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[2015] ZAGPPHC 63
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Tourvest Holdings (Pty) Limited v Henning (20239/13) [2015] ZAGPPHC 63 (11 February 2015)
IN
THE HIGH COURT OF SOUTH AFRICA
GAUTENG
DIVISION, PRETORIA
CASE NO: 20239/13
DATE: 11 FEBRUARY
2015
NOT REPORTABLE
NOT OF INTEREST
TO OTHER JUDGES
In the matter
between:
TOURVEST
HOLDINGS (PTY)
LIMITED
...........................................................................
Plaintiff
and
SOLOMON
JOHANNES
HENNING
.................................................................................
Defendant
JUDGMENT
Tuchten
J
:
1 The plaintiff sues
the defendant for damages in delict. The defendant is a practising
attorney. I shall refer to him as Mr Henning.
In summary, the
relevant allegations made by the plaintiff in its particulars of
claim are the following:
1.1 On 16 July 2009,
the plaintiff mistakenly paid R754 740 into the bank account of Tulah
Trading (Pty) Limited (Tulah) held at
the Standard Bank.
1.2
On two occasions
1
during 2009, the plaintiff sent letters to Mr Henning in his capacity
as attorney for Tulah and/or Pascal Monkam jnr
2
stating that the payment had been made in error, that Tulah was not
entitled to these funds and that if Tulah did not repay the
money,
the plaintiff would institute action for the recovery of the amount.
1.3 Mr Henning said
that he would take instructions from Tulah and/or Monkam and revert
to the plaintiff.
1.4 Mr Henning did
not revert to the plaintiff. Instead, he took out a writ on behalf of
Monkam and caused the amount of R592 641,49
standing to the credit of
Tulah at the Standard Bank to be attached and paid over ultimately to
Monkam.
1.5 Mr Henning did
not tell the plaintiff of the attachment of the funds and the payment
to Monkam.
1.6 Mr Henning knew
that the attachment and payment to Monkam would frustrate any attempt
by the plaintiff to recover the amount
from Tulah.
1.7 Mr Henning’s
conduct was unlawful in that he “acted in constructive contempt
of Court in that [such conduct] was
designed and executed in a manner
to effectively frustrate any attempt by the Plaintiff to recover the
amount erroneously paid
to Tulah”.
1.8 Tulah was not
able to repay the amount erroneously paid and the plaintiff, unable
to recover the amount from Tulah, has suffered
damages in the sum
attached and paid to Monkam, ie R593 641,49.
2
The case I have summarised is the case that the plaintiff sought to
prove. The plaintiff bore the onus on all the issues raised
by the
plaintiff in its particulars of claim. The plaintiff also alleged in
its particulars that the money paid into Tulah’s
account at the
instance of the plaintiff was
res
litigiosa,
which
it was not. As the plaintiff did not persist in this allegation, I
need not deal with it.
3 Mr Henning raised
certain following defences in his plea. Firstly, prescription, on the
basis that the plaintiff’s cause
of action arose more than
three years before the summons was served, which is correct. The
plaintiff’s answer to this, pleaded
in the particulars of
claim, was that it only became aware of the Mr Henning’s
conduct on or about 13 May 2012. Section 12(d)
of the Prescription
Act provides:
A debt shall not be
deemed to be due until the creditor has knowledge of the identity of
the debtor and of the facts from which
the debt arises: Provided that
a creditor shall be deemed to have such knowledge if he could have
acquired it by exercising reasonable
care.
4 The onus in
relation to the prescription defence rests on Mr Henning. The
uncontradicted evidence on behalf of the plaintiff shows
that the
plaintiff indeed did not know of the actions of Mr Henning until
2012. The plaintiff served its summons in this action
on Mr Henning
in 2013. The prescription plea was not argued by counsel for Mr
Henning and there was no suggestion in the evidence
or argument that
the plaintiff had the necessary knowledge before 2012 or could have
acquired the necessary knowledge by exercising
reasonable care. The
plea of prescription is dismissed.
5 On the merits of
the claim, Mr Henning admitted in his plea having received the two
letters pleaded, dated 7 September and 13
November 2009 respectively.
He specifically denied ever acting as attorney for Tulah. He asserted
that he
acted by virtue of a
normal relationship from his client;... just carried out his mandate
from his client;... [and] acted in good
faith at all times.
Mr Henning asserted
that he had no knowledge whether Tulah had any rightful claim to the
amount deposited. He denied that the writ
or the attachment
frustrated any attempt by the plaintiff to recover the money from
Tulah, that he was in constructive contempt
of court or that his
actions were unlawful. He denied further that the plaintiff only
found out what the defendant had done on
13 May 2012. He denied that
his conduct had caused the plaintiff to suffer any damages.
6 The background to
the present dispute, probably entirely unknown to the plaintiff
during 2009, was that Monkam and Mr Monkam snr
were engaged in a
protracted commercial dispute. There were numerous applications to
court, orders of court made and varied and
appeals noted. In
addition, there was an arbitration before Van den HeeverSC of the
Pretoria Bar (the arbitrator) which resulted
in several awards. There
was a suggestion in evidence that one of the awards is the subject of
a pending review. I told counsel
during the course of the trial that
I would not act on the say so of any witness in relation to any of
these proceedings and that
I required the court documents before I
found that any such proceeding had taken place and what its outcome
was. The proceedings
to which I refer in the course of this judgment
are those in respect of which adequate proof has been provided.
7 The final award of
the arbitrator is dated 11 March 2009.1 summarise the relevant
background facts as they appear from the final
award. On 16 August
2007, Rabie J ordered in this court that the Pretoria Bar Council
appoint an arbitrator to determine the dispute
between Mr Monkam snr
and Monkam in respect of the directorship and ownership in five named
companies, ie Hoopstraat Beleggings
(Pty) Ltd (Hoopstraat), Tulah,
Madeleine Properties (Pty) Limited (Madeleine), Monkam Holdings (Pty)
Limited and Monkam Investment
Properties (Pty) Limited (in
liquidation. Van den Heever SC was duly appointed as arbitrator.
8 The then attorney
for Monkam sought leave to appeal against the order of Rabie J. Leave
was refused, as was a petition to the
SCA. Mr Monkam snr delivered a
statement of claim in June 2008, claiming certain relief pertaining,
inter alia, to the shares and
loan accounts in Hoopstraat, Monkam
Investment Properties and Madeleine and asking that the appointment
of Monkam as a director
in these companies be set aside.
9 In his statement
of defence, Monkam pleaded that he had bought the entire
shareholdings in Hoopstraat and Monkam Investments and
that the
entire shareholding in Madeleine had been donated to him by Mr Monkam
snr.
10 Monkam went on to
allege that he had, pursuant to a mandate from Mr Monkam snr, set up
the Fusie Trust, into which Monkam pleaded
he transferred the shares
in Hoopstraat and Monkam Investments.
11 The disclosure
that these shares were held by the Fusie Trust prompted Mr Monkam snr
to bring an urgent application in this court
under case no. 42005/08
for the joinder, in the arbitration, of the trustees of the Trust,
one of whom was Monkam himself. Monkam
opposed the application for
joinder on a legal ground: that arbitration being a matter of
agreement, the trustees of the Trust
could only be joined with their
agreement, which had not been given.
12 The application
for joinder came before Makgoba J on 25 September 2008. The learned
judge rejected the point raised in opposition
to the joinder and
granted an order for the joinder of the trustees in the Trust.
13 At this point, on
about 6 October 2008, Monkam’s attorneys withdrew and were
replaced by a different firm, which came on
record as attorneys for
all the defendants in the arbitration, ie Monkam and the trustees of
the Trust (whom I shall call collectively
the arbitration
defendants). The new legal representatives for the arbitration
defendants asked for a postponement. On 29 October
2008, an interim
award was made, postponing the arbitration by agreement to 23
February 2009. This interim award also directed
discovery by 14
November 2008.
14 The arbitration
defendants, however, did not discover as directed. On 8 December
2008, by notice of motion directed to the arbitrator,
Mr Monkam snr
applied to strike out Monkam’s plea and counterclaim for
failure to discover.
15 On 12 January
2009, a further interim award was made, directing discovery by 23
January 2009 and providing in terms that failure
to make discovery
would result in the arbitration defendants’ plea and
counterclaim being struck out. Monkam, in his personal
and
representative capacities, discovered on 23 January 2009. This
prompted a notice in terms of rule 35(3), to which there was
no
response. Mr Monkam snr then moved to compel compliance with this
notice.
16 The application
to compel compliance with the notice in terms of rule 35(3) led to a
further interim award being made by agreement
on 18 February 2009:
the arbitration defendants were ordered to make further discovery by
the next day, failing which the arbitration
defendants’ plea
and counterclaim would be struck out.
17 On 23 February
2009, yet another interim award was made: inter alia, the trustees
other than Monkam, who had up to then apparently
been represented
together with Monkam by the same attorneys and counsel were granted
the opportunity of engaging their own attorney;
the issues relating
to Madeleine were to be decided separately from and before all the
other issues disclosed in the arbitration
pleadings; and Monkam’s
plea and counterclaim in relation to Madeleine were struck out.
18 On 26 February
2009, after evidence was led, the arbitrator made an award directing,
inter alia, Monkam to deliver the share
certificates in respect of
the entire shareholding of Madeleine together with duly completed
transfer forms to Mr Monkam snr, declaring
Mr Monkam snr the sole
beneficiary of all the loan accounts in Madeleine and setting aside
the appointment of Monkam as a director
of Madeleine. The arbitration
was then adjourned to 27 February 2009.
19 On 27 February
2009, the present defendant, Mr Henning, appeared at the arbitration
on behalf of Monkam and all the other defendants.
Monkam himself was
also present at the arbitration. The arbitrator recorded that this
was the first time that Monkam had himself
been physically present at
the arbitration. Mr Henning sought a postponement to enable him to
prepare. This request led to a further
interim award. The arbitration
was postponed and Monkam directed to pay certain costs. If those were
not paid by 6 March 2009,
the defence of the arbitration defendants
would be struck out and Mr Monkam snr would be entitled to proceed
with the arbitration
by default.
20 Mr Henning made
submissions to the arbitrator in relation to costs and to that extent
the award was made against Mr Henning’s
submissions. On 11
March 2009, Pelser SC appeared at the arbitration on the instructions
of Mr Henning. Pelser SC told the arbitrator
that the costs order
against Monkam had been irregular because Mr Henning had not been
representing Monkam in his personal capacity.
I may say that this
conflicts with what Mr Henning told me in the witness box.
21 Pelser SC then
asked that the arbitration be adjourned to enable the trustees to
challenge the order made by Makgoba J on 25
September 2008. Leave to
appeal against this order had been refused by Makgoba J on 9 February
2009. The trustees had apparently
decided to seek leave (out of time)
to appeal to the SCA.
22 The arbitrator
refused the adjournment and proceeded with the arbitration. Monkam
had not complied with the award of 18 February
2009 and the
arbitrator made an award directing the defendants in the arbitration
to deliver the entire shareholdings in Hoopstraat
and Monkam
Investments to Mr Monkam snr, declared Mr Monkam snrthe sole
beneficiary of the loan accounts in these two companies
and set aside
the appointments of Monkam as a director of these two companies.
23 I was told in
evidence that the SCA had granted leave to appeal against the joinder
order but no order to that effect is before
me. There is an
indication in the documents that Monkam may have brought a review
application in relation to one or other of the
arbitration awards.
There is a document before me which appears to be a draft “notice
of review”, which it was alleged
by the attorney for Mr Monkam
snr related to Hoopstraat and Monkam Investment. As I have said,
unless the court file, or an agreed
set of documents is placed before
me, I cannot find that any order as alleged or, indeed, any such case
exists. I was also told
that there are settlement discussions pending
between Mr Monkam snr and Monkam and that further litigation between
those parties
is presently in abeyance.
24 Mr Henning said
in evidence that he had accepted a mandate to act for Monkam the
night before his appearance before the arbitrator
on 27 February
2009, having been asked to take Monkam’s case by Monkam’s
previous attorney. Mr Henning met Monkam for
the first time on the
day he first attended the arbitration.
25
Mr Henning testified that he was invited by counsel for Mr Monkam
snr, S Maritz SC, to attend an informal lawyers’ meeting
at
which the various legal representatives took refreshments and chatted
about the case in which they were involved. During that
meeting, Mr
Henning said, S Maritz SC told him that the Monkam family were from
the Cameroons and were the richest family in that
country; indeed the
Ruperts
3
of the Cameroons. On the strength of this remark, which Mr Henning
said was merely made in passing, Mr Henning said he concluded
that
all the bank accounts of the companies at issue between Mr Monkam snr
and Monkam had large credit balances. These bank accounts,
Mr Henning
said, included that of Thula.
26 Mr Henning also
testified that he at no time took a statement from Monkam or attended
a comprehensive consultation at which the
history of the dispute and
other relevant matters were canvassed. I would find this evidence
improbable if Mr Henning were merely
acting for Monkam without the
assistance of counsel. But in this case, Mr Henning briefed Pelser
SC, a reputable silk at the Pretoria
bar. It is improbable that
counsel attended to his brief in so slapdash a fashion and of course
if there were such a consultation,
Mr Henning as the instructing
attorney would have been present. Mr Henning has at all relevant
times conducted a one man practice
and was himself responsible for
drawing many of Monkam’s pleadings and affidavits. Commercial
litigation between family members
is notoriously complex. On Mr
Henning’s version, he was not at risk for fees. In these
circumstances, I find Mr Henning’s
unsupported allegation that
he had not comprehensively consulted with Monkam shortly after he
began to act for Monkam highly improbable.
27 In this context,
I do not overlook Mr Henning’s unchallenged evidence that he
suffered emotional distress during this period
when a family member
was the victim of violent crime in September 2009. As a result, he
said, he neglected his practice for several
months.
28
The Pretoria Hotel is owned by Madeleine. Up until the award of 26
February 2009,
4
all the revenue of the Monkams’ revenue generating assets,
including the Pretoria Hotel, was received into the bank account
of
Thula. I shall refer to this as the treasury arrangement. Ms Suisie
Monkam, Monkam’s sister, is now the sole director
of Madeleine.
She testified that after the award of 26 February 2009, she opened a
new bank account for Madeleine with the Standard
Bank and notified
all Madeleine’s debtors accordingly. The operation of the
treasury arrangement thus ceased when Madeleine’s
new bank
account was opened.
29 The plaintiff was
one of Madeleine’s debtors. The plaintiff arranges tours and
reserves accommodation for the tour members
in its own name. From at
least 7 July 2009 Madeleine gave in its invoices to the plaintiff
details of this new account as the account
into which Madeleine
required the plaintiff to make payments to Madeleine. The amount due
by the plaintiff to Madeleine in July
2009 was R754 740. From this it
follows that by 7 July 2009, the treasury arrangement had ceased to
operate.
30 Mr Yorick Fisch
was the employee within the plaintiff responsible for paying
Madeleine. Mr Fisch died at a young age and was
therefore not
available to the plaintiff as a witness. Fisch paid the sum due into
Thula’s account, as he had done before.
The plaintiff’s
case was that this payment was made in error. There can be no dispute
at this level. The payment was clearly
made in error. On the
probabilities Fisch did not realise that the bank account into which
the plaintiff was required to pay what
it owed Madeleine had changed.
31 In August 2009,
Fisch disclosed the error he had made to Ms Folli, the plaintiffs
chief financial officer. Ms Folli instructed
Fisch to telephone the
owner of the Pretoria Hotel. Fisch contacted Monkam. The probability
is that Fisch was unaware of the battle
between father and son for
control of the Monkam assets. At this stage Mr Monkam snr had taken
control of Madeleine and its assets
pursuant to the arbitration award
of 26 February 2009 but Monkam did not disclose this to Fisch.
Instead, Monkam referred Fisch
to “his attorney”, Mr
Henning, and supplied Fisch with Mr Henning’s cellphone number.
32 Fisch had a
telephone conversation with Mr Henning on 7 September 2009. He then
wrote a letter to Mr Henning on the same date.
It reads, under the
heading “re: Erroneous deposit - Tulah Trading (Pty) Ltd”:
With reference to
the above and our telephonic conversation dated 07 September 2009
regarding erroneous deposit of R754 740.00 into
the bank account of
Tulah Trading (Pty) Ltd dated 16 July 2009. This was for services
rendered at Pretoria Hotel to Tourvest Travel
Services.
Attached please find
all documentation that these monies were meant for Pretoria Hotel
(Madeleine Properties (Pty) Ltd and not for
the bank account in the
name of Tulah Trading.
We have attempted
with our bank to reverse the funds, but as they could not get in
contact with the account holders at the time,
we have yet to recover
these monies.
We have in the
meantime received a letter of demand from the attorneys of Madeleine
Properties and hereby urge you to assist us
with this matter soonest.
Should further
information be required, please contact the undersigned.
33 By summons dated
15 September 2009, taken out in this court under case no. 57864/09,
Madeleine sued the plaintiff for the sum
in question. The plaintiff
conceded the correctness of Madeleine’s claim and paid the sum
of R754 740 to Madeleine.
34 Ms Sirkissoon is
the plaintiff’s financial manager and was Fisch’s line
superior. On 16 October 2009, after finding
out about the incorrect
payment, she telephoned Mr Henning. She asked Mr Henning what had
transpired between him and his client.
Mr Henning responded that he
had been busy and had not discussed the matter with “his
client”, but did not say who
his client was.
35 On 8 October
2009, Ms Folli telephoned Mr Henning. She asked him what had
transpired in relation to the erroneous payment. Ms
Folli said that
Mr Henning told her that he would take instructions and advise her of
the outcome. She then wrote a letter dated
8 October 2009 to Mr
Henning. It reads, under the heading “Incorrect payment to
Tulah trading (Pty) Ltd":
As per our
conversation this morning, I hereby inform you that should we not
receive full payment from Tulah Trading, of R775, 583.23,
as
calculated below, by 15th October 2009, we will be handing this
matter over to our attorneys. I wish to advise you that should
we go
this route, you will also be liable for our attorneys fees.
[Calculation
omitted]
We tried to recall
the payment via our bankers, ie Nedbank on the 23rd July 2009, but
they advised that they were unable to get
authorisation from the
beneficiary of the account to do this, feedback from Nedbank was
received on 11 August 2009. We then contacted
Tulah Trading, and
spoke to Pascal [ie Monkam] on the 07 of September 2009, he advised
that we speak directly to his attorney,
and provided us with your
details. We contacted you on the same day, and advised you of the
matter, in which you replied to send
the details to you in writing,
and a fax was sent through to your offices on the same day, by Mr
Yorick Fisch. Mr Yorick Fisch,
called you last week, however you
advised him that you had not spoken to your client as yet.
We have already paid
the supplier that was due the money, hence we will have no option but
to hand this matter over to our attorneys,
should we not receive
payment by the 15th of October 2009.
[There follow the
plaintiff’s banking details]
36 As I have
mentioned, Mr Henning denies that he was Tulah’s attorney. This
may be true in the strictly formal sense that
although Monkam was
Tulah’s sole director, he never actually asked Henning to take
any action on behalf of Tulah. From at
the latest 26 February 2009,
the date upon which the arbitrator awarded control of Madeleine to Mr
Monkam snr, Tulah had no business
and no significant assets of which
Monkam, and therefore Mr Henning, were aware. Its bank statements
show that on the date the
plaintiff paid the sum in question into
Tulah’s bank account, Tulah’s account was in debit in the
sum of at least R3
369,95. Between 16 July 2009, when the money was
paid in by the plaintiff, and 26 January 2010, when the balance in
the account,
then only R593 641,49, was cleaned out of the account at
the instance of Mr Henning, acting for Monkam, there are no credit
entries.
After that date are several credit entries described in the
statement as “IB payment from loan” but they were not
explained.
37
I must now go back in time. Mr Monkam snr brought an application
against Monkam in this court under case no. 11967/07. It seems
probable that this application culminated in the order of Rabie J to
which I have referred, appointing the arbitrator. On 8 January
2008,
Coetzee J granted an order which provides in relevant part that
pending the finalisation of this application, Monkam (on
his return
from overseas) would act as
co-signatory
on
certain bank accounts of Hoopstraat and Tulah with two named persons
appointed as independent auditors. The purpose of this provision
was
declared (I summarise) to be to ensure probity in the operation of
the accounts.
38 Paragraph 2.11 is
of considerable importance in the context of the present case. It
provided:
That the Respondent
[ie Monkam] is to receive an amount of R50 000,00 to be paid on or
before 15th January 2008 and thereafter on
or before the same date of
every subsequent month, up until finalisation of this application.
39 It seems likely,
having regard to certain textual aspects of the order, that the
quantum of R50 000 was not agreed between the
parties but was fixed
by Coetzee J after argument. The remaining provisions of the order,
with one exception presently not relevant,
were agreed between Mr
Monkam snr and Monkam. On 25 April 2008, Legodi J was moved for a
variation of the order of Coetzee J. Legodi
J ordered that a request
which must have been made to him for an increase of Monkam’s
allowance be dismissed, but that the
... entire interim
order is hereby confirmed pending the finalisation of the arbitration
proceedings.
I shall refer in
what follows to paragraph 2.11 of the order of Coetzee J as varied by
Legodi J simply as paragraph 2.11.
40 It is common
cause that the “arbitration proceedings” referred to in
the order of Legodi J are those before Van den
Heever SC with which I
have dealt above.
41 But although Mr
Henning was not, in the sense I have described, the attorney for
Thula, it is perfectly clear that Mesdames Sirkissoon
and Folli both
thought that he was. Mr Henning testified that he had pertinently
told all three employees of the plaintiff that
he was not acting for
Thula. I reject this evidence as deliberately false for several
reasons: firstly, if Mr Henning had told
any of them so, they would
not have written to him asking to take instructions and revert.
Secondly, it was never put to either
Ms Sirkissoon or to Ms Folli
that Mr Henning would so testify.
42 Thirdly, the
plaintiff handed the matter over to Mr Mostert, a partner in the
plaintiff’s attorneys. On 13 November 2009
he sent a letter of
demand to Thula under s 345 of the Companies Act, 61 of 1973 (the old
Companies Act) demanding payment of the
amount paid to Thula in
error. On the same date Mr Mostert sent a letter to Mr Henning,
enclosing a copy of the s 345 demand. The
letter to Mr Henning read
as follows under the heading “Our client: Tourvest Holdings
(Pty) Limited/ Your client: Tulah Trading
(Pty) Limited trading as
Pretoria Hotel and Self-Catering Suites”:
We understand that
you represent Tulah Trading (Pty) Limited. Find enclosed herewith a
letter that was addressed to your client,
the contents of which is
self-explanatory.
It is simply
inconceivable that Mr Mostert would have written the letter of 13
November 2009 to Mr Henning unless he had been told
that Mr Henning
was acting for Thula.
43 Fourthly, Mr
Henning did not reply to any of these three letters. Even given the
his difficult personal circumstances, I do not
think he has given any
satisfactory explanation for his failure to contradict the impression
he and Monkam had given to the authors
of the letters. But in my view
Mr Henning had a specific motive for keeping the plaintiff and its
attorney in the dark about whom
he represented. He did not want to
precipitate any action by the plaintiff against Tulah because such
action would reduce or even
destroy Mr Henning’s chances of
getting his hands on the money standing to Tulah’s credit in
its bank account. The
plaintiff had taken no action against Tulah
during the several months after it had discovered the error. Mr
Henning probably sensed
weakness on the part of the plaintiff and
resolved to exploit it.
I shall get to this
later in more detail.
44
Fifthly, Mr Henning, as he well knew,
could
have been
appointed
as attorney for Tulah if Monkam had thought it necessary because
Monkam was the only director of Tulah. But as I shall
show, Monkam,
pursuant to a strategy designed by Mr Henning, took action
against
Tulah
in breach of Monkam’s fiduciary duty as director of Tulah. I
have no doubt that if the plaintiff had taken proceedings
against
Tulah, Monkam would in his capacity as its director have consulted
with or appointed Mr Henning to act for Tulah. Indeed,
Mr Henning
admitted that he
did
ask
Monkam whether the payment by the plaintiff had been made in error.
With this too I shall deal later.
45 On 14 September
2009, Mr Henning wrote a letter to Mr Monkam snr’s attorney.
This letter is not before me but the reply,
dated 2 October 2009, is.
One can work out from the reply what the letter said. Mr Henning’s
letter was a demand for payment
pursuant to paragraph 2.11. It
emerges from the reply that payment was demanded from “your
client”. No person, natural
or juristic, was identified in the
letter of demand as being “your client”. Payment under
paragraph 2.11 had been made
until February 2009. After that, payment
was discontinued.
It will be recalled
that the arbitrator had made his final award on 11 March 2009 and
that the payments under paragraph 2.11 were
due on the 15th of the
month.
46 In the letter
dated 2 October 2009, Mr Monkam snr’s attorney made the point
that payment under paragraph 2.11 had to be
made “until
finalization of the arbitration, which was finalized in March 2009.”
The point was also made that the order
did not fix the attorney’s
client with liability to pay under clause 2.11.
47 It is unlikely
that the demand for payment which came so soon after the letter from
Yorick Fisch dated 7 September 2009 was mere
coincidence, although Mr
Henning says it was. Monkam (and Mr Henning) had not protested the
cessation of payments, one of which
would have been due four days
after the arbitrator’s final award. There was no explanation
why Monkam had waited six months
to claim these substantial sums. I
think that the probability is that Monkam identified the money in
Thula’s account as an
easy target. The plaintiff was not
actively seeking to protect its rights, indeed it was positively
supine, and Mr Monkam snr had
no interest in this money because
Madeleine had been settled by the plaintiff.
48 It is in this
context that Mr Henning says that he asked Monkam whether it were
true that the payment by the plaintiff had been
made in error. Mr
Henning’s evidence was that Monkam had told him that the
payment was not made in error because of the treasury
arrangement
mentioned in paragraph 28. But, Mr Henning said (I summarise), he did
not ask Monkam whether the treasury arrangement
was still in
operation when the plaintiff made its payment and had no reason to
think that it was not. I find this evidence unworthy
of credit. I
shall say why I think so below.
49 Mr Henning took
no action in relation to Monkam’s claim under paragraph 2.11
until 26 November 2009. The delay is not explained
but Mr Henning
testified that on that day Monkam came personally to his office from
Sandton. Mr Henning drew an affidavit in support
of a request to the
registrar to issue a writ under the court heading of the case in
which the order containing paragraph 2.11
had been granted. In the
affidavit Monkam said that he was claiming payments of R50 000 per
month from 15 March through to 15 December
2009 -even though the
amount claimed for December 2009 could on Monkam’s version not
be due. Furthermore, the amount was
claimed from Thula, Hoopstraat
and Madeleine.
50 The body of the
affidavit, to which the orders of Coetzee J and Legodi J were
attached, contained the following:
4 In terms of
paragraph 2.11 [of the order of Coetzee J], [Thula, Hoopstraat and
Madeleine] are to pay me a salary of R50 000.00,
the first payment to
be made on 15 January 2008 and thereafter on or before the same date
of each subsequent month.
5 By virtue of [the
order of Legodi J], also on this case number, the order [of Coetzee
J] was confirmed and the condition “up
until finalisation of
this application” as referred to in clause 2.11 ... was
substituted with the condition “pending
the finalisation of the
arbitration proceedings.”
6
The arbitration proceedings have as yet not been finalised as there
is an appeal to the full bench of this honourable court pending
in
this regard.
5
Therefor[e]
I am still entitled to monthly payments of R50 000.00 until
finalisation of the arbitration proceedings on appeal.
7 [Thula, Hoopstraat
and Madeleine] made such payments to me but only until 15 February
2009 when the last payment was made to me.
8 The payments due
on 15 March 2009,15 April 2009, 15 May 2009,15 June 2009,15 July
2009,15 August 2009, 15 September 2009, 15 October
2009, 15 November
2009 and 15 December 2009 are still outstanding as the said
RESPONDENTS failed to make such payments to me.
9 There is
therefore] presently 10 payments of R50 000.00 each due and payable
to me, thus a total amount of R500 000.00.
10 I am therefore
entitled thereto that a warrant of execution be issued against
[Thula, Hoopstraat and Madeleine],
51 The Registrar
acceded to the request for a warrant of execution. The writ of
execution, prepared and signed by Mr Henning, directed
the sheriff to
“attach and take into execution the movable goods” of
Thula, Hoopstraat and Madeleine and “of
the same to cause to be
realised by public auction" the sum of R500 000 together with
interest at 15,5% per annum. A schedule
was attached to the affidavit
in support of the request for a writ showing the dates from which it
was contended interest would
run on each claim for R50 000..
52 But Mr Henning
did not instruct the sheriff to act in accordance with the terms of
the writ. Instead he instructed the sheriff
to repair to the branch
of the Standard Bank housing the account of Thula into which the
erroneous payment by the plaintiff had
been made. On 26 January 2010
Mr Henning accompanied the sheriff to the Standard Bank to ensure, he
said, that the sheriff was
not sent from pillar to post.
53 It is difficult
to understand the reason for the delays between signature of the
affidavit, application for the writ and the
actual execution of the
writ. Mr Henning said that the delays demonstrated the truthfulness
of his version that he had simply regarded
this as a routine case
which was not urgent. There is no evidence to contradict him on this
score but I doubt that I have been
told the full story. Be that as it
may, the money in the Standard Bank account of Thula was not at risk
because no funds could
be withdrawn from that account without the
cooperation of Monkam who was an essential co-signatory on the
account.
54 On 27 January
2010, without any notice to Thula or anyone else, the Standard Bank
paid the sum of R593 641,49 in satisfaction
of the writ. It will be
noted that the writ called for payment of R500 000 plus interest. Mr
Henning said that he did not make
an interest calculation but that
the additional amount above R500 000 was for interest. The sheriff’s
return makes no reference
to a demand for interest. Furthermore,
interest properly calculated was agreed between counsel at R42
290,16. So, taking the writ
at face value, there was an overpayment
by the bank.
55 Counsel for the
plaintiff sought to lay the blame for the overpayment at the door of
Mr Henning. I do not think that the evidence
would justify my doing
so. The calculation might have been made by a bank official or the
sheriff. Or perhaps the bank official
merely decided to pay over
whatever was in the account. Whatever the truth may be in this
regard, the amount paid over reduced
the funds in the account to a
nil balance.
56
The approach to the registrar for a writ was done
ex
parte,
on
incomplete information, on a factual basis which was incorrect and
pursuant to legal submissions which were absurd. No notice
was given
to any of those whose movables were targeted by the writ. Mr Henning
justified this by reference to the practice of this
court which has
existed for many decades.
57
It is true that a longstanding practice exists under which a party
armed with a court order providing for a prospective indebtedness
is
permitted to approach the registrar
ex
parte
for
a writ. Maintenance orders are frequently the subject of such
requests for writs. Counsel for the plaintiff accepted that there
was
such a practice but submitted that any such
ex
parte
approach
must be subject to the same stricture that governs ex
parte
applications
to court, ie that, as has been authoritatively stated in
National
Director of Public Prosecutions v Basson
2002
1 SA 419
SCA at para 21:
Where
an order is sought
ex
parte
it
is well established that the utmost good faith must be observed. All
material facts must be disclosed which might influence a
court in
coming to its decision, and the withholding or suppression of
material facts, by itself, entitles a court to set aside
an order,
even if the non-disclosure or suppression was not wilful or
mala
fide (Schlesinger v Schlesinger
1979
(4) SA 342
(W) at 348E-349B).
58
Mr Henning admitted (indeed, as an attorney who conducted a
litigation practice of many years standing he could hardly do
otherwise)
that he was aware of this rule. But, Mr Henning said,
although he knew that he was not entitled to suppress material facts
from
a
court,
he
believed that there was no such obligation on him in relation to a
request to the registrar to
implement
an
order of court. He admitted further that if he had disclosed or
caused Monkam to disclose to the registrar that the claim was
disputed by Mr Monkam snr on behalf of Hoopstraat and Madeleine, that
the plaintiff had made a substantial payment into Tulah’s
account, the proceeds of which Mr Henning intended to attach or that
the treasury arrangement (pursuant to which the payments of
R50 000
had in the past been made to Monkam) had come to an end, the
registrar might well have declined to issue the writ.
59 I do not believe
that this seasoned litigation lawyer thought that although he was not
entitled to withhold material facts from
(ie mislead) a court, he was
entitled to mislead the registrar of the court. I reject Mr Henning’s
evidence to the contrary
and find that he withheld the information
which Monkam had given him or which he had acquired through
representing Monkam with
the intention of deceiving the registrar.
60 On 28 January
2010, Mr Henning received into his trust account from the sheriff the
sum of R592 686,45, representing the amount
paid to the sheriff by
Standard Bank less the sheriff’s charges. On 1 February 2010,
Mr Henning paid the sum of R563 054,45
to Monkam and transferred the
balance, R29 634, to his business account as his fee and collection
commission.
61 On 26 February
2010, Mr Henning obtained a further writ from the registrar, upon the
same cause of action and with the same nondisclosures.
This further
writ was obtained on the strength of an affidavit prepared by Mr
Henning and sworn by Monkam on 23 February 2010.
In addition to the
allegations from the earlier affidavit which I have quoted, Monkam
alleged that a further two payments of R50
000 each were due to him
by Tulah, Hoopstraat and Madeleine. In this further warrant, the
sheriff was directed to attach movables
to the sum of R100 000 plus
interest from the same three alleged debtors, ie Tulah, Hoopstraat
and Madeleine. On 26 February 2010,
on the strength of this further
writ, the sheriff attached the sum of R102 634,12 in the bank account
of Madeleine at the Standard
Bank.
62 In this instance,
a notice of attachment was served on Madeleine and came to the
attention of Ms Suisie Monkam. She immediately
notified Mr Monkam
snr’s attorney, Mr Finck. Finck promptly brought an urgent
application to this court under case no 11967/07,
the case number
under which the appointment of an arbitrator had been ordered by
Rabie J and interim orders granted by Coetzee
J and Legodi J which
gave rise to and varied paragraph 2.11. Finck made the founding
affidavit in the absence of Mr Monkam snr
in the Cameroons, so I
shall call this application the Finck application. All the papers
making up the Finck application are before
me and were referred to
extensively in the evidence.
63 The purpose of
the Finck application was to stay and ultimately set aside the
further writ dated 26 February 2010. Finck’s
affidavit asserts
that the arbitration had been finalised on 26 February 2009 with the
award of that date and that paragraph 2.11
did not stipulate that
Thula, Hoopstraat and Madeleine had been ordered to pay anything to
Monkam. Finck also pointed out that
there was no appeal pending
against the final arbitration award.
64 Mr Henning
testified that he drew Monkam's answering affidavit in the Finck
application on the day that this affidavit was sworn,
29 April 2010.
In this answering affidavit, Monkam said that there was not only an
appeal pending in this court under case no A808/09
(the papers in
which are not before me) but that there was a review of the awards of
the arbitrator pending. The appeal is in relation
to the joinder of
the Fusie Trust trustees. The only indication I have before me that
review proceedings were instituted is the
draft “notice of
review” to which I referred. On this basis, Monkam disputed the
assertion that the arbitration had
been “finalised”.
65
A court order must be interpreted as any other document.
Firestone
South Africa Ltd v Genticuro AG
1977
4 SA 298
AD 304D. The affidavits in the Finck application show that
the purpose of the provision in clause 2.11 was to provide for
remuneration
for Monkam as director of Tulah, Hoopstraat and
Madeleine. The arbitration awards declared Monkam divested of his
office as director
of Hoopstraat and Madeleine. Tulah had no business
and Mr Monkam snr had no further interest in Thula, which seems to
have existed
merely to facilitate the treasury arrangement, so the
purpose of the order in remunerating Monkam for carrying out his
duties as
director of the relevant companies had disappeared. The
literal meaning of “finalisation” in this context means
the
moment when the arbitrator delivers his final award or the
arbitrator otherwise becomes
functus
officio.
Mr
Henning must have known that if he had presented the registrar in the
affidavit with his eccentric reasoning leading to the conclusion
that
the arbitration was not finalised or if he had disclosed that the
pending review did not relate to Madeleine, the registrar
would
probably not have issued the writ, at least in relation to Madeleine.
66
Monkam’s answering affidavit further puts up the argument that
because
Mr Monkam
snr had denied being liable for the paragraph 2.11 remuneration,
it
followed that Tulah, Hoopstraat and Madeleine were so liable. Once
again, if this similarly eccentric reasoning had been put
up to the
registrar in the affidavit, the registrar might well have declined to
issue the writ.
67
Historically, the payments under paragraph 2.11 had been made by
Tulah. This background fact, taken in context, points to a conclusion
that, on a proper interpretation of paragraph 2.11, Tulah and Tulah
alone was liable under the order of Coetzee J as varied for
payment
of these amounts.
6
This point was made by Finck in his founding affidavit and elicited
the following response from Monkam in paragraph 18.1 of his
answering
affidavit in the Finck application:
I admit that the
initial payments to me were made from Tulah
.......Part of the
money that was in Tulah from time to time
came
from the account of [Madeleire], Initially the money of the whole
group went through the account of Tulah .... That is the
only reason
why I received the allowance from Tulah
...
. After the arbitration proceedings, Suisie Monkam opened an account
in the name of [Madeleine] in order to prevent me to receive
any
further monies from Tulah
....
[my emphasis]
68 This passage
shows, quite ineluctably, that Monkam knew that the payment by the
plaintiff to Tulah had been paid in error because
the treasury
arrangement had been cancelled. It also shows that Monkam knew that
no amounts, or at least no amounts of any significance,
had or would
ever come into Tulah except amounts due to Madeleine and the other
members of the Monkam group.
69 Mr Henning
testified that he had been unaware of the facts known to Monkam as
put up in paragraph 18.1 of his answering affidavit
in the Finck
application until 29 April 2010, the day on which Mr Henning said
that he had drafted the affidavit.
70
Mr Henning said that pursuant to the three letters from the plaintiff
and its attorney I have mentioned he, rather casually and
in passing,
asked Monkam if it were true that the payment had been made to Tulah
in error and that Monkam had replied that he payment
had not been
made in error
because
of the treasury arrangement.
Having
heard from his client that the payment had not been made in error
because of the treasury arrangement, thus Mr Henning, he
made no
further enquiries and left the issue there.
71 I do not believe
that this evidence can be true. I have mentioned the improbability
that Mr Henning would not comprehensively
have consulted with Monkam.
The issue of Monkam’s paragraph 2.11 remuneration must have
been of considerable importance to
Monkam. In numbered paragraph 4 of
a letter dated 7 April 2010 written by Mr Henning to Finck, Monkam
states that the payments
not only attached to his position as
director “but it was in fact an allowance to enable him to
live, which was also the
case with many other members of the family”.
In other words, cutting off the paragraph 2.11 payments meant cutting
off Monkam’s
subsistence allowance.
72 It will also be
observed that Monkam made no attempt to get to the merits of the
arbitration. He used stratagems to delay the
process. At least one of
the reasons why he did so was, on the probabilities, that as long as
the arbitration was not “finalised”,
Monkam received R50
000 a month under paragraph 2.11. This was the proverbial money for
jam. Monkam did not have to do anything
much for the money except
ensure that the arbitration did not come to an end.
73 In these
circumstances, the probability is that Monkam would anxiously and
urgently have asked Mr Henning to take action to restore
the
paragraph 2.11 payments. To advise Monkam, once Mr Henning knew that
the source of the payments was the treasury arrangement,
all Mr
Henning needed to know in order to advise Monkam in relation to the
paragraph 2.11 payments was whether Monkam knew of any
grounds upon
which it could be contended that the treasury arrangement had
survived the final arbitration award. And once Mr Henning
knew that
the treasury arrangement was no longer being honoured, whether
rightly or wrongly, and Madeleine had instructed its debtors
no
longer to settle their debts to Madeleine by payment into Tulah’s
account, it had to follow that the payment by the plaintiff
to Tulah
had been made in error.
74 But Mr Henning
says that he did not ask this question, ie whether Monkam knew of any
grounds upon which it could be contended
that the treasury
arrangement had survived the final arbitration award. I do not
believe him. Any attorney would have asked the
question of his
client. I find that Mr Henning’s denial that he had been given
the instruction embodied in paragraph 18.1
of the answering affidavit
in the Finck application is false. I find that he had been given the
instruction early on in his relationship
with Monkam. And because Mr
Henning knew that the treasury arrangement, rightly or wrongly, had
been terminated upon the final
arbitration award, he had to know that
the treasury arrangement could not justify the payment by the
plaintiff to Tulah.
75 And once it is
established that Mr Henning knew what is contained in paragraph 18.1
from early on in his relationship with Monkam,
it follows inevitably
that he drew the affidavits supporting the requests to the registrar
to issue the writs I have mentioned
knowing that the plaintiff had
paid the amount in question to Tulah in error and knowing that the
Tulah bank account was highly
unlikely to contain any money other
than as a result of the erroneous payment. His evidence that he
thought that Tulah’s
bank account was substantially in credit
from sources other than the plaintiff’s erroneous payment can
therefore also not
be true.
76 I therefore find
that Mr Henning approached the registrar to issue the writs on facts
which he knew to be untrue and having decided
to suppress relevant
facts because he knew that if those facts were disclosed, his
strategy to get at the money in Tulah’s
bank account and
otherwise would fail.
77 I was told in
evidence that the Finck application succeeded and the further writ,
dated 26 February 2010 was set aside. There
is however nothing before
me to verify this. The first writ, under which the money in Tulah’s
bank account was seized, was
never attacked and its validity was not
challenged before me.
78
Under case no. 14371/2011 (the s 424 case), the plaintiff instituted
action against Monkam in this court for an order declaring
Monkam
personally liable to the plaintiff for the debts of Tulah under s 424
of the old Companies Act and for payment of the sum
of R754 740. Mr
Henning acted throughout for Monkam in the s 424 case. In May 2012,
the plaintiffs attorney, Mr Mostert, received
documents, pursuant to
a subpoena
duces
tecum
on
the Standard Bank, showing the withdrawal from Tulah’s bank
account of the sum of R593 641,49 on 26 January 2010. This,
Mostert
said, was when the plaintiff learnt for the first time that the money
had been taken by Monkam under colour of a writ.
It was also the
first time that the plaintiff learnt of the involvement of Mr Henning
in the impoverishment of Tulah. I have referred
to this aspect of the
case in paragraph 4 above.
79 The s 424 case
came before Bertelsmann J on trial. The learned judge handed down a
written judgment on 26 September 2014 in which
he upheld Tourvest’s
claim and declared Monkam personally liable to the plaintiff for R754
740 plus costs on the scale of
attorney and client. An application
for leave to appeal is pending.
80 In the judgment,
Bertelsmann J criticised the failure of Monkam to call Mr Henning as
a witness. The learned judge described
Mr Henning as having been
Monkam’s legal advisor at all times relevant to the dispute.
Paragraph 31 of the judgment states:
If there was any
legally tenable basis for [Monkam’s] alleged claims against
TULAH, or any truth in his denial of any knowledge
of the mistaken
payment of which Mr Henning had indubitably been informed, Mr Henning
was the person who could have sustained [Monkam’s]
version. The
failure to call him amounts to a clear confirmation of the fact that
[Monkam’s] evidence must be rejected wherever
it conflicts with
that of the plaintiff.
81
In paragraph 32 of the judgment, Bertelsmann J found that Monkam’s
actions amounted to a clear fraud upon the plaintiff
and upon Tulah.
I have come to the same conclusion on the evidence presented to me.
And I have found that on the strength of what
was known to Mr
Henning, he was a joint wrongdoer (
mededader
)
in this regard with Monkam.
82 It was submitted
by counsel for the plaintiff that a similar criticism should attach
to Mr Henning for not calling Monkam. Monkam
remains Mr Henning’s
client and it is not suggested that he was unable to call Monkam as a
witness. Counsel for Mr Henning
suggested that he could not be
expected to call Monkam after Bertelsmann J had found him to be a
liar and a fraud. I do not agree.
The s 424 case is on appeal,
presumably on the basis that Bertelsmann J erred in his findings
against Monkam but in any event I
do not think that the submission
justifies the failure to call Monkam, the witness who could be
expected, on Mr Henning’s
version, to support Mr Henning’s
version. In my view the failure to call Monkam justifies the
inference that Monkam would
have contradicted the defendant’s
case on issues
I have found to be
material, particularly as to what Monkam told his attorney and when.
83 I think I should
record my impressions of the witnesses who testified before me. I
found the plaintiff’s witnesses, Mesdames
Folli, Suisie Monkam
and Sirkissoon and Mr Mostert generally credible, in the sense that
they tried to tell the truth as they recalled
it. Mr Mostert was
shown to be unreliable about certain details of the previous
litigation but I find this to be the product of
faulty memory. Mr
Mostert testified on the aspects in which his recollection was found
to be inaccurate without the benefit of
documents, which were only
produced after Mr Mostert had completed his evidence.
84
I found the defendant, however, to be a poor witness. He was
garrulous. This does not by itself provide evidence of untruthfulness
but my impression is that the defendant took refuge in garrulousness
in an effort to throw the questioner off the track. The defendant’s
evidence was in many respects evasive and vague, in my view
deliberately so, but he had a tendency to remember detail when that
was likely to be in his favour.
7
A most serious criticism of the defendant, of course, is that he does
not hesitate to lie under oath when he thinks that will advance
his
case. Coupled with that is the fact that Mr Henning has no remorse
for what he has done. He said in evidence that he would
do things
differently the next time such a situation arises; not because he
appreciates or accepts that his actions were wrong,
but because of
the trouble they landed him in. The words of Ponnan JA in relation to
expressions of remorse by accused persons
in criminal cases in S
v
Matyityi
2011
1 SACR 40
SCA) para 13 come to mind:
There is, moreover,
a chasm between regret and remorse.
Many accused persons
might well regret their conduct but that does not without more
translate to genuine remorse. Remorse is a gnawing
pain of conscience
for the plight of another. Thus genuine contrition can only come from
an appreciation and acknowledgement of
the extent of one”s
error. Whether the offender is sincerely remorseful and not simply
feeling sorry for himself or herself
at having been caught is a
factual question. It is to the surrounding actions of the accused
rather than what he says in court
that one should rather look. In
order for the remorse to be a valid consideration, the penitence must
be sincere and the accused
must take the court fully into his or her
confidence.
Until and unless
that happens the genuineness of the contrition alleged to exist
cannot be determined. After all, before a court
can find that an
accused person is genuinely remorseful, it needs to have a proper
appreciation of inter alia: what motivated the
accused to commit the
deed; what has since provoked his or her change of heart; and whether
he or she does indeed have a true appreciation
of the consequences of
those actions, [footnotes omitted]
85 Although the
plaintiff’s claim was described in the particulars of claim as
one arising from constructive contempt of court,
in argument counsel
for the plaintiff submitted that the proper description of the claim
was one for damages arising from an abuse
of the process of the
court. I do not think that the fact, as such, that the plaintiff
ascribed the incorrect label to the claim,
is of significance. The
true question is whether the facts pleaded which have been proved
constitute the delict of abuse of process.
86 The essential
allegations in this regard are that the defendant, well knowing that
his client Monkam had no claim against Tulah
under paragraph 2.11,
caused the issue and execution of a writ with the intention that his
improperly obtained writ should strip
Tulah of its only asset, with
the intention of frustrating the plaintiff’s efforts to recover
the debt which Tulah owed the
plaintiff.
87
Any conduct which constitutes an abuse of the process of the court is
unlawful. Thus, in
Brummerv
Gorfil Brothers Investments (Pty) Ltd en Andere
19913
SA 389 SCA at 412, the SCA referred with approval as reflecting our
law the words of Lord Denning in
Goldsmith
v Sperrings Limited
[1977]
2 All ER 566
(CA) at 574:
In a civilised
society, legal process is the machinery for keeping order and doing
justice. It can be used properly or it can be
abused. It is used
properly when it is invoked for the vindication of men's rights or
the enforcement of just claims.
It is abused when it
is diverted from its true course so as to serve extortion or
oppression; or to exert pressure so as to achieve
an improper end.
When it is so abused, it is a tort, a wrong known to the law. The
judges can and will intervene to stop it. They
will stay the legal
process, if they can, before any harm is done. If they cannot stop it
in time, and harm is done, they will
give damages against the
wrongdoer...
At other times the
abuse can only be shown by extrinsic evidence that the legal process
is being used for an improper purpose. On
the face of it, in any
particular case, the legal process may appear to be entirely proper
and correct. What may make it wrongful
is the purpose for which it is
used. If it is done in order to exert pressure so as to achieve an
end which is improper in itself,
then it is a wrong known to the law.
88 The SCA
continued:
Die klem val telkens
op die onbehoorlikheid van of die optrede of die oogmerk. In die
Engelse reg, blykens die dictum, kan die misbruik
van so n aard wees
dat dit op n "tort" neerkom. By ons kan dergelike optrede
in gepaste gevalle onder die algemene rubriek
van "kwelsugtige
gedingvoering" tuisgebring word (vgl, oor die algemeen, 15 Lawsa
par 595 en volgende). Dit verg bewys
van die afwesigheid van
"reasonable and probable cause".
Die begrip
"misbruik" veronderstel onbehoorlikheid (waarby
ongeoorloofdheid inbegrepe is). Die onbehoorlikheid in die
geval van
misbruik van die hofproses kan geleë wees, in Engeland sowel as
hier, of in die aard van die optrede van die betrokke
litigant in die
resultaat wat hy nastreef, of albei.
89
In
Price
Waterhouse Coopers Inc and Others v National Potato Cooperative
Ltd
2004
6 SA 66
SCA para 50, Southwood AJA described the delict of abuse of
process:
It
has long been recognised in South Africa that a court is entitled to
protect itself and others against the abuse of its process
(see
Western Assurance
Co v Caldwell”s Trustee
1918
AD 262
at 271;
Corderoy
v Union Government (Minister of Finance)
1918
AD 512
at 517;
Hudson
v Hudson and another
1927
AD 259
at 268;
Beinash
v Wixley
[1997]
ZASCA 32
;
1997 (3) SA 721
(A) at 734D;
Brummer
v Gorfil Brothers Investments (Pty) Ltd en andere
1999
(3) SA 389
(SCA) at 412C-D), but no all-embracing definition of
“abuse of process” has been formulated. Frivolous or
vexatious
litigation has been held to be an abuse of process (per
Innes C J in
Western
Assurance v Caldwell"s Trustee supra
at
271 and in
Corderoy
v Union Government (Minister of Finance)
supra
at 517) and it has been said that “an attempt made to use for
ulterior purposes machinery devised for the better administration
of
justice” would constitute an abuse of the process (
Hudson
v Hudson and another
supra
at 268). In general, legal process is used properly when it is
invoked for the vindication of rights or the enforcement of
just
claims and it is abused when it is diverted from its true course so
as to serve extortion or oppression; or to exert pressure
so as to
achieve an improper end. The mere application of a particular court
procedure for a purpose other than that for which
it was primarily
intended is typical, but not complete proof, of
mala
fides.
In
order to prove
mala
fides
a
further inference that an improper result was intended is required.
Such an application of a court procedure (for a purpose other
than
that for which it was primarily intended) is therefore a
characteristic, rather than a definition, of
mala
fides.
Purpose
or motive, even a mischievous or malicious motive, is not in general
a criteria for unlawfulness or invalidity. An improper
motive may
however be a factor where the abuse of court process is in issue.
(
Brummer v Gorfil
Brothers Investments (Pty) Ltd en andere supra
at
4121-J; 4141-J and 416B).
Accordingly,
a plaintiff who has no
bona fide
claim
but intends to use litigation to cause the defendant financial (or
other) prejudice will be abusing the process
(see
Beinash and
another v Ernst & Young and others
1999
(2) SA 116
(CC) para 13). Nevertheless it is important to bear in
mind that courts of law are open to all and it is only in exceptional
cases
that a court will close its doors to anyone who wishes to
prosecute an action (per Solomon JA in
Western
Assurance Co v Caldwell”s Trustee
1918
AD 262
at 273-274). The importance of the right of access to courts
enshrined by section 34 of the Constitution has already been referred
to. However, where a litigant abuses the process this right will be
restricted to protect and secure the right of access for those
with
bona fide
disputes
(Beinash and
another v Ernst & Young and others supra
para
17). [My emphasis]
90 There can be no
doubt that the conduct of Mr Henning, as I have found it to be, is
abuse of process as described in the authorities
which I have quoted.
This does not mean, however, that an attorney who has doubts about
the validity of his client’s case
abuses the process of the
court by advancing that case. On the contrary, it is of the essence
of our law that a lawyer entrusted
by a client with his case must
advance that case with the utmost vigour and effort, regardless of
the lawyer's personal convictions
relating to the validity of the
client’s cause of action or defence.
91
But what a lawyer in our legal system may not do is assert factual
allegations, whether on affidavit or by putting propositions
in
cross-examination, which the lawyer
knows
are
not true (as opposed to
suspects
may
be untrue). This is so trite that the proposition requires no
recitation of authority. And this is precisely what I have found
that
Mr Henning did.
92 Counsel for Mr
Henning referred me to an impressive body of learning in support of
the proposition that our law will be slow
to impose upon an attorney
who does all that he properly may do for a client a duty to safeguard
the interests of third party who
is not his client. With respect to
the industry which counsel applied to his brief, I think that this
misses the point: we are
not, on my analysis, dealing with an
attorney who did all he properly could; the case relates to an
attorney who acted improperly.
93
Counsel for the defendant referred me to
Country
Cloud Trading CC v MEC, Department of Infrastructure Development,
Gauteng
2015
1 SA 1
CC at para 21 where the Constitutional Court held that the
wrongfulness enquiry focuses on the harm-causing conduct and whether
the policy and legal convictions of the community, constitutionally
understood, regard it as unacceptable. This is based on the
duty not
to cause harm and questions the reasonableness of imposing liability.
94 Applying this
test, I have no hesitation in concluding that public policy demands
that an attorney who abuses the process of
court with the intention
of causing harm to A, should be liable to A in damages. It follows
that Mr Henning, who intended to cause
harm to the plaintiff, should
be held liable for the damages he is proved to have caused the
plaintiff.
95 I turn to that
question. A plaintiff in cases such as the present must prove a
causal link between the conduct of the defendant
and the damages
allegedly suffered. This involves two distinct enquiries. The first
is whether the unlawful conduct was a factual
cause of the loss.
In
this enquiry, the “but for” test must be applied.
International
Shipping Co (Pty) Ltd v Bentley
1990
1 SA 680
A 700E.
96 Before one gets
there, of course, the plaintiff must prove that it suffered damages.
It is a curious feature of the present case
that the plaintiff took
no action against Tulah. This was a deliberate commercial decision.
When the problem of the erroneous payment
was discovered, the
plaintiff was in the process of reorganisation. New investors had
recently come on the scene and the plaintiff
was reluctant to engage
in litigation at that time. So, although the plaintiff’s
attorney’s letter to Tulah of 13 November
2009 was written in
terms of s 345 of the old Companies Act, ultimately giving rise to a
presumption that Tulah could not pay its
debts, the plaintiff did not
apply for the liquidation of Tulah in 2009 even though a liquidation
application was prepared. In
2010, the plaintiff once again
considered liquidating Tulah but found out that Tulah was in the
process of administrative deregistration
and accordingly did not
proceed. The plaintiff did not even take judgment against Tulah.
Instead, the plaintiff proceeded directly
(and, as I have shown, thus
far successfully) against Monkam under s 424 of the old Companies Act
and ultimately against Mr Henning.
97 There is before
me no evidence as to Tulah’s financial position. I do not think
that the inference is warranted that Tulah
had no assets upon which
execution could be levied. There is simply no evidence in that
regard. Nor is there any evidence of what
dividend, if any, would
probably have been paid by Tulah on liquidation. There is no evidence
showing whether or not Tulah had
any creditors other than the
plaintiff. The plaintiff was a concurrent creditor of Tulah. There is
no evidence showing whether
or not Tulah had any secured or preferent
creditors or that, if Tulah had been liquidated with the sum in
question still in its
bank account, there would have been any free
residue on winding up from which the plaintiff would have received a
dividend and,
if so, in what amount.
98 In short, it has
not been proved on a balance of probabilities that but for the delict
committed by Mr Henning, the plaintiff
would have recovered any money
from Tulah. On the evidence before me, the plaintiff cannot succeed.
The proper order, in these
circumstances, is one of absolution,
leaving the plaintiff free, if it so wishes, to proceed afresh.
99 As to costs: Mr
Henning has been substantially successful but I intend to deprive him
of the costs normally awarded to a party
to commercial litigation who
is substantially successful. My reasons are firstly that almost no
time was devoted during the trial
to quantum and secondly that Mr
Henning’s conduct both in the events which led to the present
action and in the witness box
has been reprehensible.
100 I make the
following order:
1 The defendant is
absolved from the instance;
2 There will be no
order as to costs.
NB Tuchten
Judge of the High
Court
11 February 2015
1
In
fact there were three letters in all.
2
The
father of Pascal Monkam jnr is Pascal Monkam snr. I shall refer to
Monkam jnr merely as Monkam and to his father as Mr Monkam
snr.
3
A
reference to the South African family of that name, who are reputedly
very wealthy.
4
Pursuant
to which the shares and loan accounts in Madeleine were declared by
the arbitrator to vest in Mr Monkam snr.
5
My
emphasis.
6
But
the interpretation issue is complicated by the consideration that the
intention to be determined is that of the court, not that
of the
parties who proposed portions of the order.
7
I
do not overlook that in some instances documents produced showed that
Mr Henning’s memory was better than Mr Mostert’s.