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[2014] ZAGPPHC 363
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Harris N.O. and Others v Muhanga Mines (Pty) Ltd (47245/2013) [2014] ZAGPPHC 363 (12 June 2014)
IN
THE GAUTENG DIVISION HIGH COURT, PRETORIA
(REPUBLIC
OF SOUTH AFRICA)
Case
Number: 47245/2013
DATE:
12/6/2014
In
the matter between:
GLEN WILLIAM HARRIS N.O.
…....................................................................
FIRST
APPLICANT
RENE-LYNNE
BARRY-KLEYNHANS N.O.
…..........................................
SECOND
APPLICANT
GREYSTONE
TRADING 820
CC
......................................................................
THIRD
APPLICANT
(In
Liquidation)
and
MUHANGA
MINES (PTY)
LTD
..................................................................................
RESPONDENT
JUDGMENT
MOLEFE, J:
[1] This is an
application in terms of which the applicants seek the leave of the
court to amend their notice of motion. The application
is opposed by
the respondent.
Factual
Background
[2] The first and
second applicants are joint liquidators of the third applicant (in
liquidation). The respondent is a creditor
in the estate of the
third applicant.
[3] On 1 August
2013, the applicants launched an application under the
above-mentioned case number in terms of which it sought orders
in the
following terms:
3.1 That all
payments made by the Respondent and on behalf of Greystone Trading
820 CC (in liquidation) and as per the schedule
attached to this
notice of motion as annexure “X” be set aside as a
collusive dealing before the liquidation of Greystone
Trading 820 CC
and in terms of
section 31
(1) of the
Insolvency Act, 24 of 1936
;
3.2 That the
Respondent being a party to a collusive disposition be held to be
liable to make good any loss thereby caused to the
insolvent estate
in question, and that the Respondent be ordered to pay for the
benefit of the estate by way of a penalty, such
sum as the Honouable
Court may adjudge, not exceeding the amount by which the Respondent
benefited and as envisaged in terms of
the provision of
section 31
(2) as read with
section 31
(3) of the
Insolvency Act, 24 of 1936
;
3.3 In the
alternative to prayers 3.1 and 3.2 above, that the payments made by
the Respondent and on behalf of the insolvent company,
Greystone
Trading 820 CC as set out in annexure “X” be set aside as
a voidable preference as set out in terms of the
provisions of
section 30
of the
Insolvency Act, 24 of 1936
;
3.4 In a further
alternative to prayers 3.1, 3.2 and 3.3 above that the payments made
by the Respondent and on behalf of the insolvent
company, Greystone
Trading 820 CC, be set aside as a voidable preference as set out in
terms of the provisions of
section 29
of the
Insolvency Act 24 of
1936
;
3.5 That the
respondent be ordered to pay the applicants the amount of R8 656 309,
30, (Eight Million Six Hundred and
Fifty Six Thousand Three Hundred
and Nine Rand and Thirty Cents) being the total of the payments made
by the Respondent and ostensibly
on behalf of Greystone Trading 820
CC and as per the schedule attached to the notice of motion as
annexure “X”;
3.6 That the
Respondent be ordered to pay the costs of this application on an
attorney and own client scale.
3.7 Further
and/or alternative relief.
[4]
In limine,
the respondent in the answering affidavit raised a contention that
they were of the view that neither the provisions of
section 29
,
30
or
31
of the
Insolvency Act
(“the Act”) entitled the
applicants to obtain the relief sought in prayers 1, 2, 3, 4 and 5 of
the notice of motion
and that the relief could not be granted upon
the facts as set out in the founding affidavit.
[5] Consequently,
and in reply, the applicants indicate that it has always been their
intention to seek the setting aside of the
payments insofar as it
constitutes a discharge in respect of the admitted indebtedness of
the respondent to the third applicant.
The applicants attached
an amended notice of motion, which they state they will seek to move
at the hearing of the application.
[6] The amendment
sought by the applicant in the amended notice of motion is in effect
the following:
6.1 Insofar as
paragraph 1 of the notice of motion is concerned, by including the
words “
. . . . insofar as it is alleged that they constitute
a discharge of debt owed by the respondent to the third applicant”
at the end of the paragraph;
6.2 By amending
paragraph 2 by inserting the words “
being the sum of
R8 656 309, 30”
;
6.3 By amending
paragraph 3 and 4 of the notice of motion by including the words “
-
- - - insofar as it is alleged that they constitute a discharge of
the debt owed by the respondent to the third applicant”
at
the end of the paragraph.
[7] Subsequent to
the filing of the applicant’s replying affidavit and on 8
October 2013, the respondent filed a notice in
terms of
Rule 30
(2)
(b) and
Rule 30A
that the applicants were required to bring a formal
application for amendment prior to amending its notice of motion.
[8] Consequently,
and on 22 October 2013 the applicants filed a notice of intention to
amend in terms of
Rule 28
in terms of which the amendments as set out
in the amended notice of motion are proposed.
[9] The respondent
subsequently filed a
Rule 28
(4) objecting to the proposed amendment
in terms of which the respondent contends that it is prejudiced by
the proposed amendments
in that:
9.1 it contains a
new cause of action which is introduced in the replying affidavit to
which the respondent has not been afforded
an opportunity to respond;
9.2 the relief
sought in terms of the proposed amendment is not supported by
evidence in the founding affidavit;
9.3 the evidence in
support of the relief claimed in the proposed amendment is
inadmissible and ought to be struck out from the
replying affidavit;
9.4 the relief
sought in the proposed amendment is inconsistent with the case upon
which the respondent was called on to meet in
its answering
affidavit;
9.5 there is no
explanation by the applicants as to the late introduction of the
amendment of the notice of motion.
[10] Subsequent to
the respondent’s objection to the amendment, applicants have
launched the current application for leave
to amend which is before
me.
[11] Applicants’
counsel
[1]
submitted that the
general approach to be adopted in applications for amendment has been
set out in numerous cases
[2]
,
however the vital consideration is that an amendment will not be
allowed in circumstances which will cause the other party such
prejudice as cannot be cured by an order or costs and where
appropriate a postponement. Counsel relied in
Union
Bank of SA Ltd v Wolff
1939 WLD
222
at 225.
[12] Counsel for the
applicants argued that the amendment is not material and does not
results in an insurmountable prejudice to
the respondent. From
the applicants’ founding affidavit, it is clear that the
applicants wanted to claim monies from
the respondent, which the
respondent allege that payments made to the creditors constitutes a
discharge of debt owed by the respondent
to the third applicant.
[13] Applicant’s
counsel further argued that if the amendment is granted, the
respondent may file a supplementary affidavit
to make consequential
adjustments to its documents and addressing the issues which the
respondent feels it is prejudiced by.
Furthermore, the
applicants are in terms of
Rule 28
, to tender the wasted costs
occasioned by the proposed amendment which tender has been made in
the notice of amendment.
[14] Respondent’s
counsel
[3]
submitted that the
relief sought by the applicants is incompetent and inconsistent with
the provisions of the Act relied upon.
Counsel argued that the
effect of the relief sought by the applicants in the notice of
motion, is to set aside the payments made
by the respondent to third
parties, who are not joined in these proceedings, and for the relief
the Act makes no provision.
It is counsel’s contention
that the entities referred to in annexure “X”, ought to
have been joined in the proceedings
as they had a material and direct
interest in the subject matter of the relief sought in the
application.
[15] Counsel for the
respondent argued that there is no evidence in the founding affidavit
of any loss suffered by the third applicant
or its creditors as a
consequence of the payments by the respondent to the creditors of the
third applicant. The respondent
relies on the terms of a
written contract between the respondent and the third applicant in
terms of which the respondent was contractually
entitled, in the
course of its contractual relationship with the third applicant, to
make payments to the said third parties, in
the event of the third
applicant not doing so. It is counsel’s argument that the
applicants sought to introduce an
entirely new claim in the replying
affidavit for different relief to that sought in the notice of
motion. This necessitated
the amendment of the notice of
motion, which according to the respondent’s counsel was done in
an irregular manner.
Furthermore, counsel argued that there are
no allegations in the founding affidavit that the payments made by
the respondent to
those entities referred to in annexure “X”
constituted a discharge of the indebtedness of the respondent to the
third
applicant. Accordingly, the relief sought by the
applicant in the amended notice of motion cannot be sustained.
[16] It is the
contention of the respondent’s counsel that payments made by
the respondent to the third party creditors of
the third applicant,
cannot conceivably constitute a collusive dealing or a voidable
disposition, or an undue preference to the
prejudice of the creditors
of the third applicant. If anything, the creditors of the third
applicant benefitted from such
payments because those creditors who
were paid, were no longer creditors in the estate of the third
applicant.
[17] Respondent’s
counsel argued that there were deficiencies in the applicant’s
notice of amendment; the amendment
is not supported by an affidavit;
therefore there is no explanation for the lateness of the notice of
amendment, no evidence to
explain the
bona fides
and no
explanation for the new case which is made in reply. Counsel in
this regard relied in the case of
Oblowitz Bros v Guardian
Insurance Co Ltd 1924 CPD at 84.
It is counsel’s
contention that the amendment is substantial, and attempts to address
and change the cause of action of the
applicants. It was
therefore necessary for the applicants to explain on oath why the
amendment is sought. It is counsel’s
submission that, not
only is it improper for the applicant to introduce a new case in a
replying affidavit, but the evidence will
be inadmissible and cannot
be relied upon to support the new relief sought in the notice of
motion. In the circumstances
the applicants, in seeking an
amendment, after having heard and considered the respondent’s
defence is not
bona fide.
It is counsel’s argument
that the prejudice which the respondent stands to suffer if the
amendment is granted cannot
be cured by a postponement.
Applicable
Legal Principles
[18] The party
seeking an amendment bears the onus of showing that it is made
bona
fide
and that there is an absence of prejudice
[4]
.
The granting or refusal of an application for the amendment of a
pleading is a matter for the discretion of the court, to
be exercised
judicially in the light of all the facts and circumstances before
it. The tendency of South African courts has
been to allow
amendments where this can be done without prejudice to the other
party. In
Moolman
v Estate Moolman
[5]
,
Watermeyer
J reflected the widely held view of our courts when he remarked that:
“
the
practical rule adopted seems to be that amendments will always be
allowed unless the application to amend is mala fide or unless
such
amendment 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”.
[19] In
Macduff
& Co (in liquidation) v Johannesburg Consolidated Investment Co
Ltd
[6]
the court relied on certain passages quoted in
Rishton
v Rishton
[7]
from English decisions to the same effect:
“
My
practice has always been to give leave to amend unless I have been
satisfied that the party applying was acting mala fide, or
that, by
his blunder, he has done some injury to his opponent which could not
be compensated for by costs or otherwise”.
And:
“
However
negligent or careless may have been the first omission and however
late the proposed amendment, the amendment should be
allowed if
it can be made without injustice to the other side. There is no
prejudice if the other side can be compensated
by costs”.
[20] In
Trans-Drakensberg Bank Ltd
case
supra
the court held that the primary object of allowing an amendment is
“
to obtain a proper ventilation of the dispute between the
parties”
. The vital consideration in the decision
whether to grant an amendment is whether the amendment will cause the
other party
“
such prejudice as cannot be cured by an order
for costs and where appropriate, a postponement”.
[21] In
casu,
the applicants in the founding affidavit relied on the provision of
sections 29
(i);
30
or
31
of the Act. The applicants sought an
order in terms of which the dispositions in annexure “X”
are declared disposition
without value, alternatively are declared
voidable preferences, further alternatively are declared an undue
preference to creditors,
further alternatively are declared a
collusive dealing before sequestration.
Section 29
(1) of
the Act provides as follows:
“
Voidable
preference
(1) Every
disposition of his property made by a debtor not more than six
months before the sequestration of his estate or, if he
is deceased
and his estate is insolvent, before his death, which has had the
effect of preferring one of his creditors above
another, may be set
aside by the court if immediately after the making of such
disposition the liabilities of the debtor exceeded
the value of his
assets, unless the person in whose favour the disposition was made
proves that the disposition was made in the
ordinary course of
business and that it was not intended thereby to prefer one creditor
above another”.
Section 30
(1) of
the Act provides as follows:
“
Undue
preference to creditors –
(1) If a debtor
made a disposition of his property at a time when his liabilities
exceeded his assets, with the intention of preferring
one of his
creditors above another and his estate is thereafter sequestrated,
the court may set aside the disposition”.
Section 31
of the
Act provides as follows:
“
Collusive
dealings before sequestration
(1) After the
sequestration of a debtor’s estate the court may set aside any
transaction entered into by the debtor
before the
sequestration, whereby he in collusion with another person, disposed
of property belonging to him in a manner which
had the effect of
prejudicing his creditors or of preferring one of his creditors
above another.
(2) Any person
who was a party to such collusive disposition shall be liable to
make good any loss thereby caused to the insolvent
estate in question
and shall pay for the benefit of the estate, by way of penalty, such
sum as the court may adjudge, not exceeding
the amount by which he
would have benefited by such dealing if it had not been set aside;
and if he is a creditor he shall also
forfeit his claim against the
estate.
(3) Such
compensation and penalty may be recovered in any action to set aside
the transaction in question”.
[22] I am of the
view that there is no evidence in the founding affidavit to support
the relief sought by the applicants in the
notice of motion.
The consequent pro-posed amendment clearly contains a new cause of
action, and which was only introduced
in the replying affidavit.
The relief sought in the proposed amendment is inconsistent with the
case upon which the respondent
was called on to meet in its answering
affidavit. Furthermore, the proposed amendment is not supported
by evidence in the
founding affidavit. The application to amend
would, in my view, cause an injustice to the respondent as the
proposed amendment
will put the respondent in a different position
they were when the notice of motion which it sought to amend was
filed. The
prejudice which the respondent stand to suffer if
the amendment is granted cannot be cured by a postponement or costs
(tendered
by the applicants).
[23] Where no cause
of action existed at the time of the issue of summons, the courts
have been prepared to allow an amendment to
introduce a cause of
action which have come into existence or have been perfected after
the issue of summons only upon proof of
“
exceptional
or special circumstances
[8]
”.
[24] Regarding the
respondent’s objection to the amendment on the basis that it
was not supported by an affidavit, it has
been held that the
application to be made in terms of subrule 28 (4) is not an
application where the formal notice of motion procedure
supported by
affidavit as contemplated in
rule 6
(1) has to be used. Claasen
J in
Swartz v Van der Walt\ T\A Sentraten
1998 (1) SA
53
at 57
stated as follows:
“
In cases
where a mere word or figure requires amendment, it would be totally
absurd to file a notice of motion supported by an
affidavit to secure
such amendments. Affidavits would only be necessary in more
substantial amendments, such as the withdrawal
of admission”.
[25] Delay in
bringing the application for leave to amend will not in itself
constitute a sufficient reason for refusing the amendment.
(See
Trans-Drakensberg Bank Ltd case
supra
).
Where however, the delay causes prejudice to the other party which
cannot be cured by an order for costs and (where appropriate)
a
postponement, the amendment will generally be refused. An
explanation for the delay should be furnished.
In
Rossouw
v Bonthuys
1933
CPD 201
the court indicated
that a party applying for an amendment of the pleading should explain
on affidavit why the pleading was not
put in proper order at the
outset.
In
casu
, the
applicants did not explain the substantial proposed amendment not the
delay in bringing the application for leave to amend.
[26] Due to the
above-mentioned reasons, it is my view that the respondents stand to
suffer prejudice by the proposed amendment
which may not be cured by
costs nor by a postponement.
[27] In the
circumstances, the following order is made:
The application
for the amendment of the notice of motion is dismissed with costs.
______________________
D
S MOLEFE
JUDGE
OF THE HIGH COURT
APPEARANCES:
Counsel
on behalf of Applicants :
Adv. J
Hershensohn
Instructed
by : Deysel Attorneys
Counsel
on behalf of Respondent :
Adv.
Philips Daniels SC
Instructed
by : Malan Scholes INC.
Date Heard :
26 March 2014
Date
Delivered : 12 June 2014
[1]
Adv.
J Hershensohn
[2]
Trans-Drakensberg
Bank Ltd v Combined Engineering (Pty) Ltd
1967 (3) SA 632
(D) at 638
A
[3]
Adv.
Philips Daniels SC
[4]
Krische
v Road Accident Fund
2004 (4) SA 358
(W) at 363
[5]
1927
CPD 27
at 29
[6]
1923
TPD 718
at 720
[7]
1967
(3) SA 632
(D) at 637 A – 641 C
[8]
Western
Bank v Wood
1969 (4) SA 131
(D) at 136