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[2017] ZANCHC 22
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Fincrop Risk Management (Pty) Ltd v Lusern Koning CC and Others (1388/14;964/14) [2017] ZANCHC 22 (31 March 2017)
HIGH
COURT OF SOUTH AFRICA
NORTHERN
CAPE DIVISION, KIMBERLEY
CASE
NO: 1388/14
In
the matter between :
F
I
NCROP
R
I
SK
MANAGEMENT
(PTY)
LTD
APPLICANT
(IN
L QUIDATION)
and
LUSERN
KONING
CC
1
st
RESPONDENT
ANDRIES
JACOBUS
GROENEWALD
N.O
2
nd
RESPONDENT
FRANCOIS
GROENEWALD
N
.
O
3
rd
RESPONDENT
PAUL M
I
CHIEL
BESTER
N.O
4
th
RESPONDENT
Case
No: 964/14
In
re :
F
I
NCROP
R
I
SK MANAGEMENT
(PTY)
LTD
PLAINTIFF
AND
LUSERN
KON NG CC
(Registration
no
2004/094520/
23)
1
st
DEFENDANT
ANDRIES
JACOBUS
GROENEWALD
N.O
2
nd
DEFENDANT
FRANCOIS
GROENEWALD
N.O
3
rd
DEFENDANT
PAUL
M
I
CH
EL BESTER
N
.
O
4
th
DEFENDANT
And
In
Re:
FINCROP
RISK MANAGEMENT (PTY) LTD
(
I
N
L
I
QUIDAT
I
ON)
PLAINTIFF
And
ANDRIES
JACOBUS
GROENEWALD
N.O
1
st
DEFENDANT
FRANCOIS
G
ROENEWALD
N.O
2
nd
DEFENDANT
PAU
L MICHIEL
BESTER
N
.O
3
rd
DEFENDANT
(Each
in their capacity as trustees of the Voordeel Trust)
Coram:
Lever
AJ
JUDGMENT
L
Lever AJ
1.
This is an application to consolidate two civil matters under the
provisions of Rule 11 of the Uniform Rules of Court (the Rules).
This
application itself was brought in terms of Rule 6(11) of the Rules.
The two matters which the applicant seeks to consolidate
are:
firstly, a civil action against the first to fourth respondents who
are respectively the first to fourth defendants in this
civil claim
brought under case number 1388/14; and secondly, a matter that
started its life as an interpleader brought under case
number 964/14
which was subsequently referred to trial in a Court Order made by
agreement.
2.
Rule 11of the Rules provides:
"Where
separate actions have been instituted and it appears to the court
convenient to do so, it may upon the application of
any party thereto
and after notice to all interested parties, make an order
consolidating such actions, whereupon-
(a)
the said actions shall proceed as one action;
(b)
the provisions of rule 10 shall
mutatis mutandis
apply with
regard to the action so consolidated; and
(c)
the court may make any order which to it seems meet with regards to
the further procedure,
and may give one judgment disposing of all
matters in dispute in the said actions."
3.
The principles to be applied when
considering whether two separate
actions
should be consolidated can be summarised as follows:
3.1.
From
the
wording
of
Rule
1
1
,
set
out above,
the
main
consideration
i
s
'convenience'.
I
n
this
context convenience refers to
the
convenience
of
the
parties,
witnesses
and
the
Court
.
[1]
3.2.
Further,
in
the
context
of
Rule
1
1
'convenience' includes
a
consideration of
all
the
circumstances
of
the
cases
concerned
and
making
a
value
judgment
based
on
such
circumstances
as
to whether it appears
to
be
fitting and
fair
to
the
parties
concerned
to consolidate the said actions.
[2]
3.3.
The
purpose
of
consolidating
matters
in
terms
of
Rule
1
1
is
to
enable
the
determination
of
issues
which
are
substantially
the
same
in
one
action
to
avoid
a
multiplicity
of
actions
with
the
associated
disadvantages.
[3]
3.4.
An
important
consideration
for
a
court
considering
the
exercise
of
its
discretion
to
order
the
consolidation
of
actions
in
any
particular
case
i
s,
whether
it
will
save
money
and
avoid
a
multiplicity
of
actions.
[4]
3.5.
The
'associated
disadvantages' of
a
'multiplicity
of
actions'
mentioned
in
3.3
a
bove,
refers
to
the
risk
of
different
courts
making
conflicting
findings of facts
and
credibility
of
witnesses
in respect of the
same facts and
witnesses.
[5]
This would
naturally
be
undesirable
for
obvious
reasons.
[6]
3.6.
A
court
will
not
exercise
its
discretion
to
order
a
consolidation
of
actions
where
this
will
result in
a
party
suffering
substantial
prejudice.
[7]
4.
In order to deal with the consolidation application in its proper
context, it is necessary to briefly set out the
roles of
the respective parties and the basis of the respective claims.
5.
In the action brought under case number 1388/14, the applicant in the
present application, is the plaintiff (Fincrop). Lusern
Koning CC
(Lusern Koning), the first respondent in the present application, is
the first defendant in the said action. Second,
third and fourth
respondents in the present application are the second, third and
fourth defendants in such action. The second,
third and fourth
defendants are cited in their capacities as joint trustees of the
Voordeel Trust (the Voordeel Trust or the Trust)
in the said action.
6.
In case number 1388/14 Fincrop claims payment of amounts due under
two separate loan agreements made with Lusern Koning. In the
said
action, Fincrop claims against the Voordeel Trust on the basis
that the trust executed a suretyship in
favour of Fincrop
for the debt of Lusern Koning to Fincrop.
7.
A combined plea was filed on behalf of Lusern Koning and the Voordeel
Trust in the said action. On behalf of Lusern Koning, the
following
defences were raised in such plea :
7.1.
Lusern Koning pleads that Fincrop does not have
locus
standi
as it ceded its claim against Lusern Koning to
Grindrod Trading;
7.2.
Lusern Koning denies the conclusion of the two loan agreements;
7.3.
Lusern Koning in any event denies the contention that Fincrop
fulfilled
its obligations in terms of the relevant loan agreements,
if it is found that such loan agreements were concluded; and
7.4.
Lusern Koning denies that it is liable to Fincrop in any sum.
8.
n the said combined plea, and on behalf of the Voordeel Trust, the
contention that a valid and enforceable dead of suretyship
was
executed by the Voordeel Trust in favour of Fincrop was denied on the
basis that at the time that the said suretyship was executed,
not all
of the trustees appointed at the relevant time signed the said deed
of suretyship.
9.
In the action that started off as an interpleader, being case number
964/14, Fincrop, in an Order obtained by consent, became
the
plaintiff.
In
terms of the same Court Order, the Voordeel Trust represented
by the second, third and fourth respondents herein,
became the
defendant.
10.
Originally, the said interpleader was launched by Suidwes Landbou
(Pty) Ltd trading as Suidwesfin (Suidwesfin). Suidwesfin held
an
amount in the order of R3.4 million. Both Fincrop and the Voordeel
Trust claimed the amount held by Suidwesfin.
11.
In terms of the court Order taken by agreement, referred to above,
Fincrop became the plaintiff and filed a declaration, and
the
Voordeel Trust became the defendant and it filed a plea to the said
declaration.
12.
In the said declaration Fincrop pleaded that:
12.1.
It relied upon the same two loan agreements between it and Lusern
Koning pleaded in Case Number 1388/14;
12.2.
Lusern Koning failed to pay the monies advanced to it in terms of the
said loan agreements and that
Lusern Koning was indebted to Fincrop
in an amount greater than the amount held by Suidwesfin;
12.3.
In terms of each of the said loan agreements Lusern Koning ceded to
Fincrop its claim against any third parties
arising from the sale of
any agricultural products by Lusern Koning to such third parties;
12.4.
The sum held by Suidwesfin constituted the proceeds of the sale of
wheat cultivated
by Lusern Koning with
the funds advanced to Lusern Koning by Fincrop in
terms of one
of the loan agreements already referred to above;
12.5.
The relevant wheat delivered to Suidwesfin was delivered by Lusern
Koning falsely in the name of the Voordeel
Trust. That such false
representation was made to thwart Fincrop's claim to the proceeds
that flowed from the sale of such wheat.
That Fincrop's claim to the
proceeds of the sale of such wheat arose from the cession given by
Lusern Koning in favour of Fincrop
referred to in 12.3 above.
12.6.
The wheat delivered to Suidwesfin was in fact wheat delivered by
Lusern Koning;
12.7.
The transactions between Lusern Koning and the Voordeel Trust in
respect of the wheat delivered to Suidwesfin
were concluded
unlawfully and in fraud of Fincrop's claim as a creditor of Lusern
Koning.In the circumstances, Fincrop is entitled
to an order
setting aside such fraudulent transactions; and
12.8.
IIf such transactions are set aside, then Lusern Koning acquired
a claim against Suidwesfin
equal to the proceeds of the sale of the
wheat concerned, being the sum presently held by Suidwesfin. By
virtue of the cession
referred to in 12.3 above, Fincrop claims the
amount held by Suidwesfin together with the interest that has accrued
on the said
sum.
13.
The Voordeel Trust raises the following defences in the plea filed on
its behalf:
13.1.
Again, the
locus
standi
of Fincrop is
placed in dispute. The Voordeel Trust alleges that Fincrop ceded any
claim which it may have against Lusern Koning
to Grindrod Trading.
The same defence is raised by Lusern Koning in case number 1388/14;
13.2.
It denies the contention that the two loan agreements between Fincrop
and Lusern Koning were concluded. This defence
was also raised by
Lusern Koning in case number 1388/14;
13.3.
It takes the position that if it is found that the said loan
agreements between Fincrop and Lusern Koning
were in fact concluded,
then Fincrop did not fulfil its obligations in terms of such loan
agreements. This defence was also raised
by Lusern Koning in case
number 1388/14; and
13.4.
It avers that the wheat that was delivered to Suidwesfin was
delivered in the name of the Voordeel Trust
and that consequently the
Voordeel Trust is entitled to the proceeds of the sale of such wheat
together with the interest that
has accrued on the relevant sum.
14.
The above summary of the pleadings is a fair reflection of the issues
as they were raised in the pleadings in the respective
matters.I n the consolidation application, the issues reflected in
the respective pleadings were not placed in issue. n
the
circumstances, the issues raised in the respective pleadings,
as summarised above, were
common cause between the
parties in the present application.
15.
. From the above summary, it can be seen that there are a
number of issues that are
common
to both actions and would
have to be
determined in both actions. These
issues include the following:
15.1.
Whether Fincrop has
locus
standi
;
15.2.
Whether Fincrop and Lusern Koning concluded the two loan agreements
relied upon by Fincrop. This is directly
relevant in case number
1388/14 and is relevant in case number 964/14, originally the
interpleader, on two grounds firstly whether
or not the liability
exists under such loan agreements and whether Fincrop is entitled to
the proceeds of the sale of the wheat
by Suidwesfin by virtue of the
cession in its favour in such loan agreements;
15.3.
In the event that Fincrop establishes that such loan agreements were
concluded, whether Fincrop had discharged
its obligations in terms of
such loan agreements; and
15.4.
Whether Lusern Koning is liable to Fincrop in any amount if such loan
agreements were concluded and the
actual quantum of such liability.
16.
As can be seen from the summary of the issues raised in the
pleadings, there are two issues which are not common to both
actions.
These issues are:
16.1.
In case number 1388/14 the issue of whether the Voordeel Trust is a
surety for the liability of Lusern Koning to Fincrop.
This is not an
issue in case number 964/14; and
16.2.
In case number 964/14 the question of whether the proceeds of the
sale of the wheat delivered to Suidwesfin were cultivated
by Lusern
Koning with finance from the funds advanced to it by Fincrop
are not in issue in case number 1388/14. However,
taken
together with the associated issues of fraud and false
representations relating to the delivery of the wheat to
Suidwesfin
in the name of the Voordeel Trust, as pleaded by Fincrop,
shows that although Lusern Koning is not cited as a party in
case
number 964/14, it is intimately involved in or connected to case
number 964/14.
17.
The arguments made by applicant in support of consolidation are:
17.1.
That the same witnesses will testify in matters that are common to
both actions;
17.2.
Consolidation will avoid a multiplicity of actions and the associated
duplication of costs, which will result
in substantial savings in
respect of both costs and time;
17.3.
Consolidation will avoid the risk and prejudice of conflicting
findings of fact and credibility of witnesses
by different courts in
this division;
17.4.
Consolidation will not entail substantial prejudice to Lusern Koning
or the Voordeel Trust; and
17.5.
It would be convenient to both the court and the parties if the
actions were consolidated.
18.
The
arguments
made
by respondents
in
opposition
to
consolidation are:
1
8.1.
Relying
on
the
authority
of
the
New
Zealan
d
Insurance
case
[8]
respondents
argued
that
applicant
bore
the
onus
of
establishing that
the
respondents
would
not
suffer
substantial
prejudice
by
virtue
of
the
consolidation.
It was
submitted
on
behalf
of
the
respondents
that
applicant had failed
to
discharge such onus;
18.2.
Respondents' appended a letter from applicant's attorney to their
answering affidavit. In the said letter
applicant's attorney
expressed the view that: "...this action is independent of any
other litigation between the parties and
cannot be consolidated with
any such litigation." On behalf of the respondents it is
contended that this letter from applicant's
attorney is not
reconcilable with the allegations now contained in the present
application;
18.3.
On
the
authority
of
I
nternational
Tobacco
Company
of
South
Africa
Ltd
v
United
Tobacco
Companies
(South)
Ltd
[9]
respondent
submitted
that
applicant
had
not
explained
why
it
had
instituted
two
separate actions in
the
first
place
and
that
in
such
circumstances
a
consolidation
should
not
be ordered;
18.4.
Lusern Koning is not a party to case number 964/14;
18.5.
The factual and legal issues are not similar though some allegations
are repeated in the two matters;
18.6.
. The respondents do not know at this stage whether there will
be any clash of interest and/or whether
the Trust and Lusern
Koning will use the same attorney and Counsel;
18.7.
Respondents believe that findings in regard to the allegations of
underhand dealings in case number 964/14
may be prejudicial to either
the Trust or Lusern Koning.
19.
The applicant had raised the issue as to whether both the Trust and
Lusern Koning were properly authorised to oppose this application
in
its affidavits. Having regard to the
approach that a litigant's authority
should be challenged by using the procedure contemplated in Rule 7, I
do not need to discuss this aspect of the case further, save
to state
that applicant had not used the procedure contemplated in Rule 7.
20.
Turning now to a consideration of arguments raised by the
respondents. Firstly, the submission that the onus of establishing
that the respondents would not suffer substantial prejudice lay with
the applicant. This is obviously a correct statement of the
law, but
one has to consider what it means. Here, obviously, context is
relevant. If the prejudice is evident from the pleadings
or
surrounding circumstances, then applicant will have to deal with such
potential prejudice and will need to discharge the onus
of showing
that if there is prejudice it is not substantial.
21.
However, if the potential prejudice is not evident from the pleadings
and surrounding circumstances then respondents must
have an
evidential burden to raise the grounds of potential prejudice in
their answering affidavits. Otherwise, how would one reasonably
expect the applicant to deal with the grounds of potential prejudice
the respondents might suffer.
22.
In the present case, there are no grounds of potential prejudice that
emerge from the pleadings and the surrounding circumstances.
The only
potential ground of prejudice raised by the respondent appears in
paragraph 18.7 above, namely, that a finding on the
alleged underhand
dealings might prejudice Lusern Koning or the Trust.
23.
Since that ground of prejudice has been raised it is convenient to
deal with it now. Mr Lotz SC who appeared for the applicant,
in
dealing with the respondents' contentions that it would be prejudiced
in this way, referred to court to the applicants replying
affidavit
where the applicant contends if it is found if there is no dishonest
conduct on the part of the respondents then clearly
neither Lusern
Koning or the Trust suffers any prejudice. Applicant then goes on to
contend that if the allegations of generally
dishonest conduct and
collusion are in fact established, then it is not prejudice that
either Lusern Koning or the Trust can lawfully
complain of in the
present application to join the two actions.
24.
In my view the contentions of applicant in this regard have substance
and I uphold its argument. Since no other grounds of potential
prejudice appear from the pleadings or surrounding circumstances and
no other grounds of potential prejudice were pertinently raised
by
the respondents, I find that the applicants have discharged the onus
of establishing that the respondents will not suffer substantial
prejudice by consolidating the two actions.
25.
The next argument raised by the respondent relates to the letter from
the applicant's attorney that the matter in case number
1388/14 can
be decided independent of any other litigation between the parties.
Mr Snellenburg SC who appeared for the respondents
conceded that
applicant's attorney would not be bound by a mistake in law.
In my view, even if the applicant's attorney
was mistaken and
formed his opinion on the facts, it would not without more preclude
the applicant from reconsidering
its
position. Respondents have
not made any allegations
which would, as a
consequence, preclude the applicant from reconsidering its position.
Accordingly, I do not find this to be a
valid ground to oppose the
application to consolidate the said actions.
26.
Turning
now
to
the
point
raised
by
respondents
that
applicant
had
not
explained
why
it
had
initiated
two
different
actions
and
that
consequently
the
consolidat
i
on
should
be
refused.
In
the
circumstances
of
this
case it
is
not
necessary
to
consider
whether
the
I
nternational
Tabacco
Company
case
[10]
i
s
still
good
authority
in
our
law,
because
on
the
facts
of
the
present
case,
case number 964/
1
4
was
instituted
by
another
party,
Suidwesfin,
as
an
interpleader.
On
these
facts,
applicant
did
not
make
a
decision
to
institute
two
separate
actions.
Accordingly,
there
is
no
substance
to
this
ground
of
opposition
to
the
application
to
consolidate.
27.
The next ground for opposing the consolidation application is that
Lusern Koning is not a party to case number 964/14.In this
regard,
the applicant has shown that the conduct of Lusern Koning is so
intimately wound up in the issues to be traversed in case
number
964/14 that in my view it would be both convenient and beneficial to
consolidate the two actions.
28.
Then on respondents' behalf, it was argued that the factual and legal
issues are not similar though some of the allegations
are repeated in
both matters. On this argument, all I need to do is to refer to the
analysis of the issues that emerge from the
pleadings set out above.
From such analysis, it emerges that the majority of issues to be
decided are common to both actions, that
it is only two issues that
are not common to both actions. The facts do not support this ground
for opposing the consolidation
application.
29.
The last argument raised by the respondents that still needs to be
considered is that respondents are not sure if there is a
clash of
interest between them and they are not sure if they would be using
the same legal team. In case number 1388/14 the Trust
and Lusern
Koning filed a combined plea. In consulting to take instructions to
draw such plea it would have been incumbent upon
their legal
representatives to establish whether there was a clash or potential
clash of interests. No such clash prohibited them
from filing a
combined plea.
30.
In the affidavits filed in the present application, neither the Trust
nor Lusern Koning drew attention to any specific or potential
clash
of interest. In these circumstances, to raise this issue in argument
is speculative at best and does not establish a basis
for either
prejudice or inconvenience.
31.
The applicant argued that a consolidation will eliminate the risk
inherent in multiple actions, being the risk of conflicting
findings
on fact and credibility in the same Division of this Court. In these
circumstances the applicant has established that
it is convenient to
consolidate the two matters. As set out above, the applicant has
established that there will not be substantial
prejudice to either
Lusern Koning or the Trust if both matters are consolidated.
32.
Considering the issues outlined above I find that it would be
convenient to consolidate the relevant actions.
33.
The last issue to consider is the question of costs of the
application to consolidate. In its Notice of Application to
consolidate
dated 19 September 2016, the applicant seeks a costs
order, whose effect is to reserve the question of costs for the court
that
hears the consolidated trial.
34.
In an application for consolidation this is the appropriate costs
order to make, because such court is best placed at the end
of the
day to determine whether the consolidation was in fact convenient to
the parties and the court. However, in the heads of
argument filed on
behalf of the applicant, it gave notice that it was now seeking a
punitive order for costs on an attorney and
client scale, including
the costs of Senior Counsel.
35.
In my view a punitive costs order against the respondents is
not justified in the present circumstances and the
appropriate
court to make a just and equitable costs order would be the court who
entertains the consolidated action.
In
the circumstances, the following order is made:
1)
That the actions pending in this Court between the abovementioned
parties under Case No: 1388/14 and Case No: 964/14 be and are
hereby
consolidated in terms of Rule 11 and that the said actions shall
hereafter proceed as one action.
2)
That the costs of this application shall be reserved for
determination by the trial Court hearing the consolidated action.
_______________________
Lawrence
Lever
Acting
Judge
Northern
Cape Provincial Division
On
behalf of Applicant :
Adv. G.M.E Lotz SC
Attorney's
on Record
: Duncan & Rothman Inc
On
behalf of Respondents : Adv N. Snellenburg SC
Attorney
's on Record :
Haarhoffs Inc
Date
of hearing
: 18 November 2016
Date
of Judgment
: 31 March 2017
[1]
Rail Commuters Action Group and Others v Transnet
Limited
and Others
2006 (6) SA 68
(C) at 888.
[2]
Mpotsha v Road Accident Fund and Another
2000 (4) SA 696
(C) at
7001-J.
[3]
Nel v Silicon Smelters (Pty)
Ltd
and Another
1
981
(4) SA
792
(A) at 801
0
-E
and 8028.
[4]
Rail Commuters Action Group v Transnet
Ltd,
above at 88A; Mpotshe v Road Accident
Fund,
above at 700H.
[5]
Rail Commuters Action Group v Transnet
Ltd,
above at 896.
[6]
Rail Commuters Action Group v Transnet
Ltd,
above at 89G-I.
[7]
New Zealand Insurance Co Limited v Stone and Others
1
963
(3) SA 63
at 696.
[8]
Above at 69C.
[9]
1
953
(
1
)
SA 241(W) at 243F.
[10]
Above.