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[2019] ZAFSHC 60
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Shaman Filling Station CC t/a Total Orangesig and Another v Garagesure Consultants and Acceptances (Pty) Ltd (A268/2018) [2019] ZAFSHC 60 (30 May 2019)
IN
THE HIGH COURT OF SOUTH AFRICA,
FREE
STATE DIVISION, BLOEMFONTEIN
Reportable:
NO
Of
Interest to other Judges:
NO
Circulate
to Magistrates:
NO
Case number:
A268/2018
In
the matter between:
SHAMAN
FILLING STATION CC t/a
TOTAL
ORANGESIG
First Appellant
CAROL
BALINDIWE MOTAKE
Second Appellant
and
GARAGESURE CONSULTANTS
AND
ACCEPTANCES (PTY)
LTD
Respondent
CORAM:
NAIDOO, ADJP
et
DAFFUE, J
et
REINDERS,
J
HEARD
ON:
24 MAY 2019
JUDGMENT
BY:
DAFFUE,
J
DELIVERED
ON:
30
MAY 2019
I
INTRODUCTION
[1]
This
appeal lies against a judgment by a single judge of this Division
(“the trial court”) granting orders in favour
of the
plaintiff against two defendants, the one paying the other to be
absolved, in the sum of R500 000.00 together with
interest on
this amount and costs of suit.
[1]
[2]
On 26
October 2018 the trial court granted leave to appeal to the
unsuccessful defendants, costs of the application for leave to
appeal
to be costs in the appeal.
[2]
II
THE PARTIES
[3]
First
and second appellants, the unsuccessful defendants in the trial
court, are Shaman Filling Station CC, t/a Total Oranjesig
and Carol
Balindiwe Motake respectively. They were represented before us
by Adv S Grobler, who also appeared in the trial
court, duly
instructed by Honey Attorneys. It is perhaps appropriate to
mention at this stage that the particulars of claim
and documents
relied upon by plaintiff were drafted rather poorly. This is
highlighted by the allegation in the particulars
of claim that the
first defendant is a company which is clearly not the case if its
registration number and the relevant documents
are considered.
[3]
The first appellant is a close corporation. More will be said
in this regard later.
[4]
Respondent,
the successful plaintiff in the trial court, is Garagesure
Consultants and Acceptances (Pty) Ltd, represented in the
appeal as
well as in the trial court by Adv D de Kock, instructed by Webbers
Attorneys.
[5]
In
order to avoid confusion the parties will be referred to as cited in
this court.
III
THE RELIEF CLAIMED
[6]
Respondent described itself as
“
at
all relevant times hereto acting as duly authorised agent of COMPASS
INSURANCE COMPANY LIMITED which is an insurance company
…..”
[4]
This is in
line with the documentation relied upon.
[5]
[7] In
order to claim the amount of R500 000.00 plus interest and
costs, respondent averred that (1) it
issued a fuel guarantee for
this amount to Total SA (Pty) Ltd (“Total”) in respect of
purchases to be made by first
appellant from Total and (2) the second
appellant bound herself as surety and co-principal debtor with first
appellant
“
for
all its obligations under the agreement.”
[6]
[8]
The fuel guarantee is not attached to the
particulars of claim. POC3 relied upon is a letter and not
the
actual guarantee.
[7]
However, it is accepted that appellants admitted that a fuel
guarantee was issued. The terms thereof remain a mystery
and
were not dealt with at all in the evidence.
[9]
The Suretyship Agreement, POC4, is inelegantly worded to say the
least. It will be dealt with in more
detail later herein.
[10] It is
respondent’s case on the pleadings that first appellant owed
Total in excess of R2m and that it had to pay
the amount of
R500 000.00 to Total on demand in order to give effect to its
obligations in terms of the fuel guarantee.
IV
THE TRIAL COURT’S JUDGMENT
[11] The
trial court held, as testified to by the only witness who testified
at the trial, Mr Mitchell, the managing
director of respondent, that
respondent
“
was
mandated by Compass Insurance to do certain things”
and
“
in
the event of success in this litigation, money will be paid to the
bank account of Compass Insurance to which they have rights.”
[8]
[12] It also
held that according to the
“
uncontested
evidence Total SA delivered fuel products to the defendants in the
amount of R2 193 176.36,”
stating
that the debtor’s account and certificate of balance were part
of the record.
[9]
[13] The
trial court dealt with the appellants’ submission that
respondent did not have the necessary
locus
standi in iudicio
to institute the action.
[10]
It held that the Surety Agreement was not disputed and that
“
(t)he
parties to the Surety Agreement are clearly identified with rights
and duties vis-a-vis each other. As a result there
can be no
talk of lack of
locus
standi
and this argument cannot be upheld.”
[11]
[14] It was proved
that Total demanded R500 000.00 from respondent which this
entity paid to Total in terms of the fuel
guarantee. Therefore,
the trial court had little difficulty in granting judgment as prayed
for.
V
THE GROUNDS OF APPEAL
[15] The
appellants formulated several grounds of appeal, but it is only
necessary to mention the following which Mr
Grobler advanced in his
heads of argument and in oral argument before us, to wit:
(1) The trial court
erred in finding that respondent had
locus standi
to sue on
behalf of its principal, Compass Insurance;
(2) the trial
court erred in finding that respondent had made out a case to the
effect that the Surety Agreement provided
for a right of recourse
against appellants.
VI
EVALUATION OF THE JUDGMENT AND THE PARTIES’ SUBMISSIONS
[16]
The first question to be asked is whether respondent was enforcing a
legal right and had sufficient interest
in the relief claimed.
A sufficient interest is in itself not enough; the claim must be
based on a legally enforceable right.
[12]
We are not concerned with a right to address social injustice and s
38 of the Constitution is not applicable. Therefore
it is
relevant to ascertain whether respondent’s rights have been
adversely affected by the alleged wrong.
[13]
[17]
Several exceptions are applicable to the general rule.
[14]
I considered all these, but could not find any authority to support
respondent’s version that it was entitled to sue
as agent.
I enquired from Ms De Kock if she could assist, but she could not.
[18]
As a general rule an agent has no
locus
standi
to sue or be sued in his/her own name on behalf of the principal.
Obviously, when an agent has acquired contractual rights
in his/her
own name, the agent may sue to claim what is due.
[15]
Three documents, to wit the particulars of claim, Fuel Insurance
Policy and the Suretyship Agreement, stipulate that Garagesure
is the
agent of Compass Insurance. It needs to be pointed out that both
agreements refer to the contracting party as Compass Insurance,
which
is conveniently referred to throughout the documents as Garagesure.
In my view this does not change the identity of
the real contracting
party, to wit Compass Insurance. No agency agreement has been pleaded
or tendered in evidence and the terms
of such agreement, if it
exists, are unknown.
[19]
One company may not claim in its own name for and on behalf of
another company, even if they are sister
companies within the same
group. The Constitutional Court dealt with an analogous issue
in
Areva
.
[16]
[20]
Respondent and Compass Insurance are no doubt separate legal entities
if the pleadings and the evidence
are evaluated. Mr Mitchell
testified during examination in chief that
“
we
act on the mandate of Compass
Insurance and recoveries form part of that mandate any monies
recovered we pay into
their
bank account
which is held by Compass Insurance but we have user rights.”
[17]
(emphasis
added). This reminds me of the position of a firm of attorneys
instructed to collect a client’s debtor’s book.
Surely, the firm of attorneys cannot sue the debtors in their own
name, unless the claims have been ceded to it.
[21]
The R500 000.00 was paid from Compass Insurance’s bank
account and in the event of respondent’s
claim being
successful, the amount to be collected has to be paid into the same
account.
[18]
The
necessary consequence of the evidence – both in chief and
during cross-examination – is that Compass Insurance
was the
owner of the money that was used to pay Total in accordance with the
fuel guarantee and that Compass Insurance expected
to receive the
amount of R500 000.00 so paid out together with interest in the
event of a successful claim against appellants.
It is apparent
from the evidence that Garagesure did not even act as a conduit pipe
in respect of funds paid out or received.
Compass Insurance’s
bank account was used at all times.
[22] I
am of the view that respondent lacked
locus standi
to sue for
an amount allegedly due to Compass Insurance and this conclusion
should be the end of the matter. However, in
the event that
this might be an incorrect conclusion, I shall briefly deal with the
second ground of appeal mentioned above.
[23] I
tried to understand what the parties intended to achieve with the
Suretyship Agreement, but had great
difficulty in interpreting the
contract. I accept that suretyships were required, but whether
a valid and enforceable agreement
was entered into is a different
matter. In an oft-quoted judgment Wallis JA summarised the current
state of our law regarding the
interpretation of documents, including
contracts, as follows in
Endumeni
Municipality
[19]
:
“
Interpretation
is the process of attributing meaning to the words used in a
document, be it legislation, some other statutory instrument,
or
contract, having regard to the context provided by reading the
particular provision or provisions in the light of the document
as a
whole and the circumstances attendant upon its coming into
existence. Whatever the nature of the document, consideration
must be
given to the language used in the light of the ordinary rules of
grammar and syntax; the context in which the provision
appears; the
apparent purpose to which it is directed; and the material known to
those responsible for its production. Where more
than one meaning is
possible, each possibility must be weighed in the light of all these
factors. The process is objective, not
subjective. A sensible meaning
is to be preferred to one that leads to insensible or unbusinesslike
results or undermines the apparent
purpose of the document.”
Thus,
the matter must be approached holistically and context and language
must be considered together with neither predominating
over the
other. Lewis, JA stated the approach as follows in
Mahmood
Investments
:
[20]
“
It
is settled law that the contractual provision must be interpreted in
its context, having regard to the relevant circumstances
known to the
parties at the time of entering into the contract …. It is
also clear that the position must be given a commercially
sensible
meaning …”
[24]
In
Novartis
Lewis, JA repeated her views in the following words
[21]
:
“
[28]……..
A court
must examine all the facts - the context - in order to determine what
the parties intended. And it must do that whether
or not the words of
the contract are ambiguous or lack clarity. Words without context
mean nothing.”
(emphasis
added)
[25] I
repeat what Lewis, JA said in
Novartis
supra.
In
order to establish what the parties intended, all the facts –
the context – must be examined in order to determine
what the
parties intended. In the words of Wallis, JA in
Endumeni
supra
,
a
“
sensible
meaning is to be preferred to one that leads to insensible or
unbusinesslike results or undermines the apparent purpose
of the
document.”
[26]
The Fuel Insurance Policy provides for subrogation in clause 22
thereof which reads as follows:
“
On
the payment of a claim in terms of this Policy, the Fuel Company
shall transfer to Garagesure all rights relating to the claim
so that
Garagesure is subrogated to such rights.”
[22]
R
espondent’s
counsel made it clear at the start of the proceedings in the trial
court that no reliance was placed on subrogation.
However, Mr
Mitchell was confronted about this in cross-examination and it became
evident that he had difficulty understanding
the basis of
respondent’s claim.
[23]
He had to admit that respondent did not rely on a cession of the
claim from Total to it as the agreement anticipated –
whether
that is required in the case of subrogation is not to be considered
for purposes hereof – and then indicated that
the claim is
actually based on the Suretyship Agreement. It is in this
agreement that appellants bound themselves according
to the witness
and therefore respondent solely relied on this agreement for its
claim against appellants.
[24]
[27]
After much deliberation during cross-examination
Mr Mitchell eventually had to concede that the Surety Agreement
does
not stipulate that in the event of Garagesure (or Compass Insurance)
having to make payment to Total, it would be entitled
to claim the
amount so paid from appellants.
[25]
[28]
In order to establish whether Mr Mitchell’s concession was
fairly made, I considered the judgment of the
trial court carefully
in conjunction with the authorities quoted above pertaining to
interpretation of documents as well as the
principles applicable to
performance guarantees.
[29]
I referred to paragraphs [22] and [23] of the trial
court’s judgment above. I repeat that the
trial court
found that clauses 3.1 and 3.3 were the relevant parts of the
Suretyship Agreement and it then also referred to clause
4.2 thereof
which stipulates that the agreement
“
extends
to any damages or other compensation to which Garagesure may be
entitled, arising out of the guarantee.”
The
respondent did not claim for damages or compensation of some sort.
It sought to be reimbursed for
the
amount paid to Total in terms of its Fuel Guarantee. In clause
3.1 second appellant bound herself as surety for the punctual
performance by first appellant of its obligations in connection with
the
“
Guarantee”
.
I presume the guarantee mentioned in this clause is a reference to
the
“
fuel
insurance guarantee policy”
mentioned
in clause 2.1. There is no such thing as a
“
fuel
insurance guarantee policy”
although
the parties apparently referred to the Fuel Insurance Policy issued
by Compass Insurance to Total, POC1. Apparently,
Compass
Insurance (or Garagesure for the argument) issued a fuel guarantee
which has not been placed before the trial court.
The issuing
of the guarantee was admitted, but its terms and conditions remain
mysterious.
[30]
Performance guarantees are often encountered in economic life.
Insurance companies and banks are generally
responsible for issuing
these guarantees to employers or owners relating to, for example,
construction contracts. In the
event of non-compliance by the
contractor of its obligations towards the employer or owner, the
insurance company is called upon
to settle what it undertook to pay
in such event. The guarantor generally has an independent,
autonomous contract with the
employer/owner as beneficiary, but it
may also be no more than an accessory obligation.
[26]
[31]
The parties hereto probably had in mind the signing of a counter
indemnity as was the case in
Lombard
Insurance
.
[27]
In such case the guarantor who indemnifies the employer/owner (or in
this case the supplier) arranges for a counter indemnity
agreement to
be entered into with the contractor or in this case the fuel
dealership in terms whereof the guarantor is to be indemnified
upon
paying on demand by the beneficiary. If suretyships are also
required from others on behalf of the principal debtor,
these are
then obtained as was the case in
Lombard
Insurance
.
In the present matter respondent, who was probably responsible for
drafting of the agreement, apparently sought to merge
the counter
indemnity and Suretyship Agreement into one document, causing serious
confusion in the process. I agree with
Mr Grobler that in terms
of the
“
guarantee
contract”
the
insurer, Compass Insurance (or for the argument Garagesure), had to
retain a right to claim from its insured what it might be
called upon
to pay Total. It accepted payment of monthly premiums from
first appellant in exchange for the indemnity provided,
but if it
also had in mind to be fully reimbursed by first appellant, that
should have been agreed to in clear terms. The
same argument
applies to the terms of the Suretyship Agreement which does not
contain a clause, based on an objective interpretation
of the
agreement and considering the language used and the context,
entitling Compass Insurance (or Garagesure) to sue appellants
for
amounts paid out to Total. Second appellant bound herself as
surety for the performance of first respondent in connection
with the
“
Guarantee.”
VII
CONCLUSION
[32]
In sum
mary
, respondent had no
locus
standi
to issue summons on behalf of Compass Insurance, a totally
different legal entity. Even if I am wrong in this regard, the
second point discussed above should be adjudicated in favour of
appellants. The trial court erred in granting judgment in favour
of
respondent. The appeal must succeed. Costs should follow the
event.
VII
ORDERS
[33]
Consequently the following orders are made:
(1) The
appeal is upheld with costs.
(2) The
orders of the trial court are set aside and substituted with the
following:
“
The
plaintiff’s claim is dismissed with costs.”
J P DAFFUE, J
I concur
S NAIDOO, ADJP
I concur
C REINDERS, J
On
behalf of Appellants :
Adv S Grobler
Instructed
by
: Honey Attorneys
BLOEMFONTEIN
On
behalf of Respondent :
Adv D de Kock
Instructed
by
: Webbers Attorneys
BLOEMFONTEIN
[1]
Order on p 120 and judgment on pp 121 -129 of the
record.
[2]
Record p135.
[3]
Par 2 of particulars of claim: p 5 of record,
read with pp 20, 21, 23, 25, 26 31 and 36.
[4]
Par 1 of particulars of claim, p 5.
[5]
Introductory paragraph of Fuel Insurance Policy,
POC1, p 10 and Suretyship Agreement, POC4 on p 21.
[6]
Paras 8 and 10 of particulars of claim, p 7, read with the
Suretyship Agreement, POC4 on pp 21 – 24.
[7]
P 20.
[8]
Par 13 of the judgment on p 125.
[9]
Par 20 on p 127.
[10]
Paras 22 – 25 of the judgment, pp 127 &
128.
[11]
Par 25.
[12]
Cilliers et al, Herbstein & Van Winsen: The
Civil Practice of the High Court of South Africa, 5
th
ed pp 147 & 185.
[13]
Ibid p 186 & authorities quoted
.
[14]
Ibid pp 147 & 148; 190 – 204.
[15]
Continental Illinois Bank v Greek Seamen’s Pension Fund
189
(2) SA 515
(D & CLD) at pp 538H – 542C
and
Springfield Omnibus Service Durban CC v Peter Maskell Auction CC
[2006] 4 All SA 483
(N) paras 8 - 15.
[16]
Areva NP Inc in France v Eskom Holdings (SOC) Ltd
and another
2017 (6) SA 621
(CC) at paras 29 – 34 & 37 –
39.
[17]
Record, p 92 lines 10 -14.
[18]
As confirmed during cross-examination:
record, p
93.
[19]
Natal Joint Municipal and Pension Fund v Endumeni Municipality
2012
(4) SA 593
(SCA) at para 18. See also Bothma-Batho Transport
(Edms) Bpk v S Bothma en Seun Transport (Edms) Bpk
2014 (2) SA 494
(SCA) at par 10 -12.
[20]
BP Southern Africa (Pty) Ltd v Mahmood Investments (Pty) Ltd
[2010]
2 All SA 295
(SCA) at para 11.
[21]
Novartis v Maphil
[2015] ZASCA 111
(3 September 2015) at para 28.
[22]
POC1 at p 14.
[23]
Record, pp 95 – 99.
[24]
Record, p 103 lines 15 -18.
[25]
Record, pp 104 – 107 and
p
17 lines 1&2 in particular
.
[26]
Compass Insurance v Hospitality Hotel
Developments
2012 (2) SA 537
(SCA) at pp 540 – 542B.
[27]
Lombard Insurance Company Ltd v Schoeman
[2018] 1
All SA 554
(GJ) at para 10 and further.