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[2008] ZASCA 154
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Janse van Rensburg NO and Others v Steenkamp and Another, Janse van Rensburg NO and Others v Myburgh and Others (237/08, 467/08) [2008] ZASCA 154; 2010 (1) SA 649 (SCA) ; [2009] 1 All SA 539 (SCA) (27 November 2008)
Links to summary
THE
SUPREME COURT OF APPEAL
REPUBLIC
OF SOUTH AFRICA
JUDGMENT
Case Nos:
237/08 and 467/08
J
H JANSE VAN RENSBURG NO 1
st
Appellant
P
FOURIE NO 2
nd
Appellant
J
L LUBISI NO 3
rd
Appellant
L
M MALATSI-TEFFO NO 4
th
Appellant
E
M MOTALA NO 5
th
Appellant
RM
KGOSANA NO 6
th
Appellant
and
A
J STEENKAMP 1
st
Respondent
N
J JANSE VAN RENSBURG 2
nd
Respondent
AND
J
H JANSE VAN RENSBURG NO 1
st
Appellant
P
FOURIE NO 2
nd
Appellant
J
L LUBISI NO 3
rd
Appellant
L
M MALATSI-TEFFO NO 4
th
Appellant
E
M MOTALA NO 5
th
Appellant
RM
KGOSANA NO 6
th
Appellant
and
J
J MYBURGH 1
st
Respondent
D
M VAN DER MERWE 2
nd
Respondent
J
P VAN DER WESTHUIZEN 3
rd
Respondent
Neutral
citation:
Janse
van Rensburg NO v Steenkamp
(237/08
and 467/08)
[2008] ZASCA 154
(27 November 2008)
Coram:
FARLAM,
CAMERON, MTHIYANE, HEHER JJA and KGOMO AJA
Heard:
14
NOVEMBER 2008
Delivered:
27
NOVEMBER
2008
Corrected:
Summary:
Practice
–
res
judicata
–
liquidators’ reliance on different sections of
Insolvency Act
24 of 1936
in consecutive proceedings to set aside dispositions –
not giving rise to issue estoppel – reliance on ‘once and
for all’ rule – not justified.
_____________________________________________________________________
ORDER
__________________________________________________________________
On
appeal from:
High Court,
Pretoria (Basson, Mavundla JJ and Sithole AJ sitting as court of
first instance, in appeal 237/2008; Murphy J similarly,
in appeal
467/2008).
1. The
appeals succeed in Appeal Nos 467/2008 and 237/2008.
2. The
orders of the courts
a quo
are
set aside.
3. For
the order made in case no 18109/2005 there is substituted the
following order:
‘
1.
An order is made in terms of paragraphs 1 and 2 of the notice of
motion.
2.
The respondents are ordered to pay the costs jointly and severally,
the one paying the other to be absolved, including the costs
of two
counsel where employed.’
4. The
respective orders made in case nos 14010/2005, 14428/2005 and
18764/2005 are substituted by the following orders:
‘
1.
The special pleas of
res judicata
and
lis alibi pendens
are dismissed.
2.
The defendants are ordered to pay the costs jointly and severally the
one paying the others to be absolved, including the costs
of two
counsel where employed.’
5. The
costs of the respondents Steenkamp, Myburgh and Van der Merwe in
their respective appeals are to be costs in the estate in
liquidation. The respondent Van der Westhuizen is to pay the costs of
the liquidators in respect of his appeal. No order is made
in respect
of the respondent Janse van Rensburg.
6. Any
party aggrieved by the orders for costs may, within fifteen days
after this judgment is delivered, on notice to all other
parties,
apply to be heard on the question of such costs.
_____________________________________________________________________
JUDGMENT
__________________________________________________________________
HEHER
JA
(Farlam,
Cameron, Mthiyane JJA and Kgomo AJA concurring):
[1] There
are two appeals before us. In both the appellants are the liquidators
of those entities through which the notorious Krion
scheme was
operated.
1
[2] The
common question is whether the liquidators should be permitted to
proceed with actions against the respondents in reliance
upon
s 26
or
s 29
of the
Insolvency Act 24 of 1936
or whether they are barred from
so doing by reason of their failed reliance on
s 30
of that Act in
the
Fourie
case
and the order made on appeal there pursuant to
s 26.
[3] There
are five respondents, Messrs Steenkamp and Janse van Rensburg (in
Appeal no 237/2008) and Messrs Myburgh, Van der Merwe
and Van der
Westhuizen (in Appeal no 467/2008).
[4] After
judgment was delivered by this Court in the
Fourie
case
all the respondents were served with civil summonses issued on behalf
of the liquidators. The grounds of each action were substantially
the
same: the liquidators claimed an order in terms of
s 26
setting aside
dispositions made without value prior to six months before date of
liquidation and an order in terms of
s 29
setting aside dispositions
made within six months of that date which had the effect of
preferring the respondent above other creditors
and payment of the
amounts of the said dispositions.
[5] All
the respondents pleaded to the claims. They placed in issue the right
of the
liquidators
to rely on either
s 26
or
29
because of the judgment in the
Fourie
case
and raised defences of
res
judicata
,
issue estoppel and
lis
pendens
and ‘election’ (ie a combination of a decision taken
prior to or during the
Fourie
litigation
to found their claims on
ss 26
and
30
to the exclusion of
s 29
and an
averment
that the plaintiffs were bound to invoke all their remedies in one
action).
[6] The
present respondents were by no means the only objects of the
liquidators’ attention since the numbers of summonses
issued
exceeded 6000. Anticipating similar wide-spread resistance to their
claims the liquidators were naturally disinclined to
proceed further
without testing the strength of the defences. After negotiation with
attorneys representing Steenkamp they launched
motion proceedings in
the Pretoria High Court (under Case No 18109/2005) against him in
which they claimed substantive relief in
the following terms:
‘
1. It
be declared that the Applicants (namely the liquidators of MP Finance
Group CC (in liquidation)) are entitled to institute
a claim against
the defendant in terms of Section 29 of the Insolvency Act, 24 of
1936 (as amended) and are not precluded from
doing so by the judgment
of the Supreme Court of Appeal under SCA case number 522/2003.
2. It
be declared that the fact that the Respondent may have been a party
to proceedings under Transvaal Provincial Division case
number
1288/03 does not preclude the Applicants from instituting a claim
against the Respondent in terms of Section 29 of the Insolvency
Act,
24 of 1936 (as amended), in this matter.’
[7] During
the course of the proceedings Janse van Rensburg was joined as a
respondent at his request. He traversed a number of
additional
defences in his answering affidavit which had no bearing on the scope
of the intended test case. In its judgment the
court
a
quo
did
not deal with the merits of those defences, a number of which were
patently at odds with aspects of the judgment in
Fourie’s
case.
[8] The
application was argued on the basis of a statement of common-cause
facts:
‘
1. The
Applicants are the liquidators of the Krion scheme – the
consolidated entity referred to as MP Finance Group CC.
2. The
Krion scheme was at all relevant times insolvent in that its
liabilities exceeded its assets.
3. The
scheme made certain dispositions to the Respondent and the relevant
dispositions by the scheme were made within the period
of six months
before the date of winding-up.
4. The
winding-up occurred on 4 June 2002.
5. The
scheme was unlawful.
6. The
dispositions made by the scheme were not made in the ordinary course
of business.
7. The
deposits by and payments to the Respondent are as set out in
paragraph 14.2 of the founding affidavit.
8. Some
depositors (also participants in the scheme) received payments during
the six-month period, while others did not.
9. Case
number 1288/03 did not deal with Section 29 claims and neither the
Transvaal Provincial Division judgment nor the judgment
of the
Supreme Court of Appeal dealt with or referred to section 29.
10. A
portion of the Applicants’ claim against Respondent is made in
terms of Section 29.’
[9] The
court
a
quo
made
the following order:
‘
46.1 The
applicants [the liquidators] are not entitled to institute a claim
against the respondents in terms of
Section 29
of the
Insolvency Act
and
are precluded from doing so by the judgment of the Supreme Court
of Appeal in
Fourie
N.O. and others v Edeling N.O. and others
[2005]
All SA 393
(SCA)
per
Conradie
JA.
46.2 The
fact that the respondents may have been party to proceedings in the
Transvaal Provincial Division case number 1288/2003
precludes the
applicants from instituting a claim against the respondents in terms
of
Section 29
of the
Insolvency Act.
46.3 The
application for a declarator is dismissed.
46.4 The
applicants are to pay the respondents’ costs, including the
costs of two counsel.’
[10] The
actions instituted by the liquidators against Myburgh, Van der Merwe
and Van der Westhuizen proceeded to trial in the Pretoria
High Court.
The parties agreed that all three should be decided together
according to the issues raised in the (identical) special
pleas
without the assistance of evidence. In a carefully considered
judgment Murphy J upheld the special plea of
res
judicata
and
dismissed the liquidators’ actions with costs including those
of two counsel.
[11] Both
courts granted the liquidators leave to appeal to this Court. Before
us the respondents Steenkamp, Myburgh and Van der
Merwe were
represented by Mr Strydom and Mr Van Tonder while Mr Van der Merwe
appeared for Van der Westhuizen. There was no appearance
for Janse
van Rensburg. There was a substantial over-lapping of arguments for
the respondents but it will not be necessary to distinguish
between
them for the purpose of reaching a decision.
[12] Because
the judgments of the lower courts and the submissions on appeal
proceeded on the basis of what this Court decided in
the
Fourie
appeal,
it will be appropriate to summarise briefly the main aspects of that
judgment.
[13]
Fourie
was an appeal from a judgment of Hartzenberg J. The order made by the
learned judge (in its final form) directed as follows:
‘
1. It
is declared that the investment scheme [concluded] by Marietjie
Prinsloo (formerly Pelser) during the period 1998 to June
2002 under
various names including M P Finance Consultants CC, Madikor Twintig
(Pty) Ltd, Martburt Financial Services Limited,
M & B Ko-operasie
Beperk and Krion Financial Services Limited (“the investment
scheme”) was at all material times
from and after 1 March 1999,
insolvent in that its liabilities exceeded its assets.
2. All
contracts concluded between the investment scheme and investors in
the scheme were illegal and null and void.
3. All
actual payments from and after March 1999 by the aforesaid investment
scheme to investors including the second and further
respondents in
so far as they exceed the investment of each particular investor are
set aside as dispositions by the scheme to
investors at times when
its liabilities exceeded its assets with the intention of preferring
the particular investor above other
investors in terms of
section 30
of the
Insolvency Act, provided
that a reinvestment is not to be
regarded as a payment and that the right of investors to rely on the
provisions of
section 33
of the
Insolvency Act is
in no way affected
by this order; what is to be regarded as a re-investment is to be
determined objectively in each case
.
4. An
inquiry is ordered into the details of the amounts of the aforesaid
payments and the examination and investigation provisions
of
paragraph 38 of the scheme of arrangement
2
,
sanctioned on 22 November 2002 under case number 27035/2002, shall
apply
mutatis
mutandis
for
the purposes of this inquiry.
5. The
applicants may set the matter down for judgment against any investor,
at any time, on the same papers, duly supplemented
by evidence, as to
the
quantum
of
the claim.’
[14] The
appeal in
Fourie
by the liquidators and the investor representative was limited to the
order as I have quoted it. The investor respondents were
in effect
granted leave to cross-appeal against the order before the amendment
of para 3 thereof. This Court held (per Conradie
JA) that:
1. Service
of the application in the court
a
quo
on
the overwhelming majority of investors
‘fell
gravely short of what would have been required to ensure that the
investors receive a fair trial’ (at para 21).
2. The
investors’ representative had not been competent to represent
the investors or make admissions on their behalf (at
para 11).
3. The
appeal should be decided only on such factual material as was common
cause between the parties to it (at para 13).
4. The
gains derived by the investors from the Krion scheme were illegal and
the investors could not retain them (at para 16).
5. The
evidence did not establish that the gains made by the investors were
paid to them with an intention to prefer one creditor
above another
any more than the investments were repaid with that intention and
reliance by the liquidators (and the court
a
quo
)
on s 30 of the Act had therefore been misplaced (at para 16).
6
. Repayment
of an investor’s capital was not a disposition without value
since the
investor
had the right to recover such payment by condiction (paras 13, 19).
7. The
court
a
quo
could
and should have made an order under s 26 in respect of profits, ie
amounts paid to investors over and above repayment of capital
contributions, because such payments had been made in pursuance of an
illegal scheme, were themselves illegal and, therefore, not
made for
value (para 17 and Order 3).
8. Impliedly,
the declaratory order issued would be binding on those respondents
who defended the proceedings but not upon the general
body of
investors upon whom service was effected by publication of a rule
nisi
3
(para
21).
[15] At
para 22 of the
Fourie
judgment
this Court said:
‘
Section
32(3)
of the
Insolvency Act is
in these terms-
“
When
the court sets aside any disposition of property under any of the
said sections [which include
s 26]
, it shall declare the trustee
entitled to recover any property alienated under the said disposition
or in default of such property
the value thereof at the date of the
disposition or at the date on which
the
disposition is set aside, whichever is the higher”.
Para
5 of the order confirming the rule envisages recovery proceedings.
Any investor against whom
such
recovery proceedings are brought would be free to maintain that he or
she is, for lack of notification or by reason of having
been misled
by the terms of the publication, not bound by the order of
Hartzenberg J. It may be that fresh setting aside proceedings
against
such an investor would then have to be combined with the recovery
proceedings. It seems unlikely that it will come to this
since an
investor would have to deny that the gains paid out by the scheme
were dispositions without value, a proposition that
has not been
challenged by any of the parties and one that I consider to be
correct.’
[16] The
order (in so far as is now relevant) that this Court made in the
Fourie
appeal
was the following:
‘
A.
The appellants’ and the first respondent’s appeals are
dismissed with costs that include the costs of two counsel.
B.
The cross-appeals of the third, fourth and fifth respondents succeed
with costs that include
the
costs of two counsel. Paragraph 3 of the order is set aside and
replaced by the following paragraph:
“
3. All
actual payments, whether as profit or interest, from and after 1
March 1999 by the aforesaid investment scheme to the second,
third,
fourth, fifth and further respondents, in so far as they exceed the
investment of each particular investor are set aside,
under
s 26
of
the
Insolvency Act as
dispositions without value by the scheme to
investors at times when its liabilities exceeded its assets, provided
that the right
of investors to rely on the provisions of
s 33
of the
Insolvency Act is
in no way affected by this order.”’
[17] Murphy
J interpreted the judgment and order in
Fourie
as
embodying a final judgment binding upon the general body of investors
until set aside. I am by no means sure that that is the
right
construction to place on it
4
.
In addition each of the respondents in the present appeal initially
denied that he had received notice of the proceedings in
Fourie
or
was bound by the judgment. Thereafter, almost certainly for reasons
of expediency, all ‘elected’ to be bound. I doubt
that
such an
ex
post facto
submission
can render a judgment not otherwise binding
res
judicata
as
against them or the other parties involved. But as these issues were
not fully argued before us I am content to leave them open
and to
decide the appeal on the basis argued by the respondents,
viz
that
each of the parties to the present appeals was also a party to
Fourie
.
[18] Murphy
J held that the action before him related to the same subject matter
(
eadem
res
)
and the same cause of action (
eadem
petendi causa
)
as those determined in
Fourie
.
He upheld the plea of
res
judicata
but
limited the liquidators’ exercise of the recovery process under
s 32(3) of the Act to the recovery of actual payments
of profits in
the relevant period according to the procedure mandated in para 4 of
the order of Hartzenberg J. He also found that
the ‘once and
for all’ rule (about which more below) applied to the
institution of the liquidators’ actions under
s 29 and barred
such actions. Counsel for the respondents adopted his reasoning. By
contrast counsel for the liquidators submitted
that a cause of action
arising from s 29 was not the same as one derived from either s 26 or
30, that the Court in
Fourie
was
not called upon to pronounce on s 29 and did not do so and, further,
that there was no issue common to the proceedings which
would justify
an application of the principles of issue estoppel. They contested
the appropriateness of the ‘once and for
all rule’ in the
context of the present appeals.
[19] As
I understood the respondents’ counsel (and as I interpret the
judgment of Murphy J) they concede that
res
judicata
in
its classic formulation does not apply. That concession is obviously
justified because a simple comparison of the elements of
each section
shows no commonality of cause of action. The legislation was clearly
designed to provide remedies sufficient to meet
the different
circumstances envisaged in each of the sections. But, so they argue,
eadem
petendi causa
bears
a more flexible meaning which embraces issue estoppel; and the common
issue between secs 29 and 30 is an intention to prefer,
a matter that
was resolved, finally, against the liquidators in the
Fourie
judgment.
(The last leg of the contention is, as I have noted, correct.) But
even if the flexibility of the doctrine proves inadequate,
a proper
application of the once and for all rule will, they submit, bring
their clients home.
[20] The
application of the principles of
res
judicata
in
the form of issue estoppel was discussed in
Kommissaris
van Binnelandse Inkomste v Absa Bank Bpk
1995
(1) SA 653
(A) at 666D-670C. This Court affirmed that the source of
the finding by Greenberg J in
Boshoff
v Union Government
1932
TPD 345
(that in order to uphold a defence of
res
judicata
the
cause of action need not be precisely the same in both actions) lay
in our own common law authorities rather than English law
and that
‘Voet’s example’ [concerning reliance on the
actio
redhibitoria
and
the
actio
quanti minoris
as
the same causes] ‘and the acceptance by Greenberg J of a
broader meaning of
petendi
causa
both
carry the necessary implication that for a defence of
res
judicata
it
is not an immutable requirement that the same thing must be claimed.’
(My translation.)
[21] Botha
JA nevertheless added the following cautionary remarks in opposition
to the suggestion that South African courts have
taken over the
English doctrine of ‘issue estoppel’ lock, stock and
barrel (at 669F-670C):
‘
Consequently
it is inappropriate to posit that this Court should decide whether
the doctrine of issue estoppel has become part of
our law. The
question simply does not arise. The true meaning of
Boshoff
v Union Government
is
that the judgment has the effect that the strict requirements of the
common law for a defence of
res
judicata
(in
particular,
eadem
res
and
eadem
petendi causa
)
should not be understood literally in all circumstances and applied
as inflexible rules, but there is room for adaptation and
extension,
according to the basic requirement of
eadem
quaestio
and the
ratio
of the defence. Seen in this light, there can, I think, be no reason
in principle to fault the approach of the court in
Boshoff
v Union Government
.
The unacceptable alternative would be to cling with literal formalism
to propositions in the old authorities, which would be at
odds with
the vigorous development of the law to provide for the demands of
novel factual situations. It is however inappropriate
to express an
opinion on the question as to whether the actual outcome was
satisfactory on the facts of that case, because the
facts of the
present matter, are, as will presently appear, wholly different. Each
case must be decided according to its own facts.
It is not practical
to try to formulate guidelines in abstract terms which can be made
applicable to all situations. For example,
one of the facts in
Boshoff
v Union Government
was
that default judgment was taken in the previous case. From a passing
remark of Greenberg J at 351 it appears that that fact
was not
raised by the plaintiff in answer to the defence of
res
judicata
.
In a future case it may well be necessary to consider whether it is
advisable to recognise an extended application of the defence
in such
circumstances. But it is not for this Court to reflect on that
question in the present case because it does not arise here.
We have
to deal with a particular set of facts to which the court
a
quo
applied
the line which was taken in
Boshoff
v Union Government
and
which was followed in a series of cases afterwards. That direction,
as I have tried to show, is not of itself objectionable
in principle.
Our task is merely to determine whether its application to the
present facts is justified.’ (My translation.)
’
[22] Finally,
in rejecting the submission that the parties were bound by a general
practice in respect of something not in issue
in earlier proceedings
and about which it had been unnecessary to make a finding, Botha JA
said (at 676B):
‘
To
allow the defence of
res
judicata
in
the form of issue estoppel in these circumstances, would be to go
further than has previously happened, whether in cases at provincial
level or in England. It would be unfair to the Commissioner and run
counter to the considerations of fairness which underpin such
a
defence. The common law requirements of the defence of
res
judicata
were
strictly circumscribed, precisely to avoid injustice (see eg
Bertram
v Wood
[(1893)
10 SC 177
at 180)]. Considerations of fairness are also of
decisive importance in the application of issue estoppel in the
English case-law
(see eg
Re
State of Norway’s Application (No 2)
[[1989]
1 All ER 701
(CA) at 714j]. Consequently the possibility of extending
the principles of
res
judicata
to
any particular case of issue estoppel must be approached with great
circumspection..’ (My translation.)
[23] The
question arose once more in
National
Sorghum Breweries Ltd (t/a Vivo African Breweries v International
Liquor Distributors (Pty) Ltd
[2000] ZASCA 159
;
2001
(2) SA 232
(SCA). Olivier JA (writing for the majority) referred to
the previous authorities but limited his formulation of the question
before
the court to the following statement (at 239H-I):
‘
[3] The
fundamental question in the appeal is whether the same issue is
involved in the two actions: in other words, is the same
thing
demanded on the same ground, or, which comes to the same, is the same
relief claimed on the same cause, or, to put it more
succinctly, has
the same issue now before the Court been finally disposed of in the
first action?’
[24] In
Smith
v Porritt
2008
(6) SA 303
(SCA) at 307J Scott JA summarised the law:
‘
[10] Following
the decision in
Boshoff
v Union Government
1932
TPD 345
the ambit of the
exceptio
rei judicata
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
judicata
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, 670J-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
judicata
.
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 Bank Bpk
(supra)
at 670E-F.) Relevant considerations will include questions of equity
and fairness not only to the parties themselves but
also to others.
As pointed out by De Villiers CJ as long ago as 1893 in
Bertram
v Wood
(1893)
10 SC 177
at 180, “unless carefully circumscribed, [the defence
of
res
judicata
]
is capable of producing great hardship and even positive injustice to
individuals”.’
[25] It
is apparent that the first duty of the Court is to compare the
relevant facts of the two cases upon which reliance is placed
for the
contention that the cause of action (in the extended sense of an
essential element) is the same in both.
[26] As
I have noted, counsel for the respondents submitted that the
essential element
common to both ss 29 and 30 is the intention of the insolvent to
prefer; in order for the liquidators to rely on s 29 they would
now
have to deny the finding in
Fourie
that
no such intention existed. I disagree. Such a denial is not necessary
to found an action based on s 29 and indeed, the liquidators
have not
contradicted that finding in the actions instituted against the
respondents. They needed only to allege and prove a disposition
which
‘had the effect of preferring one creditor above another’.
It is true that the defendants were entitled to and
did plead that
the insolvent had no such intention. That, however, was of itself
insufficient to meet the liquidators’ case
in full. The
defendants had also to plead and prove that the assailed disposition
was made in the ordinary course of business.
So, although the finding
of absence of intention in
Fourie
created
an issue estoppel to that limited extent and the liquidators would
not be permitted to counter the respondents’ averment
that such
intention was absent, that minor triumph will not avail the
respondents, because a plea of
res
judicata
(whether
in its classical or extended form) cannot succeed unless it nullifies
the legal force of the cause of action (put otherwise,
it cannot be
raised successfully if it leaves the plaintiff with a viable cause of
action). That being the result here, the respondents
did not, on the
first ground, set up a sustainable answer to the relief claimed by
the liquidators.
[27] The
scope of the ‘once and for all’ rule was said in the
National
Sorghum
case
at 241D-E to require that all claims generated by the same cause of
action be instituted in one action. As I have already found
that the
respective sections do not create the same cause of action, even in
the extended sense, it is difficult to justify the
applicability of
the rule to the facts of these appeals. Murphy J was however
persuaded by a dictum from
Henderson
v Henderson
[1843] EngR 917
;
(1843)
3 Hare 100
at 114-115,
[1843-1860] All ER Rep 378
at 381-2 (and the
Full Court in Case No 18109/2005 agreed with him), as follows:
‘
In
trying this question, I believe I state the rule of the Court
correctly, when I say, that where a given matter becomes the subject
of litigation in, and of adjudication by, a court of competent
jurisdiction, the Court requires the parties to that litigation
to
bring forward their whole case, and will not (except under special
circumstances) permit the same parties to open the same subject
of
litigation in respect of matter which might have been brought forward
as part of the subject in contest, but which was not brought
forward,
only because they have, from negligence, inadvertence, or even
accident, omitted part of their case. The plea of
res
judicata
applies,
except in special cases, not only to points upon which the Court was
actually required by the parties to form an opinion
and pronounce a
judgment, but to every point which properly belonged to the subject
of litigation, and which the parties, exercising
reasonable dilgence,
might have brought forward at the time.’
[28] Murphy
J expressed the view (in concurrence with that of Blignaut J in
Consol
Glass v Twee Jonge Gezellen
(2)
2005 (6) SA 23
(C) at 46H) that ‘the
Henderson
principle’ is not in conflict with the approach of Botha JA in
Kommissaris
van Binnelandse Inkomste v Absa Bank Bpk (supra)
and
that ‘logic and equity will justify its application in
appropriate cases’. While that may be so, I think that any
such
application must depend on an understanding of its true foundations.
[29] In
Arnold
v National Westminster Bank plc
[1991]
3 All ER 41
(HL) at 48j Lord Keith pointed out that, although
Henderson’s was a case of action estoppel, the statement of the
law has
been held to be applicable also to issue estoppel. The
learned law lord had earlier referred (at 48e) to
Brisbane
City Council v A-G for Queensland
[1978]
3 All ER 30
(PC) at 35-36;
[1979] AC 411
at 425, where Lord
Wilberforce said
‘
The
second defence is one of res judicata. There has, of course, been no
actual decision in litigation between these parties as
to the issue
involved in the present case, but the appellants invoke this defence
in its wider sense, according to which a party
may be shut out from
raising in a subsequent action an issue which he could, and should,
have raised in earlier proceedings. The
classic statement of this
doctrine is contained in the judgment of Wigram V-C in
Henderson
v Henderson
[1843] EngR 917
;
(1843)
3 Hare 100
,
[1843-60] All ER Rep 378
and its existence has been
reaffirmed by this Board in
Hoystead
v Taxation Comr
[1926]
AC 155
,
[1925] All ER Rep 56.
A recent application of it is to be
found in the decision of the Board in
Yat
Tung Co v Dao Heng Bank
[1975]
AC 581.
It was, in the judgment of the Board, there described in
these words (at 590): “. . . there is a wider sense in which
the
doctrine may be appealed to, so that it becomes an abuse of
process to raise in subsequent proceedings matters which could and
therefore should have been litigated in earlier proceedings.”
This reference to “abuse of process” had previously
been
made in
Greenhalgh
v Mallard
[1947]
2 All ER 255
at 257 per Somervell LJ, and their Lordships endorse it.
This is the true basis of the doctrine and it ought only to be
applied
when the facts are such as to amount to an abuse, otherwise
there is a danger of a party being shut out from bringing forward a
genuine subject of litigation.’
[30] I
respectfully agree. The identification with abuse of the process
accords with the policy expressed in the maxim
nemo
debet bis vexari pro una et eadem causa
which
underlies the principle of
res judicata
.
As was said in the
National Sorghum
case
(at 241D-E) the abuse arises when the same cause of action is raised
against a defendant a second time. But what is to be noted
from both
the
Henderson
and
Brisbane City Council
cases is the additional emphasis on the facts of each matter, for how
else should a court determine whether the conduct of a party
has
reached the level of being an abuse? That being so it is for the
party who relies on the application of the rule pertinently
to plead
such reliance and lay a foundation in fact which would enable the
opposing parties to deal with such reliance. In the
context of the
present appeal that required that the respondent had to lay a basis
for barring the liquidators from carrying out
what was prima facie
their right and duty to employ the remedy created by s 29 of the Act.
But I find no such evidence in the record
of either appeal. On the
contrary, the equities clearly favoured the liquidators in two
important respects (which, being matters
of common sense, arise from
the proven facts). These are─
1. To
uphold the plea would be to defeat an equitable redistribution among
creditors of the estate because the liquidators were
unduly cautious
(or even mistaken) in enforcing their remedies consecutively rather
than in a single action, and even though the
defendants made no
attempt to show that they would suffer any prejudice beyond the
normal incidence of litigation.
2. The
defendants were debtors of the estate who were unaware of the
proceedings against them in
Fourie
and
took no part in defending those proceedings. That they should now
receive the benefit of the judgment on the highly artificial
basis
that they choose to be bound by it would be absurd. Therefore, even
if, as Murphy J found, all the elements of s 29 were
‘points
that properly belonged to the subject of the earlier litigation’,
that would not have been enough to justify
invocation of the rule.
[31] The
final matter which requires consideration is
lis
alibi pendens
. In this regard Murphy J (whose
approach was espoused by the respondents’ counsel) said the
following:
’
48. In
the light of that conclusion there is strictly speaking no need to
determine the merits of the special plea of
lis pendens
. There
may be some advantage though in making one or two observations about
it in the hope of assisting the liquidators and the
investors in
bringing the process to finality. In paragraph 4 and 5 of his order
Hartzenberg J established a recovery procedure
that clearly met with
the approval of the Supreme Court of Appeal, subject of course to the
reservations just discussed. The plea
of
lis pendens
is to the
effect that the attempt to recover the gains from the investors by
means of the present action duplicates unnecessarily
that procedure.
It would seem that in the earlier proceedings the plaintiffs were the
ones who proposed the recovery procedure.
The claims made in the
reply that the freshly instituted actions are pursued as a matter of
convenience and as a less costly process,
frankly ring hollow. The
appropriate course of conduct will be for the liquidators to proceed
by the special recovery procedure.’
[32] While
this approach possesses a superficial attraction it ignores a
consideration which the liquidators have said, in the motion
proceedings, played an important role in the decision to institute
the actions,
viz
the
serious reservations (to put the matter at its lowest) expressed by
Conradie JA as to whether the general body of investors
was
truly involved in the
Fourie
case (as opposed only to their ‘representative’)and the
offer his judgment extended to them to distance themselves
from its
consequences. The liquidators were accordingly faced with the real
problem that should they follow the recovery procedure
ordered by
Hartzenberg J (in itself derived from an agreement by the investors’
representative which Conradie JA said the
investors could not be held
to) there was no certainty that that procedure would be effective
against any of the investors or that
any of them would recognise any
of the findings by this Court in
Fourie
.
For that reason alone the liquidators’ decision to initiate
actions under ss 26 and 29, making all necessary averments as
if for
the first time, was sensible and reasonable.
[33] There
is a further respect which bears upon the reasonableness of the
liquidators’ conduct. The recovery procedure was
inextricably
bound up with the appointment and functions of the investors’
representative, Mr Edeling. Following the
Fourie
judgment’s expressions of doubt
concerning the competence of any appointment of that nature and the
adverse remarks relating
to decisions taken by him, so we were
informed by counsel, Edeling resigned. He purported to cede the
investors’ right to
another umbrella body. He has not been
replaced. Whether or not the special recovery procedure was capable
of practical implementation
without the role of the investors’
representative was a matter of obvious concern to the liquidators. In
the circumstances
they could fairly believe that the interests of
creditors would best be served by taking action afresh against
individual debtors
of the estate.
[34] Finally,
in relation to
lis alibi pendens
,
there are considerations of convenience and cost which favour the
institution of the actions against individual debtors. Murphy
J
thought that the liquidators’ argument ‘rings hollow’
but I do not agree with him. I quote from the heads of
argument of
their counsel before us:
‘
Case
1288/2003,in its entirety encompasses some 1 400 to 1 500 pages. If
the procedure envisaged in paragraph 5 of the Hartzenberg
J order
were followed, it would mean that each one of these pages would have
to be copied and served on each of the defendants
in each of the
Krion matters. As appears from the papers some 6 000 claims have been
instituted. That amounts to some 9 million
pages. In terms of rule
70, an attorney can charge R1.25 (see rule 70 section D, item 1) per
copy. That amounts to some R11 million.
. . .”. Furthermore, it
could reasonably be expected that there would be a number of default
judgments in the 6 000 matters
instituted. In those circumstances the
registrar of the High Court and/or a Judge of the High Court would be
required to read 1
500 pages all of which however have been
summarized in the 7 page particulars of claim. This waste of judicial
time would hardly
have been approved by the Courts. . . . [T]he
institution of an action comprising
some 7 page particulars of claim is the very contrary of
vexatiousness. . . . It is aimed at saving costs.’
[35]
Lis
alibi pendens
is a discretionary remedy. It
requires a balance of the interests of the affected parties to
achieve a fair result: cf
Van As v Apollus
1993 (1) SA 606
(C) at 610D-G. Because of the
failure of the lower courts to take the material considerations that
I have identified in the preceding
paragraphs into account, we may
properly exercise the discretion ourselves. Since I can discern no
particular inconvenience or
disadvantage to an affected investor in
having to face the liquidators in a trial action designed to recover
assets for the benefit
of creditors, the liquidators’ decision
should prevail. I therefore conclude that the plea of
lis
alibi pendens
should not be sustained.
[36] The
respondent Janse van Rensburg brought a counter-application for a
declaration in Case No 18109/2005. The court
a
quo
did not consider it or make a costs order
relating to it. The liquidators’ notice of appeal was not
directed to either aspect.
It is accordingly inappropriate for this
Court to do so either, despite submissions made in the heads of
argument for the liquidators
seeking dismissal of the
counter-application on grounds of non-joinder of the general body of
investors in the scheme.
[37] The
costs order which follows is derived from my understanding of the
substance of an agreement between certain of the parties
(as it was
communicated to the Court by appellants’ counsel during the
appeal hearing).
Ex abundante
I
have added a rider based on dicta in
Estate
Garlick v Commissioner for Inland Revenue
1934
AD 499
at 505.
[38] In
the result the following order is made:
1. The
appeals succeed in Appeal Nos 467/2008 and 237/2008.
2. The
orders of the courts
a quo
are
set aside.
3. For the
order made in case no 18109/2005 there is substituted the following
order:
‘1.
An order is made in terms of paragraphs 1 and 2 of the notice of
motion.
2.
The respondents are ordered to pay the costs jointly and severally,
the one paying the other to be absolved, including the costs
of two
counsel where employed.’
4. The
respective orders made in case nos 14010/2005, 14428/2005 and
18764/2005 are substituted by the following orders:
‘1.
The special pleas of
res judicata
and
lis alibi pendens
are dismissed.
2.
The defendants are ordered to pay the costs jointly and severally the
one paying the others to be absolved, including the costs
of two
counsel where employed.’
5. The costs
of the respondents Steenkamp, Myburgh and Van der Merwe in their
respective appeals are to be costs in the estate in
liquidation. The
respondent Van der Westhuizen is to pay the costs of the liquidators
in respect of his appeal. No order is made
in respect of the
respondent Janse van Rensburg.
6. Any party
aggrieved by the orders for costs may, within fifteen days after this
judgment is delivered, on notice to all other
parties, apply to be
heard on the question of such costs.
__________________
J
A HEHER
JUDGE
OF APPEAL
APPEARANCES:
FOR
APPELLANT
S (both
cases): S du Toit SC
R
Jonker
ATTORNEYS
: Thys
Cronjé Incorporated
PRETORIA
C/o
Van der Merwe & Sorour
BLOEMFONTEIN
FOR
RESPONDENT
S: Steenkamp
(in appeal 237/08), Myburgh and Van der Merwe (in appeal 467/08: T
Strydom (with him T van Tonder)
V
an
der Westhuizen (in appeal 467/08): M P van der Merwe
N
o
representation for Janse van Rensburg (in appeal 237/08).
ATTORNEYS
: GP
van der Merwe Attorneys
PRETORIA
C/o
JG Botha Attorneys
BLOEMFONTEIN
1
For
particulars of which see
Fourie
and others v Edeling and others
[2004]
ZASCA 28
(1 April 2004);
[2005] 1 All SA 393
(SCA).
2
Para
38 of the scheme provided as follows:
‘
In
order to limit the issues in dispute in the action, the liquidators
and
investor
representative
and
their respective attorneys shall at the cost of the estate examine
the books and records of M P Finance and conduct such further
investigations as may reasonably be necessary with a view to
verifying and reaching agreement on the particulars of the various
transactions between M P Finance and investors. The liquidators are
authorised to grant the
investor
representative
unrestricted
access to the books and records of M P Finance.’
3
Which
included the respondents in the present appeal.
4
I
particularly have in mind such cases as
Dada
v Dada
1977
(2) SA 287
(T) and the authorities cited there (at 288C-F).