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[2015] ZAKZPHC 18
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Tebfin (Pty) Ltd v Kusakusa Catering & Projects CC CC and Another, Tebfin (Pty) Ltd v Kusakusa Catering & Projects CC CC and Another (1695/14, 1696/14) [2015] ZAKZPHC 18 (26 March 2015)
IN
THE HIGH COURT OF SOUTH AFRICA
KWAZULU-NATAL
DIVISION, PIETERMARITZBURG
CASE
NUMBER: 1695/14
In
the matter between:
TEBFIN
(PTY) LTD
(REGISTRATION
NO.
2006/015762/07)
................................................................................
Plaintiff
and
KUSAKUSA
CATERING & PROJECTS CC CC
(REGISTRATION
NO.
2007/100636/23)
....................................................................
First
Defendant
MEMBER
OF THE EXECUTIVE COUNCIL for
HUMAN
SETTLEMENTS AND PUBLIC WORKS,
KWAZULU-NATAL
PROVINCE
...........................................................................
Second
Defendant
AND
CASE
NUMBER: 1696/14
In
the matter between:
TEBFIN
(PTY) LTD
(REGISTRATION
NO.
2006/015762/07)
................................................................................
Plaintiff
and
KUSAKUSA
CATERING & PROJECTS CC CC
(REGISTRATION
NO.
2007/100636/23)
...................................................................
First
Defendant
MEMBER
OF THE EXECUTIVE COUNCIL for
HUMAN
SETTLEMENTS AND PUBLIC WORKS,
KWAZULU-NATAL
PROVINCE
..........................................................................
Second
Defendant
JUDGMENT
VAN
ZYL, J.
:-
1.
The two matters before court are both
opposed exceptions wherein the second defendant, as the excipient,
excepted to the plaintiff’s
particulars of claim. Both
exceptions relate to an alleged failure by the plaintiff to disclose
a cause of action as against the
second defendant, are couched in
identical terms and by consent, were argued together as a single
matter.
2.
The same plaintiff instituted action in
each of these matters. However, the first defendant in case number
1695/14 is Somju Investments
CC and the first defendant in case
number 1696/14 is KusaKusa Catering and Projects CC. In neither
matter have the respective first
defendants responded to the
exceptions. In both matters the second defendant is the Member of the
Executive Council for Human Settlements
and Public Works,
KwaZulu-Natal Province. As indicated, it is the second defendant who
is the excipient in both actions. For convenience
the parties are
herein referred to as in the actions.
3.
At the outset and order to place the
exceptions in their proper perspective, it is necessary to deal
briefly with the background
and formulation of the plaintiff’s
claims. In each of the actions the plaintiff alleged that the
respective first and second
defendants had concluded, what were
termed obligatory agreements, flowing from preceding successful
tender processes between the
respective first defendants and the
second defendant. These obligatory agreements related to different
school construction projects
to be performed by the respective first
defendants on behalf of the second defendant.
4.
It was further alleged that the first
defendants in each instance were thereby required to comply with
certain formalities. These
included that the respective projects had
to be completed within specified time spans, failing which the
respective first defendants
would become liable to the second
defendant for penalties. Furthermore, that during the course of the
construction the respective
first defendants would become entitled to
submit to the second defendant progress payment certificates,
referred to as invoices,
for part payment of the respective contract
prices.
5.
It appears that each of the first
defendants required financial assistance for the acquisition of
materials to be used in their
respective construction projects and
that the plaintiff agreed to advance, by way of loans, monies to such
defendants for this
purpose. As security for these loans the relevant
defendants agreed to cede to the plaintiff their respective
entitlements to collect
monies becoming due to them by the second
defendant upon presentation of the various progress payment
certificates, but limited
to the agreed loan amounts underlying the
loan agreements in each instance.
6.
The respective loan agreements thus entered
into between the respective first defendants and the plaintiff were
concluded in writing
and included the cessions referred to above.
Copies of these agreements are annexed to the particulars of the
plaintiffs’
claims in the two actions. In case number 1695/14
there were two such agreements (respectively annexures “B”
and “C”)
and in case number 1696/14 only one such
agreement (annexure “B”). However, these agreements are
all in materially
similar terms.
7.
In respect of each of these agreements the
plaintiff alleged in paragraphs 7 and 12 of the particulars of claim
in case number 1695/14,
as well as paragraph 7 of the particulars in
case number 1696/14, that the respective first defendants had duly
complied with their
obligations to the second defendant in terms of
the obligatory agreements and “..
accordingly
(each first defendant)
became
entitled to receive payment of the contract price and obliged
(the
second defendant)
to effect payment in
favour of the plaintiff in the sum of
..”,
followed by a stated sum corresponding to the total amount ceded in
each instance.
8.
The plaintiff further alleged that notice
of the cessions had in each instance been given to the second
defendant and that each
first defendant had authorised the second
defendant to pay the proceeds of the progress payment certificates
(referred to as invoices)
up to the values of the ceded amounts into
the nominated banking account of the plaintiff. The plaintiff alleged
in paragraphs
8 and 13 of the particulars of the plaintiff’s
claim in case number 1695/14 that notice of the two cessions had been
given
to the second defendant on 8 May and 11 September 2012 and in
paragraph 8 of the particulars in case number 1696/14 on 7 June 2012.
9.
The particulars of plaintiff’s
claims, under a heading reading “Statement and Debatement of
Account” then in both
actions alleged as is set out below. For
convenience the extract is taken from paragraphs 16 and 17 of the
particulars of plaintiff’s
claim in case number 1695/14.
However, paragraphs 11 and 12 in the particulars of the plaintiff’s
claim in case number 1696/14
are similar, save for the date in
paragraph 12 which is 7 June 2012. The relevant paragraphs read, as
follows:
“
16.
As a consequence of the fiduciary relationship between the Plaintiff
and the First Defendant and the contractual obligations
imposed upon
the Plaintiff and the Defendants respectively, Plaintiff became
entitled to receive an account at regular intervals
from both the
First and Second Defendants regarding amounts paid to the Plaintiff
standing in relation to the Obligationary Agreement
read with the
written Cession referred to above.
17.
Despite demand, the Defendants have failed to render any account
alternatively have rendered defective the inadequate accounts
to the
Plaintiff in respect of the amounts which were paid to the First
Defendant by the Second Defendant standing in relation
to the
Obligationary Agreement on the dates following upon that of 11
September 2012”
10.
The particulars of the plaintiff’s
claims in the two actions also conclude with similar prayers for
relief. Again the extract
is taken from case number 1695/14, which
reads:
“
1.
that Defendants render a full account of all payments having been
effected between them in terms of the obligationary and Cession
agreements since 8 May 2012 to date.
2. Debatement of
the said account;
3. Costs of suit;
4.
Further, other and / or alternative e relief.”
11.
It is apparent from the aforegoing that,
underlying the plaintiff’s claims in both actions, is the
assertion that a fiduciary
relationship had come into existence
between the plaintiff on the one hand and
inter
alia
the second defendant on the other.
It is the plaintiff’s case that such a relationship came about
by virtue of the contractual
arrangements entered as between the
plaintiff and the respective first defendants in the two actions and
in terms of which the
plaintiff advanced monies and in return
received cession of the respective first defendants’ rights to
receive payments from
the second defendant in each instance.
12.
In both actions the second defendant
excepted on the ground that the plaintiff’s particulars of
claim failed to disclose a
cause of action as against the second
defendant. The relevant portions of the exceptions were formulated,
as follows:-
“
The
Plaintiff in its particulars of Claim failed to allege and prove:
(a) a basis of a
right to receive an account from the Second Defendant;
(b)
a contractual obligation on the part of the Second Defendant to
render such account;
(c)
a statutory duty on the part of the Second Defendant to render such
an account.
”
13.
Mr Bedderson, who appeared for the second
defendant in the exceptions, submitted that no contractual
relationship had arisen as
between the plaintiff and the second
defendant and no contractual or statutory duty existed requiring the
second defendant to render
an account to the plaintiff. Counsel
further submitted that the only other basis upon which the plaintiff
could rely for such a
duty was to have established that there existed
as between the plaintiff and the second defendant a
fiduciary
relationship, but that no such allegation appears from the
particulars of the plaintiff’s claims in either action.
14.
In is clear, however, that the cession
agreements relied upon were bilateral agreements concluded as between
the plaintiff and the
respective first defendants only and that the
second defendant was not party to such agreements. It is not always
necessary to
plead the terms of an agreement extensively in order to
establish that a
fiduciary
relationship came about. In Phillips v Fieldstone Africa (Pty) Ltd
and Ano
2004 (3) SA 465
(SCA), Heher JA at para 27 remarked that;
“
There
is no magic in the term ‘fiduciary duty’. The
existence of such a duty and its nature and extent are questions
of
fact to be adduced from a thorough consideration of the substance of
the relationship and any relevant circumstances which affect
the
operation of that relationship
”
And
further in the same paragraph it was said that;
“
The
emphasis in the particulars of claim upon the representative nature
of the appellant’s status in dealing with Safika and
the duty
to account for profits acquired by him in that capacity should have
been to counsel an unmistakeable beacon which marked
the claim as one
in which the appellant stood towards the respondents in a position of
confidence and good faith which he was obliged
to protect. No
more was required to set up a case on a fiduciary duty.
”
15.
In Absa Bank Bpk v Janse van Rensburg
2002
(3) SA 701
(SCA) the court of appeal was called upon to deal with a
matter where the respondent claimed the existence of a fiduciary
relationship
between himself and the appellant as his bankers with
regard to the conduct of a current account. The court held that the
respondent
was in any event not entitled to claim an account and a
debatement thereof because, in order to succeed on such a claim the
respondent
would have had to prove either the existence of a
fiduciary relationship between himself and the appellant, or that the
appellant
had contractually bound itself to account, or the existence
of a statutory duty obliging the appellant to render and debate an
account. In this regard the court of appeal referred with approval at
page 708 E-F to the decision in Rectifier and Communications
Systems
(Pty) Ltd v Harrison
1981 (2) SA 283
(C).
16.
The court of appeal also held that it was
generally accepted that the contractual relationship underlying the
operation of a current
account was that of debtor and creditor and
that as such it did not give rise to a fiduciary relationship between
the parties thereto
(paragraph 16 at page 709B). The court further
remarked that there was in any event no reason why the appellant
should be legally
obliged to assist in determining the extent of a
claim against it. (at page 709C.).
17.
In Rectifier and Communications Systems
(Pty) Ltd v Harrison (supra) Watermeyer JP at page 287H to 288B held
that there was no general
principle of law that, when one party did
not know how much it was owed by another, it could demand that the
latter render an account.
The Court remarked that a plaintiff was not
infrequently faced with uncertainty as to the amount of its claim,
but could then solve
the difficulty with resort to discovery
proceedings in terms of the rules of court.
18.
The second defendant did not dispute that
the relationship which came about between the plaintiff and the
respective first defendants
could be of a fiduciary nature as between
them. Nor was it suggested that the respective first defendants would
not have a duty
to account to and debate with the plaintiff. What
counsel for the second defendant submitted with some vigour was that
such a relationship
did not extend to the second defendant, who was
not contractually involved with the plaintiff. In short, the
contractual relations
between the plaintiff and the respective first
defendants were bilaterally concluded and the second defendant was
not a party thereto.
19.
Mr Hattingh, who appeared for the plaintiff
in the exceptions, but who was not the author of its particulars of
claim in the two
actions, submitted that a cession in
securitatem
debiti
amounted to a conglomerate of
incongruous elements. Relying upon the remarks of the court of appeal
in
Grobler v
Oosthuizen
2009 (5) SA 500
(SCA)
at
para 17, counsel submitted that both the cedent and the cessionary
have rights in relation to the performance of the debtor and
by
necessary implication this would include the right to receive an
account from the debtor, as part of the debtor’s performance.
20.
In my view there is no merit in counsel’s
submissions in this regard. The argument confuses the rights and
duties arising
from the contractual relationship which came about
inter partes
between the plaintiff and the respective first defendants with those
which came about between the first defendants and the second
defendant.
21.
The plaintiff’s particulars of claim
contain no grounds upon which it can be suggested that the second
defendant, prior to
the cessions, as the debtor of the respective
first defendants owed them any duty to account. That is not
surprising because the
underlying relationship between the respective
first defendants and the second defendant was one in terms of which
the second defendant
became obliged to pay the relevant first
defendant for construction work performed.
Prima
facie
the nature of their relationship
was one of debtor and creditor. There was no suggestion that the
second defendant stood in any
fiduciary relationship towards the
respective first defendants, or would have any duty to account to
them. Since it is trite that
a cedent cannot transfer to the
cessionary greater rights than the cedent possessed in the first
instance, it follows that the
rights of the respective first
defendants, thus ceded to the plaintiff, would not contain any
entitlement to an accounting as against
the second defendant.
22.
That being so, there is also no basis upon
which the second defendant, after and by virtue of being notified of
the cessions pursuant
to agreements to which it was not a party,
could then become liable to render an account to the cessionary of
its creditor. The
situation appears analogous to that which prevailed
in the Rectifier and Communications Systems matter (supra) and the
solution
to the plaintiff’s difficulties probably lie in
discovery proceedings.
23.
It follows that the plaintiff’s
particulars of claim in both actions are defective and do not
disclose causes of action as
against the second defendant for the
accounting relief sought. Both exceptions should be allowed, with
costs. However, since both
matters were by common consent argued as
one, the Taxing Master should make due allowance for this fact in
assessing the costs
with regard to each individual matter.
24.
In the result I make the following order on
exception by the second defendant to the plaintiff’s
particulars of claim in respect
of each of the actions under case
number 1695/14 and 1696/14;
a.
The exception in each instance is upheld.
b.
The allegations contained in each of the
particulars of the plaintiff’s claims and insofar as any
liability to the plaintiff
by the second defendant is alleged, are
struck out.
c.
The plaintiff is granted leave in respect
of each of the two actions, if so advised, to amend its particulars
of claim within 20
days.
d.
The plaintiff will pay the costs of the
exceptions.
____________________
Van
Z
ӱ
l,
J.
JUDGMENT
RESERVED: 14 OCTOBER 2015
JUDGMENT
HANDED DOWN: 26 MARCH 2015
COUNSEL
FOR PLAINTIFF: ADV. C. HATTING
(Instructed
by DU RANDT DU TOIT & PELSER ATTORNEYS c/o STOWELL & CO. Ref:
A Norgot/DU61/0005Tel: 033 845 0500)
COUNSEL
FOR FIRST DEFENDANT: NO APPEARANCE
COUSEL
FOR SECOND DEFENDANT: ADV. B. S. M. BEDDERSON
(Instructed
by THE STATE ATTORNEY Ref: MR C W DORKIN -289/463/14/T/P7 c/o CAJEE
SETSUBI CHETTY INC. Ref: A ESSA/ND