claim is set out in the forensic report, comprising of
over 7 000 pages of documents, which is annexed to the particulars of
claim.
[46]
If
a party raises in an exception that the claim has prescribed, it is
not necessarily an irregular step. The court has to examine
if the
particulars of claim were indeed excipiable,
viz
whether
they contained insufficient averments to sustain a cause of action
and, if not, the exception should be upheld.
[14]
[47]
I find that the
averments forming the basis upon which the fourth ground of complaint
is founded to be indeed insufficient to sustain
the cause of action
and accordingly uphold the applicant’s exception in this
regard.
Fifth
ground
:
[48]
This ground is directed at paragraph 16 of
the particulars of claim, reading as follows:
“
16.
Full particulars of
the abovementioned payments, misappropriations, irregularities and
failures are detailed in the forensic report
of the Facct Forensic
Consulting dated 29 June 2022. A copy of the forensic report,
including all annexures referred to therein,
is attached hereto as
Annexure “POC1”
.”
[49]
The applicant argued that the respondent’s
annexing of and accompanying broad, unparticularised and unspecific
reliance on,
and reference to, annexure ‘
POC1
’
to its particulars of claim is objectionable, improper, impermissible
and/or annexure ‘
POC1
’
is irrelevant because:
“
(a)
the report is not a “detailed” report as alleged or
inferred in paragraph 16 of the plaintiff’s
particulars of
claim;
(b)
the report furthermore does not provide “full particulars”,
or any particulars, any “payments,
misappropriations,
irregularities and failures” purportedly traversed therein and
specifically reconcilable or identifiable
with that alleged in the
plaintiff’s particulars of claim;
(c)
the respondent furthermore fails to list, allege and identify, in its
particulars of claim, any of the
following relevant to annexure
‘POC1’;
(i)
those specific portions of the report – which runs to some
approximately 300 pages with
annexures – upon which the
plaintiff relies; and
(ii)
the case the respondent seeks to allege in respect of such
specifically identified portions
.”
[50]
He further submitted that neither him nor
the court can be reasonably expected to trawl through annexure
‘
POC1’
,
and its annexures, in order to speculate on the undisclosed
non-existent cross-referencing and/or relevance of any material facts
contained therein, within the context of the respondent’s
particulars of claim.
[51]
He also argued that the report in itself
constitutes inappropriate, vexatious, scandalous, inadmissible and/or
irrelevant matter.
[52]
Whereas I am inclined to agreeing with the
applicant that mere reliance on ‘
POC1’
by the respondent without setting out material facts relied on with
particularity in the particulars of claim is insufficient to
sustain
a cause of action, I do not find the report to be vexatious,
scandalous and/or irrelevant to warrant the striking-out of
the
paragraphs being complained of. Having said that, I find that this
ground should only succeed on the basis of exception as
contemplated
in Rule 23(1).
Sixth
ground
:
[53]
This ground is directed at paragraphs 17
and 18 reading follows:
“
17.
“
Considering
the aforesaid, the 1
st
defendant, in his capacity as admitted practicing attorney and
conveyancer and head of the plaintiff’s conveyancing
department,
and director of the plaintiff:
17.1 Breached
the duty of care and/or fiduciary duty described in paragraph 9.2
supra;
17.2 Breached
one or more or all of his statutory fiduciary duties as director of
the Plaintiff as set out in Section 76(2),
Section 76(3)(a) and
Section 76(3)(b)
of the
Companies Act, No. 71 of 2008
;
17.3 Was
grossly negligent and/or negligently breached one or more or all of
the statutory duties in
Section 76(3)(c)
of the
Companies Act, No. 71
of 2008
;
17.4 Was, for
purposes of
section 77
of the
Companies Act, No. 71 of 2008
, party to
acts and/or omissions in the knowledge that the acts and/or omissions
were calculated to defraud clients and/or creditors,
employees, or
shareholders of the plaintiff, or which had another fraudulent
purpose; and or
17.5
Intentionally stole and/or misappropriated some or all of the funds
as detailed in the aforesaid forensic report of
Facct Forensic
Consulting attached as annexure “POC1” supra, with the
intention of permanently depriving the plaintiff
thereof, which
constitutes theft, furtum usus and/or fraud.
18.
The aforesaid conduct
and/or omissions of the 1
st
defendant was/were wrongful.”
[54]
The applicant contends that:
“
(a)
The allegations in paragraphs 17 and 18 of the plaintiff’s
particulars of claim constitute allegations
of a conclusionary
(factual and legal) nature; which conclusionary allegations are
advanced in the absence of any underlying identifiable
material facts
(facta probanda) alleged and/or contained in the plaintiff’s
particulars of claim.
(b)
The plaintiff fails to allege the facts necessary to sustain a cause
of action, alternatively the claim
vis-à-vis the first
defendant is excipiable on the basis that it is vague and
embarrassing.
(c)
The plaintiff fails to list, allege and identify in its particulars
of claim what specific alleged “conduct”
of the first
defendant gave rise to what is being alleged in these paragraphs
remains unclear.
(d)
Reference is made to the specific “funds as detailed” in
annexure ‘POC1’ to
the plaintiff statement of claim
without any particularity. The fist defendant is now saddled with
having to go through the forensic
report to establish which of the
funds he is being hauled before this court to account for.
(e)
The plaintiff’s failure to plead the requisite aforesaid
material facts renders the claim 1 cause
of action, as pleaded,
unsustainable, alternatively goes to the very root of the cause of
action rendering such vague and embarrassing,
lacking averments
necessary to sustain a cause of action (claim) and non-compliant with
uniform
rule 18(4)
.”
[55]
In response to the applicant’s
contentions as set out above, the respondent’s view is that the
allegations of misconduct
and culpable omissions on the applicant
should be read together with what annexure “
POC1
”
to its particulars of claim reveals, together with the 7,000 pages
that have been provided to him.
[56]
The
court held in
First
National Bank of Southern Africa Ltd v Perry NO and others
[15]
that
an
exception sets out why the excipient says
that
the facts pleaded by a
respondent
are insufficient. Only if the facts pleaded by a respondent could
not, on any basis, as a matter of law, result in a
judgment being
granted against the cited defendant, can an exception succeed. Only
those facts alleged in the particulars of claim
and any other facts
agreed to by the parties can be taken into account.
[57]
I am in agreement with the applicant that
paragraphs 17 and 18 of the respondent’s particulars of claim
lack the necessary
averments to sustain a cause of action. In the
circumstances, the sixth ground of exception should also
succeed.
Seventh
ground
:
[58]
This complaint is directed at paragraph
19.2 of the particulars of claim wherein the following allegations
are made:
“
19.2
As a direct consequence of the 1
st
defendant’s aforesaid unlawful acts and omissions, negligence
and/or breach, the plaintiff suffered damages in the total
amount of
R 13 932 865.07, made up as follows:
(a).
Amounts
paid by the plaintiff
R
3 325 188.72
(b).
Complaints
at the legal Practice Council
R
6 058 129.46
(c).
Summonses
received
R
2 829 029.63
(d).
Demands
received
R
1 720 517.26
R
13 932 865.07
[59]
The applicant attacks the contents of the
aforementioned paragraph on the basis that they fail to sustain a
cause of action and
renders and/or causes the respondent’s
particulars of claim to be bad in law, lacking sufficient
particularity to enable
the applicant to reply thereto, are vague and
embarrassing and/or non-compliant with Uniform Rules 18(4) and
18(10).
[60]
He argues that a claim for damages as
alleged in paragraph 19.2 cannot be sustained in law on the following
basis:
“
(a)
Annexure ‘POC1’, in its own terms, qualifies the
correctness of, finality of and/or the plaintiff’s
alleged
liability for the amounts listed in annexures C1 to C4;
(b)
Note 1 to table 1 of annexure ‘POC1’ specifically:
“
Note
1: The determination of the “KW Inc. amount is pending the
outcome of litigation and all negotiations between the parties
involved”; and
(c)
whilst annexure ‘POC1’s use of the phrase “pending
the outcome” and moreover
because there is (contested)
“litigation” (and to a lesser extent “negotiations”
in respect of the summonses
and demands received “between the
parties involved”), indicates and infers (i) the lack of
finality and/or certainty
regarding the amounts listed; and (ii) that
the plaintiff itself denies, disputes and contests its liability in
such “litigation”
and “negotiations”.
(d)
Moreover, the fact of complaint laid with the LPC, or a summons
received by the plaintiff, or a demand
made against the plaintiff, is
not – in and of itself and without more – determinative
or conclusive of the plaintiff’s
liability in respect of such
complaint, summons and demand (and/or the amounts forming the alleged
subject matter of each thereof),
and accordingly, the losses or
damages allegedly suffered by the plaintiff.
(e)
Furthermore, the plaintiff does not allege in its particulars of
claim that – as a matter of fact
and law in respect of that
alleged in paragraph 19.1 (b), (c) and (d) of its particulars of
claim
.”
[61]
Rule 18, in its relevant parts, reads:
“…
(4)
Every pleading shall contain a clear and concise statement of the
material facts upon which the pleader relies
for his claim,
defence or answer to any pleading, as the case may be, with
sufficient particularity to enable the opposite party
to reply
thereto…
…
(10)
A plaintiff suing for damages shall set them out in such a manner as
will enable the defendant reasonably to assess the
quantum
thereof:..”
[62]
It is unclear from paragraphs 19.2 (b), (c)
and (d) of the particulars of claim as to what material facts being
relied upon to support
the respondent’s claim founded on
‘
Complaints to the Legal Practice
Council; Summonses received and Demands received
’
are to enable the applicant to assess the quantum as required.
[63]
I therefore find that the respondent’s
mere reliance on annexures ‘
C1’
to ‘
C4’
and ‘
POC1’
in relation to damages claimed against the applicant constitutes
failure to sustain a cause of action and vague and embarrassing.
On
that basis, the applicant’s seventh ground of exception is
upheld
.
STRIKE-OUT
APPLICATION
.
[64]
In addition to exception, the applicant
asks this Court to strike-out paragraphs 17 and 19.2 of the
respondent’s particulars
of claim in terms of Rule 23(2) and
further that respondent’s claim(s) be struck-out in terms of
Rule 30 and/or 30A.
[65]
The
rules give the court discretion and do not make it obligatory to
strike out a matter, which is scandalous, vexatious or
irrelevant.
[16]
It has been held that the grounds set out in the rules for
striking out material are not exhaustive in that this court has
inherent power to strike out a matter from pleadings.
[17]
[66]
Having considered the circumstances of this
matter, I am not satisfied that a case has been made out to justify
the granting of
the strike-out application. I am further not
satisfied that the applicant will suffer prejudice if the strike-out
application is
not granted.
[67]
Consequently, the application for
strike-out is refused.
COSTS
[68]
The
awarding of costs of an exception lies within the discretion of the
court. Where one exception is taken, or an exception and
a motion of
strike-out are taken together, and the excipient is substantially
successful on the main or most important exception
or application,
costs will usually be awarded to the excipient.
[18]
[69]
The applicant asked the Court to award the costs in
his favour on a
punitive scale of
attorney
and client
.
The
question then becomes whether the exceptional award of punitive
costs, as sought by the
applicant
,
is warranted in the circumstances of this matter.
[70]
The
scale of attorney and client is an extraordinary one which should be
reserved for cases where it can be found that a litigant
conducted
itself in a clear and indubitably vexatious and reprehensible manner.
Such an award is exceptional and is intended
to be very
punitive and indicative of extreme opprobrium.
[19]
I am not satisfied that there are exceptional circumstances
warranting the award of costs on a punitive scale in this case.
[71]
However, the applicant, having substantially succeeded
on most of the
grounds of exception, is entitled to the costs.
ORDER
[71]
In the result, it is ordered as follows:
1.
The applicant’s
first ground of exception against respondent’s particulars of
claim is dismissed.
2.
The applicant’s
second to seventh grounds of exception against respondent’s
particulars of claim are upheld.
3.
The applicant’s
application for strilke-out is refused.
4.
The respondent is
afforded leave to amend its particulars of claim within 10 (ten) days
from the date of judgment.
5.
The respondent is to
pay the costs of this application on party and party scale.
M.R. RANTHO, AJ
APPEARANCES:
On
behalf of applicant:
Adv.
G.W. Amm
Instructed
by:
Kramer
Weihmann Inc, Bloemfontein
On
behalf of respondent:
Adv
A.J.R. Van Rhyn SC
Adv
S. Grobler SC
Instructed
by:
Peyper
Attorneys, Bloemfontein.
[1]
Index bundle pages 64 to 12.
[2]
Index bundle page 5.
[3]
Index bundle pages 6.
[4]
Index
– Summons
at page 7.
[5]
Paras 46 to 63 of applicant’s heads of argument.
[6]
[2020]
ZASCA 83; [2020] 3 All SA 650 (SCA); 2020 (5) SA 419 (SCA) (3 July
2020)
[7]
[2020]
ZAGPJHC 145;
2022 (1) SA 442
(GJ) (26 June 2020).
[8]
Natal Fresh Produce Growers; Association v Agroserve (Pty) Ltd
1990
(4) SA 749
(N); van
Zyl
NO v Bolton
1994 (4) SA 648
at 651; Voget v Kleynhans
2003 (2) SA
148
(C) at 151; TWK
Agriculture
Ltd v NCT Forestry Co-operative Ltd
2006 (6) SA 20
(N) at 23.
[9]
Erasmus,
Superior Court Practice at B 23.1.
[10]
Southernpoort
Developments (Pty) Ltd v Transnet Ltd
2003(5) SA 665 (W).
[11]
Paragraph 5 of respondent’s’ heads of argument.
[12]
1997 (1) SA 710
(A) at 725.
[13]
Paras 88 to 89.3 of applicant’s heads of argument.
[14]
Ibid
.
[15]
[2001]
3 All SA 331
(A) at para 6.
[16]
Titty’s Bar & Bottle Store (Pty) Ltd v ABC Garage (Pty)
Ltd
1974 (4) SA 362
(T) at 368F-H.
[17]
Ibid
at
368E-H.
[18]
Standard Bank of SA v Milner
1932 OPD 54
at 58.
[19]
Plastic
Converters Association of SA on behalf of Members v National Union
of Metalworkers of SA
[2016]
ZALAC 39
; (2016) 37 ILJ 2815 (LAC) (
Plastic
Converters Association of SA
)
at para 46.