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[2021] ZAGPPHC 221
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Special Investigation Unit v Odendaal Erasmus and Thulare and Others (33867/2017) [2021] ZAGPPHC 221 (29 March 2021)
IN
THE HIGH COURT OF SOUTH AFRICA
(GAUTENG
DIVISION, PRETORIA)
REPUBLIC
OF SOUTH AFRICA
Case
Number: 33867/2017
NOT
REPORTABLE
SPECIAL
INVESTIGATION UNIT
Plaintiff
And
ODENDAAL
ERASMUS AND THULARE INC
First
Defendant
ANDRE
ODENDAAL
Second
Defendant
VAUGHN
SUMMERTON
Third
Defendant
MEYERTON
OPSPOORDERS
Fourth
Defendant
JUDGMENT
JANSE VAN
NIEUWENHUIZEN J
[1]
This is an exception
taken by the defendants against the plaintiff’s particulars of
claim on the grounds that it is vague
and embarrassing or that it
fails to disclose a cause of action.
Introduction
[2]
The plaintiff
instituted action against the defendants for payment of the amount of
R 2 615 000, 00.
[3]
The claim originates
from the appointment of the first defendant on the panel of attorneys
of the Midvaal Local Municipality (“the
MLM”). The
plaintiff was in terms of section 2(1) of the Special
Investigation Units and Special Tribunals Act, 74 of
1996 (“the
Act”) requested to investigate the affairs of the MLM.
[4]
The second and third
defendants are cited in their capacities as partners or directors of
the first defendant. The fourth defendant
is cited in its capacity as
the entity that provided auctioneering services to the MLM.
[5]
During the course of
its investigation the plaintiff formed the view that the defendants’
dealings with the MLM amounted to
unlawful or improper conduct and
the present action was instituted
.
Grounds
of exception
Locus
standi
[6]
The plaintiff alleges
that it is acting in terms of Proclamation R33 of 2011, published in
Government Gazette
No. 9539 dated 20 May 2011, read with section 2(1) of the Act.
[7]
The defendants submit
that the powers conferred on the plaintiff in the Proclamation do not
entitle the plaintiff to institute action
against the defendants on
the causes of action contained in the particulars of claim.
[8]
In the result, the
issue of
locus
standi
will only
need to be considered if the exception to the remainder of the
plaintiff’s particulars of claim is dismissed. Should
the
further grounds of exception be upheld,
locus
standi
will only
become relevant once the plaintiff has amended its particulars of
claim.
Terms of appointment
[9]
The plaintiff alleges
that the first defendant was appointed on 8 August 2006 under bid
number 8/2/5/9 to provide it with legal
services, debt collection and
auctioneering services for the financial years 2006 to 2009. The
first defendant was also appointed
for the financial years 2009 to
2012 under a subsequent bid process.
[10]
The plaintiff further
alleges that the first defendant’s appointment created an
attorney and client relationship between the
MLM and the defendants
and that the defendants stood in a position of confidence to protect
the interests of the MLM.
[11]
In paragraph 12 of the
particulars the plaintiff pleads five relevant and material
conditions applicable to the appointment of the
first defendant.
[12]
The defendants raised
an exception to paragraph 12 on the basis that the plaintiff does not
allege whether the conditions were oral,
in writing, tacit or
implied. If in writing the defendants submit that the written
instrument embodying the conditions should have
been attached to the
particulars of claim.
[13]
Rule 18(6) of the
Uniform Rules of Court provides as follows:
“
A
party who in his pleading relies upon a contract
shall
state
whether the contract is in writing or oral and when, where and by
whom it was concluded, and if the contract is written a
true copy
thereof or of the part relied on in the pleading shall be annexed to
the pleading.”
(own
emphasis)
[14]
The averments in
paragraph 12 do not comply with the provisions of rule 18(6) and
are vague and embarrassing in that the defendants
do not know what
case they have to meet.
Claim 1
[15]
The defendants have
raised various objections in respect of the averments in support of
claim 1 of the plaintiff’s particulars
of claim. The objections
will be dealt with holistically and with reference to the specific
transactions that form the subject
matter of the claim against the
defendants.
[16]
In paragraph 13 of the
particulars of claim the plaintiff alleges that, in accordance with
the appointment of the first defendant,
it instructed the
defendants
to make
recoveries, either through litigation or by auctioneering services,
of some debts owed by ratepayers. The ratepayers included
ratepayers
that had to benefit from the MLM’s indigent policy.
[17]
Bearing in mind that
the MLM only had a contract with the first defendant, it is unclear
on what basis the MLM gave instructions
to the second to fourth
defendants.
[18]
In paragraph 14 of the
particulars of claim the plaintiff avers as follows:
“
14.
A list of all the outstanding debts and affected properties, was
prepared and handed over to the
defendants
by the MLM, with instructions to recover or dispose by sale, those of
the properties which belonged to the MLM, including those
which had
been donated to it.”
[19]
In paragraph 15 the
plaintiff sets out detail in respect of the disposal of eleven
properties.
[20]
In paragraph 16, the
plaintiff surmises the following in respect of the disposals:
“
16.
In the circumstances, the disposal and sale of the described
properties in the manner described including
the profits made, was
unlawful, violated the principle of legality, and is also in breach
of a system of procurement contemplated
in section 217 of the
Constitution of the Republic of South Africa, 1996 (“the
Constitution”), as well as sections
112 and 114 of the Local
Government: Municipal Finance Management Act, 56 of 2003 (“MFMA”),
in that: …”
[21]
If one, however, has
regard to the factual allegations in respect of the transactions, the
conclusion drawn in paragraph 16 is perplexing.
[22]
Henley-On-Klip, Erf 20:
[22.1] default
judgment was obtained against the owner of the property for a debt of
R 2 601, 30 owed to the MLM. The
property was sold at auction to
the fourth defendant for R 4 000, 00. The property was
thereafter resold by the fourth defendant
for R 50 000, 00;
[22.2] the amount
of R 4000, 00 is more than the debt owed to the MLM and should there
have been any excess it should have
been paid to the owner of the
property;
[22.3] the fact
that the fourth defendant bought and sold the property is of no legal
consequence to the MLM. It’s only
interest in the property was
to recover the debt owed by the owner, which it did;
[22.4]
the allegations in respect of this property do not sustain a cause of
action against the defendants.
[23]
Henly-On-Klip, Erf 1491
[23.1] the
outstanding amount for rates and taxes was R 4 781, 04.
The plaintiff alleges that the owner “donated”
the
property to the MLM and the property was removed from the auction
list and sold to the fourth defendant for R 10 000,
00;
[23.2] the fourth
defendant paid the outstanding rates and taxes in the amount of R
5 218, 96 to the MLM, retained the
balance of R 4 781, 04
and re-sold the property for R 180 000, 00;
[23.3] in terms of
the first defendant’s appointment alleged in paragraph 13
supra
, it had to recover outstanding debts owing by ratepayers
to the MLM;
[23.4] in terms of
paragraph 14 the MLM provided a list of the outstanding debts and
affected properties to the defendants,
with instructions to recover
or dispose by sale, those properties which belonged to the MLM or has
been donated to it;
[23.5] having
regard to the instructions to the first defendant to recover debts
owed to the MLM, it is not clear whether
the properties had to be
disposed of solely to settle the debt owed by the ratepayer to the
MLM or whether the properties that
were donated should have been sold
for a profit to the benefit of the MLM;
[23.6]
to this end the allegations pertaining to the sale of the donated
property at auction is vague and embarrassing.
[24]
De Deur Estates, Erf
279
[24.1] this
property was, similarly to the property in paragraph 19
supra
,
sold after default judgment for the outstanding debt was obtained,
the outstanding debt was paid to the MLM and the property sold
for a
profit.
[24.2]
for the same reasons mentioned in paragraph 19
supra
the allegations
pertaining to this property do not disclose a cause of action against
the defendants.
[25]
Henley-On-Klip, Erf 653
[25.1]
this property was also “donated” to the MLM and sold for
a higher price than the outstanding debt. The
allegations in respect
of this property are also vague and embarrassing for the reasons set
out in paragraph 20
supra.
[26]
Henly-On-Klip, Erf 1317
[26.1] this
property was owned by the MLM and sold at auction to the fourth
defendant for R 85 000, 00. The fourth
defendant,
thereafter, sold the property for R 585 000, 00.
[26.2] the
instruction to the first defendant, according to paragraph 14 of the
particulars, was to sell the properties owned
by the MLM. It is not
clear whether the sale had to be by public auction or private treaty.
[26.3] if the
instruction were to sell at auction, the averments in respect of this
property do not sustain a cause of action
against the defendants.
[23.4]
if the instruction was to sell by way public treaty, the allegations
would constitute a cause of action against the
defendants. The
vagueness caused by the failure to allege what the instructions were
causes embarrassment to the defendants, in
that the defendants are
not in a position to plead to the averments pertaining to this
property.
[27]
The Balmoral Estates,
Erf 67
[27.1]
according to the allegations contained in this
paragraph the property
was donated to the MLM and sold to the fourth defendant for
R 800 000, 00 who resold the property
for R 800 000, 00.
[27.2]
no profit was made by the fourth defendant and it
is unclear from the
averments in respect of this property what the cause of action
against the defendants is.
[27.3]
in
the result, this paragraph lacks averments to
sustain a cause of
action against the defendants.
[28]
Bronkhorstspruit Farm
No. 329, Portion 141
[28.1] the
plaintiff alleges that the “historical owner” of the
property was one Waldman and that the property
was sold by the
defendants to the second defendant for R 10, 00 and resold
by the second defendant for R 200 000,
00.
[28.2] it is not
clear whether Waldman owed the MLM any amount, whether default
judgment was obtained, whether the property
was sold by private
treaty or at auction and whether the property was donated to the MLM
or not.
[28.3] in the
result, the averments in respect of this property are vague and
embarrassing.
[29]
Bronkhorstspruit Farm
No 326, Portion 66, Ironsyde 1494, Portion 24, De Deur Estates, Erf
197, Portion 1 and De Deur Estates 319,
Portion 13:
[29.1]
the averments in respect of these properties are, save for the
amounts, the same as the averments in respect of the
property in
paragraph 25
supra
and are likewise vague and embarrassing.
[30]
In paragraph 18.1 of
the particulars of claim, the plaintiff provides detail in respect of
the computation of the amount of R 2 615 000, 00
claimed from the defendants. The defendants have raised various
objections to the manner in which the amount has been computed.
The
calculation of the amount is based on the allegations in support of
claim 1, which allegations fall by the wayside due the
fact that
exception in respect thereof stands to be upheld.
Claim 2
[31]
Although the same
amount is claimed in claim 2, the claim is not in the alternative to
claim 1. This in itself causes embarrassment
to the defendants.
[32]
The contents of
paragraphs 1 to 15 are repeated under claim 2 and the same complaints
referred to
supra
apply in respect of
paragraphs 13, 14 and 15.
[33]
The cause of action is
based on the breach of a fiduciary duty the defendants allegedly owed
to the MLM. Without averring in which
manner the defendants breached
their fiduciary duty in respect of each of the transactions listed in
paragraph 15, it is difficult
to grasp on what basis the defendants
are liable to pay the amount of R 2 615 000, 00
to the plaintiff.
Conclusion
[34]
In the premises, the
exception is upheld.
ORDER
1.
The exception is upheld
with costs.
2.
The plaintiff is
afforded a period of 15 days within which to file an amended
particulars of claim.
N. JANSE VAN
NIEUWENHUIZEN
JUDGE OF THE HIGH
COURT OF SOUTH AFRICA
GAUTENG
DIVISION, PRETORIA
DATE
HEARD PER COVID19 DIRECTIVES:
15
March 2021
(Virtual hearing.)
DATE
DELIVERED PER COVID19 DIRECTIVES:
29 March 2021
APPEARANCES
Counsel
for the Plaintiff:
Advocate V.P. Ngutshana
Instructed
by:
The State Attorney Office
Counsel
for the Defendant:
Advocate S.D. Maritz
Instructed
by:
Odendaal and Thulare Attorneys