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[2021] ZAGPPHC 491
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GroCapital Financial Services (Pty) Ltd v Salalidis N.O and Others (41942/2017) [2021] ZAGPPHC 491 (20 July 2021)
HIGH
COURT OF SOUTH AFRICA
(GAUTENG
DIVISION, PRETORIA)
(1)
REPORTABLE: NO.
(2)
OF INTEREST TO OTHER JUDGES: NO
(3)
REVISED.
DATE
20
JULY 2021
CASE
NO: 41942/2017
In
the matter between:
GROCAPITAL
FINANCIAL SERVICES (PTY) LTD
Plaintiff
and
INA
SALALIDIS N. O.
First
Defendant
STANLEY
FELIX MAGID N. O.
Second
Defendant
IOANNIS
SALALIDIS N. O.
Third
Defendant
MICHAEL
BRETT HORWITZ N. O.
Fourth
Defendant
SEGERAN
MOONSAMY N. O.
Fifth
Defendant
J
U D G M E N T
(Re
postponement and other interlocutory issues)
This matter has been heard by
way of a virtual hearing and disposed of in the terms of the
Directives of the Judge President of
this Division. The
judgment and order are accordingly published and distributed
electronically.
DAVIS, J
[1]
Introduction
The plaintiff is claiming some R3,
2 million with interest from the defendants as sureties for the
principal debtor, J P Krugerrand
Deeds (Pty) Ltd. The initial
first defendant (Mr Salalidis) was cited in his personal capacity as
a surety and his co-surety
was the JPKL Empowerment Trust (the
Trust). Mr Salalidis, a Mr Magid, a Mr Horwitz and a Mr
Moonsamy were cited as the trustees
of the Trust. At the
eventual trial date of 19 July 2021, the defendants raised certain
incapacity issues regarding the Trust
as well as the substitution of
Mr Salalidis by the executrix in his deceased estate (Mrs Salalidis)
and applied for a postponement
of the trial. The circumstances
relating to these and other interlocutory issues, more fully appear
from the chronology of
the matter, set out hereunder.
[2]
Relevant Chronology
2.1
13 March 2015 –
Mr Salalidis signs a deed of suretyship in favour of the
plaintiff – this is not in dispute.
2.2
13 March 2015 –
Mr Magid signs the deed of suretyship binding the
Trust in favour of the Plaintiff, having been duly
authorised in terms of a written resolution, signed by all the
abovementioned
cited trustees.
2.3
8 May 2016 –
Unbeknown to the plaintiff, Mr
Horwitz resigned as
trustee. No new letter of authority is issued by
the Master.
2.4
20 January 2017 –
The Principal debtor commences business rescue
proceedings, entitling the plaintiff to act on the
aforementioned suretyships.
2.5
20 June 2017 –
Action is instituted.
2.6
19 October 2017 –
After having been placed under bar, the defendants
deliver their plea, claiming that the plaintiff’s
agreement with the principal debtor was subject to unfulfilled
conditions
precedent and that their suretyships should be rectified
to limit the extent of each suretyship.
2.7
8 March 2019 –
Attorneys Schultz Inc (specifically Ms Candice Schultz),
now Scultz Demarthe Inc, appointed as attorneys for the
defendants with Mr Magid as the “primary point of contact”.
2.8
29 November 2019 –
Unbeknown to the plaintiff Mr Moonsamy passed
away.
2.9
2 July 2020 –
Unbeknown to the plaintiff Mr Salalidis passed away.
2.10
15 July 2020 –
Unbeknown to the plaintiff Mrs Salalidis is appointed the
executrix in
Mr Salalidis’s deceased estate.
2.11
31 August 2020 –
Attorneys Schultz Inc (again specifically Ms Candice
Schultz), withdraw as attorneys of record for the late
Mr Salalidis in both his personal capacity and his capacity as
trustee for
the Trust. The notice says nothing of his passing
and gives his last known address and draws the plaintiff’s
attention
to rule 16 regarding service of documents (on such last
known address). No rule 15 notice is delivered by the said
attorneys
in substitution of their late client and in protection of
his estate.
2.12
21 January 2021 –
Notice of set down for trial on 19 July 2021 is served.
2.13
24 May 2021 – The
plaintiff gives notice of its intention to amend its plea
to insert an alternative cause of action, based on
unjustified enrichment as well as an averment that, had there been
suspensive
conditions, the fulfillment thereof was frustrated by the
defendants.
2.14
8 June 2021 – The
plaintiff’s amended pages to its particulars of claim are
delivered (the defendants attorney says this was done on
7 June 2021).
2.15
8 June 2021 – Ms
Candice Schultz, the defendants’ attorney and deponent
to the principal affidavit delivered in support of the
application for striking the trial matter from the roll,
alternatively postponing
it, states that, “in response”
to the amended pages, she informed the plaintiff’s attorneys
that:
-
there were no trustees
of the Trust “currently in office”.
-
accordingly she was
unable to take instructions in order to respond to the amendment and
“
more
importantly, unable to even begin preparing for trial
”
and
-
the substitution of the
executrix had not yet occurred and “none of the defendants are
before the court”.
2.16
8 June 2021 – A
rule 15 notice, substituting Mrs Salalidis for Mr Saladadis
is delivered and an amended notice is delivered two days
later by the plaintiff’s attorneys.
[3]
The status of the
trust
3.1
It is trite that where
the number of trustees fall below the required number prescribed in a
trust deed, such a trust cannot perform
any legal juristic acts or,
more precisely, the remaining trustees cannot legally bind the
trust. See:
Hyde
Construction CC v Deuchar Family Trust and Another
2015
(5) SA 388
(WCC) and
Land
and Agricultural Bank Ltd v Parker
2005 (2) SA 77
(SCA) (the
Landbank
– case).
3.2
This does not mean that
the trust ceases to exist and it can, for example still be
sequestrated. See
JP
van Schalkwyk Attorneys v Botha NO and Another
(65348/2020) [2021] ZAGPPHC 189 (23 March 2021).
3.3
At the time that action
had been instituted in this matter by the plaintiff, it pleaded that
Mr Horwitz was a trustee of the Trust.
This allegation has been
admitted by the defendants at the time and need not be proven by the
plaintiff, according to the rules
of pleadings generally.
3.4
The defendants’
attorneys now allege that Mr Horwitz had resigned prior to the date
of their plea. No explanation is
given for this discrepancy and
neither has the admission been withdrawn. It might be that the
pleader has simply not taken
proper instructions or it might be that
Mr Horwitz had not complied with the formalities required by section
21 of the Trust Property
Control Act 57 of 1988 for his resignation
to have been effective.
3.5
Either way, the
remaining three trustees have since passed away. The
consequence is that, even if Horwitz might still be a
trustee, the
trust deed requires a minimum of three trustees for the Trust to be
able to legally transact. The defendants’
attorneys
indicate that three new trustees have been proposed who have signed
the necessary documents but letters of authority
could not be issued
by the Master because it could not locate the Trust’s files in
its office. The regularisation of
the Trust’s incapacity
or impediment to act was apparently only initiated in July 2021.
3.6
Apart from the
administrative ineptitude by an organ of state, which, in the
experience of this court, is nothing out of the ordinary,
what I find
astounding is how the attorneys who vehemently claim to act on behalf
of the Trust, have done nothing until their authority
to act has been
challenged to assist the Trust in regularizing its position.
Nothing has been done in this regard since the
passing of Mr
Salalidis in July 2020, nor after the attorneys withdrew as his
attorney in his capacity as trustee, nor since the
passing of Mr
Magid in March of this year. The excuse that the attorney only
became aware of these issues during the course
of June 2021 “in
preparation for trial” after the plaintiff had amended its
particulars of claim, carries with it the
admission that no
preparations had been done in the period since the service of the
set-down in January 2021, being the preceeding
five months before
trial.
3.7
Not only is the lack of
preparation deplorable, but the attorney’s allegation that she
could not obtain instructions due to
the absence of trustees in order
to file a plea to the amended particulars, further implies that she
had received the Rule 28 Notice
of intention to amend on 24 May 2021
but either ignored it or allowed the dies mentioned therein to lapse
without attempting to
take instructions. Counsel for the
defendants, in passing, also relied on the fact that no plea has yet
been filed in respect
of the amended claims. He alleged that
the cause of action introduced thereby had probably become
prescribed. One would
have expected such an objection to have
been considered or at least debated with clients by any attorney with
serious concern for
her client’s case. This is after, on
her version, she had received an instruction on behalf of Mr Magid
(when he was
still alive) to “
urgently
commence preparation for trial
”.
3.8
The result of all this
is, however that the Trust has no living trustees and the resignation
of Mr Horwitz is open to some doubt.
To all intents and purposes, the
Trust is “incapacitated” and unable to proceed with the
trial.
3.9
Counsel for the
plaintiff argued that this should not be a bar to default judgment
being granted against the Trust and argued that
the case was in that
sense, analogous to the judgment of this court in
JP
van Schalkwyk Attorneys
.
I must immediately point out that in the
JP
van Schalkwyk
–
case, as appears from the judgment therein, the court was at pains to
allow “a voice” to be heard on behalf
of the trust in
that case, via the remaining trustees.
3.10
To allow the trial to
proceed at the present juncture, would be to disallow any “voice”
on behalf of the Trust, given
the facts of the matter. In this
regard, the sole or principal beneficiary also threw his weight
behind the application not
to have the trial proceed.
3.11
The case against the
Trust should however, not be struck off the roll. The plaintiff
was unaware of the change in the landscape
of trusteeship, was
entitled to rely on the admissions contained in the plea and was not,
until it was too late, alerted to the
current status of the Trust by
the attorney claiming to act on its behalf. In this sense the
matter is distinguishable from
the Parker Trust in the
Landbank
– case, which was never properly before even the court a quo.
3.12
Rather than striking
the matter from the roll, it should be postponed sine die insofar as
the Trust is concerned.
[4]
The representation
of the Trust
4.1
On the date of the
appointment of Schultz Inc, now Schultz Domarthe Inc in March 2019,
there were still a valid number of trustees.
4.2
The plaintiff argued
that the appointment and power to act as attorneys had to be
confirmed by a resolution by the Trust.
I disagree, a valid
appointment can be proven in other ways and I am satisfied, without
describing the various letters and documents,
that at that time the
Trust and its trustees had appointed the attorneys, the trustees
intended for the attorneys to represent
the Trust and the attorneys
had not been acting on a frolic of their own but fully intended to
represent the Trust. See also
Eskom
v Soweto City Council
1992 (2) SA 703
(W) and
Mall
(Cape) (Pty) Ltd v Merino Ko-operasie Bpk
1957 (2) SA 347
(C) in this regard.
4.3
It is not certain what
happened with the instructions to act on behalf of the Trust upon the
demise of Mr Moonsamy in November 2019
or if the attorney was made
aware of this, but certainly she (referring to Ms Schultz
specifically) became aware of the passing
of her client Mr Salalidis,
who was one of the remaining two trustees. Although the
attorney claimed Mr Magid was the trustee
authorized to appoint the
attorneys, all indications are that Mr Salalidis was the actual
witness and representative of the trustees.
It was also
expressly on behalf of the other trustees that he deposed to the
discovery affidavit. He was also one of the
signatories, not
only to the resolution authorising the signing of the Trust’s
deed of suretyship, but also the facility
letter granted to the
principal debtor, the validity of which has been placed in dispute.
In fact, he was the sole director
of the principal debtor who the
attorney is also representing in the business rescue proceedings.
I find it irresponsible
for the attorney to not alert her opponents
of his passing and to not making any enquiries at the time as to her
mandate to act
on behalf of the Trust or as to the Trust’s
status generally.
4.4
Once the notice of set
down for trial was delivered, the attorney would surely have informed
her clients thereof and enquired as
to witnesses and representation
of the Trust. If not at that time, then surely at the time of
the passing of Mr Magid, the
attorney should have become aware of the
lack of authority of the Trust and her consequential lack of
authority to act on its behalf.
Even if she was, due to her
apparent lack of contact with her clients, unaware of the passing of
Mr Magid at the time, in law,
the Trust then ceased to have the
capacity to act and to have the attorney act on its behalf.
[5]
The executrix
5.1
It is not clear exactly
when the plaintiff became aware of the particulars of Mrs Salalidis
as executrix in the deceased estate
of Mr Salalidis. It might
only be once Ms Schultz was galvanised into action in the beginning
of June 2021. Fact of
the matter is, she only formally became a
party by 10 June 2021 at the instance of the plaintiff.
5.2
Thereafter, however,
two weeks elapsed before a consultation was held by her with Ms
Schultz.
5.3
Apart from the
consultation, there is no evidence of what else Mrs Salalidis had
attempted to do in order to either obtain legal
advice or prepare for
trial. The excuse that she was not served with all the
documents and only given access thereto via
Caselines and that this
is a ground for postponement, is a feeble excuse. Her attorney,
Ms Schultz, having acted for Mr Salalidis
all along, had all the
documents. Counsel’s argument that Mrs Salalidis had to
consider the case and had not pleaded
to the amended claim is equally
unconvincing. Almost a month had passed since her last
consultation with Ms Schultz and there
is no evidence of any trial
preparation or any other activity. The dies for a consequential
plea have also elapsed.
Of most of this, Mrs Salalidis would be
unaware, being a housewife and a lay person. The practitioner
in whom she had placed
her trust, Ms Schultz, was, however, not only
steeped in the case, but schooled in the procedures of this court.
5.4
In the end, counsel for
Mrs Salalidis conceded begrudgingly that what she was actually
seeking, amounts to an indulgence.
In my view, not to grant the
indulgence would cause her more prejudice than the plaintiff would
suffer, if a postponement is granted.
The plaintiffs’
prejudice would largely be addressed by the issue of interest and
costs.
[6]
Costs
6.1
The general principle
is that he or she who seeks an indulgence must, by the payment of
costs, ensure that the other party is not
prejudiced thereby. I
find that this principle is applicable in this instance in respect of
the first defendant.
6.2
Since the passing of Mr
Magid, the defendants’ attorneys could have no mandate to act
for the Trust. This is confirmed
by their own argument that the
Trust is not even properly before the court for purposes of trial.
In this regard, when continuing
with litigation on behalf of an
incapacitated client, the attorney should be liable for costs
de
boniis propriis
, so
the plaintiff argues.
6.3
I considered granting a
costs order against the attorneys for the Trust or Ms Schultz
personally, not only on the above basis, but
as a result of the other
conduct (or lack thereof) outlined earlier, but in the end decided,
in the exercise of my discretion,
that the conduct fell just short of
the requirements for such an order as discussed recently in both the
majority and minority
judgments of the Constitutional Court in
Public
Protector v South African Reserve Bank
2019 (6) SA 253
(CC), although the context in that case was in
relation to a public official.
6.4
I do find, however,
that the plaintiff should not be out of pocket for the wasted costs
occasioned by the postponement and costs
shall therefore be on the
scale as between attorney and client.
6.5
In view of the Trust’s
status and, following the judgment in the
Landbank
– case, there shall be no order against the Trust.
[7]
Order:
1.
The trial is postponed
sine die.
2.
The first defendant is
ordered to pay the wasted costs occasioned by the postponement on the
scale as between attorney and client.
N
DAVIS
Judge
of the High Court
Gauteng Division, Pretoria
Date of
Hearing: 19 July 2021
Judgment
delivered: 20 July 2021
APPEARANCES:
For
the Plaintiff:
Adv A Duvenhage
Attorneys for the
Plaintiff:
Van
Gruenen & Associates Inc., Pretoria
For
the Defendants:
Adv A Roeloffze
Attorney
for the Defendants :
Schultz Demarthe Inc.,Pretoria