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[2018] ZAGPPHC 625
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Liberty Group Limited t/a Liberty Life v Makgotla and Another (43579/13) [2018] ZAGPPHC 625 (25 January 2018)
SAFLII
Note:
Certain
personal/private details of parties or witnesses have been
redacted from this document in compliance with the law
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SAFLII
Policy
IN THE HIGH COURT OF SOUTH AFRICA
(GAUTENG DIVISION, PRETORIA)
(1)
NOT REPORTABLE
(2)
NOT OF INTEREST TO OTHER
JUDGES
(3)
REVISED.
43579/13
25/1/2018
In
the matter between
LIBERTY GROUP LIMITED trading
as LIBERTY LIFE
PLAINTIFF
(REGISTRATION NUMBER [….])
And
HENRY PHULANE
MAKGOTLA
FIRST DEFENDANT
(IDENTITY NUMBER [….])
SEMPOPI JOYCE
MAKGOTLA
SECOND DEFENDANT
(IDENTITY NUMBER [….])
JUDGMENT
TLHAPI
J
INTRODUCTION
[1]
The plaintiff instituted action against the
defendants for the
recovery of an amount of R211 763.96 being Agent's Commission which
was overpaid and was now being clawed back.
The matter did
not
proceed against the second defendant
who has passed away. The claim against the first defendant is based
on a suretyship he concluded
with the plaintiff on 15 August 2003 as
a member and on behalf of a Closed Corporation, African Skies. There
was an alternative
claim in terms of section 2e (5) of the Closed
Corporation 69 of 1984 holding the defendant personally liable for
the debts of
the close corporation as at date of deregistration.
Africa Skies was
,
deregistered
es reflected in a certificate by the Registrar of Companies Issued on
17 May 2013. The pl1intiff was not aware that
the Closed Corporation
was deregistered, Summons commencing this action was issued on 17
July 2013.
BACKGROUND
[2]
It was common cause that the closed corporation represented by the
defendants concluded
a 'Broking Agreement' on 14 October 2003 were it
was appointed as 'independent intermediary' as defined in the Long
Term Insurance
Act and In the Broking Agreement the closed
corporation is referred to as 'brokerage', In terms of the Suretyship
the first defendant
bound himself jointly and severally as surety for
and Co-Principal Debtor
in solidum
with the Close Corporation
for payment on demand to the plaintiff of any indebtedness in terms
of the Agreement. It was also agreed
that the suretyship shall remain
in place as long as the Close Corporation remained indebted to the,
plaintlff, end furthermore
that all legal costs of the plaintiff
would be paid on an attorney and client scale,
[3]
Some of the material terms relied upon were pleaded as follows;
"7.6 The
Commissions referred to in sub-clause 8.1 of the Agreement shall be
paid in accordance
with the Schedule of Commissions ...... .
7.7 Should
a contract issued pursuant to the proposal ,submitted by the Close
Corporation
lapse, and not be reinstated within three months from the
date of lapse, no commission shall be paid ...unless such
reinstatement
was the result of the sole efforts of the Close
Corporation..
7.8 …..
.
7.9 If
a contract on the life of any person, which is sssued by the
Plaintiff, or any associated
company of the plaintiff, is surrendered
,cancelled, made paid up or lapsed or the sum assured or premium ,
reduced or an automatic
premium loan Is taken on the policy or a loan
taken within a period of six months a before or after the date of any
application
to the plaintiff for a new contract on such person's
life, total commission on the new contract shall be determined by the
plaintiff
and the Brokerage shall refund any excess commission ;
7.13 ……
7,14 ……
7.16 ……
7.16 On
termination of the Agreement, payment of any commission to the Close
Corporation shall be subject
to:
(a) The
liquidation or set off of all indebtedness to the plaintiff; and
(b)
Compliance by the Close Corporation with clause 8.3 of the Agreement;
7.17
……….
7.18 Any
advances made to the Close Corporation at any time against commission
to be earned….
Shall constituted debts of the Close
Corporation to the Plaintiff, which the Plaintiff may call upon to be
paid at any time. Should
any debts remain outstanding in excess of 30
days, they shall attract interest at a rate determined from time to
time by the Executive
Director of Financial Services Operation, which
rate shall not exceed the maximum rate permitted in terms of the
Usury Act. A certificate
setting out the indebtedness of the Close
Corporation to the Plaintiff signed by the Director or General
Manager of the Plaintiff
shall be prima facie evidence of such
indebtedness…..”
[4]
The closed corporation was paid commissions on contracts introduced
and accepted by
the plaintiff. The commission was payable in advance.
The contracts consisted of insurance policies and investment policies
where
premiums were paid on a monthly basis. The plaintiff was
entitled to reclaim payment of commissions paid in advance where the
contracts
were subsequently surrendered, cancelled, made paid up or
had lapsed. This is referred to as clawing back of commission
overpaid.
During the duration of the contract it was possible that
where the brokerage submltted new business which was accepted, that
set
off was applied and the negative amounts of commission be
deducted from commission due.
[5]
Ms Muldoon, employed by the plaintiff for 16 years testified that she
was responsible
for preparing the commission statements which
statement, were discovered. She did not know why the , Broking
Agreement was terminated
or
whether it was at the instance of
the plaintiff or the defendants. The statements were compiled from
information sourced from the
systems of the plaintiff, which though
different in format are, the same. It was a requirement that in
respect of policies, and
investments that businesses remain active in
the books of the plaintiff for a period of 2 years (policies) and 5
years (Investments)
respectively. Commission was earned in respect of
business introduced and accepted and this was reflected at payment of
first year
commission, and commission on annual premium increases on
the statements,
[6]
She took us through some of the statements to illustrate commission
earned and those
reflecting negative amounts are the commission which
has to be reclaimed or clawed back by plaintiff. The Commission
payable to
the brokerage is the same as reflected on the commission
statements. These were usually sent to the brokerage and they were
also
made available to the brokerage online, so that the brokerage
would have at all times information regarding the commission
statements.
She testified that according to information available the
commission was paid to African Skies.
[7]
Examples were given of a commission statement and the commission
movement statement.
As shown on page 85 of the bundle the
commencement date is recorded, which is the same date in respect of
all the statements; followed
by African Skies mentioned as the
intermediary; then the statement date and the amount due to the
intermediary of R13 242, 12.
On page, 75 of the bundle being the
schedule on commission movements is shown that the latter amount had
been paid to the intermediary.
On page 90 of the bundle is shown that
an amount of R18 926.56 was payable as commission, that there was a
negative balance of
R10662.90 (commission over paid in respect
of lapsed policies); the balance of R9265.66 is reflected on the
commission movement
schedule, page 78, as being paid to the
intermediary.
The defendant did not object to
the statements as presented.
[8]
Although the agreement was terminated on 19 May 2008 the commission
statements annexed
to the particulars of claim as annexure 'O'
indicate now the negative amounts (overpaid commission) accumulated
as a result to
lapsed policies. A schedule annexed to annexure 'D'
shows which kind of policies were affected, the policy numbers and
names of
the client. On 7 May 2009 the negative amount ,that is the
amount of commission to be clawed back stood et R211 763.96 and this
was the amount claimed from the first defendant. Th certificate of
balance as provided for in the • agreement was not signed
as
provided in the agreement.
[9]
The first defendant raised prescription. In a special plea, he stated
that the plaintiff’s
claim had prescribed on May 2008, ‘the
debt having been transferred to the legal department of the
collection on 2 June 2009
and that upon termination of the contract
the plaintiff had all facts which gave rise to the claim and the
identity of the debtor.’
On the merits it was denied in his
plea that the Closed Corporation had been deregistered. The defendant
denied that he had knowledge
of the commission statements and of his
indebtedness in the amount claimed by the plaintiff.
[10]
The first defendant testified that he had experience of fifteen years
in the Insurance business
when he joined the plaintiff in 2003, and
that at the same time he also did business for other insurance
companies. According;
to the him and in terms of the rules of the
plaintiff he was obliged to pay back commission on lapsed policies
within 12 months
and he denied that business had to be on the books
for 2 years and 5 years as mentioned by Ms Muldoon. He denied thot he
wrote
all that business which resulted in the amount claimed. He last
wrote business for the plaintiff during 2006. He denied ever
receiving
any commission after 2008 after the agreement had be n
terminated or that ho wrote business for the plaintiff during this
time.
He had lodged a complaint that there were fraudulent
applications made in the name of the Close Corporation and that the
commission
claimed back related to these policies. The first
defendant alluded to hearing before ASISA that he had requested a DVD
of the
hearing which was never availed to him. He contended that the
plaintiff had knowledge of this hearing.
[11]
It is apposite to mention that during the testimony of Ms Muldon, Mr
Matemane who represented
the first defendant objected to the use of
the trial bundle during the leading of evidence. He informed the
court that they were
not in possession of the trial bundle, he had
been instructed a few days before the hearing. Mr Roux for the
plaintiff indicated
that the defendant had been though four attorney,
who had withdrawn and the trial bundle had been discovered as
confirmed in the
Pre-trial minute. I ruled that the trial proceed
because on a reading of the minute, of the third pre-trial minute,
held on 28
October 2018, the defendant seem to have been aware of the
content of the• documents discovered. Furthermore, Mr Matemane
should have enquired that he was in p possession of all the necessary
information especially that he had agreed to represent the
first
defendant at the trial which he knew was proceeding.
THE
LAW
[12]
Mr Roux argued that the first defendant had failed to put up a
version in cross-examination by
disputing the evidence of the
plaintiff. An opportunity had to be given to the plaintiff to respond
to the version of the defendant
which was also pleaded. Consequently,
failure to put up a version to illustrate which •aspect of the
plaintiff'• evidence
is disputed, would entitle the plaintiff to
assume that the defendant had admitted and accepted as correct the
version of the plaintiff;
President of the Republic of South
Africa and Others v South African Rugby Football Union and Others
2000 (1) SA 1
(CC) at paragraph 51, this rule was also affirmed
in S
v.
Bassak 2000 ZACSA paragraph 26;
“
[61]
As a general rule it is essential, when it is intended to suggest
that a witness is not speaking the truth on a particular
point, to
direct the witness,· attention to the point by questions put
in cross examination, . showing that an imputation
is intended to be
made and to afford the witness opportunity, while still in the
witness box, of giving any explanation open to
the witness and of
defending his or her character”
[13]
The cross-examination of Ms Muldoon concentrated mainly on the issue
of prescription. No
version for the first defendant was put up to
dispute the fact that commission was paid to the Closed Corporation
in advance, and
that there was commission which had to be clawed
back, this despite his contention that the that the policies recorded
were fraudulent.
In my view no evidence was offered to prove that the
commission was not paid to the Closed Corporation. Th first defendant
has
not disputed the fact that the commission statements were availed
to the Closed Corporation by post and also online.
[14]
He has conceded that where there were lapses then commission paid in
advance, which constituted
, overpayment had to be repaid and that
such payment would be effected by setting off from commission earned.
After the contract
was terminated on 19 May 2008 then on the evidence
of Ms Muldoon the commission earned would come from commission as a
result of
annual premium increment in respect of those policies which
remained on the books of the plaintiff. In his evidence mention was
made of an enquiry before a body known as ASISA. It does not appear
from the pleadings, that that Issue was pleaded. Therefore,
this Is
not relevant to the issue of his indebtedness to the plaintiff.
Furthermore, the first defendant has not disputed why he
should not
be held liable for the liabilities of the Close Corporation in terms
of section 26(5) of the Closed Corporation Act.
He seems to put the
blame for deregistration on the plaintiff without living a basic for
such conclusion. It does not seem to me
to me that he studies the
commission statements and schedules properly because they do not show
that Close Corporations did business
for the plaintiff after the
contract was terminated. My understanding is that figures were drawn
from first year commission earned
and that in respect of the policies
which had lapsed, set off applied to the Closed Corporation’s
indebtedness.
[15]
Mr Roux was asked to address the feet that the certificate of balance
annexed to the summon,
was not signed by a director as provided in
the agreement. He correctly submitted that failure to do so did not
prejudice the defendants,
as the purpose of the certificate was to
establish a
prima facie
case thereby shifting the onus to the
defendant. Ms Muldoon testified a, how the amount of indebtedness was
calculated.
[16]
The last issue to determine iii whether the first defendant's plea on
prescription should succeed
or not. It was trite that the
Prescription Act 68 of 1969
provided for the circumstances in which
debt is extinguished and that In this instance
section 11(d)
providing for extinction of the debt after three years. Also
applicable is
section 12
(1) which provides that (a)
'prescription
shall commence to run as soon as the debt is due'
and 12 (3)
'A
debt shall not be due until the creditor has knowledge of the
identity
of
the debtor and of the facts from which the debt
arises: provided that a creditor ,hall be deemed to have such
knowledge if he could
have acquired It by exercising reasonable care.
[17}
Mr Matemane argued that the plaintiff had acquired complete knowledge
of the facts leading to the indebtedness
claimed on 7 May 2009 and
that prescription commenced to run from that time, Mr Roux argued
that it was impossible for the plaintiff
to have acquired full
knowledge of the indebtedness because the figure continued to change
every month as such indebtedness was
set either increased as a result
of the policies that were lapsing or decreased as commission earned
was set off, and that this
continued to be the case even after the
determination of the amount claimed of R211, 763.96 on 7 May 2009.
Another factor was that
the plaintiff had no knowledge after
conducting a Cipro search as appears in annexure B on 17 May 2013
which confirmed that the
deregistration of African Skies. Action was
instituted on 17 July 2013.
[18]
In terms
of
the
Agreement the indebtedness to the plaintiff did not disappear as a
result of the cancellation, of the agreement. According to
Ms Muldoon
there would not be any prescription because there was continued
movement on the balances. It is my view that there would
always be
movement on the balances for a long time after the termination of the
contract, even after twenty years e.g. a retirement
annuity policy or
a lapse of policy being made paid up long after the period of risk on
the books of the plaintiff. On a study
of Policy Movements,
Commission Movements and Commission Statements relied upon the
Indebtedness of the defendant was not reducing.
It is my view that the plaintiff
by drawing the line on the indebtedness of the defendants at R211
763.96 on 7 May 2009 made an
election to recover commission overpaid
up to that amount. If there was my intention to adjust the figure it
would have been pleaded
or the particulars of claim would have beer,
amended to cater for additional amounts occasioned by the indefinite
movement of the
balances.
[19]
In
Truter and Another v Deysel
2008
(4) SA 168
(SCA) states:
"[15] ....For
the purposes of the Act, the term 'debt due' means debt which is
owing and payable. A
debt Is due In the sense that the creditor
acquirers a complete cause of action for the recovery of the debt,
that is, when the
entire set of facts which the creditor must prove
In order to succeed with his or her claim against that debtor is in
place, in
other words, when everything has happened which would
entitle the creditor to institute action and to pursue his or her
claim."
"[18]
Cause of action for the purpose, of pro1criptlon thus means-
,.,.every
fact which it would be necessary for the plaintiff to prove, if
traversed, in order to support his right to judgment of
the Court. It
does not comprise every piece of evidence which is necessary to prove
each fact, but every fact which is necessary
to be proved."
In my view all the facts necessary
to institute action in terms of the surety agreement were readily
available to the plaintiff
and in as far as the deregistration was
concerned could have been readily available on 7 May 2009 when the
election to sue was
made. It is for this reason that the special plea
of prescription should be upheld.
[20]
In the result the following order is given:
1. The
special plea of prescription is upheld and the plaintiff’s
action is dismissed
with Costs.
TLHAPI
W
(JUDGE
OF TME HIGH COURT)
MATTER
HEARED ON
: 16
AUGUST 2017
JUDGMENT
RESERVED ON
: 17
AUGUST 2017
ATTORNEYFOR
THE PLAINTIFF
:
RC
CHRISTIE INCORPORATED.
ATTORNEYS
FOR THE DEFENDANT :
RAMANTSI ATTORNEYS.