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[2017] ZASCA 95
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Transalloys (Pty) Ltd v Mineral-Loy (Pty) Ltd (781/2016) [2017] ZASCA 95 (15 June 2017)
THE SUPREME
COURT OF APPEAL OF SOUTH AFRICA
JUDGMENT
Not
Reportable
Case
No: 781/2016
In
the matter between:
TRANSALLOYS
(PTY) LTD
APPELLANT
and
MINERAL-LOY
(PTY)
LTD
RESPONDENT
Neutral
Citation:
Transalloys
v Mineral-Loy
(781/2016)
[2017] ZASCA 95
(15 June 2017)
Coram:
Navsa, Theron, Wallis, Petse and
Zondi JJA
Heard:
11 May 2017
Delivered:
15 June 2017
Summary:
Requirements for
res judicata
and
issue estoppel: When appropriate to separate issues.
ORDER
On
appeal from
Gauteng
Division, Pretoria, of the High Court, (Janse van Nieuwenhuizen J
sitting as court of first instance):
1
The order of the high court is set aside and replaced with the
following
order:
‘
1
The replication of
res
judicata
is upheld
and paras 9.2 to 9.4, 17.2 and 22.2.1 of the amended plea are struck
out.
2
The second defendant is ordered to pay costs of the separate
determination
of the issues raised by the replication.’
2
The appeal is otherwise dismissed with costs, such costs to include
those
consequent upon the employment of two counsel.
JUDGMENT
Zondi
JA (Navsa, Theron, Wallis and Petse JJA concurring):
Introduction
[1]
The respondent, Mineral-Loy (Pty) Ltd, instituted an action against
Highveld Steel and Vanadium Corporation Limited (Highveld)
and the
appellant, Transalloys (Pty) Ltd, as first and second defendants
respectively, in the Gauteng Division, Pretoria, of the
High Court,
claiming payment of commission due to it for services rendered on
behalf of the appellant pursuant to a distribution
and service
agreement allegedly concluded by the parties. The respondent based
its claim on two invoices for August 2008 and September
2008. It also
claimed damages for the loss of profit allegedly resulting from the
repudiation of the distribution and service agreement.
Highveld and
the appellant disputed liability. When the matter came before
Fabricius J on 14 March 2013 in the court below, the
parties sought
and obtained an order that 27 issues, inter alia, relating to the
existence of the agreement, its precise terms
and conditions and its
repudiation be determined separately before any other issues.
[2]
In due course Bertelsmann J heard the separated issues and on 3 June
2013 delivered a judgment and determined them in favour
of the
respondent. Following upon Bertelsmann J’s judgment the
respondent amended its particulars of claim, inter alia, by
relying
on new breaches of the distribution and service agreement and by
increasing the quantum of its claim for damages.
[3]
In turn, the appellant amended its plea by pleading that on or about
21 December 2006 the parties varied the terms of the agreement.
The
appellant alleged that in terms of the agreement as varied the
respondent had to meet certain contractual prerequisites to
qualify
for the payment of commission. The appellant contended further that
the respondent failed to meet those prerequisites and
that it was
therefore not entitled to be paid commission. In the alternative, the
appellant alleged that the respondent had waived
its rights under the
agreement and was therefore not entitled to be paid any commission.
[4]
The respondent replicated and pleaded that the issues sought to be
introduced by means of the amended plea were
res judicata
. It
contended that the appellant should be precluded from raising and
relying on those issues.
[5]
At the hearing of this matter we were advised by counsel that Janse
van Nieuwenhuizen J had on 14 July 2016, and by agreement
between the
parties, granted an order that the special plea of
res judicata
be adjudicated separately, before any other issues. Janse van
Nieuwenhuizen J made no formal ruling to that effect, but the matter
proceeded in accordance with the agreement and ultimately, she upheld
the respondent’s special plea of
res judicata
with
costs. The appellant appeals against that judgment with leave of the
court below.
[6]
Before dealing with the merits of the appeal, it is necessary to make
a few remarks about separating issues. The purpose of
rule 33(4) of
the Uniform Rules of Court - entitling a court to try issues
separately in appropriate circumstances - is to facilitate
the
convenient and expeditious disposal of litigation. But that result is
not always achieved. It may not be appropriate to deal
with the
matter on separated basis where the issues are inextricably linked
and not discrete. This court in
Denel (Edms) Bpk v Vorster
2004
(4) SA 481
(SCA) para 3 held that even where the issues are discrete,
the expeditious disposal of the litigation is often best achieved by
ventilating all the issues at one hearing, particularly where there
is more than one issue that might be readily dispositive of
the
proceedings. In other words, careful thought must be given to the
anticipated course of the litigation as a whole, before a
decision to
separate the issues is taken. The trial court must be satisfied that
it is proper to order a separation as it has a
duty to ensure that
the issues to be tried are clearly circumscribed with clarity and
precision, so as to avoid confusion. These
guiding principles were
not observed when a separation order was sought and obtained in this
matter.
[7]
Careful thought was not given to the anticipated course of litigation
as a whole before on each occasion a decision to separate
the issues
was taken. The issues have been adjudicated on a separated basis
twice in this matter resulting in a delay in the determination
of the
real issues. The history of litigation in this matter makes it clear
that separation was ordered without first ensuring
that the issues to
be tried were clearly circumscribed. That was particularly the case
with the separation order on the first occasion,
which purported to
state 27 separate issues for determination and led Bertelsmann J to
issue an order declaring that: ‘Plaintiff
succeeds against the
second defendant on every issue identified in [the separation
order]’. The indeterminate nature of that
order led to much of
the confusion in the present proceedings.
[8]
Back to the merits of this appeal, the question is whether a
replication of
res judicata
was rightly upheld. In other
words, the broad question is whether all the issues raised in the
appellant’s amended plea are
the same as those that were before
and finally adjudicated by Bertelsmann J on 3 June 2013. In this
regard the pleadings and the
judgment of Bertelsmann J must be
carefully analysed.
Original
claim
[9]
The dispute between the parties has its genesis in the distribution
agreement the respondent concluded with Highveld, the appellant’s
predecessor, in October 1985 and amended in October 1994. A dispute
arose between the parties regarding payments allegedly due
to the
respondent under the agreement. That led to the institution of the
action against Highveld.
[10]
The respondent’s original claim had two components; one for the
payment of two invoices issued in August 2008 and September
2008 for
commissions in the amount of R168 712.56 and R114 316.69
respectively (invoice claims). The other was for damages
in the sum
of R1 195 403.76 representing the respondent’s loss
of profit for a 12 month period as a result of Highveld’s
repudiation of the agreement and alleged failure to give reasonable
notice of termination (damages claim).
[11]
The respondent’s cause of action was based on the terms and
conditions of the distribution agreement and the assignment
of that
agreement by Highveld to the appellant. It pleaded as follows:
11.1.
The respondent alleged that it was appointed by Highveld as its sole
distributor of ferromanganese, and later
silico-manganese, in the
Republic of South Africa and would purchase such products from
Highveld and on-sell the products at a
profit to various customers.
11.2.
Certain customers were excluded and Highveld would supply such
excluded customers directly with the products.
The respondent alleged
that it was expected to visit the excluded customers and do market
surveys and other services for Highveld
in respect of such excluded
customers and that Highveld agreed to pay the respondent a commission
on all Highveld’s sales
to them.
11.3.
Highveld would on a monthly basis furnish the respondent with values
of sales of ferromanganese by Highveld to
excluded customers and of
commission payable to the respondent to enable the respondent to
invoice Highveld.
11.4.
The respondent further alleged that it invoiced the appellant for
commission on sales effected in August 2008
and September 2008 and
that the appellant refused to pay such invoices.
11.5.
Highveld sold the business in question to the appellant and assigned
its rights and obligations under the agreement
to the appellant with
effect from either 1 July 2007 or April 2008, after which latter date
the respondent invoiced the appellant
for its commission.
11.6.
As regards the claim for damages for loss of profit, the respondent
alleged that after the agreement was assigned
to the appellant, the
appellant in repudiation of the agreement refused to furnish the
respondent with monthly values of sales
of the products sold by the
appellant or of the amount of commission payable to the respondent.
[12]
Highveld and the appellant defended the action. Not only did they
deny liability to the respondent, but they disputed the terms
of the
agreement as pleaded by the respondent. When the matter came before
Fabricius J in the court below, the parties agreed on
the 27 issues
upon which the court hearing the matter would be required to
adjudicate. In the main, the separated issues related
to the
existence of the agreement on which the respondent relied; its
precise terms; whether during the months of May to September
2008 the
respondent rendered the distribution and support services in
accordance with the agreement; whether the appellant failed
to make
payment of the commission for the months of August and September
2008; whether it was repudiated and whether the rights
and
obligations of Highveld under and in terms of the agreement were
assigned to the appellant.
[13]
The separated issues went on trial before Bertelsmann J and he
determined them in favour of the respondent. In short, the effect
of
the findings on the separated issues was that the appellant had
assumed the obligations of Highveld in terms of the 1985 agreement
as
amended in 1994; and its refusal to provide calculations to determine
commission due and to make payment, constituted repudiation.
[14]
The respondent and Highveld subsequently concluded a settlement
agreement and the respondent withdrew its claims against Highveld.
With that Highveld fell out of the picture.
The
amended claim
[15]
During the trial before Bertelsmann J it became apparent to the
respondent that the appellant and/or Highveld had sold the
relevant
products to customers who were not excluded customers in terms of the
distribution agreement and to whom only the respondent
was entitled
to sell such products. Furthermore the respondent became aware that
the appellant and/or Highveld had during the period
July 2007 to 30
September 2008 effected sales to customers on the excluded list
without disclosing the values of those sales and
the amount of
commission payable to the respondent. Arising from these facts, the
respondent amended its particulars of claim.
[16]
In the amended particulars of claim the respondent retained its claim
for payment of the commission on the two invoices it
issued to the
appellant in August 2008 and September 2008. What was amended was the
following:
16.1.
The amount claimed for damages consequent upon the repudiation of the
distribution agreement was increased from
R1 195 403.76 to
R5 237 121 on the basis that the average amount of the
monthly invoices issued by the respondent
during the 12 month period
preceding the repudiation was R436 426.75 and not R99 616.98
as initially averred.
16.2.
Two further claims for damages due to the breach of the distribution
agreement were introduced, namely:
16.2.1
A claim for damages for loss of profit in the amount of
R15 071 485.04 arising from sales of the relevant
products
to Afro Mineral Trading AG (AMT); a non-excluded customer, in terms
of the tolling agreement (AMT claim); and
16.2.2
A claim for damages for loss of profit of 5 per cent on sales and
distribution by the appellant of silico-manganese
and ferro-manganese
to non-excluded customers during the period July 2007 to 30 September
2008 and a claim of 2 per cent commission
on sales and distribution
of ferro-manganese effected by the appellant to customers on the
excluded list (undisclosed sales). The
amount claimed was R5 093 663.
Appellant’s
amended plea
[17]
In response to the respondent’s amended particulars of claim
the appellant amended its plea by pleading in para 9.2 that
the
distribution agreement was varied in terms of a memorandum of 21
December 2006 (variation defence), alternatively that the
respondent
waived its rights under the distribution agreement (waiver defence).
The appellant contended in para 17 of its amended
plea that the
respondent was not entitled to be paid commission on the ground that
in breach of its obligations in terms of the
agreement as varied, it
inter alia, failed to submit valid claims for commission in respect
of the excluded customers; procure
orders with a referral number
issued by Highveld and/or the appellant; and submit monthly
visitation reports. This defence
related only to the claim on the two
invoices and not to the original damages claim based on the
repudiation of the distribution
agreement.
[18]
The allegations underlying the appellant’s variation defence
are pleaded in para 9.3 of its amended plea as follows:
18.1.
The respondent was appointed as Highveld’s agent for local
sales;
18.2.
Highveld would pay to the respondent a commission of 2 per cent for
sales to the excluded customers;
18.3.
Any clients of Highveld visited by the respondent would be issued
with a referral number to be used when the client
concerned placed an
order with Highveld;
18.4.
Orders placed with Highveld without a referral number would not be
included for commission payable to the respondent;
18.5.
The respondent was obliged to submit a monthly visitation report to
Highveld and/or the appellant detailing the
clients visited during
the month with the relevant referral number that had been issued;
18.6.
For market development, the respondent would consult with Highveld
prior to visiting a new client to ensure that
the client was not
already a direct client of Highveld and the appellant.
[19]
As regards the respondent’s AMT claim, the appellant in para 22
of its amended plea denied that the respondent was entitled
to be
paid the commission for the sales to AMT. In addition, the appellant
alleged that AMT was registered in Switzerland, that
sales to it
would have been foreign sales and that it was not a potential
customer that the respondent would have approached.
[20]
The appellant’s waiver defence, which is in the alternative to
what is pleaded in paras 9.2 and 9.3, is set out in para
9.4 of its
amended plea. The appellant contended that, whilst fully aware of its
rights under the distribution agreement, as amended
in December 2006
and at all times thereafter, the respondent waived its rights to
obligations by Highveld and/or the appellant
in terms of the
distribution agreement, inter alia, by:
20.1.
receiving the memorandum;
20.2.
not challenging and/or disputing the contents of the memorandum; and
20.3.
conducting itself in a manner that was consistent only with having
accepted the terms and obligations as contained
in the memorandum.
[21]
This gave rise to a replication by the respondent that in light of
the earlier judgment by Bertelsmann J, the appellant was
precluded
from relying on variation, alternatively waiver, by the
exceptio
rei judicata
. As alluded to above, this contention was upheld
by Janse van Nieuwenhuizen J. The issue on appeal is whether Janse
van Nieuwenhuizen
J was correct. The parties agreed that the matter
concerns the application of the extended
res judicata
in the
form of issue estoppel.
[22]
For
res judicata
to operate it must be shown that the earlier
judgment relied upon was a final judgment, and that there must be
identity of parties
and of the subject-matter in the former and in
the present litigation. This court in
Prinsloo NO & others v
Goldex 15 (Pty) Ltd & another
[2012] ZASCA 28
;
2014 (5) SA
297
(SCA) described the
res judicata
and the issue estoppel as
follows:
‘
[10]
The expression “res iudicata” literally means that the
matter has already been decided.
The gist of the plea is that the
matter or question raised by the other side had been finally
adjudicated upon in proceedings between
the parties and that it
therefore cannot be raised again. According to Voet 42.1.1, the
exceptio was available at common law if
it were shown that the
judgment in the earlier case was given in a dispute between the same
parties, for the same relief on the
same ground or on the same cause
(
idem
actor
,
idem
res et eadem causa petendi
)
(see eg
National
Sorghum Breweries Ltd (t/a Vivo African Breweries) v International
Liquor Distributors (Pty) Ltd
[2000] ZASCA 159
;
2001
(2) SA 232
(SCA)
([2001]
1 All SA 417)
at 239F – H and the cases there cited). In time
the requirements were, however, relaxed in situations which gave rise
to
what became known as issue estoppel. This is explained as follows
by Scott JA in
Smith
v Porritt and Others
2008
(6) SA 303
(SCA)
para
10:
“
Following
the decision in
Boshoff
v Union Government
1932
TPD 345
the ambit of the
exceptio
res iudicata
has
over the years been extended by the relaxation in appropriate cases
of the common-law requirements that the relief claimed
and the cause
of action be the same (
eadem
res
and
eadem
petendi causa
)
in both the case in question and the earlier judgment. Where the
circumstances justify the relaxation of these requirements those
that
remain are that the parties must be the same (
idem
actor
)
and that the same issue (
eadem
quaestio
)
must arise. Broadly stated, the latter involves an inquiry whether an
issue of fact or law was an essential element of the judgment
on
which reliance is placed. Where the plea of
res
iudicata
is
raised in the absence of a commonality of cause of action and
relief claimed it has become commonplace to adopt the
terminology of
English law and to speak of issue estoppel. But, as was stressed by
Botha JA in
Kommissaris
van Binnelandse Inkomste v Absa Bank Bpk
1995
(1) SA 653
(A)
at
669D, 667J – 671B, this is not to be construed as implying an
abandonment of the principles of the common-law in
favour of those of
English law; the defence remains one of
res
iudicata
.
The recognition of the defence in such cases will however require
careful scrutiny. Each case will depend on its own facts and
any
extension of the defence will be on a case-by-case basis (
Kommissaris
van Binnelandse Inkomste v Absa
(supra)
at 670E – F). Relevant considerations will include questions of
equity and fairness, not only to the parties
themselves but also to
others. . . .”’
(See
also
Caesarstone Sdot-Yam Ltd v World of Marble and Granite 2000
CC & others
[2013] ZASCA 129
;
2013 (6) SA 499
(SCA) paras 21
and 22.)
[23]
The main thrust of the appellant’s argument was that in the
circumstances of the matter, where the respondent has introduced
new
causes of action for further breaches of the same agreement between
the parties (which breaches were only discovered during
the course of
evidence in the first hearing), it would be inequitable and unfair to
prevent the appellant from relying on a variation
of the agreement,
alternatively a waiver of certain rights therein as a defence to the
new claims by the application of issue estoppel
and that the
appellant did not have a duty to rely on the variation or waiver in
the first hearing.
[24]
In contrast, the respondent’s contention was that it was
incumbent upon the appellant to have pleaded such defences to
the
claims as they existed on the pleadings at the first hearing. It
argued that insofar as the variation of the agreement would
give rise
to defences to its initial claims – something that is not
wholly apparent on a reading of the memorandum and the
pleaded terms
of the variation – those defences should have been raised to
the initial claims.
[25]
It is clear that the issues now raised by the appellant form part of
the issues that Bertelsmann J was called upon to determine,
namely
whether the respondent and Highveld (the appellant’s
predecessor) had concluded the agreement; what were the precise
terms
and conditions of the agreement and whether the parties had concluded
the amendment of the agreement so that it covered sales
of
silico-manganese. As I have pointed out by way of introduction,
Bertelsmann J finally determined those issues in favour of the
respondent. It is therefore not open to the appellant to seek to
avoid liability under the distribution agreement by contending
that
the agreement was varied in the respects now alleged, alternatively
that respondent waived its rights to obligations by the
appellant.
The ‘once and for all rule’ requires that all claims
generated by the same cause of action, be instituted
in one
action.
[1]
Similarly,
once the merits of a claim have been finally determined in favour of
a party it is not permissible for the defendant
to seek to raise
fresh defences not raised initially. What is sauce for the plaintiff
goose, is also sauce for the defendant gander.
It was therefore
incumbent upon the appellant to have pleaded the variation and waiver
defences to the original claims as they
existed on the pleadings at
the first hearing in so far as they constituted defences to those
claims.
[26]
The object of the defence of
res
judicata
is
based on two grounds: the one public policy, that is to say, it is in
the interest of justice that there should be an end to
litigation,
and the other, the hardship to a litigant, that he should not be
vexed twice for the same cause.
[2]
To
allow the appellant’s new defences in relation to the
respondent’s claims for payment of the two unpaid invoices
and
the claim for damages arising from repudiation would defeat the whole
object of the defence of
res
judicata.
The
two defences which are now sought to be advanced would require
reconsideration of the findings of Bertelsmann J on issues that
were
before him. Bertelsmann J concluded that an agreement on the terms
and conditions alleged by the respondent had been established
and
that the appellant had repudiated the agreement. These findings will
have to be revisited and will be disturbed were the issues
sought to
be introduced by the appellant to be allowed. The appellant had a
fair opportunity to participate in the initial litigation,
where the
issues relating to the existence of the agreement, its precise terms
and conditions and whether it was breached, were
fully ventilated and
decided. The amounts claimed by the respondent in the initial
litigation in respect of the commission and
for damages were not so
insignificant to justify his failure to raise these two defences in
the initial litigation.
[27]
In relation to the respondent’s claim for commission on the two
invoices and the claim for damages the appellant’s
defences of
variation and waiver are
res judicata
and the appellant is
therefore precluded from raising them again. In the circumstances the
replication of
res judicata
in relation to para 17.2, read
with paras 9.2; 9.3 and 9.4, of the amended plea, was correctly
upheld, but the order requires amendment
by striking out the
offending paragraphs.
[28]
The AMT claim, however, stands on a different footing. I agree with
the appellant’s submission that the court below erred
in
finding that the issue relating to the AMT claim was considered by
Bertelsmann J and is therefore
res judicata
. Bertelsmann J, in
para 61 of his judgment, made it clear that the AMT agreement fell
outside the issues he was called upon to
decide and therefore it was
not necessary for him to deal with it. The fact that the appellant
had concluded a tolling agreement
with AMT, in terms of which the
appellant would sell its entire ore production to AMT, arose during
the cross-examination of Mr
Duff by the appellant’s counsel in
the proceedings before Bertelsmann J. But other than that it never
enjoyed any further
attention in the initial proceedings. It featured
for the first time when the respondent amended its particulars of
claim during
2015 to introduce a fresh claim of some R15 million.
[29]
Although the AMT agreement was referred to in the appellant’s
amended plea and counterclaim, but not as giving rise to
a separate
claim, the parties did not want it to form part of the issues in
respect of which a separation order was granted. That
this is the
approach adopted by the parties finds support in para 36 of
Bertelsmann J’s judgment in which the following is
stated:
‘
Prior
to the commencement of the hearing the parties argued a proposed
limitation of the issues for decision by this court. Fabricius
J
issued an order limiting the present disputes for decision to all
those relating to the merits of the disputes as set out above,
but
excluding any consideration of what would constitute a reasonable
notice period for the termination of plaintiff’s agreement
with
the first defendant, (if any), and any potential damages suffered by
plaintiff if its factual averments were to be accepted.
Any reference
to the tolling agreement was also excluded.’
[30]
If the alleged amendment or waiver pleaded in para 9 of the amended
plea constituted a defence to the AMT claim, this would
have posed a
dilemma. The appellant would be facing a fresh claim in excess of R15
million to which it had not been required to
respond during the
hearing before Bertelsmann J and it would be precluded from raising
that defence by the fact that it could and
should have raised this in
relation to a claim of less than R1 million on the invoices. In those
circumstances it would have been
necessary for us to consider whether
this would give rise to injustice. However, although the amended plea
to the AMT claim purports
to incorporate a reference to the amendment
of the agreement, nothing in the amendment impinges on the defence
actually pleaded
as summarised in para 19 above. The reference to the
amendment is simply surplsage. In the circumstances, the allegation
in this
regard in para 22.2.1 of the amended plea can be struck out,
without affecting the defence actually raised that AMT was a foreign
company and the respondent would not have sought to make sales to it.
The
order
[31]
In the result the following order is made:
1
The order of the high court is set aside and replaced with the
following
order:
‘
1
The replication of
res
judicata
is upheld
and paras 9.2 to 9.4, 17.2 and 22.2.1 of the amended plea are struck
out.
2
The second defendant is ordered to pay costs of the separate
determination
of the issues raised by the replication.’
2
The appeal is otherwise dismissed with costs, such costs to include
those
consequent upon the employment of two counsel.
________________
D
H Zondi
Judge
of Appeal
Appearances
For
the Appellant:
J Daniels (with him C T
Vetter)
Instructed
by:
Mervyn
Taback Inc, Parktown
Webbers
Attorneys, Bloemfontein
For
the Respondent:
G Kairinos SC (with him A Schluep)
Instructed by:
Andrew Duff Attorneys, Bryanston
Bezuidenhout
Inc, Bloemfontein
[1]
African
Farms and Townships Ltd v Cape Town Municipality
1963
(2) SA 555
(A);
National
Sorghum Breweries Ltd (t/a Vivo African Breweries) v International
Liquor Distributors (Pty) Ltd
[2000] ZASCA 159
;
2001
(2) SA 232
(SCA) para 10;
Custom
Credit Corporation (Pty) Ltd v Shembe
1972
(3) SA 462
(A) at 472A-D
[2]
Carl-Zeiss-Stiftung
v Rayner and Keeler Ltd & others
(No 2)
[1966] 2 All ER 536
at 549.