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[2017] ZAKZDHC 11
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Pharo v Futter and Another (1206/2016) [2017] ZAKZDHC 11; 2018 (2) SACR 192 (KZD) (20 March 2017)
IN
THE HIGH COURT OF SOUTH AFRICA
KWAZULU-NATAL,
LOCAL DIVISION, DURBAN
REPORTABLE
CASE
NO:
1206/2016
In
the matter between:
SHAWN
PHARO
Plaintiff
and
ALAN
CRAIG
FUTTER
First
Defendant
PIET
GROVE
Second
Defendant
ORDER
(a)
The exception is upheld.
(b) Paragraphs 19 and 31
and prayers 21.3 and 33.3 of the particulars of claim are struck out.
(c) The plaintiff is
ordered to pay the costs of the exception.
JUDGMENT
Delivered
on: 20 March
2017
PLOOS
VAN AMSTEL J
[1]
This matter came before me by way of an exception to the plaintiff’s
particulars of claim. His claim is for confirmation
of the
cancellation of an agreement, restitution of a sum of R100 000
which he had paid pursuant to the agreement and damages
in an amount
of R1 846 695.
[2]
It is averred in the particulars of claim that the parties concluded
a written agreement in January 2011 in terms of which they
would, as
partners and under the name Alpi Oil, engage in the business of
refining used oil for sale to an entity called Tribolube.
The
plaintiff would acquire a 20% interest in the partnership, for which
he had to pay the defendants a sum of R225 000. An
amount of
R100 000 was payable on signature of the agreement and the
balance over time, out of his share of the profits. The
agreement
provided that one third of the capacity of a certain plant would be
given to the plaintiff for the purposes of resale.
[3]
The case pleaded by the plaintiff is that the defendants made various
representations to him, in particular relating to a machine
which
they said they had built, which was capable of cleaning and refining
oil. He says he was induced by these representations
to enter into
the agreement and pursuant thereto he paid a sum of R100 000 to
the defendants as a part payment towards his
share in the
partnership. He claims that these representations were false, that
the machine was not capable of doing what had been
represented to
him, that the defendants knew their representations were false and
that their intention was to make him part with
his money. He
accordingly cancelled the agreement and claims restitution of the
R100 000 which he had paid. There is no difficulty
with this
claim and it is not the target of the exception which has been taken.
[4]
The exception relates to a claim for loss of profits which the
plaintiff says he would have made had the agreement been successfully
implemented. He pleads that he would have received at least 10 000
litres of oil per month and over a period of forty seven
months would
have earned a profit of R940 000, plus a further sum of
R906 695, representing 20% of the profit which the
first
defendant had represented to him the partnership would have earned
over a period of five years. In the alternative he pleaded
that the
representations were made negligently.
[5]
The first defendant gave the plaintiff a notice to remove the cause
of the complaint, which was that the particulars were vague
and
embarrassing. The plaintiff was unmoved by the notice and the first
defendant filed a notice of exception. The basis of it
was that the
particulars of claim relating to the damages claim were vague and
embarrassing, alternatively that they lacked sufficient
averments to
sustain a cause of action. The excipient points out that the
plaintiff cancelled the agreement on the basis of fraudulent,
alternatively negligent, misrepresentations, and that his claim for
damages is based in delict. It contends that the measure of
his
damages is to put him in the position he would have been in had the
delict not been committed, not to put him in the position
he would
have been in had the misrepresentations been true.
[6]
This is correct and in accordance with our law of delict.
[1]
If the misrepresentations had not been made the plaintiff would not
have entered into the agreement. In that event he would not
have
earned any of the profits which he now seeks to claim.
[7]
The case relied on by the plaintiff,
Transnet
Ltd v Sechaba Photoscan (Pty) Ltd
[2]
is distinguishable and of no assistance to him. The court held in
that case that a claim for prospective loss of profits can be
made as
delictual damages. That is nothing new. Damages are regularly awarded
for loss of future income in personal injury cases.
The principle
however is that the plaintiff has to be put in the position in which
he would have been had the delict not been committed.
[8]
In the
Transnet
case the court found that if the delict, which
was fraud, had not been committed the plaintiff would have been
awarded the tender,
would have acquired the printing business which
was the subject of the tender and would have made profits out of the
business.
In other words, in order to put it in the position it would
have been in had the delict not been committed it was necessary to
award it damages for loss of profits.
[9]
That is not the case here. If the delict were not committed there
would have been no contract and no profits. The claim for
loss of
prospective profits is therefore unsustainable.
[10]
Counsel for the plaintiff however submitted that an exception is not
the right procedure as the claim arises out of the same
cause of
action as the claim for R100 000 which is not covered by the
exception. She referred to
Putco
Ltd v Radio Guarantee Co (Pty) Ltd
[3]
where Nicholas J said that an exception cannot validly be taken to a
declaration on the ground that it does not support one of
several
claims arising out of one cause of action. The learned judge relied
for this statement on
Dharumpal
Transport (Pty) Ltd v Dharumpal
.
[4]
[11]
Dharumpal
was decided before the Uniform Rules were promulgated. The rules
which governed exceptions in this province at that time were rules
55
and 56 of Order XI of the Natal Rules of Court. Rule 55 provided for
an exception where the pleading concerned contained averments
not
sufficient in law to sustain in whole or in part the action or
defence, as the case may be. The plaintiff’s claim was
for the
balance of the purchase price of a number of buses, tools and spares,
plus interest. The defendant filed two exceptions,
one in respect of
the balance of the purchase price and the other in respect of the
interest. Hoexter JA pointed out that both
claims arose out of one
cause of action, namely the breach of the sale agreement. He said
that if the averments in the declaration
were sufficient to sustain
the claim for the balance of the purchase price, then, even if they
were not sufficient to sustain the
claim for interest, they were
sufficient to sustain the claim
in
part
.
This was a reference to the wording of rule 55, namely ‘…not
sufficient in law to sustain in whole or in part the
action or
defence…’. He added:
[5]
‘
The excipient is not entitled
to have the declaration set aside because it is not sufficient to
sustain both the major and
the minor claims in the action. That
is nevertheless what the excipient asks the Court to do in his first
exception. He excepts
to the whole declaration on the ground that the
averments therein do not sustain merely the minor claim. In my
opinion such an
exception cannot be countenanced in the face of the
express words of rule 55’.
[12]
At 706E Hoexter JA said:
‘
The main purpose of the
exception that a declaration discloses no cause of action is to avoid
the leading of unnecessary evidence.
That purpose cannot be served by
taking exception to a declaration on the ground that it does not
support one of several claims
arising out of one cause of action. In
the present case, for instance, the upholding of the exception that
the declaration does
not support the minor claim would make no
difference whatever to the evidence to be led at the trial.’
[13]
Rule 23(1) of the Uniform Rules provides for an exception where any
pleading is vague and embarrassing or lacks averments which
are
necessary to sustain an action or defence. The words ‘in whole
or in part’ do not appear in rule 23, and never
did.
[14]
Dharumpal
was
therefore decided on a rule with a different wording than the current
rule 23. Further, upholding an exception on only one of
the two
claims would not have resulted in less evidence being required. In
Barclays
National Bank Ltd v Thompson
[6]
Van Heerden JA said, with reference to
Dharumpal
,
that it has been said that the main purpose of an exception that a
declaration does not disclose a cause of action is to avoid
the
leading of unnecessary evidence at the trial. He also said that the
function of a well-founded exception that a plea, or part
thereof,
does not disclose a defence to the plaintiff’s cause of action
is to dispose of the case in whole or in part. He
said it is for this
reason that exception cannot be taken to part of a plea unless it is
self-contained, amounts to a separate
defence, and can therefore be
struck out without affecting the remainder of the plea.
[15]
In
Lampert-Zakiewicz
v Marine & Trade Insurance Co Ltd
,
[7]
a full bench decision, De Kock J said the remedy of an exception is
available where the exception goes to the root of the opponent’s
claim or defence. If, for example, there is a point of law to be
decided which will dispose of the case, in whole or in part, the
proper course is to proceed by way of exception. In that case the
exception was aimed at a part of the plea which concerned a claim
for
future loss of earnings. It was held that the issue raised by the
exception was a separate and distinct one which should, if
possible,
be decided on exception despite the existence of other machinery,
such as rule 33, by means whereof it could be decided.
De Kock J
pointed out that, depending on which way the exception went in the
case, evidence as to future loss of earnings would
or would not be
necessary at the trial.
[16]
In the present matter there are two distinct claims in the
particulars of claim. The first is for restitution of the payment
of
R100 000 by virtue of the cancellation of the agreement. The
only evidence it requires relates to the validity of the
cancellation. The second is for damages in the sum of R1 846 695
which the plaintiff says represent the profits he would
have earned
over a period of five years if the contract was fully and properly
executed. Evidence will have to be led as to the
likely performance
and profitability of the business over a period of five years. I
have already found that this is not a
valid claim and the leading of
evidence to support it will be a waste of time and money. The claim
is bound to fail.
[17]
In
Telematrix
(Pty) Ltd v Advertising Standards Authority SA
[8]
Harms JA said exceptions should be dealt with sensibly. They provide
a useful mechanism to weed out cases without legal merit.
An over –
technical approach destroys their utility.
[18]
I am satisfied that the damages claim is sufficiently distinct and
separate from the claim for restitution to be susceptible
to an
exception. I do not see why the excipient should be put to the
expense and time of dealing with the unsustainability of the
claim as
a separate issue in terms of rule 33.
[19]
I make the following order:
(a)
The exception is upheld.
(b)
Paragraphs 19 and 31 and prayers 21.3 and 33.3 of
the particulars of claim are struck out.
(c)
The plaintiff is ordered to pay the costs of the
exception.
Appearances:
For
the Plaintiff
:
N Beket
Instructed
by
:
Gishen-Gilchrist Inc
c/o Northmore Montague
Durban
For
the 1
st
& 2
nd
Defendants
:
J Nicholson
Instructed
by
:
Shepstone & Wylie Attorneys
Date
Judgment Reserved
:
23 February 2017
Date
of Judgment
:
20 March 2017
[1]
Ranger v Wykerd and another
1977 (2) SA 976
(A) at 987.
[2]
Transnet Ltd v Sechaba
Photoscan (Pty) Ltd
2005
(1) SA 299 (SCA)
[3]
Putco Ltd v Radio Guarantee
Co (Pty) Ltd
1984 (1) SA
443
(W) at 456.
[4]
Dharumpal Transport (Pty)
Ltd v Dharumpal
1956 (1)
SA 700 (A).
[5]
Dharumpal
supra at 705C-D.
[6]
Barclays National Bank Ltd
v Thompson
1989 (1) SA 547
(A) at 553 G-H.
[7]
Lampert-Zakiewicz v Marine
& Trade Insurance Co Ltd
1975
(4) SA 597 (C).
[8]
Telematrix (Pty) Ltd v
Advertising Standards Authority SA
2006 (1) SA 461
(SCA) para 3.