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[2016] ZAGPPHC 676
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Rocla (Pty) Ltd v Burden & Swart Attorneys and Others (21573/2014) [2016] ZAGPPHC 676 (29 July 2016)
HIGH
COURT OF SOUTH AFRICA
(GAUTENG
DIVISION, PRETORIA)
Case
no.:21573/2014
Date:
29/7/2016
NOT
REPORTABLE
NOT
OF INTEREST TO OTHER JUDGES
REVISED
In
the matter between:
ROCLA
(PTY)LTD
Applicant
and
BURDEN
& SWART
ATTORNEYS First
Respondent
MARTIQ
1008
CC
Second
Respondent
J.J.D.
PIETERS
Third
Respondent
JUDGMENT
RABIE,
J
1.
By agreement between the parties two interlocutory
applications have been placed before this court for adjudication. The
first is
an application by the second respondent to compel the
applicant to comply with a Rule 35(14) notice served on it by the
second
and third respondents on 23 April 2014. The second is an
application by the applicant for the amendment of its description in
its notice of motion in the main application. Both applications,
which were both opposed, related to the main application which
was
brought by the applicant with a view to recovering an amount of R320
414, 10 from the respondent which amount, according to
the applicant,
was erroneously paid into the trust account of the first respondent
on 30 September 2013.
2.
The two applications were argued by the parties simultaneously
and in my view it is appropriate to give one judgement relating to
both the applications. For purposes of convenience I shall refer to
the parties as they were referred to in the main application.
3.
Before referring to the main application it may be necessary
to briefly refer to certain background facts. During October 2014 the
second respondent issued summons against the applicant for payment of
three sums of money totalling an amount of R320 414,10. All
three
amounts were for payment of goods sold and delivered by the second
respondent to the applicant. In its plea the applicant
denied the
averments in the second respondent's particulars of claim. The
applicant also filed a counterclaim against the second
respondent
for payment of the amount of R1 800 862,09 as damages resulting from
the alleged unlawful conduct of, inter alia, the
second respondent.
4.
The applicant was in the business of manufacturing and
supplying precast concrete products. The second respondent was in the
business
of manufacturing moulds and related products which could be
used by the applicant in its business. By mid- 2011 orders to the
value
of R19 809 482,99 had been placed with the second respondent.
According to the applicant it discovered during an internal
investigation
that two of its employees were in a corrupt
relationship with the second respondent, and more particularly its
sole member, the
third respondent, in terms of which the second
respondent would add a 10% surcharge to its ordinary price for
products and services
ordered by the applicant from the second
respondent. Such inflated invoices would be rendered to the applicant
and once paid, the
amount so added, would be paid to the aforesaid
two employees of the applicant. According to the applicant the
second respondent
also occasionally performed work for one of these
employees free of charge and that this employee and the third
respondent were
business partners in other ventures. According to the
applicant the aforesaid actions by both the two employees and the
second
and third respondents were unlawful and caused the applicant
to suffer considerable damages. The applicant reported the matter
to
the South African Police Services. Under these circumstances the
applicant denied being indebted to the second respondent in
any
amount but in turn claimed to be entitled to payment of damages in
the amount claimed in the counterclaim.
5.
Initially, and prior to the issue of summons, when demand was
made by the second respondent for payment of the amount of R 320 414,
10, which the applicant refused to pay, the applicant's attorney
wrote a letter dated 4 September 2012 to the first respondent,
who
had it all comes been the attorney of the second and third
respondents, setting out to the full version of the applicant
relating
to the aforesaid corrupt relationship. On 18 October 2012
the second respondent instituted action against the applicant for
payment
of the aforesaid amount.
6.
Subsequent to notice of plaintiffs intention to defend, the
second respondent launched an application for summary judgement on 21
November 2012 which was supported by an affidavit deposed to by the
third respondent. The applicant resisted the application and
presented its aforesaid version of events. On 31 January 2013 leave
was granted to the applicant to defend the second respondent's
action. The plea and counterclaim was delivered on 28 February 2013.
The second respondent pleaded to the applicant's counterclaim
on 8
April 2013 and delivered amended particulars of claim on 7 May 2013.
A trial date is presently being awaited.
7.
During or around June 2013 the applicant's holding company
decided to restructure its business and the businesses of some of its
subsidiaries. During this process it was decided by the applicant to
pay an amount of money equal to the amount claimed from
it by the
second respondent into the trust account of the applicant's attorneys
to be held there pending the final determination
of the second
respondent's action and the applicant's counterclaim. For this
purpose the banking details of the applicant's attorneys
were
provided to the applicant.
8.
However, when the instruction for payment eventually landed on
the table of a creditor's clerk in the employ of the applicant's
holding company, who was not
au fait
with the facts of the
matter, she erroneously paid the amount into the trust
account
of the first respondent, being the attorneys of the second
respondent, instead of into the trust account of the applicant's
attorneys. This amount was electronically transferred to that
account on 30 September 2013.
9.
On 14 November 2013 the first respondent acknowledged to the
applicant's attorneys the receipt of the aforesaid payment. It was
on receipt of this letter that the applicant and it's attorneys
realised that something had gone horribly wrong and on establishing
what had happened, commenced with steps to recover the monies
erroneously paid into the first respondent's trust account.
10.
All attempts to recover the money came to nought and it in
fact appeared that the first respondent had paid out the amount to
the
second respondent or the third respondent without recourse to the
applicant or its attorneys. It would seem that the respondents
regarded the payment as payment of the amount claimed and to which,
according to them, the second respondent was entitled. The
respondents consequently refused to pay back the money to the
applicant or its attorneys and after much correspondence between
the
respective attorneys, the applicant launched the main application
during March 2014 claiming back the amount of R230 414,
10 from the
respondents. The respondents opposed the application.
11.
The disputes between the parties in terms of the action and in
terms of the main application respectively, are thus not the same.
In
the action the disputes turn mainly on the fraud perpetrated on the
applicant and in the main application the disputeis whether
the
payment of the amount of R320 414, 10 was paid to the first
respondent's trust account in error and can be reclaimed.
12.
I shall now refer to the two
interlocutory applications which have to be decided by this court.
Although the second respondent's
application to compel was launched
prior to the applicant's application for an amendment, it is
appropriate to refer to the applicant's
application first.
13.
The application to amend the applicant's notice of motion
commenced with a Notice of Intention to Amend dated 22 July 2014.
Notice
was given that the applicant intended to amend its notice of
motion in the main application by "substituting the description
of the applicant therein, presently being 'Rocla (Pty)Ltd', with
'Rocla SA (Pty)Ltd"'. On 5 August 2014 the second and third
respondents filed a notice of objection to the proposed amendment.
The grounds upon which the objection was based, where the following:
According to the second and third respondents the proposed amendment
constituted a substitution of parties and that the procedures
referred to in Rule 28 (1) do not allow for such substitution of
parties. In the alternative it was submitted that the amendment
would
result in the notice of motion being in conflict with the founding
affidavit wherein it was stated that the applicant was
Rocla (Pty)
Ltd, and also in conflict with the documentation attached to the
founding affidavit which also refers to Rocla (Pty)
Ltd, and that the
amendment would therefore have the consequence of the notice of
motion being in conflict with the founding affidavit
and that Rule
28(1) does not make provision for the amendment of the founding
affidavit. Thirdly, it was stated that the first
respondent had
already filed its answering affidavit and will thus be prejudiced by
the proposed amendment as the rule makes no
provision for the first
respondent to file a further answering affidavit.
14.
From the evidence before this court it appears that after
receipt of the main application the first respondent conducted a
search
of companies registered under the name of the applicant.
Apparently it found two companies with the same name, Rocla (Pty)
Ltd,
one being a company which was apparently registered in 1980 but
which had subsequently been deregistered, and the second being a
company registered during October 2013.
15.
Since the second company was only registered after the parties
had stopped doing business with each other, the respondents in all
probability thought that the applicant was the first company which
had been deregistered and was thus a non-entity who could not
have
launched the main application. Whatever the respondents' thoughts
were, the aforesaid prompted the second and third respondents
to
serve a notice in terms of Rule 35(14) on the applicant's attorneys
in which the production of certain documents was called
for. The
notice was served on 23 April 2014.
16.
A number of documents were called for but two sets of
documents clearly related to the identity and status of the
applicant. The
applicant refused to disclose the documents mentioned
in the notice. In reaction, the respondents adopted different courses
of
action. The first respondent delivered an answering affidavit in
the main application and the second respondent, but not the third
respondent, brought an application to compel compliance with the rule
35(14) notice.
17.
The applicant opposed the application to compel and filed an
answering affidavit on 23 July 2014. In the answering affidavit the
applicant, inter alia, fully addressed the issue of the identity of
the applicant. One of the factors which came to the fore was
that
there was an error in the description of the applicant in the main
application. This resulted in the applicant filing a Notice
of
Intention to Amend on the day prior to the filing of the answering
affidavit in the application to compel, namely on 22 July
2014. In
the notice it was stated that the applicant intends to amend its
notice of motion in the main application "by substituting
the
description of the applicant therein, presently being 'ROCLA (PTY)
LIMITED', with 'ROCLA SA (PTY) LIMITED (registration number
1973/013163/07) (formerly Rocla (Pty) Limited)"'.
18.
As stated before, the second and third respondents objected
to the applicant's notice to amend its Notice of Motion. This
resulted
in the applicant filing an application to amend its notice
of motion on 18 August 2014. This application was, however, not
opposed
by the third respondent but only by the second respondent
who filed an answering affidavit on 3 October 2014. It is to this
application
which I shall now turn my attention.
19.
It is trite that the object of allowing an amendment is to
obtain a proper ventilation of the disputes between the parties and
to determine the real issues between them, so that justice may be
done. See Erasmus et al, Superior Court Practice at B1-178. In
Moolman v Estate Moolman
1927 CPD 27
, at p29, Watermeyer J stated
that "the practical rule adopted seems to be that amendments
will always be allowed unless the
application to amend would cause an
injustice to the other side which cannot be compensated by costs, or
in other words unless
the parties cannot be put back for the
purposes of justice in the same position as they were when the
pleading which it is sought
to amend was filed".
20.
A court accordingly considers prejudice or injustice to the
other side but the fact that an amendment may cause the other party
to lose its case against the party seeking the amendment is not,
however, the kind of prejudice which will dissuade the court from
granting it. It is in the light of these principles that the
applicant's application for amendment must be considered.
21.
In its founding affidavit the applicant explained that at the
time of the filing of the pleadings in the action, the applicant, as
defendant in the main claim and plaintiff in reconvention in the
counterclaim, was Rocla (Pty)Ltd. Subsequent thereto and as part
of a
reconstruction process, the applicant's name was changed, on 1
November 2013, to Rocla SA (Pty)Ltd. It would be recalled
that the
amount of R320 414, 10, which was according to the applicant
erroneously paid over to the respondents' attorneys, was
paid on 30
September 2013,
i.e.
approximately one month prior to the
applicant undergoing a name change. However, the name change was
effected prior to the launching
of the main application on 14 March
2014. Although it remained the same company who had done business
with the second respondent
and who defended the second respondent's
claim and had instituted the counterclaim, the main application
should have been instituted
citing the applicant by its new name of
Rocla SA (Pty)Ltd.
22.
According to the applicant it unfortunately neglected to
inform the applicant's attorneys before and at the time of the main
application
was drafted and issued, that the name of the applicant
had in the meantime been changed. It was as a result of this omission
that
the applicant was erroneously described in its founding papers
by its old name, Rocla (Pty) Ltd, instead of by its new name, Rocla
SA (Pty) Ltd. According to the deponent to the applicant's founding
affidavit in the main application, it also did not occur to
him at
the time that he signed the affidavit, that it contained the
aforesaid mistake. The error only came to the knowledge of
the
applicant's attorneys when the respondents alluded in their
affidavits to the two other companies referred to above.
23.
The
applicant explained that the company who had defended the action and
instituted the counterclaim was incorporated under the
name Rocla
(Pty) Ltd in 1973. It was also this company which made the erroneous
payment into the first respondent's trust account
in 2013. According
to the applicant the respondents could never have been in any doubt
that it was this company who launched the
main application for the
repayment of the amount erroneously paid.
24.
According to the applicant the
first company mentioned by the respondents which was registered in
1980 and which had since been
deregistered, was completely unknown to
it. The second company referred to by the respondents which was
registered during October
2013 was known to the applicant. The
applicant explained thatduring the restructuring process in 2013 the
applicant, Rocla (Pty)
Ltd, which was registered in 1973 under
registration number 1973/013163/07, sold its business to a shelf
company Newshelf 1261
(Pty) Ltd. In terms of a series of further
agreements this company was subsequently substituted as purchaser by
Newshelf 1265
(Pty) Ltd, which became a wholly-owned subsidiary of
Newshelf 1261 (Pty) Ltd. After the conclusion and implementation of
the said
agreements the name of Newshelf 1265 (Pty) Ltd was changed
to Rocla (Pty) Ltd. It was also during this time that the name of the
original Rocla (Pty) Ltd which was registered in 1973, was changed to
Rocla SA (Pty) Ltd.
25.
It seems clear that the opposition by the second and third
respondents was mainly prompted by the fact that their investigations
failed to uncover the name change of Rocla (Pty) Ltd which was
registered in 1973, into that of Rocla SA (Pty) Ltd during 2013.
Instead it uncovered a company which had long been deregistered and
which has nothing to do with the applicant and the name change
of the
shelf company into Rocla (Pty) Ltd, which was not the entity which
originally did business with the second respondent and
which was a
party to the action instituted by the second respondent.
26.
Consequently, it appears clearly from the evidence before this
court that the sole purpose of the amendment was simply to rectify
the applicant's description so as to ensure that its true identity is
reflected in the main application. The purpose or the fact
of the
amendment is not to substitute one party with another party, as the
respondents would have it and which, according to the
respondents, is
not permitted. Firstly a substitution can be effected by way of an
amendment under Rule 28 but such circumstances
need not be referred
to in the present case. It is clear from the applicant's founding
affidavit that the entity which brought
the main application is the
same entity which had been sued by the second respondent and which
had made the erroneous payment.
The application to amend is simply a
correction of the misdescription of the correct applicant. Such
misdescriptions are routinely
rectified by way of amendments in terms
of Rule 28.
27.
There is also no merit in the respondents' second ground of
objection that the amendment will result in the applicant'
description
in the notice of motion being at variance with that
contained in the founding affidavit. An affidavit constitutes
evidence and
it is not possible to amend an affidavit in terms of
Rule 28. Evidence may be rectified by the making of a further
affidavit, such
as the applicant had done
in casu.
The
discrepancy which might initially exist can cause no prejudice. The
respondents knew at all times that the main application
was brought
by the defendant party in the action and by no other entity and it is
clear that the correct description of that entity,
which was caused
by a formal name change, was sought by way of the amendment. Apart
from being the correct procedure to have been
followed, there can be
no prejudice whatsoever to the respondents if the amendment were to
be allowed.
28.
The respondents' third ground of objection was that the first
respondent will be prejudiced by the amendment because it had already
delivered its answering affidavit and would not have an opportunity
to file further affidavits if the amendment is allowed. I
agree with
the submission on behalf of the applicant that this objection is
also simply frivolous. Firstly, the first respondent
did not oppose
the amendment and it does not lie in the mouth of the second
respondent to complain about prejudice that the first
respondent may
allegedly suffer. Secondly, it is simply not correct to say that the
first respondent would not have an opportunity
to supplement its
answering affidavit if the amendment is allowed. Rule 28(8) expressly
provides for such a right and the court
can in any event allow such
a party to supplement its papers.
29.
It is further difficult to envisage any prejudice or injustice
the proposed amendment can possibly cause to the respondents. The
sole purpose of the amendment was to rectify the applicant's
description so as to ensure that the respondents can be under no
misapprehension as to its true identity and to facilitate the proper
ventilation the disputes between the parties. The respondents
can at
this point have no doubt that the applicant is in fact the entity
with which the second respondent had done business all
along and
against which it had issued summons. The amendment does not seek to
introduce a new unknown entity in substitution of
an existing party.
30.
I agree with the submission on behalf of the applicant that
the grounds of objection were so devoid of any merit that it cannot
be said that anything else was intended but to confuse the issues and
to inconvenience the applicant. Consequently the applicant's
application for amendment should succeed.
31.
In respect of costs both the second and third respondents
objected to the proposed amendment and thus resulted in the
applicant
being forced to file a substantive application for the
aforesaid amendment. The third respondent was the deponent of the
answering
affidavit filed on behalf of the second respondent. The
fact that the third respondent did not file his own answering
affidavit
does not change the fact that they have made common cause
by both objecting to the proposed amendment. Consequently, in my
view
,
the second and
third respondents should be ordered jointly and severally to pay the
costs of the amendment application.
32.
This brings me to the second interlocutory application to be
decided. The second respondent served a notice in terms of rule 35
(14) on the applicant requiring the applicant to make available for
inspection and copying a large number of documents for purposes
of
drawing and filing an answering affidavit. The notice followed the
wording of rule 35 (14) except inasmuch as same was modified
to apply
to an application proceeding as opposed to an action proceeding.
33.
The notice did not specify why the documents called for were
required for purposes of drawing and filing the second respondent's
answering affidavit.
34.
It is trite that rule 35 (14) does not apply to motion
proceedings unless and until a direction to that effect has been
issued in
terms of rule 35 (13). Rule 35 (13) provides that "The
provisions of this rule relating to discovery shall mutatis mutandis
apply, in so far as the court may direct, to applications." A
direction by the court in terms of rule 35 (13) is an essential
prerequisite for a notice in terms of rule 35 (14) and the failure to
obtain such a prior direction is fatal to an application
to compel. I
agree with the submission on behalf of the applicant that the second
respondent's application to compel should be
dismissed for this
reason alone.
35.
The second respondent neither sought nor obtained any
direction in terms of rule 35 (13) and the provisions of rule 35
(14) are
consequently not applicable and not available for the
second respondent in respect of the main application. If the second
respondent
wished to rely on rule 35 (14) to obtain the discovery of
the documents referred to in the rule 35 (14) notice, it first
needed
to bring an application for a direction in terms of rule 35
(13). It is immaterial at this stage whether such an application
would
have been successful but it may be pointed out that such a
direction is not available for the mere asking. See Moulded
Components
and Rotomoulding South Africa Pty Ltd v Coucourakis and
Another
1979 (2) SA 457
(W) at 470 D-E. Over and above this
difficulty, rule 35 (14) can in the case of an action procedure only
be relied on when documents
called for are essential, and not merely
useful, for purposes of pleading.
36.
During argument counsel on behalf of the second respondent
only moved for an order in respect of the documents referred to in
paragraphs
3, 8, 12 and 13 of the Notice. I have considered the
submissions in respect of the reasons offered why the documents in
these paragraphs
should be discovered but have not been convinced
that even if rule 35 (14) were to have been applicable, the second
respondent
would have been entitled to discovery of the documents
mentioned in those paragraphs.
37.
Upon refusal by the applicant to accede to request in the Rule
35 (14) notice, the second respondent filed an application to compel
the applicant to comply with the said notice. However, in the notice
of motion of the application to compel the second respondent
added a
reference to rule 35(12) in the first prayer which reads as follows:
"Directing the applicant to comply with the respondent's
Rule
35(14) Notice (read with Rule 35(12)) dated 22 April 2014, excluding
item 11 thereof;". This reference to rule 35 (12)
is an attempt
by the second respondent to also rely on this rule for purposes of
discovery of the documents referred to in the
Notice in terms of
rule35(14).This attempted reliance in the application to compel on
rule 35 (12) is misplaced and unjustified.
An application to compel
the production of documents in terms of rule 35 (12) has to be
preceded by a notice in terms of rule 35
(12). There was no such a
notice
in casu.
Consequently rule 30A, which governs an
application to compel, cannot be complied with for it requires a
failure by a party to comply
with a notice given pursuant to the
rules. The applicant couldn't comply to a notice in terms of rule 35
(12) if same had not
been given to it. There was thus no obligation
on the applicant to make documents available to the second respondent
without it
having been properly called upon to do so in terms of an
applicable rule on which rule 35(14) it was not entitled to bring an
application to compel compliance with rule 35 (12), even if rule 35
were applicable to the proceedings.
38.
In the light of the aforesaid it is not necessary to deal with
the submissions by the applicant that rule 35 (12) is in any event
not applicable since no reference was made to documents in the
applicant's affidavit and furthermore since the listed documents
are
wholly irrelevant to the real issues in the main application.
39.
During argument the second respondent also relied on rule 35
(11) and the court's inherent power to order the production of
documents
even if they are not discoverable in terms of rule 35 (12)
or (14). The court has an inherent power to order the production of
documents in appropriate cases. However, the relief sought by the
second respondent in its application was one compelling the applicant
to comply with the second respondent's rule 35 (14) notice and no
case was made out why the court should exercise its discretion
in
terms of rule 35 (11).
40.
If the second respondent wished any of the rules pertaining to
discovery to apply to the main application, it should have given the
required notice, where applicable, and brought a properly motivated
application. Different principles govern the different procedures
envisaged in rule 35 and a respondent party is entitled to know what
it faces when confronted with a particular application. A
party
cannot be allowed, such as which the second respondent is asking this
court to allow, to jump from one rule to another as
and when the shoe
pinches. Consequently, the second respondent's application should be
dismissed.
41.
As far as costs are concerned, there is no reason why costs
should not follow the event in respect of the application to compel.
42.
In the result the following order is made:
1.
Leave is granted to the applicant to amend its notice of motion in
the above matter by substituting its description, being "Rocla
(Pty) Limited" with "Rocla SA(Pty)Limited (registration
number 1973/0131 63/07) (formerly Rocla (Pty) Limited)".
2.
The second and third respondents are ordered jointly and severally to
pay the costs of the application for leave to amend.
3.The
application to direct the applicant to comply with the second
respondent's Rule 35 (14) Notice is dismissed.
4.The
second respondent is ordered to pay the costs of the application to
direct the applicant to comply with the second respondent's
Rule
35(14) Notice.
C.P.
RABIE
JUDGE
OF THE HIGH COURT