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[2021] ZAGPJHC 399
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Clinpete (Pty) Ltd v K201146712 (South Africa) (Pty) Ltd and Others (17/28917) [2021] ZAGPJHC 399 (12 August 2021)
IN THE HIGH COURT OF
SOUTH AFRICA
GAUTENG LOCAL
DIVISION, JOHANNEBSURG
REPORTABLE:
NO
OF
INTEREST TO OTHER JUDGES: NO
REVISED:
YES
DATE:
12 AUGUST 2021
Case number: 17/28917
In the matter between:
CLINPETE
(PTY)
LTD
Applicant
and
K201146712
(SOUTH AFRICA) (PTY) LTD
First
Respondent
JEFFREY
FROOM
Second
Respondent
RICHARD
RUBIN
Third
Respondent
CITY
OF JOHANNESBURG
Fourth
Respondent
JUDGMENT
SLON AJ
1.
The applicant seeks payment by the first to
third respondents of certain municipal charges levied by the fourth
respondent in respect
of certain immovable properties (‘the
property’). Its cause of action is an agreement of sale
concluded between the
applicant and the first respondent on 10
January 2014 in terms of which the latter purchased the property from
the former for the
sum of R25 million. The purchase price was payable
in certain instalments over three years, commencing after transfer
would have
been registered, the final balance thereof due on the
third anniversary of the date of transfer (‘the agreement’).
2.
The second and third respondents (and
another party which does not now feature) signed a deed of suretyship
on the same date as
the agreement was signed, binding themselves
jointly and severally as sureties and co-principal debtors
in
solidum
with the first respondent to
the applicant for the due and punctual fulfilment and performance of
all obligations of the first
respondent under the agreement. A
further provision appears at the end of the deed to the effect that
the suretyship liability
of the second respondent thereunder is
limited to 27.5%, and of the third respondent to 72.5%, of any
indebtedness of the first
respondent to the applicant. Whether, on a
proper construction of the deed of suretyship as a whole, that
proportionality applies
vis-à-vis the applicant, or merely as
between the sureties themselves as seems to me more probable, is an
interesting question
which need not detain me.
3.
The relevant clauses for purposes of this
application appear under the heading ‘POSSESSION AND
OCCUPATION’ as follows:
‘
5.1
Possession of the property, and occupation thereof, subject to the
existing leases of which the purchaser is aware,
shall be given to
and taken by the purchaser on the date of signature hereof and from
which date the property shall be at the sole
risk and profit of the
purchaser which shall be liable for all rates, taxes and other
imposts leviable in respect thereof.
5.2
Notwithstanding the provisions of clause 5.1, the purchaser agrees
and undertakes to assume all the liability
of the seller for any
rates, taxes and other imposts leviable against the property for the
period ending on the date of signature
hereof. The purchaser hereby
indemnifies and holds the seller harmless against any and all claims
which may be made against the
seller for payment of any such rates,
taxes or other imposts.’
4.
The answering affidavit is deposed to by
the second respondent who avers that he is a shareholder of the first
respondent. He purports
to speak on behalf of both of the first and
third respondents, although neither of these produce a resolution or
confirmatory affidavit,
respectively, to that effect. By the time
that this application came before me, it would appear that the first
respondent had been
deregistered, and the third respondent appears to
have emigrated from South Africa at some point; he has delivered no
papers on
his own behalf and makes no appearance. The fourth
respondent does not oppose the relief sought. The claim is, to all
intents and
purposes, now pursued against the second respondent only,
although the applicant’s further intentions vis-à-vis
the
third respondent are not expressly stated. Nothing turns on that
for the purposes hereof. I shall henceforth use the term
‘respondents’
to refer to the first, second and third
respondents collectively where necessary.
5.
The first respondent took occupation of the
property on 10 December 2013, about a month before the date of
signature of the agreement,
and thereafter received all rentals from
the tenant or tenants occupying the same. In reply, the applicant, in
response to a merely
bald denial by the respondents that the rental
was ‘significant’, states that, on its estimate based on
a schedule
it attaches, the rentals so received amounted to in excess
of R1 million per month. That would have been, one surmises, for the
period 10 December 2013 to 12 January 2018, at least, the date of the
replying affidavit. If that is so, the total rentals received
by the
first respondent (or whomever stepped into its shoes after its
apparent deregistration) would have been of the order of
R49 million.
6.
The crux of the relief claimed by the
applicant in its notice of motion is for payment, either to the
applicant or to the fourth
respondent, of ‘municipal services
charged to the property’ (there was no dispute that this term
could only have meant
‘all rates, taxes and other imposts
leviable in respect thereof’ as per clause 5 of the agreement)
pursuant to two
clearance certificates dated 22 and 23 May 2017
respectively, obtained, presumably in order to advance the
registration of the
transfer of the properties under the agreement.
The total alleged liability referred to in the certificates is some
R13 million,
and this excluded the imposts on a third erf included in
the property sold which is, for various reasons, excluded from the
calculation.
7.
The crux of the respondents’ defence
in the answering affidavit is that the amounts claimed by the fourth
respondent as reflected
in the certificates are inaccurate for
various reasons, and that the first respondent, and accordingly the
second and third respondents,
are not liable for payment thereof.
They also dispute that the documents relied upon by the applicant are
in fact clearance certificates
at all.
8.
The matter served before me in the form of
a skirmish over an intricate peripheral issue which, upon careful
reflection, seems to
have been a futile diversion from the true
issues to be determined between the parties. It concerned the attempt
by the second
respondent to deliver a supplementary answering
affidavit (‘the SSA’). It was sought to be filed,
including therein
an application for condonation, as early as 17 July
2018. The affidavit itself runs to 18 pages, and contains annexures
of some
260 pages. The purpose of that affidavit was, firstly, to
place before the Court an analysis of the respects in which the
municipal
charges referred to above were alleged to be incorrect or
improbable, and secondly, to introduce a brand new and legally
complex
defence.
9.
The jist of the latter defence was that the
agreement and the suretyship are void or voidable by reason of an
alleged misrepresentation
made by the applicant to the second
respondent that the building on the property had been constructed as
a residential dwelling
which construction was not in accordance with
approved building plans. I am told that, contemporaneous with the
filing of the SAA,
the second respondent issued summons against the
applicant on the basis of the latter cause of action. The applicant’s
contention
is that it is merely an expedient afterthought and that,
even if there were no building plans, that would have had no material
bearing on the agreement, or on the property for the purposes for
which it was purchased. It is not necessary, however, for me to
venture into the merits of that claim.
10.
The
argument before me proceeded for some time by both parties on the
subject of the admission of the SAA, interwoven with the merits
of
the application as a whole, for the purposes of which both parties
had delivered submissions at the eleventh hour.
[1]
11.
In argument as to whether or not the SAA
should be admitted, there was some debate concerning the identity of
the party upon whose
shoulders rested the duty under the agreement to
ascertain the correct quantum of the municipal charges, of what each
party knew
of the alleged inaccuracies thereof at various times and
had or had not done about it:
11.1.
I understood the applicant’s
submissions to be based on the clauses of the agreement, referred to
above, and that (a) it was
the respondents’ duty to establish
what the municipal charges were; (b) that they should have paid
whatever was claimed by
the fourth respondent in that regard, if
necessary under protest; (c) that the respondents had consequently
taken undue advantage
of the situation by failing to pay the
municipal charges (or even any proportion thereof which they might
have established or believed
to be owing), thereby frustrating
transfer, and, with it, the payment of the purchase consideration the
instalments of which, it
will be recalled, were due to commence and
run only after transfer; (d) that, all the while, the respondents
were sitting pretty
(my words, not the applicant’s) while
continuing to receive significant rentals from the property; and (e)
that all of this
conduct had been facilitated by way of an alleged
entitlement to raise a dispute as to the quantum of the municipal
charges for
which the respondents were liable.
11.2.
The second respondent, neatly side-stepping
the consequences of the respondents’ alleged behaviour as
stated above, stuck
doggedly to its guns that (a) the applicant
itself was at all relevant times aware of the inaccuracies of the
municipal account;
(b) that it was its duty to establish the
correctness thereof before it could saddle the respondents with the
liability therefor;
(c) that no motion Court could make a
determination on paper of the correctness of the amounts claimed; (d)
that such a determination
had indeed to be made if the applicant had
any hope of success; (e) made a great deal of various delays and
procedural missteps
of which it claimed the applicant was guilty; and
(f) that he would demonstrate in the action already instituted that
the agreement
and the deed of suretyship were in any event void or
voidable.
12.
Overall, the second respondent argued for
the admission of the SAA on the grounds,
inter
alia
, of its relevance, pointing out
that it had been delivered some years earlier and that the applicant
had not sought to answer it.
The applicant opposed its admission on
the basis that the second respondent had not make out a proper case
therefor, that the evidence
sought to be introduced was inadmissible
and that the misrepresentation defence was excipiable.
13.
The second respondent consequently sought
the dismissal of the application on the basis of the existence of an
irresoluble dispute
of fact on the papers – with or without the
SSA.
14.
The applicant submitted that, should the
SSA be admitted, an opportunity should be permitted to it to answer
it, and the application
postponed. Were it not to be admitted, the
applicant sought to amend the relief such as to fix the period of the
respondents’
liability for the municipal charges to the period
of December 2013 to May 2018; and to compel the respondents within 30
days to
submit a ‘formal dispute’ to the fourth
respondent addressing the alleged inaccuracies in the account
(thereby, presumably,
discharging the applicant from any
responsibility as regards the quantum of the claim), failing which
the application could be
re-enrolled and the claim should then
proceed on the basis of the clearance certificates. The second
respondent’s counsel
objected to such an informal amendment for
obvious reasons.
15.
All of these matters having thus been
canvassed, including a reference by the second respondent’s
counsel to a letter in which
it had been proposed by applicant that
the application be referred to trial so that the alleged disputes of
facts on the papers
could be properly ventilated, the applicant’s
counsel then, rather suddenly, requested a referral to trial.
16.
As far as I can make out from the second
respondent’s submissions, which the applicant did not dispute,
the letter in which
that proposal was made by the applicant was dated
21 July 2021, and was refused by the second respondent. The letter
was received
about a month after the applicant set the matter down,
on 23 June 2021, for the hearing in the week of 2 August 2021.
17.
Thus, the focus of the hearing then shifted
from the question of the admission of the SSA to the question of
whether or not the
application should be referred to trial. Should
that be refused, the question of the admissibility of the SSA would
remain live;
if granted, there would, in my view, be no practical
purpose in deciding that question, save perhaps as to the matter of
costs.
18.
The
applicant’s counsel, in resisting the applicant’s belated
request, pertinently referred in this regard to
De
Reszke v Marais & Others
[2]
and
Law
Society of the Northern Provinces v Mogami & Others
[3]
in
support of the proposition that counsel is, as a rule, and in the
absence of exceptional circumstances, required to make his
or her
election as to the referral of a matter to oral evidence,
in
limine
;
and that, since the applicant had failed to do so, and could not
point to any exceptional circumstances to excuse the lateness
of the
request, the request should be rejected.
19.
The
provisions of Rule 6(5)(g) of the High Court Rules are ‘of wide
import and empower the Court, where an application cannot
properly be
decided on affidavit, to make such order as to it seems meet with a
view to ensuring a just and expeditious decision.’
[4]
The question of whether a Court should refer a matter for oral
evidence or to trial is a matter for the exercise of a wide
discretion
[5]
on all the facts
before it.
20.
Although, in an ideal world, the request to
refer should certainly made at the commencement of a hearing, that is
not an immutable
rule. The authorities relied upon in
De
Reszke
do not go that far. The
Court was there concerned with a too far ‘swing of the
pendulum’ in its Division in favour of
permitting such requests
in general.
21.
Comrie
J (in that matter, speaking on an appeal to the full Court) cited a
dictum of Botha JA in
Administrator,
Transvaal, & Others v Theletswane & Others
[6]
in which the learned Judge of Appeal expressly held that the approach
by a Court to allow counsel for an applicant, as a general
rule, to
present his or her case on the footing that the applicant is entitled
to relief on the papers, but to apply in the alternative
for the
matter to be referred to evidence if the main argument should fail,
‘has much to commend itself’.
22.
I note also that in the
Law Society
’s
case, the request to refer the matter to oral evidence appears,
specifically from three or four lines at 195B-C of the
report, to
have been made in the first instance before the Supreme Court of
Appeal (‘the SCA’). There is no suggestion
that such
request was made at any time in the court
a quo
. It is not
difficult to imagine the reluctance of the SCA to accede to such a
request at such a late stage in circumstances where
the request is
not justified by exceptional circumstances. The same would appear to
have been the case in
De Reszke
.
23.
The
basis of Harms DP’s dictum in the
Law
Society
’s
case that ‘the circumstances must be exceptional’ before
a Court will permit an applicant to apply in the alternative
for the
matter to be referred to evidence should the main argument fail, is
made in approval of the finding in
De
Reszke
.
That is in turn based on two other judgments, one authored by Corbett
JA (as he then was)
[7]
in which
the learned Judge of Appeal said that the rule is a salutary general
one, but not inflexible; and in doing so a judgment
of Didcott J (as
he then was)
[8]
was cited with
approval. In the latter judgment, a diversion from the general rule
was stated to be ‘exceptional perhaps’
when justified by
convenience, ‘much depend[ing] on the particular enquiry and
its scope’.
24.
I do not, therefore, read the dictum in the
Law
Society
’s case as intending to lay down an absolute
rule requiring the existence of exceptional circumstances at all
costs. The question,
as I have said, remains a matter for the
exercise of a wide discretion within the ambit of the provisions of
rule 6(5)(g) on a
case-by-case basis. That entails, as a discretion
almost invariably does, considerations of justice and fairness
overall, the proper
exercise of which is in its nature resistant to
general over-arching prescriptions.
25.
Notwithstanding the applicant’s
conduct in the matter before me, and the second respondent’s
complaints about it, some
of which may have been well-founded at
least as regards the procedural aspects thereof, I have concluded
that it would be just
and expeditious to accede to the applicant’s
request.
26.
I do so, in the exercise of my discretion,
for the following reasons:
26.1.
As I have already intimated, the question
of the admission of the SSA was, in my view, a mere side skirmish in
relation to the real
issues to be determined such that justice may be
done between the parties. I would go as far as to say that the SAA
was largely
unnecessary since the quantum of the charges had already
been disputed in the answering affidavit, sufficient in any event to
raise
a dispute of fact, whether or not such dispute was legitimate;
and a nagging suspicion remains that the filing of the SAA was an
expedient calculated to deflect attention from the other, more
important issues between the parties.
26.2.
It seems to me (and I need put it no higher
for present purposes) that the applicant has an arguable case, on the
strength of the
agreement construed as a whole, that clause 5 thereof
places the responsibility on the respondents’ shoulders to pay
the
municipal charges claimed by the fourth respondent, whatever they
may be, it being known to both parties, as the second respondent
itself pointed out, that the fourth respondent’s billing system
has for many years been a state of chronic disorder; and
by
extension, that, if such charges are indeed incorrect, to resolve
that question, if they wished to do so, with the fourth respondent
independently of the applicant.
26.3.
The
quid pro
quo
of the bargain seems to have been
that the respondents would obtain all the lucrative benefits of
possession, as well as that of
being required to pay the purchase
consideration over a period of several years commencing only after
the date of transfer, in
return for taking on that obligation: it is
unlikely, in my view, that the parties’ intention could have
been such as to
permit the respondents to frustrate the registration
of transfer in due course by the use of such a tool.
26.4.
Whether
that case can be finally sustained by the applicant is another
matter; it may, and, in my view based on the papers before
me,
probably would, require evidence as to the relevant circumstances,
including the surrounding facts and the conduct of the parties,
[9]
to permit the Court to arrive at a proper construction of the
parties’ intention as regards clause 5.
26.5.
Similarly, there can be no question that,
if the second respondent is found to be entitled to raise the matter
of the accuracy of
the municipal charges, oral evidence would be
required for the purposes of that determination; as it would
regarding the defence
of voidness sought to be introduced after the
delivery of answering affidavit.
26.6.
Since there is already an action underway
in respect of the latter, I imagine that the same issues to be
determined as a result
of the referral may in any event come into
play in that forum, and that, for that reason, and in any event, no
material prejudice
to the respondents would be occasioned thereby.
27.
I come finally to the question of costs.
27.1.
The amendment informally sought by the
applicant in the supplementary heads, albeit in the alternative to
the admission of the SSA,
was certainly irregular, and the
applicant’s counsel’s objection thereto well taken. Such
an amendment may be a matter
to be thrashed out in the trial process,
if the applicant intends to persist in it.
27.2.
It is manifestly true that the decision of
the applicant as to whether or not to request that the matter be
referred to trial was
made later than it should have been. It should
at least have made up its mind prior to the set down of application
before me so
that the issues to be determined could have been limited
to the question of the referral only – on the plausible
assumption
that the second respondent would most probably have
persisted in its opposition thereto.
27.3.
Had that occurred, it would probably not
have been necessary to hear the merits of the application at such
length as it was so heard,
save in so far as they impacted on the
request for a referral. A full hearing on the question of the
admission of the SSA, which
was interwoven with the argument on the
merits, would similarly have been obviated, or, at least, curtailed.
27.4.
I would estimate that the time taken for
the hearing in those circumstances, and the preparation therefor,
would have been reduced
by approximately half, and the costs order
made below reflects this.
28.
I make the following order:
28.1.
No order is made on the application.
28.2.
The application is referred for
determination to trial under the provisions of rule 6(5)(g), for the
purposes of which:
28.2.1.the
notice of motion will stand as the summons;
28.2.2.the
applicant shall deliver its declaration within one month of the date
of this order being handed down;
28.2.3.the
regulation of all further pleadings and other steps will be governed
by the provisions of the High Court Rules applicable
to trial
actions.
28.3.
The
costs of the application are reserved for the determination of the
trial Court, save that the applicant shall pay half of the
second
respondent’s costs incurred on and after 23 June 2021 and
occasioned by the preparation for the hearing, and the hearing
itself, of this application on 4 August 2021.
28.4.
Should
the applicant fail to deliver its declaration within the time stated
above, this order will, save for this paragraph,
ipso
facto
lapse in its entirety and the
following order will apply:
The application is
dismissed with costs.
B M SLON
Acting Judge of the High
Court
Gauteng Local Division,
Johannesburg
This
judgment was prepared and authored by Acting Judge Slon. It is handed
down electronically by circulation to the parties or
their legal
representatives by email and by uploading it to the electronic file
of this matter on Caselines.
HEARD
ON:
4
August 2021
DECIDED
ON:
12
August 2021
HANDED
DOWN ON:
13 August 2021
For
the Applicant:
Mr
M V J Chauke
Instructed
by
Thompson Wilks Inc
For
the Second Respondent:
Mr L Hollander
Instructed
by:
Swartz Weil Van der Merwe Greenberg Inc
[1]
The
applicant filed supplementary heads of argument on 28 July 2021 and
the second respondent on the morning of the hearing on
4 August
2021. Of the latter I was unaware until they were mentioned by
counsel in argument. In the overall view I take of the
matter,
neither set of heads contains much substantive material directly
relevant to the just and proper resolution of the application.
[2]
2006
(1) SA 401
(C) at 412J-413H
[3]
2010
(1) SA 186
(SCA) at 195C-D
[4]
Erasmus:
Superior
Court Practice
Vol 2 (Original Service 2015) at p D1-70 and authorities cited in fn
4 on that page.
[5]
Ibid
at
D1-73 and the authority cited in fn 1 on that page.
[6]
[1990] ZASCA 156
;
1991 (2) SA 192
(A) at 200C
[7]
i
n
the well-known authority of
Kalil
v Decotex (Pty) Ltd & Another
1988 (1) SA 943
(A) at 981F-G
[8]
in
Hymie
Tucker Finance Co (Pty) Ltd v Alloyex (Pty) Ltd
1981 (4) SA 175
(N) at 179D
[9]
cf
Capitec
Bank Holdings Limited & Another v Coral Lagoon Investments 194
(Pty) Ltd & Others
– unreported (470/2020)
[2021] ZASCA 99
(9 July 2021)