ABSA Brokers (Pty) Ltd v RMB Financial services and Others (332/08) [2009] ZASCA 83; 2009 (6) SA 549 (SCA) ; [2009] 4 All SA 463 (SCA) (20 August 2009)

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ABSA Brokers (Pty) Ltd v RMB Financial services and Others (332/08) [2009] ZASCA 83; 2009 (6) SA 549 (SCA) ; [2009] 4 All SA 463 (SCA) (20 August 2009)

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THE
SUPREME COURT OF APPEAL
REPUBLIC
OF SOUTH AFRICA
JUDGMENT
Case no 332/08
In the matter between:
ABSA BROKERS (PTY) LTD Appellant
and
RMB FINANCIAL SERVICES First
Respondent
RMB ASSET MANAGEMENT (PTY)
LTD Second Respondent
MOMENTUM DISTRIBUTION
SERVICES Third Respondent
MOMENTUM GROUP LTD Fourth
Respondent
Neutral citation:
Absa
Brokers v RMB Financial Services and others
(332/08)
[2009] ZASCA 83
(20 August 2009)
Coram: NUGENT, MLAMBO, MHLANTLA,
JJA, LEACH
et
BOSIELO AJJA
Heard: 25 May 2009
Delivered: 20 August 2009
Summary: Interpretation of
section 2 of the Apportionment of Damages Act 34 of 1956.
____________________________________________________________
ORDER
____________________________________________________________
On appeal from: High Court,
Pretoria (Legodi J sitting as a court of first instance).
Save as set out in paragraph (b)
the appeal is dismissed with costs;
The order of the court below is
varied by the addition of the following sentence, the date referred
to being a reference to the
date upon which this order was
substituted for the order of the court below:
‘
The plaintiff is granted leave
to amend its particulars of claim within 21 days of the date of this
order.’
___________________________________________________________
JUDGMENT
___________________________________________________________
MHLANTLA JA et NUGENT JA (MLAMBO
JA, LEACH et BOSIELO AJJA concurring)
[1] This is an appeal against an
order of the High Court, Pretoria (Legodi J) upholding an exception.
The issues between the parties
will be best understood against the
background of the factual issues that follow. An action was brought
against the appellant by
the Claasen Family Trust (the Trust) for the
recovery of damages alleged to have been sustained. The Trust alleged
that the appellant’s
employee had convinced it to invest an amount
of R1 020 000 in an investment product known as ‘RMB
Guaranteed Cashflow
Investment’ (the product) by representing that
the capital amount invested in the product would be guaranteed and
refunded at
the end of the investment period. This however was not
the case. As it turned out, so it was alleged, the capital was placed
at
risk and could not be repaid on maturity. The appellant settled
the claim by paying the Trust an amount of R585 686.56.
[2] The appellant, having settled
the claim, instituted action in the High Court, Pretoria against the
four respondents in the proceedings
that are the subject of this
appeal, alleging that they were joint wrongdoers, and sought to
recover a contribution from one or
more of the respondents. The
appellant pleaded that the first and second respondents had devised,
designed and developed the product
and had furthermore utilized the
services of the third and fourth respondents to promote and market it
to members of the public,
including its employees. The respondents
are alleged to have caused the appellant’s employee to make false
or incorrect representations
about the true nature and
characteristics of the product to members of the public.
[3] The respondents excepted to
the appellant’s particulars of claim on the basis that no cause of
action was disclosed. The court
below upheld the exception. This
appeal is before us with the leave of that court.
[4] The appellant’s claim is
founded upon s 2(12) read with s 2(6) of the Apportionment
of Damages Act 34 of 1956, which
permits a joint wrongdoer to recover
a contribution from another joint wrongdoer in certain circumstances.
This appeal turns on
the interpretation of s 2 of the Act and,
in particular, it raises the question whether the appellant was
obliged to give
notice in terms of s 2(2), or obtain leave of
the court in terms of s 2(4), as a precondition to instituting
action against
the respondents. It is convenient at this stage to set
out the relevant provisions of s 2.
[5] Section 2(1) is a guiding
principle to have a unitary action. It allows for an action to be
instituted against joint wrongdoers
in the following terms:
'(1) Where it is
alleged that two or more persons are jointly or severally liable in
delict to a third person (hereinafter referred
to as the plaintiff)
for the same damage, such persons (hereinafter referred to as joint
wrongdoers) may be sued in the same action’.
Section 2(2) allows for joint
wrongdoers who have not been sued in an action to be alerted to their
potential liability, whether
by the plaintiff or by a defendant, so
as to enable them to intervene in the proceedings, in the following
terms:
(2) Notice of any
action may at any time before the close of pleadings in that action
be given –
by the plaintiff;
by any joint
wrongdoer who is sued in that action,
to any joint
wrongdoer who is not sued in that action, and such joint wrongdoer
may thereupon intervene as a defendant in that action’.
[6] The Act recognises the
potential prejudice to a joint wrongdoer who is not joined in an
action and in this regard s 2(4)
provides a sanction if the
notice referred to in s 2(2) has not been given to a joint
wrongdoer as follows:
(4)(a) If a joint
wrongdoer is not sued in an action instituted against another joint
wrongdoer and no notice is given to him in
terms of paragraph (a) of
subsection (2), the plaintiff shall not thereafter sue him except
with the leave of the court on good
cause shown as to why notice was
not given as aforesaid.
(b) If no notice is
under paragraph (a) or (b) of subsection (2) given to a joint
wrongdoer who is not sued by the plaintiff, no
proceedings for a
contribution shall be instituted against him under subsection (6) or
(7) by any joint wrongdoer except with the
leave of the court on good
cause shown as to why notice was not given to him under paragraph (b)
of subsection (2)’.
[7] Provision is made for a
contribution to be claimed by one joint wrongdoer against another, so
far as it is material to this
appeal, by s 2(12) read with
s 2(6). The relevant portion of s 2(12) provides as
follows:
‘
(12) If any joint
wrongdoer agrees to pay to the plaintiff a sum of money in full
settlement of the plaintiff’s claim, the provisions
of subsection
(6) shall apply
mutatis
mutandis
as if judgment had been given by a competent court against such joint
wrongdoer …’.
Section 2(6) in turn, provides as
follows:
‘
If judgment is in
any action given against any joint wrongdoer for the full amount of
the damage suffered by the plaintiff, the
said joint wrongdoer may,
if the judgment debt has been paid in full, subject to the provisions
of paragraph (b) of subsection
(4), recover from any joint wrongdoer
a contribution in respect of his responsibility for such damage of
such amount as the court
may deem just and equitable having regard to
the degree in which that other joint wrongdoer was at fault in
relation to the damage
suffered by the plaintiff and to the damages
awarded: …’.
[8] As appears from subsection
(6), the right that is accorded to one joint wrongdoer to recover a
contribution from another is
expressly stated to be ‘subject to the
provisions of paragraph (b) of subsection (4)’. The essence of the
respondents’ exception
was that the appellant had not alleged that
it had given them as defendants notice of the first action as
required by s 2(2)
of the Act, nor had it obtained leave of the
court in terms of s 2(4), before the proceedings against them
were instituted.
They thus contended that the appellant was precluded
from instituting the action.
[9] Before us counsel for the
appellant disputed that construction of the relevant subsections.
Directing his argument to the phrase
'where it is alleged' in s 2(1)
he contended that the appellant was not obliged to give notice to the
respondents of the Trust’s
action, nor to have the leave of the
court, since it had not been alleged in the Trust’s action that the
respondents were joint
wrongdoers. In that regard he relied upon what
was said in
Becker v
Kellerman
,
1
which held that
the phrase ‘where it
is alleged’ in s 2(1) must be interpreted as ‘where it is
alleged in an action’.
[10] In that case Mashigo, an
employee of Becker had caused damage to Kellerman's motor vehicle in
a road accident. Kellerman sued
Mashigo for damages caused in the
collision. Thereafter and without notice or the leave of the court
he instituted a claim for
a contribution against Becker, who had not
caused the accident and was sued on the basis of vicarious liability.
Becker raised
a special plea that Kellerman could not sue him
because he had failed to give him notice in terms of s 2(2) or
obtain the
leave of the court in terms of s 2(4).
[11] The court dismissed the
special plea. Much of the judgment in that case is taken up with the
question whether a person who
is vicariously liable for the conduct
of another is a joint wrongdoer for the purposes of the Act. Having
found that such a person
is indeed a joint wrongdoer, the court
turned to the question
‘
whether or not
all joint wrongdoers who are in fact jointly or severally liable in
delict for the same damage, are joint wrongdoers
for the purposes of
subsections (2) and (4) of section (2)
’
2
(our translation).
It held that Becker was not such
a joint wrongdoer, with the result that Kellerman was entitled to sue
him without the leave of
the court, notwithstanding that Becker had
not been given notice of the earlier action.
[12] The reasoning of the court
in
Becker v Kellerman
,
as we understand it, was that ‘joint wrongdoers’ as contemplated
by the relevant subsections were confined to persons who
had been
alleged to be joint wrongdoers in the initial action. Absent such an
allegation in the course of the initial action, the
person who was
subsequently sued was not a ‘joint wrongdoer’ and did not fall
within the terms of subsection (4)(a). Because
there had been no
allegation in the action against the employee that Becker was a joint
wrongdoer, so the court held, he was not
a ‘joint wrongdoer’ as
contemplated by subsection 4(a).
3
[13] The court below sought to
distinguish
Becker v
Kellerman
but we do
not think this case is materially distinguishable. Quite clearly the
circumstances in which the issue arose in that case
differ from those
of the present case. But if such an allegation is indeed a
prerequisite to a person being a ‘joint wrongdoer’
for purposes
of subsection 4(a) – as was found in
Becker
v Kellerman –
then
it seems to us that that must apply as much to subsection 4(b). And
if that is so, it is fatal to the respondents’ case,
because there
is no suggestion that in the action by the Trust against the
appellant it was alleged by anyone that the respondents
were joint
wrongdoers (and the case was argued on the basis that no such
allegation had been made).
[14] But we disagree with the
construction that was placed upon the Act in that case. In our view
the court in
Becker v
Kellerman
accorded
undue significance to the use of the word ‘alleged’ in s 2(1).
To the extent that the subsection defines ‘joint
wrongdoers’, it
defines the term to mean ‘two or more persons [who are] jointly or
severally liable in delict to a third person
for the same damage’.
4
We do not think that the phrase ‘where it is alleged’ purports to
suggest that the term is confined to persons who have been
alleged at
some time to be joint wrongdoers. The purpose of the phrase is no
more than procedural. Subsection (1) creates a procedural
framework
for the initiation of the unitary process in which the respective
rights and obligations of the plaintiff and all concurrent
wrongdoers
will be determined. It could hardly have been phrased so as to refer
to persons who are joint wrongdoers in fact when
the very question to
be determined in the proceedings that it authorises is whether or not
they are indeed ‘joint wrongdoers’.
References to ‘joint
wrongdoers’ in the remaining subsections are at times a reference
to persons who are alleged to be joint
wrongdoers, and at other times
a reference to persons who are joint wrongdoers in fact, but that is
again dictated by the same
procedural reasons.
5
But we cannot agree that the determination of whether a person is or
is not a joint wrongdoer for purposes of those subsections
is whether
or not an allegation to that effect was made in the original action.
That construction seems to us not only to strain
the language but, as
pointed out by the court below, it would also lead to absurdities
when applied to s 2 as a whole.
[15] We agree with the court
below that the clear purpose of the Act is to avoid a multiplicity of
actions arising from a single
loss-causing event. The scheme of the
Act contemplates a single determination of liability by multiple
wrongdoers and the apportionment
of liability amongst them in single
proceedings. Thus a plaintiff who alleges that two or more persons
are liable for the damage
that is in issue then he or she is
permitted by s 2(1) to sue them all in the same action. A
defendant who alleges that another
person is also liable to the
plaintiff is capable of joining him or her in the proceedings under
Rule 13 of the Uniform Rules.
And if the plaintiff and the defendant
choose not to join that person in the action, then that person must
at least be given the
opportunity to intervene by being notified of
the action. The clear purpose of subsections 4(a) and (b) is to
encourage the resolution
of all claims in single proceedings by
barring further proceedings against parties who have not been given
such notice (except
with the leave of the court).
[16] That seems to us to be the
plain meaning of the language of the various subsections. The
language is also consistent with the
manner in which it was applied
in
South African
Railways and Harbours v South African
Stevedore Services,
6
where the phrase ‘joint wrongdoers’ was used within the context
of the Act in different senses, and in
Wapnick
v Durban City Garage
,
7
as well as in
Lincoln v
Ramsaran
.
8
Both the latter cases dealt with applications to the court for leave
to institute action for a contribution in terms of s 2(4)
of the
Act as no notice of the original action had been given to the persons
subsequently alleged to be joint wrongdoers. No allegation
in either
matter had been made that the person from whom the apportionment was
sought was a joint wrongdoer. The merits of each
application were
considered and the court held that leave of the court had to be
obtained before such wrongdoers could be sued
regardless of the fact
that no allegation had been made in the original action that they
were joint wrongdoers. In the
Lincoln
case the application
was granted, whilst in
Wapnick
leave was refused as
the applicant had failed to show good cause.
[17] In our view the finding in
Becker v Kellerman
that the provisions of subsection 4 apply only to a person who has
been alleged in the original proceedings to be a joint wrongdoer,
is
inconsistent with the scheme of the Act and undermines the object and
purpose thereof. The conclusion is illogical and was in
our
respectful view erroneous. It follows therefore that the reliance by
the appellant on
Becker
v Kellerman
is
misplaced. In the absence of notification to the respondents of the
earlier action, as required by subsection 2, and without
the leave of
the court, the appellant was precluded by subsection 4(b) from
instituting the present action. In those circumstances
the exception
was correctly upheld.
[18] In so far as the form of the
order issued by the court below is concerned, it was accepted by
counsel for all the parties that
the appellant ought to have been
permitted to amend its particulars of claim to remedy the defect if
it is capable of doing so.
The order will be amended accordingly.
[19] In the result the following
order is made:
(a) Save as set out in paragraph
(b) the appeal is dismissed with costs.
(b) The order of the court below
is varied by the addition of the following sentence, the date
referred to being a reference to
the date upon which this order was
substituted for the order of the court below:
'The plaintiff is granted leave
to amend its particulars of claim within 21 days of the date of this
order.'
___________________
N Z MHLANTLA
JUDGE OF APPEAL
__________________
R. W. NUGENT
JUDGE OF APPEAL
Appearances:
For Appellant J P Vorster SC
K W Lüderitz
Instructed by:
Gildenhuys Lessing Malatji,
Pretoria
Honey Attorneys, Bloemfontein
For First and Second
Respondents M Du P van der Nest
SC
DA Turner
Instructed by:
Deneys Reitz, Sandton,
Johannesburg
Webbers, Bloemfontein
For Third and Fourth
Respondents S Symon SC
Instructed by:
Keith Sutcliffe &
Associates, Johannesburg
EG Cooper &Madjiet,
Bloemfontein
1
1971
(2) SA 172
(T) at 182H.
2
At
182B-C.
3
At
185A-C.
4
See
McKerron
The
Law of Delict in South Africa
7ed 306.
5
Shield
Insurance Co Ltd v Zervoudakis
1967 (4) SA 735
(ECD) 737H-738A;
South
African
Railways
and Harbours v South African Stevedore Services
Co
Ltd
1983 (1) 1066 (A) at 1089H-1090A;
Wapnick
v Durban City Garage
1984 (2) SA 414
(D) at 421D-422F.
6
At
1089.
7
1984
(2) SA 414
(D).
8
1962
(3) SA 374
(N).