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[2021] ZAMPMBHC 7
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Moller v Komatiland Forest (Pty) Ltd (3075/2010) [2021] ZAMPMBHC 7 (10 February 2021)
REPUBLIC OF SOUTH
AFRICA
IN THE HIGH COURT
OF SOUTH AFRICA
(MPUMALANGA
DIVISION, MBOMBELA)
(1)
REPORTABLE:NO
(2)
OF INTEREST TO OTHER JUDGES:NO
(3)
REVISED: YES
CASE
NO: 3075/2010
In the matter
between:
FRANCOIS
ANDRIES MOLLER
Excipient
and
KOMATILAND
FOREST (PTY) LTD
Respondent
J
U D G M E N T
MASHILE J:
INTRODUCTION
[1]
The parties are referred to as the Plaintiff and the Excipient in the
exception. To avoid possible
confusion ensuing, I shall simply refer
to the Excipient as KLF and the Respondent as Moller. KLF operates as
a subsidiary of South
African Forestry Company Limited (SOC)
(“SAFCOL”), which is a wholly State-owned company, as is
evident from the suffix
of its name. On 20 August 2019, KLF
instituted legal proceedings against Moller, its former employee,
claiming damages in the amount
of
R1 080 616.62,
interest plus costs.
[2]
On 16 September 2019, Moller responded by delivering his notice of
intention to defend the action
for damages against him. Again, on 11
October 2019, he delivered a notice in terms of Rule 23(1) wherein he
complains that the
particulars of claim off are vague and
embarrassing and/or lack averments necessary to sustain a cause of
action and as such, excipiable.
Moller went ahead
and afforded KLF opportunity to remove the source of complaint within
15 days of the date of service of the notice.
KLF in response sought
to amend its particulars of claim but failed to perfect it.
GROUNDS OF
EXCEPTION
[3]
The complaints raised by Moller are three and I proceed to describe
the grounds on which they
are predicated in full below:
“
FIRST
EXCEPTION
3.
The
Plaintiff
,
in paragraph 1 of the particulars of claim, avers that the Plaintiff
is KOMATILAND FORESTS (PTY) LIMITED
("KLF")
,
a wholly owned subsidiary of the state-owned company, the SOUTH
AFRICAN FORESTRY COMPANY SOC LIMITED
("SAFCOL")
.
4.
KLF and SAFCOL
are separate and distinct legal entities.
5.
In paragraph
18 of the particulars of claim, the Plaintiff avers that between 2004
and April 2015, House of Frames
("House
of Frames")
was
contracted by
SAFCOL
to,
inter
alia,
design,
print and frame policy statements.
6.
The
Plaintiff's particulars of claim are rendered vague and embarrassing,
alternatively,
fail to disclose a cause of action, insofar as:
6.1
In
paragraph 20 of the particulars of claim, the Plaintiff avers that
the Defendant failed to disclose to
KLF
,
that House of Frames was a business conducted by his wife, in
circumstances where
SAFCOL
contracted with House of Frames; and
6.2
KLF
claims payment of an amount associated with the purported
non-disclosure, in circumstances where
SAFCOL
contracted with House of Frames.
SECOND
EXCEPTION
7.
In addition to
the first complaint, the Plaintiff avers, in paragraphs 18 - 21 of
the particulars of claim, that:
7.1
Between 2004 and April 2015, House of Frames was contracted by SAFCOL
to,
inter alia
, design, print and frame policy statements;
7.2
The Excipient/Defendant's wife is the sole director of House of
Frames, which business was operated
from the Excipient/Defendant's
matrimonial property;
7.3
The Excipient/Defendant failed to disclose to KLF that House of
Frames was owned and conducted
by his wife; and
7.4
As a result of the Excipient/Defendant's failure to declare an
alleged conflict of interest, the
Excipient/Defendant was enriched in
an amount of R 164 246. 96.
8.
The
Plaintiff's particulars of claim are further rendered vague and
embarrassing,
alternatively
,
fail to disclose a cause of action, insofar as:
8.1
Firstly
,
no cogent basis has been pleaded from which an enrichment can be
established, in circumstances where,
inter
alia
:
8.1
The Plaintiff
does not allege that the services rendered were not required by the
Plaintiff;
8.2
The Plaintiff
does not allege that the services were not rendered for value; and
8.3
Payment for
the services rendered was made to a third party.
8.4
Secondly, the
Plaintiff fails to aver:
8.4.1
The nature of
the amount claimed; and
8.4.2
How the amount claimed has been calculated?
THIRD
EXCEPTION
9.
In paragraph
29 of its particulars of claim, the Plaintiff alleges that KLF
suffered damages, "
estimated
"
to be R 138 000.00.
10.
The
Plaintiff's particulars of claim are rendered vague and embarrassing,
alternatively, fails to disclose a cause of action, insofar
as:
10.1
The Plaintiff
claims damages in an estimated amount.
10.2
In addition,
the Plaintiff fails to aver:
10.2.1.
The nature of the amount claimed; and
10.2.2.
How the amount claimed has been calculated?”
THE
LEGAL CONTEXT
[4]
The law concerning exceptions is settled.
A
pleading is vague and embarrassing when “
it
is either meaningless, or capable of more than one meaning. It is
embarrassing in that it cannot be gathered from it what ground
is
relied on...”
See
Leathern
v Redox
[1]
.
A pleading is also vague and embarrassing when an intelligible cause
of action cannot be gathered from it
[2]
.
[5]
T
he
onus is on the defendant who alleges that a summons is so vague and
embarrassing, alternatively discloses no cause of action,
to
establish this. It must do so by establishing that in all its
possible meanings, the pleadings as they stand are so vague and
embarrassing that they are meaningless, and/or alternatively, that no
cause of action is disclosed
[3]
.
[6]
An exception that a pleading is vague and
embarrassing cannot be directed at a particular paragraph within a
cause of action. The
exception must go to the whole cause of action,
which must be demonstrated to be vague and embarrassing. It must be
such that it
is so “
vague and
embarrassing to the extent that the Defendant does not know the claim
he has to meet”.
[7]
Where
an exception is taken a court looks only to the pleading excepted to
as it stands, not to facts outside those stated in it
[4]
.
As such, the excipient
must
satisfy the court that it would be seriously prejudiced if the
offending pleading were allowed to stand
[5]
.
[8]
To the extent that KLF asserts that this Court ought to ignore that
KLF AND SAFCOL are two separate
legal entities, each with its own
legal persona, it could be instructive to make reference to
circumstances under which it courts
have found it necessary to lift
the corporate veil. In this regard, I am reminded of the case of
Stephen
Malcolm Gore N.O and 37 others N.N.O.
(in
their capacities as the liquidators of 41 companies comprising King
Financial Holdings Ltd (in liq.) and its subsidiaries)
Faiza.
Binsward J cited the English case of
Ben
Hashem v. Shayif and Another
[6]
(Fam where Munby J set out the following seven principles (at
paras 159-164):
8.1
Ownership and control of a company are not
of themselves sufficient to justify piercing the veil;
8.2
The court cannot pierce the veil, even when no unconnected third
party is involved, merely because
it is perceived that to do so is
necessary in the interests of justice;
8.3
The corporate veil can only be
pierced when there is some impropriety;
8.4
The company’s involvement in an impropriety will not by itself
justify a piercing of its
veil: [furthermore] the impropriety must be
linked to use of the company structure to avoid or conceal liability;
8.5
It follows…. that if the court is to pierce the veil, it is
necessary to show both control
of the company by the wrongdoer and
impropriety in the sense of a misuse of the company as a device or
façade to conceal
wrongdoing;
8.6
A company can be a façade for such purposes even though not
incorporated with deceptive
intent, the relevant question being
whether it is being used as a façade at the time of the
relevant transaction(s); and
8.7
The court will pierce the veil only so far as is necessary to provide
a remedy for the particular
wrong which those controlling the company
have done.
In other words,
the
fact that the court pierces the veil for one purpose does not mean
that it will necessarily be pierced for all purposes.
EVALUATION
FIRST SOURCE
OF COMPLAINT
[9]
The complaint in this regard is that KLF having described itself as a
wholly owned subsidiary
of SAFCOL and that it and SAFCOL are two
separate and distinct legal entities, continues to aver that
between
2004 and April 2015 House of Frames was contracted by
SAFCOL
to design, print and frame policy statements.
KLF
also alleges that Moller
failed to
disclose to
KLF
,
that House of Frames was a business conducted by his wife.
[10]
As observed by Moller, to the extent that KLF attempted to amend the
particulars of claim, it acknowledged
the flaws in them. However, the
faults were not addressed as the amendments were not perfected in
consequence of which the defects
persist. SAFCOL is the party that
concluded the agreement with the House of Frames.
[11]
In those circumstances why would Moller in the employ of KLF, a
company with a separate and distinct
legal personality from SAFCOL,
be under any obligation to disclose his marriage relationship to
SAFCOL. SAFCOL was in a business
relationship with an independent
legal entity operated by Moller’s wife. Moller on the other
hand was in the employ of KLF
and very far removed from the
activities of SAFCOL and House of Frames.
[12]
The fact that KLF is a subsidiary of SAFCOL or that House of Frames
was a business run by Moller’s
wife, without more, is neither
here nor there and in any event, cannot place an obligation on him to
disclose any information to
SAFCOL. KLF seems to be placing
gratuitous weight on its relationship with SAFCOL and Moller’s
employment with KLF on the
one hand, and Moller’s marriage
relationship with his wife on the other, to conclude that there
should have been a disclosure.
[13]
Of course this ignores the separate and distinct legal personalities
enjoyed by these parties. The
circumstances under which the
proverbial lifting of the corporate veil can occur is rigorously
controlled and guarded, as is evident
from the case of
Stephen
Malcolm
Gore N.O. and 37 Others
N.N.O
.
supra.
[14]
Once this Court has decided that the separate and distinct legal
personalities of the companies ought
to be left intact, it becomes a
matter of course that any claim by KLF arising as a result of the
alleged non-disclosure of Moller
to SAFCOL must fail. In the
circumstances, I find that the first complaint that the particulars
of claim are vague and embarrassing
or that they do not disclose a
cause of action is well-conceived and is upheld.
SECOND
SOURCE OF COMPLAINT
[15]
The complaint here is that Moller failed to disclose a conflict of
interest in consequence of which
Moller has been enriched in the
amount of R164 246.96. The conflict arose because his wife was
firstly, the sole director
of House of Frames, secondly, that she ran
its business from the matrimonial property of the parties, thirdly,
that she was the
owner of the business and fourthly, that she was
the operator. From these allegations, KLF takes a giant leap
and alleges
that in consequence of the conflict of interest as
aforesaid Moller has been enriched (probably meaning unjustly
enriched).
[16]
Assuming that KLF meant to refer to unjust enrichment, the
particulars of claim are insufficient to
found an unjust enrichment
remedy for as long as it cannot demonstrate that the agreement
between House of Frames and SAFCOL was
invalid. KLF does not even
allege that it did not require the services that were rendered by
House of Frames nor that the services
were not rendered for value.
[17]
Moreover, payment for the services was made to a third party, House
of Frames, yet KLF seeks to hold
Moller liable. KLF completely misses
the point. There is no correlation between Moller and the contracting
parties. Understood
in this manner, this Court cannot resolve
otherwise but that the particulars are vague and embarrassing or
disclose no cause of
action.
[18]
Rule 23(3) provides that:
“
Wherever an exception is
taken to any pleading, the grounds upon which the exception is
founded shall be clearly and concisely stated”.
Insofar
as the nature of the amount claimed is concerned, I am somewhat
befuddled what Moller meant to convey. As such, this Court
finds it
hard to express its views on the issue.
[19]
The above said, if ‘nature of the amount’ is meant the
nature of the remedy then this Court
agrees that to the extent that
KLF refers to ‘enrichment’ and not unjust enrichment, its
particulars of claim are vague
and embarrassing because no such
remedy exists in our law. Rule 23(3) is unequivocal that the ground
on which an exception is predicated
ought to be concise and clear. I
am not certain what Moller means by ‘nature of the amount’.
[20]
Calculation of the amount referred to
supra
is intricately
related to the nature of the amount. If calculation of the amount
means calculation of the amount by which Moller
has been unjustly
enriched, then indeed the particulars of claim are vague and
embarrassing or do not disclose a cause of action.
To the extent that
‘calculation of the amount’ refers to the ‘nature
of the amount’ that is said not to
have been stated, the ground
of the exception ought to suffer the same fate as it falls short of
the requirements of Rule 23(3).
THIRD
SOURCE OF COMPLAINT
[21]
Moller’s issue insofar as the third complaint is concerned is
that KLF claims damages in an estimated
amount of R138 600.00.
Additionally, KLF has failed to describe the nature of the amount and
how it has calculated it. It
is undesirable to claim estimated
damages but it is not unheard to do this and certainly it should not
render the particulars of
claim vague and embarrassing nor should
they be regarded as failing to disclose a cause of action. The hurdle
can simply be overcome
by the employment of Rule 21(2).
[22]
With regard to KLF’s failure to state the nature of the amount
and how it has calculated it,
the views expressed in Paragraphs 18 to
20
supra
are repeated save that I cannot make any assumptions
of what Moller means. Accordingly, I do not express any views for
reasons
already stated.
ORDER
[23]
In the circumstances, I make the following order:
1.
The first
exception is upheld in its entirety;
2.
The second
exception is upheld in part, that is excluding Paragraph18 to 20 of
the judgment above, which should be understood to
have been
dismissed;
3.
The third
exception is dismissed in its entirety;
4.
The
particulars of claim are struck off and KLF is afforded 10 days
within which to amend its particulars of claim.
5.
KLF is
directed to pay the costs of Moller.
______________________________
B A MASHILE
JUDGE OF THE HIGH
COURT OF SOUTH AFRICA
MPUMALANGA
DIVISION, MBOMBELA
This judgment was
handed down electronically by circulation to the parties and/or
parties’ representatives by email. The date
and time for
hand-down is deemed to be 10 February 2021 at 10:00.
APPEARANCES:
Counsel for the
Excipient:
Adv N Lombard
Instructed
by:
Girard Hayward Inc
Counsel for
Respondents:
Adv T Mosikili
Instructed
by:
Madiba Masitenyane & Githiri Attorneys
Date of
Hearing:
10 December 2020
Date of
Judgment:
10 February 2021
[1]
1911
NPD 346
at 348
[2]
See
Keeley
v Heller
1904 TS 104
and Factory Investments (Pty) Ltd v Record
Industries Ltd 1957
(2)
SA 306 (T).
[3]
See
Liquidators
Wapejo Shipping Co Ltd v Lurie Bros
1924 AD 69
at 74 and Trope v
South African Reserve Bank
[1993] ZASCA 54
;
1993 (3) SA 264
(A) at 268F.
[4]
Baliso
v Firstrand Bank Ltd t/a Wesbank
2017 (1) SA 292
(CC), at para [33].
[5]
Francis
v Sharp and Others
2004
(3) SA 230
(C)
[6]
[2008]
EWHC 2380