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[2013] ZAGPPHC 173
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Pratt v Firstrand Bank Ltd (27048/2003) [2013] ZAGPPHC 173 (14 June 2013)
NOT
REPORTABLE
IN THE HIGH COURT OF SOUTH AFRICA
(NORTH GAUTENG HIGH COURT)
Case
Number: 27048/2003
Date:14/06/2013
In
the matter between:
AEM
PRATT
…..........................................................................................................
PLAINTIFF
And
FIRSTRAND
BANK
LIMITED
....................................................................................
DEFENDANT
JUDGMENT
Fabricius
J,
1.
The
only issue before me is whether or not to uphold par. 1 of First
Defendant’s replication (Pleadings Bundle 159.1 to 159.4)
to
the effect that par. 2 of Ms. Pratt’s plea to First Defendant’s
counter claim is
res judicata
.
I
was provided with various bundles of documents by agreement between
the parties, and Counsel’s very detailed heads of argument
for
which I am very grateful.
The
relevant background facts are fully set out in a judgment of
Mokgoatlheng AJ of 5 April-2007-under case no: 27048/03. 1 do not
intend to repeat all of them. For present purposes however it is
necessary to refer to some detail, and to have regard to the relevant
pleadings.
3.
On
25 September 2003 Ms. Pratt instituted action against inter alia
Firstrand, for an order declaring that “the agreement
between
Plaintiff and First Defendant, contained in annexure “AP1”,
“AP2” and “AP3” and in
annexure “B”
to annexure “AP6” to the particulars of claim, ab iniotio
null and void.” She had entered
into, amongst others, a loan
agreement with First Defendant, being the Bank, and, having pleaded
the relevant background to that
loan, she pleaded that the relevant
amount lent to her “exceeded the fair value” of a certain
shareholding and, that
the relevant annexures referred to in her
prayer for the relief sought, constituted a transaction or
transactions whereby capital
or a right to capital was directly or
indirectly exported from the Republic of South Africa in
contravention of Exchange Control
Regulation 10(1 )(c), and
accordingly, the loan agreement was at all times null and void. This
regulation was promulgated in terms
of s9 of the Currency and
Exchange Act 9 of 1933. I may just mention that her case based on
Regulation 3(1 )(e) was later abandoned.
The other Defendants are not
before Court.
4.
On
16 November 2004 Firstrand pleaded to the particulars of claim, and
also raised a counter-claim for the repayment of the loan
advanced by
it. Ms. Pratt then pleaded to Firstrand’s counter claim, and
denied liability to repay the loan advanced to her
by Firstrand on
the grounds that the loan agreement was void because it formed part
of a suite of agreements that contravened Regulation
10(1)(c).
5.
The
matter proceeded to trial on 31 January 2007, and the separated
issues before the court were then the following (as formulated
by the
parties):
4.1
do the agreements as “AP1” to “APb”
of
the Plaintiff’s particulars of claim constitute transactions
falling within the ambit of Regulations 3(1 )(e) and 10(1)(c)?
4.2
If so, did the First Defendant have permission to conclude such
agreement and/or was the First Defendant exempted from the
provisions
of Regulation 3(1 )(e) and 10(1 )(c)?
4.3
If not, were the agreements a contravention of Regulation 3(1 )(e)
and 10(1 )(c)?
4.4
If so, did the contravention of Regulation 3(1 )(e) and 10(1 )(c)
result in the agreements being null and void?
Ms.
Pratt gave no evidence during those proceedings, but Firstrand lead
the evidence of Mr.Ribbens, who was the Bank’s head
of the
foreign exchange division, and was also the bank’s official
representative at the quarterly committee meetings of
the South
African Reserve Bank. He was not cross- examined.
I
may just mention in the context of the questions posed to the court,
that the learned acting judge was in agreement with the decision
of
Couve and Another v Reddot International (Pty) Ltd
2004 (6) SA 425
(W) to the affect that an agreement witch contravened the provisions
of regulation 10(1)(c) was null and void. In Oilwell (Pty)
Ltd v
Protec International Limited and Others
2011 (4) SA 394
(SCA), the
court disagreed with that decision, amongst others on the basis that
the Treasury could consent to any transaction ex
post facto, and
because the relevant legislation contained a penalty clause.
Before
concluding that the mentioned agreements constituted transactions
falling within the ambit of regulation 10(1 )(c), and that
Firstrand
had permission to conclude the agreements, and that they did
therefore not contravene the said Regulations, and were
therefore not
null and void, the learned judge dealt with the evidence, and held in
par. 143 of the judgment that Plaintiff had
not proven on a balance
of probabilities that the Bank knew that the amount of R25m
significantly exceeded fair value of the particular
70% shareholding,
and furthermore that the relevant transaction was concluded at
arms-length.
Accordingly
the learned acting judge dismissed Plaintiff’s action. I must
mention that the learned acting judge found, as
a matter of fact,
that the right to export capital accruing from the purchase of shares
by a non-resident is a prior approved and
committed transaction, and
that therefore the present type of transaction was permitted in terms
of Regulation 10(1 )(c). The conclusion
of the court was based on the
evidence received by it which was not challenged. In the context of
the relevant transaction being
concluded at arms-length, reference
was made to the market related price as contemplated in Exchange
Control Ruling E5(A)(i)(a).
6.
Ms.
Pratt appealed to the Supreme Court of Appeal and on 12 September
2008 the appeal was dismissed with costs.
The
judgment of the Supreme Court of Appeal also briefly sets out the
relevant background, and I deem it important to repeat what
the Court
said regarding Plaintiff’s case: “Her case as pleaded was
that the agreements or the implementation constituted
a transaction
whereby capital or a right to capital was directly or indirectly
exported from the Republic in contravention of Exchange
Control
Regulation 10(1 )(c), because no exemption or permission to do so was
granted by the Treasury or a person authorised by
the Treasury, and a
loan agreement, being part of that transaction, was illegal, null and
void and unenforceable at the instance
of the Respondent.”
There was no dispute in the appeal that regulation 10(1)(c) was
engaged by the agreements or certain
of them. The Supreme Court of
Appeal then dealt with the onus of proof, and held that Ms. Pratt was
at all times required to plead
the illegality relied on, and to
adduce evidence of all necessary and relevant facts to support her
claim. The incidence of the
onus was therefore of the greatest
importance, and the cardinal question in the first stage of the case
was compliance (or not)
with the requirements of Regulation 10(1)(c).
The failure by her to adduce any evidence of absence of permission
should have been
fata! to the success of her claim. Since however
evidence was placed before the Court concerning the issue of
permission, this
could not be ignored, and the Court then dealt with
its admissibility and substance. In the context of the Bank’s
purpose
in presenting the evidence to show that if the transactions
were struck by regulation 10(1 )(c), which they were, it was held,
that the export of capital or the right to capital took place with
permission granted by the Treasury, and in accordance with whatever
conditions it had imposed. In the particular context Mr.Ribbens had
explained that Ruling E5(c)(a) was a blanket permission granted
to
remit off-shore the proceeds of the sale of securities owned by
foreigners, provided that that was affected through normal banking
channels. His evidence in the historical context of slackening of
exchange controls upon assets held by non-residents, and evidence
of
such ongoing practice by authorised dealers at the behest of the
Reserve Bank gave rise to a rebuttable inference of fact, viz
that
the practice had the approval of the Reserve Bank. The Appellant did
not challenge this evidence, The Supreme Court of Appeal
then held
that the evidence established that the Respondent had been authorised
to remit the proceeds of the relevant sale.
7.
I
must mention that it was the Bank’s case, via Mr. P. Louw SC,
that the relevant permission had been granted when Standard
Bank
stamped the particular share certificate on 8 May 2000, which was
prior to Firstrand Bank’s involvement in the matter.
His point
was, having regard to the evidence of Mr. Ribbens, and the way that
the issues were pleaded, and put before the Court,
that the relevant
permission had been granted as a matter of course, taking into
account the practice that had evolved between
the Reserve Bank and
authorised dealers in the present context. It is clear from the
judgment of the learned judge of appeal, Heher
JA, that the Court
held that the relevant permission had been granted, and on that basis
it dismissed the appeal, but did not make
any order in respect of the
counterclaim.
8.
Some
19 months after the dismissal of her appeal, Ms. Pratt gave notice of
her intention to amend her plea to Firstrand’s
counter claim.
This amendment was granted during July 2010. The affect of this
amendment in essence is the allegation that Firstrand
devised and
implemented the transactions on behalf of her, with the intention of
circumventing regulation 10(1)(c) of the regulations,
and that in
consequence the suite of agreements, including the loan made to her,
were illegal and thus null and void. In the alternative,
she
contended that because Firstrand exceeded its authority as an
authorised dealer to remit the proceeds of the sale of the particular
shareholding in Aem Pratt and Associates through normal banking
challenge, it did not have the necessary permission by Treasury,
and
in consequence again, the agreements were illegal and therefore null
and void.
As
a result, Firstrand delivered a replication in which it introduced
the defence of res judicata, and that is the question that
I have to
decide. As I have said, Counsel went to great lengths, (for which I
thank them) to place all relevant facts and argument
before me,
principally relating to the facts that I have mentioned (briefly),
and the legal principles relating to res judicata
issues. I think it
is fair and concise to say that Mr. P. Louw SC’s argument was
that the question whether Firstrand had
permission or not to conclude
such agreements., had been before Mokgoatiheng AJ, had been decided
in the affirmative by him, and
that his decision had been upheld on
appeal. The issue of permission had thus been decided once and for
all. It was res judicata,
whether the decisions were right or wrong.
What Ms. Pratt now sought by way of the mentioned amendments was to
have the issue of
permission retried on the basis that there were two
further alternative reasons why the finding of the provincial
division and
the Supreme Court of Appeal was wrong. It was wrong
amongst others because neither of the Courts had the facts at hand
that she
now wished to place before this Court. Having regard to the
pleadings, and the evidence and the judgments, it was the Bank’s
case, in deciding the question of res judicata, that the approach
must be one as on exception i.e. that the relevant allegations
contained in the amended plea must be taken as proven, and it must
then be determined whether the ultimate case made out, sought
to
contradict the findings of the previous Courts. No evidence could be
produced on this issue.
9.
I
may mention at this stage that Mr. Harris SC sought to lead the
evidence of Ms. Pratt and Mr. Bruce-Brand to explain to me why
the
former had not been called as a witness in the proceedings, what the
relevant circumstances had been at the time, and how the
issue of the
alleged fraudulent conduct of the bank had risen and when. Mr.
Bruce-Brand in turn wished to give evidence how the
Reserve Bank
would have regarded a certain hypothetical case. During the
proceedings before me, and after due consideration of
the relevant
facts, I decided that this evidence was irrelevant and therefore
inadmissible. Ms. Pratt gave no evidence in the original
proceeding
and her Counsel preferred not to challenge the evidence of Mr.
Ribbens. Having regard to the issues that were before
the trial Court
and the Supreme Court of Appeal, I fail to see how that evidence
could be of any relevance herein. Apart from that,
It would be
grossly unfair to the Bank to allow such evidence of this stage of
the proceedings, and it would, in the absence of
any substantive
application, in essence amount to a re-opening of Plaintiff’s
case.
10.
I
do not deem it necessary to refer to all the judgments that Counsel
for both sides had placed before me in the context of a plea
of res
judicata and issue- estoppel. See: Janse van Rensburg and Others NNO
v Steenkamp and Another
2010 (1) SA 649
(SCA) at 660 to 661.
Mr.
Harris SC on behalf of Plaintiff pointed out that her allegation of
First Defendant having committed fraud, does not appear
anywhere in
the pleadings, nor was it an issue either before the trial Court or
before the SCA. Looking at that in isolation this
submission is
factually correct. Mr. Louw SC in turn argued that the central
question before the Courts was the question of permission.
The Courts
had found that permission had been granted on a blanket basis, and
this finding stood, it cannot be varied, and it was
not open to
anyone to challenge it, even it was wrong. The further reason that
Ms. Pratt now wish to advance amounted to a challenge
of a central
finding, and ought not to be allowed. In any event they were mere
facta probantia. The central issue between the parties
was the
absence or presence of permission, and this was die factum probandum
that had been finally decided by the SCA.
This
could not be undone by now relying on facta probantia. A factum
probandum is a fact in issue and facta probantia are facts
relevant
to the facts in issue. Sometimes different phrases are used such as
“main fact in issue” and “subordinate
or collateral
fact in issue”. See: Schmidt Bewys reg, 4th ed. Lexis Nexis
2000 at 388 to 390.
11
.
It
is clear from the relevant decisions, and especially those of Smith v
Porritt
2008 (6) SA 303
(SCA) and Janse van Rensburg v Steenkamp
supra, that the defence of res judicata must require careful
scrutiny, that each case
will depend on its own facts, and that any
extension of the defence will be on case-by-case basis. Relevant
considerations will
include questions of equity and fairness, not
only to the parties themselves but also to others. It is at this
stage convenient
refer to a summary of the whole debate by Leach AJA
in Yellow Star Properties 1020 v MEC, Gauteng
2009 (3) SA 577
(SCA)
at 586 par. 21 and 22:
“
...it
is necessary to deal with the principles of res judicata and
so-called “issue estoppel” relied on by both sides.
The
underlying ratio of the exceptio rei judicatia vel litis finitae is
that where a cause of action has been litigated to finality
between
the same parties on a previous occasion, a subsequent attempt by one
party to proceed against the other on the same cause
of action should
not be permitted. In National Sorghum Breweries Limited (tla Vivo
African Breweries) v International Liquor Distributors
(Pty) Ltd
[2000] ZASCA 159
;
2001
(2) SA 232
(SCA)... at 239 par 2 Olivier JA stated the requirements
for a successful reliance on the exceptio to be as follows: “the
requirements for a successful reliance on the exception were, and
still are: idem actor, indem reus, eadem res and eadem causa
pentendi. This means that the exception carrbe raised by a defendant
in their later suit against a plaintiff who is “demanding
the
same thing on the same ground” (See: Steyn CJ in African Farms
and Townships Limited v Cape Town Municipality
1963 (2) SA 555
(A) at
562A), all which comes to the same thing, “on the same cause
for the same relief (per von Wissen AJA in Custom Credit
Corporation
(Pty) Ltd v Shembe
1972 (3) SA 462
(A) at472A to B, see also the
discussion in Kommissaris van Binnelandse Inkomste v ABSA Bankk
Beperk 1995(1) SA 653 (A) at 664C
to E; or which also comes to the
same thing, whether the “same issue” had been adjudicated
upon (See: Horowitz v Brock
and Others
1988 (2) SA 160
(A) at 179A to
H).
It
has been recognised that though the strict requirements of the
exception, especially those relating to eadem res or eadem petendi
causa (the same relief and the same cause of action), may be relaxed
where appropriate. Where a defendant raises as a defence that
the
same parties are bound by a previous judgment on the same issue (viz
idem actor and eadem questio), it has become common place
to refer to
it as being a matter of so-called “issue estoppef’. But
that is merely a phrase of convenience adopted
from English Law, the
principles of which have not been subsumed into our law, and the
defence remains one of res judicata. Importantly
when dealing with
issue estoppel, it is necessary to stress not only that the parties
must be the same, but that the same issue
of fact of law which was an
essential element of the judgment on which reliance is placed must
have arisen, and must be regarded
as having been determined in the
earlier judgment.”
12.
I
deem this brief summary by the learned acting judge of appeal as
being appropriate in the present proceedings. It is in my view
clear
from the judgment of the SCA, the judgment of the trial Court, and
the evidence presented therein, as well as the relevant
pleadings
between the parties, that the issue which was an essential element in
the litigation between the parties is one of permission
by the
Reserve Bank for the particular transaction in the context of the
evidence of Mr.Ribbens and of course, having regard to
the share
certificate endorsed by Standard Bank prior to the entering into of
the contracts which form part of Plaintiff’s
particulars of
claim. That issue has been decided, and that essential issue cannot
now be revisited by way of reliance on the allegation
contained in
the amended plea. That topic, in my view, is in any event one that
would be referred to as being a facta probantia.
See in this context:
Dusheiko v Mifbern
1964 (4) SA 648
(A) at 658A where the following
was said: "I venture to think that most difficulties will in
practice be resolved if, in applying
the definition stated in
Mckenzie v Farmers Cooperative Meat Industries Limited (supra)
in any given case, it is born in mind
that the definition relates
only to “material facts”, and if at the same due regard
be paid to the distinction between
the facta probanda and the facta
probantiaIn this context “cause of action” was defined in
the mentioned Mckenzie decision
1922 AD 16
at 23 as “every fact
which it would be necessary for the Plaintiff to prove, if traversed,
in order to support his right
to the judgment of Court. It does not
comprise every piece of evidence which is necessary to prove each
fact, but every fact which
is necessary to be proved.” Further,
in Evans v Shield Insurance Company Limited
1980 (2) SA 184
(A)
at825G where it was said that “cause of action...is ordinarily
used to describe the factual basis, the set of material
facts, that
begets the plaintiff’s legal right of action.”
13.
It
is clear in the light of all of the above that it was, and is
Plaintiff’s case that there was no permission in the context
of
the mentioned Regulation 10(1 )(c) read with the relevant ruling that
applies to South African assets owned by non-residents.
In my view it
is clear that Plaintiff’s amendment persist with this approach
which, in my, has already been decided. In the
amendment she raises
the same issue which was an essential element of the judgment on
which reliance was placed. It is differently
worded, of course, but
the essence of her attack, if! can call it that, remains the same.
14.
For
the sake of completeness I must however repeat the Bank’s
argument, that permission was already in place before the various
contracts that Plaintiff refers to in her particulars of claim, were
concluded. This is clear from the evidence of Mr.Ribbens and
the view
of the SCA on appeal as well. If that is so, the Bank’s conduct
at the time, even if it is accepted to be true for
present purposes,
is irrelevant.
15.
In
the light of all of the above the following order is made in the
context of Plaintiff’s amendment of her plea to First
Defendant’s counter claim: it is declared that the question of
the validity of the loan agreement, in the context of Regulation
10(1)(c) that this Court, and on appeal the Supreme Court of Appeal,
has finally decided that issue, and First Defendant’s
plea of
res judicata in this context is therefore upheld with costs,
including the costs of two Counsel.
JUDGE H J FABRICIUS
JUDGE
OF THE NORTH GAUTENG HIGH COURT
Case
number : 27048/2003
Counsel
for the Plaintiff: Adv. L Harris SC
Adv.
A Steyn
Instructed
by: Van Zyl Hertenberger Inc.
Northcliff
Counsel
for the First Defendant: Adv Louw SC
Adv.
M. Chohan
Instructed
by: Routledge Modise Incorporated
Sandton
Heard
on: 05 June 2013
Date
of Judgment: 14 June 2013