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[2019] ZAWCHC 25
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Cloete v Edel Investments (Pty) Ltd (8683/18) [2019] ZAWCHC 25; 2019 (5) SA 486 (WCC) (5 March 2019)
IN
THE HIGH COURT OF SOUTH AFRICA
WESTERN CAPE DIVISION, CAPE TOWN
REPORTABLE
CASE
NO: 8683/18
In
the matter between:
TERTIUS
CLOETE
Plaintiff
and
EDEL
INVESTMENTS (PTY)
LTD
Defendant
Coram:
P.A.L.Gamble, J
Date
of Hearing: 6 December 2018
Date
of Judgment: 5 March 2018
JUDGMENT
DELIVERED ON TUESDAY 5 MARCH 2019
GAMBLE,
J:
INTRODUCTION
[1]
This
is an exception by the defendant to certain portions of the
plaintiff’s particulars of claim. As such, provided the
upholding of the exception will result in a discrete and material
element of the plaintiff’s claims being rendered unenforceable,
it may be adjudicated upon.
[1]
It is trite that an exception is essentially a legal objection by one
party to the other’s pleadings. As in this case, there
is a
complaint by the defendant of an inherent defect in the plaintiff’s
particulars of claim and, while accepting for the
purposes of
argument that the allegations in the particulars of claim are true,
the defendant alleges that the particulars of claim
simply do not
disclose a cause of action which is justiciable in a court of law.
[2]
[2]
In
evaluating the defendant’s argument that the defined part of
the plaintiff’s claim is excipiable because it does
not
disclose a cause of action, the onus is on it to persuade the court
that on every interpretation which the particulars of claim
can
reasonably bear, no cause of action is disclosed in relation to that
part of the claim.
[3]
And, so to the facts as they appear from the particulars of claim.
THE
MATERIAL FACTS AS ALLEGED BY THE PLAINTIFF
[3]
The plaintiff, a businessman, alleges that
on 2 October 2014 and at Maitland, he concluded a written agreement
of lease with the
defendant in terms whereof he rented a site at
commercial premises known as Racing Park, Milnerton for a period of 2
years from
1 November 2014 until 31 October 2016. It was an express
term of the lease that the plaintiff would use the premises for the
purposes
of scrap metal processing and exporting. The agreement
provided for a renewal of the lease for a further 3 years.
[4]
The plaintiff took occupation of the
premises on 1 November 2014 and thereafter conducted the scrap metal
business through a private
company which traded as “
Core
Metals
”. In June 2015, during the
currency of the initial lease, the plaintiff exercised the option and
extended the lease from
1 November 2016 to 31 October 2019.
[5]
Unbeknown to the plaintiff, the premises
could not be used for the aforementioned scrap metal business as this
conflicted with the
constitution of the Racing Park Development
Owners Association (“
the
Association
”). In the result,
when plaintiff failed (after due demand) to cease conducting the
business, on 25 August 2015 the Association
obtained an interdict
from this court precluding him from conducting the business after 1
January 2016. In light of that order,
the plaintiff eventually
vacated the premises on 1 October 2016. (The 10 month delay was
evidently occasioned by an unsuccessful
application for leave to
appeal the interdict).
[6]
The plaintiff now seeks to claim damages
from the defendant as a consequence of the premature termination of
the lease. He claims
two distinct sums –
[6.1] Loss of
profit, alternatively loss of distributions that he allegedly would
have received from Core Metals for the period
1 November 2015 to 31
October 2016 in the sum of
R702 805,44
(hereinafter conveniently referred to as “
the
first claim
”); and
[6.2] Loss of
profit alternatively distributions as aforesaid for the period 1
November 2016 to 31 October 2019 in the sum of
R2 108 416,32
(“
the second claim
”).
Each
amount is claimed separately in the particulars of claim and
exception is taken against each of the claims.
THE
BASIS OF THE EXCEPTION
[7]
It is common cause that the plaintiff’s
primary cause of action on both claims is contractual in nature it
being alleged that
the defendant breached the lease by making
available to the plaintiff premises that were incapable of being used
for the agreed
purpose – a scrap metal yard. The secondary
cause of action is delictual: an allegedly false, alternatively
negligent, misrepresentation
by the defendant as to the suitability
of the premises for the plaintiff’s business which
representation is alleged to have
been material and which induced the
contract. The exception as currently formulated has three legs to it.
Exception
A
[8]
Firstly, in relation to the first claim,
the defendant says that the plaintiff has no claim for damages for
loss of profits during
the period 1 November 2015 to 1 January 2016
because it actually traded during that time and was only precluded,
by virtue of the
interdict, from trading with effect from the latter
date. In the absence of any allegation by the plaintiff that he was
unable
to use the premises for that 2 month period, says the
defendant, his claim lacks averments which are sufficient to sustain
a claim
for that period.
Exception
B
[9]
The second exception is based on the
assertion that in the alternative claim (which is delictual in
nature) the plaintiff seeks
to claim his positive
interesse
i.e. that he wants to be placed in the position he would have been in
had the misrepresentation as to the suitability of the premises
been
true. It is said that, in a claim founded in delict, the plaintiff is
not entitled to claim his positive
interesse
by way of damages in respect of either
the first or second claims.
Exception
C
[10]
In the third exception the defendant notes
that in the second claim the plaintiff claims a loss of profits for
the period 1 November
2015 to 31 October 2019. It alleges that the
plaintiff would only be entitled claim a loss of profits if he did
not trade at all
during this period, or if he traded at a loss during
the period because he occupied unsuitable premises.
[11]
In the absence of any such allegations by
the plaintiff, says the defendant, his particulars of claim lack the
averments necessary
to sustain the cause of action on which the
second claim is based.
[12]
I should point out that shortly before the
hearing the defendant sought to amend its notice of exception by the
addition of the
phrase “
in the
present circumstances
” to para 10
of the notice. This would have had the effect of limiting the
exception in relation to the absence of a claim
in delict for
positive
interesse
to the specific circumstances of this case. The application to amend
was opposed at the hearing by Mr. Engelbrecht for the plaintiff
and
Mr. Quixley for the defendant accordingly abandoned the amendment on
the turn. Nothing more therefore need be said about that
matter.
THE
BASIS FOR THE OPPOSITION TO THE EXCEPTIONS
[13]
The thrust of Mr. Engelbrecht’s
argument on behalf of the plaintiff was that the exceptions, whether
individually or collectively
considered, did not dispose of either of
the plaintiff’s claims entirely. Rather, he said, the
exceptions were aimed at paring
down the quantum of the claims and
that it was not permissible to do so by way of exception.
[14]
So,
in relation to Exception A, it was said that it was open to the
defendant to plead to the first claim and allege,
inter
alia
,
that the quantum of the claim fell to be reduced in the
circumstances. The defendant would in such circumstances draw the
onus
of proof to establish that the plaintiff had not mitigated his
loss.
[4]
In the result, argued counsel, the defendant could readily plead the
mitigation of the plaintiff’s alleged damages and was
not
entitled to except to the particulars of claim as its complaint did
not go to the root of the claim and destroy it entirely.
[5]
There was, in the circumstances, no prejudice or procedural
embarrassment to the defendant in having to plead to the claim as
formulated.
[15]
A similar argument was advanced in relation
to Exception C save that there was an additional complaint by the
defendant that there
were not sufficient facts pleaded by the
plaintiff of the extent of the loss which he is alleged to have
suffered. The plaintiff’s
reply was to refer to the distinction
to be drawn between, for purposes of pleading, between
facta
probanda
and
facta
probantia.
He correctly argued that it
was only the former that were required to be traversed in a party’s
pleadings.
[16]
Turning
to Exception B, Mr. Engelbrecht took issue with the legal position
espoused by Mr. Quixley, claiming that there was no objection
in law
any longer to a delictual claim for damages for a party’s
positive
interesse.
Reliance was placed on
Sechaba
Photoscan
[6]
which
was recently cited with approval by the Constitutional Court in
MEC
for Health
[7]
.
[17]
In
Sechaba
Howie P considered the development of the law in detail and came to
the following conclusion in a case involving a claim by an
unsuccessful tenderer regarding an award to a successful party which
was allegedly tainted by fraud.
“
[15] It
is now beyond question that damages in delict (and contract) are
assessed according to the comparative method. Essentially,
that
method, in my view, determines the difference, or, literally, the
interesse.
The award of delictual damages seeks to compensate for the difference
between the actual position that obtains as a result of the
delict
and the hypothetical position that would have obtained had there been
no delict. That surely says enough to define the measure.
There
appears to be no practical value in observing the distinction between
positive and negative
interesse
in determining the actual damages. It is a distinction that tends to
obscure rather than clarify. If to award the difference means
necessarily awarding loss of profits then it does not assist first to
ask what positive
interesse
and negative
interesse
compromise.
[16] The idea
that loss of profit is not recoverable in delict is not historically
founded. Indeed, the converse is the case. Moreover,
it is commonly
the subject of an award of damages for loss of earning capacity in
personal injury cases. Why should it matter that
the injury is not
physical but economic, as long as the loss is one of earning
capacity? Take the example of the owner of a taxi
that is negligently
damaged. He has a claim for the profit lost while the vehicle is out
of action. Can it make any difference
if, subject to quantification,
the delict is committed when he has just bought the vehicle, before
commencing business? I think
not. Nor can it matter if the loss were
caused by fraudulent conduct, not negligence. Clearly, the loss would
impair his earning
capacity and that is part of his patrimony. The
claimant in the present case is a company. Once again, that can make
no difference.
Its patrimony has been impaired by having the bargain
that it was on the point of requiring dishonestly snatched away.
[17]
Accordingly, in my view there is nothing in principle or the facts
which bars recovery of damages by way of loss of profits
in this
case. It follows that the appellant’s main submission must
fail. The respondent is entitled to be placed in the position
it
would have been in but for its having been fraudulently deprived of
the purchase that it was destined to be awarded.”
[18]
In argument Mr. Quixley sought to
distinguish
Sechaba Photoscan
from the present matter on the facts, and referred, in particular, to
the absence of any allegations of fraud
in
casu
. Such a distinction may of course
be drawn in argument at the conclusion of the matter but that does
not afford a party the right
to except at this stage of proceedings.
The example adopted by Howie P regarding the loss allegedly sustained
by the notional taxi
owner did not involve allegations of fraud
either.
[19]
Counsel
for the defendant also sought to rely on the traditional approach
towards the distinction to be drawn between the quantification
of
contractual and delictual damages as set out in
Trotman
[8]
.
It is clear, however, from the judgment of Howie P that the Supreme
Court of Appeal considered the approach in
Trotman
to
be an unduly restrictive interpretation of our law relating to the
measure of damages (whether in contract or delict) and that
there is,
in any event, no longer a distinction to be drawn in a delictual
claim (whether based on fraud or negligence) between
negative and
positive
interesse.
CONCLUSION
[20]
In
the result I am unable to conclude that there is any embarrassment to
the defendant with the way in which the plaintiff has formulated
its
claims. There are sufficient averments made in support of the claims
for the defendant to plead thereto and, in addition, the
plaintiff’s
reliance on the law is not misplaced. As the Supreme Court of Appeal
remarked in
Telematrix
[9]
an exception must be dealt with sensibly and an overly technical
approach might destroy its utility. And while it has been said
that
the procedure provides a useful tool with which to cut down a case
which is legally flawed
[10]
,
some allowance must certainly be made for the establishment of
further facts through evidence (and any inferences which may be
sought to be drawn therefrom) which could assist the plaintiff in
discharging the onus he has attracted to establish his claims.
[21]
In the present case, where there is only an
attack on certain aspects of the plaintiff’s alternative
claims, I am not persuaded
that any advantage is to be gained by
resorting to a scalpel which might, at best, only remove a
potentially benign growth.
ORDER
OF COURT
It
is ordered that the defendant’s exceptions be dismissed with
costs.
__________________
GAMBLE, J
[1]
Barrett v Rewi Bulawayo
Development Syndicate Ltd
1922 AD 457
at 459; 470.
[2]
Stewart v Botha
[2008] ZASCA 84
;
2008 (6) SA 310
(SCA) at
[4]
[3]
Lewis v Oneanate (Pty) Ltd
[1992] ZASCA 174
;
1992 (4) SA 811
(A) at 817F
[4]
Holmdene Brickworks (Pty)
Ltd v Roberts Construction Co. Ltd
1977 (3) SA 670
(A) at 689D.
[5]
Barrett,
supra
;
Santos and others v
Standard General Insurance Co. Ltd and another
1971
(3) SA 434
(O) at 437B-D;
Tobacco
Exporters and Manufacturers Ltd and another v Bradbury Road
Properties (Pty) Ltd
1990
(2) SA 420
(C) at 424E.
[6]
Transnet Ltd v Sechaba
Photoscan (Pty) Ltd
2005
(1) SA 299
(SCA) at [15] – [17]
[7]
MEC for Health and Social
Development, Gauteng v DZ obo WZ
2018 (1) SA 335
(CC) at [42]
[8]
Trotman v Edwick
1951 (1) SA 443
(A) at 449B-C: “
A
litigant who sues on contract sues to have his bargain or its
equivalent in money or in money and kind. The litigant who sues
on
delict sues to recover the loss which he has sustained because of
the wrongful conduct of another, in other words that the
amount by
which his patrimony has been diminished by such conduct should be
restored to him."
[9]
Telematrix
(Pty) Ltd t/a Matrix Vehicle Tracking v Advertising Standards
Authority SA
2006 (1) SA 461
(SCA) at [3]
[10]
Davenport Corner Tea Room
(Pty) Ltd v Joubert
1962
92) SA 709
(D) at 715H