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[2018] ZAGPPHC 137
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Big Save Hammanskraal Wholesalers CC v Chetty and Another (29565/2011) [2018] ZAGPPHC 137 (20 February 2018)
IN
THE HIGH COURT OF SOUTH AFRICA
(GAUTENG
HIGH COURT , PRETORIA)
Case
Number: 29565/2011
NOT
REPORTABLE
NOT
OF INTEREST TO OTHER JUDGES
REVISED
In
the matter between:.
BIG
SAVE HAMMANSKRAAL WHOLESALERS CC
PLAINTIFF
And
RISHAN
CHETTY
1
ST
DEFENDANT
THORIDIUM
MEDICAL GROUP (PTY) LTD
2
ND
DEFENDANT
JUDGMENT
Fabricius
J,
1.
Plaintiff
herein, according to the Particulars of Claim, is "Big
Save Liquor Hammanskraal (Pty} Ltd"
(formerly Big
SaveHammanskraal CC). First Defendant is a Director of the
Second Defendant. In the Particulars of Claim, it
is alleged that
"Plaintiff is Big Save Liquor Hammanskraal (Pty)
Ltd, a company duly incorporated
and existing under
the Company Laws of South Africa, which at the
time of the causes of action,
set out below,
was duly registered asBig Save Hammanskraal
Wholesalers CC". During argument
I was asked to
insert the word "Wholesalers ". It is further alleged
that Big Save Hammanskraal
Wholesalers CC,
formally changed its name to Big Save Liquor
Hammanskraal CC, which was
duly converted
to a company, being the Plaintiff.
2.
It
was then alleged that on 1 June
2008, the Plaintiff and the
Second
Defendant, duly represented by Mr Chetty, entered into a written
agreement of lease in respect of a particular warehouse.
A
copy of this lease was annexed. It is
said that at the time, Plaintiff was
represented by Mr Jardim and the Second
Defendant, by the First defendant. It was further
alleged that during February 2008 ,
Plaintiff and Second Defendant entered into an oral agreement
concerning necessary renovations to be effected
at the relevant property. It was
pleaded that Plaintiff would obtain a
quote for such renovations, that First Defendant would consider
such,
and that the value of such renovations be repaid by means of
discounting the monthly rental payable as from 1 June 2008.
The
quote was obtained, and First
Defendant accepted it by signing
a
document which was annexed to the
Particulars of Claim. Accordingly, a
binding
agreement was concluded between
the parties
which was
materially breached, in that Second Defendant failed to reimburse the
Plaintiff for the particular
improvements, as
a result of which the value of
the discounts
that the Second
Defendant failed to grant, amounted to R597,
884.19. These
were the damages that Plaintiff had
suffered.
3.
This
contractual claim was not proceeded with, but Plaintiff proceeded
with claim 2, which was a claim
based on "fraudulent/negligent
misrepresentation". It was pleaded that, the
conduct of First and/or Second
Defendant was fraudulent , alternatively
negligent, in that they ha.d no intention to grant the Plaintiff the
discount referred to, and in fact intended to
sell the
warehouse premises. They knew that they
would obtain the benefit of the renovations
without having to pay for
same. First Defendant falsely represented that the Second
Defendant would in actual fact
grant the rental discount,
knowing that it would not do so. Defendants also knew that
they intended to sell the property
after renovations were completed.
4.
It
was further pleaded that the Defendants intended that Plaintiff would
act on these misrepresentations, that Plaintiff
did
in fact act thereon by
completing the renovations as agreed,
in the
bona fide,
but mistaken, belief
that it would be reimbursed by means of
discounted rental, as agreed.
5.
On
18 September 2008, the Second Defendant
sold the property, whilst knowing that
Plaintiff
would not be able to secure a discount on
his rental from
the new owner. This conduct was
unlawful as a result of which Plaintiff suffered damages
in the said amount, being
the value of the renovations, as it was
pleaded.
6.
Plaintiff's
Counsel therefore based his claim and
case on this delictual cause of
action and suggested in
argument that it was indeed a claim for pure economic loss.
7 .
Evidence
was led on behalf of Plaintiff in the form of Mr J. Jardim and Mr
Ferreira.Mr Jardim gave the relevant evidence and emphasized
that he,
having dealt with Mr Chetty before, in a contractual setting, had
dealt with him again as person to person.
He gave
details about the background and the previous
contractual arrangements and in respect of the particular
warehouse, had testified that "Themba Big Save" had
outgrown its premises and therefore intended to expand by moving
into
the premises of Second Defendant. "ThembaBig Save", which
was part of the "Big Save" Group, would
establish
the new company to operate from
the said premises. "Big
Save Themba"
in fact paid for the renovations and
Big Save Hammanskraal,
repaid
it,
either by way of cash or by the delivery
of products on the basis of set-off.
No details is this respect were provided.
8.
Defendant
filed a plea which included a special plea
relating to
locus standi.
With reference
to the alleged oral agreement concluded during February
20 0 8, and the written agreement
concluded on 1
June 20 0 8, it was pleaded that Plaintiff was
only registered as a Close Corporation
on 5 June 20 0 8 ,
this is common cause. It was denied that Plaintiff
existed and was
able to enter
into the alleged oral agreement during
February 20 0 8,
and it was
denied that Plaintiff entered
into the
written agreement of lease,
which indicates "Hammanskraal Big Save
Wholesalers"
as being the lessor. As
a result, Plaintiff does not possess the
necessary
locus standi
to be a party to this
action.
9.
Having
regard to the pleadings as a whole, I ruled that the special plea
would not be decided
in limine
as there
would be most likely an overlapping
of evidence, if such was
presented. As
I have said, Plaintiff presented
its evidence
and Mr Chetty
testified on behalf of Defendants. His
evidence differed
in material and
crucial respects from that presented on
behalf of Plaintiff,
and these issues
raised by him were never put to Plaintiff's witnesses
during cross- examination.
Quite apart from that,
I need to note that Mr Chetty was a particularly
bad witness who had difficulty in answering
even the most innocuous questions.
During argument, Defendant's Counsel wisely
abandoned any reliance on his evidence, and submitted
that the case could be decided on the
evidence presented by Plaintiff, and particularly on the basis
of the special plea. According to the agreement of
lease itself, the lessee is
"Hammanskraal
Big Save Wholesalers CC". The argument
simply was that having regard to the
fact that Plaintiff was
only incorporated on 5 June 2008, which is common cause,
no representations could
have been made to it on 1
June 2008, and obviously before that.
The alternative
claim based on delict vested
on 1 June 2008. No evidence was led in
respect
of any pre-incorporation agreement,
and none existed. Plaintiff could therefore not have been a party to
either
the agreement of lease, or the renovations
agreement, as it had not yet been incorporated on
1 June 2008. A misrepresentation can therefore not be made to a
non-existent entity.
10.
Apart
from that, Plaintiff did also not prove its damages inasmuch
as the evidence was that "Themba
Big Save CC"
made payment for the renovations, and was later
reimbursed by the Plaintiff. No payment was proven,
and where Mr
Jardim relied on the annual financial statements, which in fact also
did not reflect the total amount of R59
7,
884.19.
His evidence was of a hearsay nature.
11.
During
argument, Plaintiff' s Counsel argued that the cause of
action arose only in September
of
2008, when there was a failure to
have allowed the agreed-upon rental
discounts. This
is of course not the case as pleaded. In the context of an analysis
of the Particulars of Claim, I may add that
in my view, a proper
case based on a delict, which resulted in pure economic
loss, was not properly pleaded in
any event.
See:
Law of Delict,
5'H
Edition,
Neethling, Potgieter and Visser at p.
268 and further, and Home Talk Developments (Pty)
Ltd v
Ekurhuleni Metropolitan Municipality
2018 (1) SA 391
SCA at 411
par. 31]
Inasmuch
as Defendant did not rely on
this point, I will not
deal with
it further. Plaintiff's Counsel submitted
that there was no
authority in
our law for the proposition
that a misrepresentation
cannot be made to a
non-existent entity, and that the point was new. I certainly do
not agree
with
that contention. It is clear from
Steenkamp
N.O. v Provincial Tender Board, Eastern Cape
2006 (3) SA 151 SCA
at 169 par. 48
and
further, that an entity such as a company (or Close Corporation
I may add), prior to incorporation, is not yet in
existence, and
cannot perform a juristic act. Further, no one can act at that
stage as its agent, because one cannot act
as the agent
of a non-existent principal, unless a
pre-incorporation agreement
was concluded which was later
ratified. As I have said, there is no evidence on this
topic and that point
does not arise
herein. It is in fact common
cause that no such
agreement exulted.
12.
In
my view, the argument tendered on behalf of Defendants is sound and
it is based on facts that are not in dispute. Plaintiff
simply
did not exist as a legal entity at the time when the
misrepresentations were made. The argument relating to the failure
to
prove damages is on Mr Jardim' s evidence
also sound. It is insufficient simply to
rely on
the quote prese.nted by "SWM
Investment Holdings" dated
20
February 2008. Mr Jardim could not,
and did not, present
admissible
evidence as to who exactly had
incurred this loss, and how it
was computed, when,
and by whom. No reason was established
was hearsay evidence
should be admitted.
Proof of damage is fundamental to a delictual claim.
See:
Home Talk supra at 437 par. /93].
13.
The
result of all of the above is that Plaintiffs claim as pleaded
cannot succeed, and accordingly absolution from the
instance is
granted with costs.
JUDGE
H.J FABRICIUS
JUDGE
OF THE GAUTENG HIGH COURT, PRETORIA DIVISION