Republic of South Africa
IN THE HIGH COURT OF SOUTH AFRICA
(WESTERN CAPE DIVISION, CAPE TOWN)
Case No:3651/2023
Before: The Hon. Ms Acting Justice Golden
Date of hearing: 14 February 2024
Date of judgment: 22 February 2024
In the matter between:
PHOENIX INTERNATIONAL LOGISTICS (PTY) LTD Plaintiff
and
STAX OF WOOD CC First Defendant
GERHARD KIRSTEIN Second Defendant
JUDGMENT
GOLDEN AJ:
[1] The plaintiff has noted an exception to the defendants’ Plea dated 6 July 2023 on the
basis that it lacks averments which are necessary to sustain a defence. The relevant
facts are summarised below.
[2] The plaintiff provide d logistical and freight forwarding services to the first defendant
in respect of which the plaintiff shipped wood to the first defendant’s overseas
clients. A dispute arose regarding the plaintiff’s invoices and what was owing to it by
the first defendant. Because of the dispute the plaintiff refused to release and ship 13
containers of wood to the first defendant’s overseas clients. The defendants then
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signed two Acknowledgement of Debts (AODs) which the plaintiff required before it
was prepared to release the orders for shipment.
[3] The plaintiff filed a provisional sentence summons on 1 March 2023 where it sought
judgment against the defendants for payment of the amount of R579,700.76 together
with interest thereon based on the AODs.
[4] The defendants entered into the principal case and delivered their Plea. Their
defence is set out more fully in paragraphs 3.4 to 3.4.10 of the Plea.
[5] The defendants plead as follows:
[5.1] Prior to the signing of the documents, the plaintiff rendered logistics and freight
forwarding services to the first defendant and rendered invoices to the first
defendant.
[5.2] During the course of December 2022, the first defendant entered into a legitimate
dispute with the plaintiff concerning the plaintiff’s invoices and refused to make
further payment of same, as can be seen from emails annexed hereto marked
“SOW1”.
[5.3] At the time, the plaintiff was unable to prove that the amounts of its invoices were
indeed due and owing to it.
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[5.4] Because of the dispute, the plaintiff refused to release the first defendant’s
shipments of 13 containers of wood, which were exported by the first defendant to its
overseas customers.
[5.5] The refusal to release the shipments of wood compromised the first defendant’s
relationship with its overseas customers, to the extent that the customers threatened
to terminate their relationships with the first defendant, which in turn threatened the
first defendant’s very existence.
[5.6] At the time when the documents were signed, the plaintiff threatened the defendants
that the shipments would never be released, if the defendants do not sign the
documents.
[5.7] The threat was conveyed to the first defendant, duly represented by the second
defendant, on 10 January 2023 at Strand, orally by Mr Craig Melnick, and via email
by Ms Robin Theron, a copy of which email is annexed hereto marked “SOW2”.
[5.8] The defendants signed the documents in the bona fide and reasonable belief that, if
they failed to do so, it will inevitably lead to the first defendant’s demise, for the
reasons pleaded above.
[5.9] But for the threat, the defendants would not have signed the documents.
[5.10] The documents are therefore void due to duress.
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[6] The first exception is that the defendants have failed to plead:
[6.1] that the alleged threa t made by the plaintiff was of considerable evil to the person
concerned;
[6.2] that the alleged threat was of an imminent or inevitable evil and induced fear; and
[6.3] that the alleged threat was unlawful or contra bonos mores.
[7] The plaintiff further pleads that , to the extent that the purported defence is one of
economic duress, such a defence is in any event not sustainable in terms of the
law and does not constitute a defence to the plaintiff’s claim.
[8] The second exception posits that the covering email referred to in paragraph 3.5.1 of
the defendants’ Plea upon which the first defendant relies to prove that there was no
consent to the AOD ’s, constitutes extrinsic evidence and is inadmissible to
contradict, add to or modify the AOD’s. The plaintiff asserts that the defendants’
allegation that the plaintiff could therefore not have placed reliance on the AOD’s is
therefore unsustainable and bad in law.
[9] During the course of legal argument counsel for the plaintiff, Mr Robbertze, informed
the Court that the plaintiff no longer pursue s the second exception as it was
predicated on justus error, as the plaintiff had understood the defendants’ defence
also to have been pre mised on a mistake thereby bringing the assent to the AOD’s
into question, by relying on the email dated 10 January 2023. In this email, t he
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second defendant informs the p laintiff that he (second defendant) does not
automatically waiver his right to query any invoice which may have any
discrepancies or disagreements in the mentioned period by agreeing to the AODs.
[10] There appears to be some conflation on the part of the plaintiff between the basis for
the second exception and the defence of justus error. I d id not understand the
defendants’ defence to be one of justus error simply because they never relied on an
alleged mistake which induced them to conclude the AODs. A defence of justus error
must also be expressly pleaded if a party seeks to rely thereon which the defendants
have not done. However, I need no t determine the second exception as counsel for
both parties agreed in the hearing that the issue for determination will now only be
confined to the issue of economic duress and/or duress of goods , namely, the first
exception.
[11] The defendants’ position is that they would not, of their own volition, have concluded
and signed the AODs had it not been for the plaintiff’s threat that it would not release
the shipments to the defendants’ overseas clients . They c ontend that the refusal to
release the shipments of wood had compromised the first defendant’s relationship
with its overseas customers, where they had threatened to terminate their
relationships with the first defendant and that this had threatened its commercial
existence.
[12] The exception noted against the defence of economic duress is twofold. The first is
that the defendants’ have failed to plead the essential allegations required to
substantiate a defence of duress, and that without pleading these essential
allegations, the defendants’ plea is vague and embarrassing. The plaintiff asserts
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that the defendants should have pleaded that (i) the alleged threat made by the
plaintiff was one of considerable evil to the person concerned, (ii) that the alleged
threat was of an imminent or inevitable evil and induced fear, and that (iii) the alleged
threat was unlawful or contra bonos mores . The plaintiff contends that the failure to
have pleaded that the alleged threat was unlawful or contra bonos mores , means
that the Plea remains excipiable. Counsel for the plaintiff contended that there is
further no reasonable basis to interpret the defendants’ Plea to read that the alleged
threat was unlawful and/or contra bonos mores.
[13] The second leg of the exception is that, even if properly pleaded, the defence of
“economic duress ” is not a recognised defence in our law. The plaintiff relies on
Medscheme Holdings (Pty) Ltd & Another v Bhamjee 2005 (5) SA 339 (SCA) for th is
proposition. I shall deal with this issue first.
[14] During legal argument , co unsel for the plaintiff seemed to accept that economic
duress and/or duress of goods was an accepted defence in our law . He rather – and
more emphatically - persisted with the submission that the defence does not avail
the defendants because it had not pleaded the essentialia of such a defence.
[15] The concession that economic duress was now a legitimate defence in South African
law was correctly made.
[16] The Labour Court in NEHAWU v The Public Health and Welfare Sectoral Bargaining
Council & Others [2002] 3 BLLR 2022 (LC) has held that economic duress is held to
be present when commercial pressure is exerted on a party, amounting to coercion,
which compels the party to enter into the contract unwillingly. The Court held that
consent is vitiated in these circumstances.
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[17] In Medscheme, the respondent , a medical doctor, had also signed two AODs in
favour of the second appellant , a medical aid scheme. Under both AODs, the
respondent undertook to repay the appellant certain sums of money that he had
already claimed from the appellant. The appellant had made a threat that if the
respondent failed to sign an AOD in favour of their scheme s, they would terminate
direct payment of all claims to the respondent . According to the respondent, his
economic survival was at risk because it meant that he would have to recover his
charges from his patients who were members of the medical aid schemes who would
look to the scheme for reimbursement, and that this would result in them no longer
consulting him. Because of this threat, the respondent acknowledged himself to be
indebted to the appellant by signing the AOD.
[18] The central issue in Medscheme was whether the appellant’s threat to terminate
direct payment to the respondent was contra bonos mores . The Court a quo had
found that the threat to cause economic ruin was unconscionable and that it
amounted to economic duress. Whilst the SCA found that the respondent had signed
the AODs in the belief or fear that his failure to do so placed his medical practi se at
risk because of the appellant’s threat , it overturned the finding of the High Court on
the basis that the threat was neither unconscionable nor unlawful in the
circumstances, and, that there was accordingly no economic duress. The Court
disagreed with the High Court that the conclusion of the AOD was unconscionable,
inter alia , on the basis that the respondent had gained the ability to continue his
lucrative medical practice.
[19] In paragraph [18] of the judgment, the SCA however held that:
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“Such cases are likely to be r are … for it is not unlawful, in general, to cause
economic harm, or even to cause economic ruin, to another, nor can it generally be
unconscionable to do so in a competitive economy. In commercial bargaining the
exercise of free will (if that can ever exist in any pure form of the term) is always
fettered to some degree by the expectation of gain or the fear of loss. I agree with
van den Heever AJ (in Van den Berg & Kie Rekenkundige Beamptes at 795E -796A)
that hard bargaining is not the equivalent of duress, and that is so even where the
bargain is the product of an imbalance in bargaining power. Something more –
which is absent in this case – would need to exist for economic bargaining to be
illegitimate or unconscionable and thus to constitute duress.”
[20] Medscheme recognises that in certain [rare] cases there can be circumstances
which may constitute economic duress. It held that “Something more…would need to
exist for economic bargaining to be illegitimate or unconscionable ” to constitute this
type of duress.
[21] Duress, in the ordinary legal sense, means that a person does not act out of free
choice and acts unwillingly for a reason which has come down to bear upon him, that
he has no choice in the matter (see Kruger v Sekretaris van Binnelandse Inkomste
1973 (1) SA 394 (A) at 397 and 398).
[22] English authorities have define d economic duress as constituted by illegitimate
commercial pressure exerted on a party to a contract which induces him to enter into
the contract, and which amounts to a coercion of the will which vitiates his consent
(North Ocean Shipping Co Ltd v Hyundai Construction Co Ltd [1979] AC 704 ;
Universe Tank Ships Inc of Monrovia v International Transport Workers’ Federation
[1982] 2 ALL ER 67 (HL) )
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[23] In Times Travel (UK) Ltd v Pakistan International Airlines Corp [2021] UKSC, a more
recent decision of the Supreme Court of the United Kingdom , the Court held that
duress is established when an illegitimate threat or pressure causes a claimant to
enter into a contract (at paragraphs 78 -80). The question whether the threat made
was illegitimate , then arises . The Court held that regard must be had to, amongst
other, the behaviour of the threatening party including the nature of the pressure
which it applies and the circumstances of the threatened party . In contrast, South
African law requires the threat to be unlawful and/or contra bonos mores . The
Supreme Court in Times Travel thus defined economic duress as “ concerned with
identifying rare exceptional cases where a demand motivated by commercial self-
interest is nevertheless unjustified” (at paragraph 99).
[24] Whilst the SCA in Medscheme found that the conduct of the appellant did not
amount to economic duress , the Court held that there would be no cogent reason
why the threat of economic ruin should not be recognised as duress in South African
law. This is consistent with the legal concept of economic duress which has been
recognised in English law (see North Ocean Shipping Co Ltd v Hyundai Construction
Co Ltd and Universe Tank Ships Inc of Monrovia v International Transport Workers’
Federation supra).
[25] Whilst Medscheme has recognised a defence of economic duress and as correctly
pointed out by Deeksha Bhana in her article titled The Future of the doctrine of
economic duress in South African contract law: The influence of Roman -Dutch law,
English law and the Constitution of the Rep ublic of South Africa, 1996 , 2021 Acta
Juridica 107, the SCA did not elaborate on the requirements for such a defence. All
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the SCA said in general terms was that “ hard bargaining is not the equivalent of
duress…and that is so even where the bargain is the product o f an imbalance in
bargaining power. Something more – which is absent in this case – would need to
exist for economic bargaining to be illegitimate or unconscionable and thus to
constitute duress” (at paragraph 18).
[26] In his analysis of Times Travel , Professor Jacques du Plessis suggests that the
means used by the threatening party to create or increase the threatened party’ s
weakness or vulnerability, and the benefits that the threatening party (objectively)
obtained due to the threat are considerations which may determine whether a threat
of a lawful act is unlawful. The learned author is of the view that the complexity of the
enquiry into the unlawfulness of the threat suggests it may be unwise for South
African law to exclude the possibility of rather following a range -of-factors approach.
(See Jacques du Plessis, Lawful act duress, 2023 SALJ 733)
[27] Although f oreign authorities provide much needed guidance and insight into this
undeveloped area of our law , it will be up to our courts to develop this jurisprudence
to face th e realities of modern commerc ial and contractual practice reflective of
South Africa’s prevailing constitutional dispensation.
[28] Despite the allure of the legal d ebate, it is not for this Court to determine the
appropriate test to adopt for a defence of economic duress. This is for the trial court
to determine and to further develop the jurisprudence in this area of the law.
[29] The first exception that economic duress is not a sustainable defence in South
African law, must accordingly fail.
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[30] The defendants also rely on a defence of duress of goods . This defence was
acknowledged in Hendriks v Barnett 1971 (1) SA 765 (NPD). In distinguishing
between duress of the person and duress of goods, the Court held that in a case of
duress of goods all reasons for fear of bodily danger being absent – it is impossible
to know whether the payment is voluntarily or involuntarily made unless some
unequivocal objection to the payment is raised at the time it is made. The Court held
that this contemplates that there must be some objection to the payment. In the
instant matter, this objection is evidenced by what is pleaded in paragraph 3.5.2 of
the Plea, which is also supported by the email of 10 January 2023.
[31] As regards the approach to exceptions, I am guided by Telematrix (Pty) Ltd t/a
Matrix Vehicle Tracking v Advertising Standards Authority SA 2006 (1) SA 461
(SCA), that I should not take an overly technical approach to exceptions . I am also
reminded that exceptions must be dealt with sensibly ( Luke M Tembani & Others v
President of the Republic of South Africa & Another [2022] ZASCA 70; 2023 (1) SA
432 (SCA)).
[32] This is not a case where there is no cognisable defence which has been made out
on the pleadings. As held by Binns -Ward J in Titan Asset Management (Pty) Ltd &
Others v Lanzerak Estate Investments (Pty) Ltd & Another (case number 2102/2020,
date of judgment: 9 June 2023), a pragmatic approach is called for, bearing in mind
the purpose 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.
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[33] 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.
[34] The burden rests on the excipient, who must establish that on every interpretation
that can reasonably be attached 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 every interpretation that can be put upon the facts
(Luke M Tembani at paragraph [14).
[35] I am not persuaded that the Plea is excipiable on the grounds contended for by the
plaintiff. The Plea sets out sufficient facts which makes out a defence for economic
duress and/or duress of goods.
[36] Even if the words “ economic duress” and/or “ duress of goods ” were not expressly
pleaded, the facts pleaded in paragraphs 3.4. to 3.4.10 of the Plea support a
cognisable defence that the plaintiff had threatened the defendants and that, but for
the threat , the defendants would not have signed the AODs. The pleaded facts
clearly support a defence of economic duress. For reasons addressed herein, the
exception that the Plea is vague and embarrassing, also fails.
[37] I accordingly make the following Order:
ORDER:
[a] The exception is dismissed.
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[b] The plaintiff shall pay the defendants’ costs of the exception.
TJ GOLDEN, AJ
Acting Judge of the High Court
For the Plaintiff:
Adv JH Robbertze
Counsel for the Plaintiff
Instructed by Shepstone & Wylie Attorneys
(Ms J Woker)
For the Defendant:
Adv R Engela
Counsel for the Defendants
Instructed by VanderSpuy Cape Town
(Mr CH van Breda)