Aeroquip South Africa (Pty) Ltd v Gross and Others (36949/2008) [2009] ZAGPPHC 25; [2009] JOL 23441 (GNP) ; [2009] 3 All SA 264 (GNP) (16 April 2009)

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[2009] ZAGPPHC 25
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Aeroquip South Africa (Pty) Ltd v Gross and Others (36949/2008) [2009] ZAGPPHC 25; [2009] JOL 23441 (GNP) ; [2009] 3 All SA 264 (GNP) (16 April 2009)

IN
THE HIGH COURT OF SOUTH AFRICA
(NORTH AND SOUTH GAUTENG HIGH
COURT, PRETORIA)
Date:
2009-04-16
Case
Number: 36949/2008
In the
matter between:
AEROQUIP
SOUTH AFRICA (PTY) LTD
Applicant
and
ANDRE
GROSS
First Respondent
ROUSSEAU NELL & LOMBARD
ATTORNEYS
Second Respondent
JOHANNES JACOBUS ROUSSEAU
Third Respondent
JUDGMENT
SOUTHWOOD
J
[1] The
applicant applies on notice of motion for a final order that –
(1) the
first respondent pay to the applicant the sum of R234 723,28
together with interest thereon calculated at the rate of
15,5 %
per annum from 3 July 2007 to date of payment;
(2) the
second and third respondents, jointly and severally, pay to the
applicant the sum of R193 000 alternatively R143 000 together
with
interest thereon calculated at the rate of 15,5 % per annum from 20
July 2006 to date of payment;
(3) the
first, second and third respondents pay the costs of the
application, jointly and severally, on the scale as between

attorney and own client.
In
each case the applicant seeks an order that the liability of the
respondent or respondents be joint and several with that
of the
other respondents. The respondents oppose the application and
have filed separate answering affidavits.
[2] The
applicant seeks final relief on notice of motion. Where there are
disputes of fact on the affidavits final relief can be
granted only
in the circumstances set out in
Plascon-Evans Paints Ltd v Van
Riebeeck Paints (Pty) Ltd and Another
1984 (3) SA 620
(A)
at 634E-635C. The general rule is that a final order may be
granted if the facts averred in the applicant’s affidavits which

have been admitted by the respondent, together with the facts
alleged by the respondent justify such an order. In argument the
applicant’s counsel argued that the court should reject the
evidence of the third respondent. The applicant’s counsel and
the
second and third respondent’s counsel also argued, as a last
resort, that the issue of what was discussed on 20 July 2006
between
the applicant’s attorney, Mr Alex Eliot, and the third respondent,
be referred to oral evidence.
[3] The
applicant’s claim against the first respondent is based on a
written acknowledgment of debt in terms of which the first
respondent undertook to pay to the applicant an amount of R505
860,12. The first respondent would pay this amount in instalments
and there was an acceleration clause in terms of which the full
amount outstanding would become due and payable immediately in
the
event that the first respondent failed to pay any instalment in
accordance with the terms of the acknowledgement of debt.
The
applicant claims the full balance outstanding because the first
respondent failed to pay the instalments in accordance with
the
terms of the acknowledgement of debt. None of these facts is
disputed by the first respondent which relies on a number of
contentions as to why he should not be held liable.
[4] In
the applicant’s founding affidavit the applicant relies on three
causes of action for the order it seeks against the second
and third
respondents. The applicant’s primary cause of action (‘main
claim’) is an oral undertaking given by the third
respondent
(‘Rousseau’) on 20 July 2006 to pay to the applicant’s
attorney, Knowles Husain Lindsay Inc (‘KHL’), the funds
held in
trust by the second respondent to discharge the applicant’s claim
against East Auto Hydraulics CC (‘East Auto’ or
the
‘corporation’) upon production of the court order obtained by
the applicant against East Auto on 20 July 2006. The applicant’s
first alternative cause of action is a written
stipulatio alteri
given on 26 April 2005 in terms of which Rousseau undertook to
retain in his trust account as security an amount of R193 000 for
the capital and costs of the applicant’s claim against East Auto
and to pay that amount to the applicant which the applicant
accepted
by conduct ‘after the undertaking was given … and at the latest
on 20 July 2006’. The applicant’s second alternative
cause of
action is that the applicant was the owner of the funds referred to
in the written undertaking dated 26 April 2005 ‘or
at the very
least, had a claim to ownership of those funds’ which were
earmarked for payment to the applicant. In the applicant’s
founding affidavit there is no suggestion that the applicant’s
claim is delictual.
[5] In
the applicant’s replying affidavit the applicant makes allegations
pertinent to a delictual claim. In the applicant’s
practice note
the applicant’s counsel states that ‘the applicant claims
delictual damages on account of the fraudulent alternative
negligent
dissipation of trust funds earmarked as security for the applicant’s
claim’. In his heads of argument the applicant’s
counsel
contends that the case against the second and third respondents is
‘founded upon their breach of a duty of care owed
to the
applicant’ and in the alternative that the second and third
respondents have breached the oral agreement to transfer the
security held in trust after receipt of the court order of 20 July
2006.
[6] The
general rule is that the applicant must make out its case in its
founding affidavit and is not entitled to introduce new
matter in
its replying affidavit – see
Director of Hospital Services v
Mistry
1979 (1) SA 626
(A) at 635G-636B.
Where the
applicant introduces new matter in its replying affidavit the court
may either ignore or strike out the new matter which
should have
been in the founding affidavit – see
Tittys Bar and Bottle
Store (Pty) Ltd v ABC Garage (Pty) Ltd
1974 (4) SA 362
(T) at 368G-H
and
Shepherd v Mitchell Cotts Seafreight
(SA) (Pty) Ltd
1984 (3) SA 202
(T) at 205E-G.
As
pointed out in the latter case the court has an overriding
discretion to allow an applicant to introduce new matter in its
replying
affidavit where its omission from the founding affidavit is
properly explained. The second and third respondents rely on the
general
rule and ask that the court ignore the allegations
pertaining to the applicant’s delictual action. It is clear that
all the
facts were known to the applicant before it launched this
application and it obviously decided not to claim damages for
delict.
Such damages are usually claimed in action proceedings.
Now the applicant is attempting to claim delictual damages after all

the facts pertaining to its contractual claims have been canvassed
in the founding and answering affidavits. The second and third
respondents have clearly understood the case against them to be
based on contract and have answered accordingly. In the
circumstances
it is ruled that the applicant may not rely on the
delictual cause of action in the replying affdidavit.
[7] The
relevant facts which are admitted or are alleged by the respondents
may be summarised as follows:
(1) In
about January 1989 the applicant and East Auto, which carried on
business in the hydraulics industry, entered into a
written
distributor agreement in terms of which East Auto undertook to
purchase all its hydraulic equipment requirements from
the
applicant;
(2) In
May 2001 East Auto purchased hydraulic equipment to the value of
R185 473,19 from the applicant which the applicant
duly delivered
to East Auto;
(3) East
Auto failed to pay for this hydraulic equipment and eventually the
applicant instituted an action against East Auto
for payment of
R185 473,19 alternatively R142 153,38. On 3 August 2004 the
applicant obtained judgment by default against
East Auto for
payment of the sum of R142 153,38 and interest thereon calculated
at the rate of 15,5 % per annum from 29 October
2003 to date of
payment;
(4) In
October 2004 East Auto represented by Rousseau launched an
application for the rescission of the default judgment granted
on
3 August 2004. The corporation’s sole member, Geoffrey Dereck
Wingate-Pearse, deposed to the affidavit in support of
the
application for rescission. On 15 April 2005 Claassen J granted
the application for rescission;
(5) On
13 April 2005, i.e. two days before the court rescinded the
default judgment, Wingate-Pearse, who held the entire members
interest in East Auto, entered into an agreement with the first
respondent in terms of which he, Wingate-Pearse, sold the entire
members interest to the first respondent. Clause 3 of the
agreement reads as follows:
‘PURCHASE
PRICE
3.1 The
PURCHASE PRICE of the INTEREST is the sum of R1 000 000 (one
million Rand) only.
3.2 The
PURCHASE PRICE shall be paid by the PURCHASER as follows:
3.2.1 The
full amount being advanced by the PURCHASER’S BANK shall be
payable in trust to attorneys J.J. Rousseau
on the date that
the bank makes the amount available but not later than 15 April
2005, and;
3.2.2 The
PURCHASE PRICE shall be kept in trust pending the transfer of
possession of the BUSINESS to the PURCHASER
on the Effective
Date, and the signing of CK2 documents and cession of loan
accounts by the SELLER in favour of the
PURCHASER or his
nominee.
3.3. The
Parties hereby authorise and instruct Attorney J.J. Rousseau to
pay all creditors of the CLOSE CORPORATION and
then pay the
balance of the PURCHASE PRICE over to the SELLER upon
fulfilment of clause 3.2.2. The SELLER warrants
that he will
prior to the Effective Date disclose all creditors to Attorney
J.J. Rousseau.’
Clause
6.1.10 of the agreement reads as follows:
‘WARRANTIES
6.1 The
SELLER hereby warrants and represents to the PURCHASER that as
at the effective date:
6.1.10 There
are no litigation, arbitration, criminal or civil proceedings
in which the CLOSE CORPORATION is engaged,
nor is the
SELLER aware of any facts likely to give rise to any such
litigation, arbitration, civil or criminal proceedings.’
(6) Rousseau
was acting on behalf of East Auto in the action by the applicant
against East Auto. When the agreement in respect
of the members
interest in East Auto was prepared and signed, Rousseau pointed
out to Wingate-Pearse that he, Wingate-Pearse,
must inform the
first respondent about the applicant’s action against East Auto.
Wingate-Pearse replied that he would not
do this as the
applicant’s claim was without merit and would not succeed and
he, Wingate-Pearse, intended to deal with the
claim against East
Auto.
(7) On 22 April 2005, after
receiving a copy of the agreement, the applicant’s attorneys,
KHL, informed the first respondent’s
attorneys, Brandmullers
Attorneys (‘Brandmuller’) of the applicant’s action against
East Auto, which was still pending.
On 25 April 2005 Brandmuller
addressed a letter to Rousseau to inform him that his client,
Wingate-Pearse, had breached the
aforementioned warranty which, in
any event, was a misrepresentation. On 26 April 2005 Rousseau
replied to Brandmuller’s
letter and confirmed that the
applicant’s claim was for R142 153,38 and that –
‘
Ons
plaas ‘n bedrag van R193 000 op trust ten einde die kapitaal en
koste te dek. Ons is van mening dat Aeroquip geen eis
teen ons
kliënt het nie en is van voorneme om die aksie te verdedig’
On
the same day Rousseau addressed a letter to KHL in which he stated
that East Auto had a
bona fide
defence to the applicant’s
claim, that the agreement between the first respondent and
Wingate-Pearse was of no concern to
the applicant and that he had
given sufficient security to the first respondent.
On
4 May 2005 Brandmuller unsuccessfully demanded more security for
the first respondent’s claim.
(8) Until
1 July 2005 Rousseau practised as a sole practitioner under the
name J J Rousseau Attorneys. From 1 July 2005 until
1 November
2005 Rousseau practised in partnership with Ms Leonie Nell. On 1
November 2005 Mr Drikus Lombard bought out Rousseau’s
interest
in the partnership and from that date Rousseau was employed as a
consultant by J J Rousseau Attorneys. Later, the
second
respondent purchased the practice of J J Rousseau and Rousseau
continued to work for the second respondent as a consultant;
(9) In
about May 2006 Lombard took over the file in the case between the
applicant and East Auto but Wingate-Pearse was not
satisfied that
Lombard continue to conduct his matters and terminated his mandate
to the second respondent. On about 2 June
2006 the second
respondent withdrew as attorney of record in the action.
(10) On
20 July 2006 Legodi J heard the matter. He dismissed the
corporation’s defence and granted judgment against it for
payment of R185 473,19, interest thereon calculated at the rate of
13,5 % per annum compounded monthly from 15 July 2001 to
date of
payment and costs of suit on the scale as between attorney and
client;
(11) On
20 July 2006 the applicant’s attorney, Mr Alex Eliot, of KHL,
telephoned Rousseau, informed him that judgment had
been granted
in favour of the applicant and requested him to pay over to KHL
the money held in trust by the second respondent.
On 25 July 2006
Eliot addressed a letter to Rousseau in which he referred to the
telephone conversation of 20 July 2006, enclosed
a copy of the
court order of 20 July 2006 and asked Rousseau to transfer all
amounts held by the second respondent in its trust
account in
relation to East Auto into KHL’s trust account. On 28 July 2006
Lombard answered KHL’s letter and informed
KHL that all funds
which the second respondent had held in trust had been paid to
East Auto’s new attorney, Bra
ϋckman
n
Jooma Attorneys.
On 11 August
2006 KHL addressed a letter to Braϋckmann Jooma in which KHL set
out the history of the litigation and the funds
held in trust and
demanded that Braϋcmann Jooma pay R193 000 into KHL’s trust
account to be held in trus
t by KHL for
the benefit of the applicant. This letter indicates that a copy
was sent to Rousseau of Rousseau Nell and Lombard.
On 14 August
2006 Bra
ϋckman
n
Jooma replied to his letter and confirmed that they had received
R143 000 from the second respondent and that they had paid
over
all the funds to Wingate-Pearse on whose instructions they acted.
Bra
ϋckman
n
Jooma also stated that they had not given an undertaking to retain
any funds on trust and that they did not have any funds
which they
could pay over to KHL;
(12) In
August 2006 the applicant issued a writ of execution pursuant to
the judgment obtained on 20 July 2006 and the sheriff
attached
machinery belonging to East Auto. When the corporation failed to
make arrangements to pay the judgment debt the applicant
instructed the sheriff to arrange a sale in execution of the goods
attached. The sheriff arranged for such a sale to be held
on 11
October 2006;
(13) On
10 October 2006 the first respondent and East Auto, represented by
its new member, Lourens van Wyk, signed the acknowledgment
of debt
in favour of the applicant, and the applicant instructed the
sheriff to cancel the sale in execution. The first respondent
agreed to bind himself in his personal capacity as debtor for the
debts of East Auto to the applicant;
(14) The
sum of R505 860,12 for which the first respondent acknowledged his
indebtedness is made up as follows –
(i) R185
473,19 in respect of the applicant’s claim against East Auto;
(ii) R180
386,93 in respect of interest on the capital amount of R185
473,19 calculated at the rate of 13,5 % per annum compounded
monthly from 15 July 2001 to 4 August 2006.
(iii) R140
000 in respect of the applicant’s agreed costs;
(15) In
terms of the acknowledgement of debt the first respondent undertook
to pay the debt owing as follows:
(i) R50
000 on or before 16 October 2006;
(ii) equal
instalments of R30 000 per month for six months up and until 1
April 2007;
(iii) the
balance in equal monthly instalments of R40 000 commencing on 1
May 2007;
(16) In
terms of the acknowledgement of debt the full balance would become
payable immediately in the event of the first respondent
failing to
pay any instalment in accordance with the agreement;
(17) The
first respondent failed to pay all the instalments in accordance
with the acknowledgment of debt and the applicant
decided to
proceed against the first respondent for payment of the full
balance owing: i.e. R234 732,28.
(18) The
balance owing to the applicant by the first respondent in terms of
the acknowledgement of debt is R234 732,28 together
with interest
thereon calculated at the rate of 15,5 % per annum compounded
monthly from 3 July 2007 until date of payment.
[8] The
first respondent raises the following contentions:
(1) The
acknowledgement of debt signed by the first respondent is in
reality a suretyship by the first respondent for East
Auto;
(2) The
applicant was obliged to execute against East Auto before
proceeding against the first respondent and should have proceeded
with the sale in execution. Had it done so this application would
not have been necessary;
(3) The
applicant was also obliged to proceed against East Auto when it
was placed in liquidation. Had it done so this application
would
not have been necessary;
(4) In
the circumstances it would be unreasonable and inequitable for the
court to grant the relief sought against the first
respondent;
(5) Rousseau
was
mala fide
and dishonest
vis-à-vis
the
applicant;
(6) Rousseau
should have retained R193 000,00 to cover the capital and costs of
the applicant’s claim;
(7) Rousseau
should be ordered to pay the entire amount outstanding to the
applicant.
[9] The
second and third respondent’s contend that they did not give an
undertaking to pay the applicant’s claim to the applicant
and that
at best for the applicant there is a dispute of fact on the issue
which was foreseeable. They deny that Rousseau’s
letter to
Brandmuller of 26 April 2005 was a
stipulatio alteri
in
favour of the applicant and that the applicant accepted the benefit
of the stipulation. They also deny that the funds held in
trust by
Rousseau and/or Rousseau Nell and Lombard were earmarked for payment
to the applicant. The second and third respondents
have not dealt
with the applicant’s delictual claim for damages.
[10] The
case against the first respondent is straightforward. The first
respondent admits that he signed the acknowledgement of
debt; that
it contains the terms relied upon; that the amount claimed is owing
and that it is due and payable. It is clearly not
a deed of
suretyship and accordingly must not be dealt with as such. There is
no merit in the contention that the applicant was
obliged to execute
against East Auto before proceeding against the first respondent.
No authority is relied on in support of this
contention. There is
also no merit in the contention that Rousseau should have paid the
sum of R193 000 to the applicant and should
now be ordered to pay
the entire claim against the first respondent. No authority is
relied on in support of this contention.
The acknowledgement of
debt is clearly a separate and valid and enforceable cause of action
against the first respondent – see
Adams v SA Motor Industry
Employers Association
1981 (3) SA 1189
(A)
at 1198B-F
- and he must be held liable in accordance with its terms. In
short, the first respondent has not put up a legal defence
to the
applicant’s claim against him and the applicant is entitled to the
relief claimed.
[11] As
already mentioned the applicant’s main cause of action against the
second and third respondents is an undertaking to pay
the
applicant’s claim. This is not consistently alleged in the
applicant’s founding affidavit. In paragraph 23 it is alleged
that during the telephone conversation between Eliot and Rousseau on
20 July 2006 –
‘
The
third respondent verbally undertook to effect payment of the funds
being held in trust by the second respondent (practising
under the
name and style of Rousseau Nell and Lombard Attorneys) for the
purposes of discharging the claim of the applicant
against East
Auto, upon production of the court order referred to above’
In
paragraph 64 the applicant alleges that the applicant’s main claim
against the second and third respondents is based on –
‘
the
verbal undertaking provided by the third respondent acting on
behalf of the second respondent to Eliot on 20 July 2006 to
effect
payment of the applicant’s claim in the action (subject to
receipt of the court order dated 20 July 2006) and as more
fully
set out in annexure ‘G’ hereto’.
[12] Since
this is not expressly averred this cause of action implies that
Rousseau personally and/or the firm, Rousseau Nell and
Lombard,
undertook to pay a debt owing by the firm’s client, East Auto, to
the applicant. If it does not imply this there cannot
be a claim
against Rousseau personally or the second respondent. The applicant
alleges that the undertaking was given during a
telephone
conversation between Eliot and Rousseau on 20 July 2006 and that
this conversation was recorded in a letter to the second
and third
respondents on 25 July 2006 (i.e. annexure ‘G’). A perusal of
the letter shows that it does not purport to record
the undertaking
alleged and that it certainly does not record that Rousseau or his
firm was undertaking personal liability for
payment of the sum of
R193 000. The amount is not even referred to. In the letter, after
referring to the copy of the court order
attached, the author,
Eliot, says –
‘Please
be so kind as to transfer all amounts, which are currently being
held in the trust account of Rousseau, Nell &
Lombard in
relation to East Auto Hydraulics CC, into the trust account of
KHL, to be held by KHL in trust for the benefit of
Aeroquip South
Africa (Pty) Limited.’
It
is striking that this does not accord with the undertaking alleged
to have been given to Eliot. On the face of it, is merely
a request
from one attorney to another attorney to transfer funds in the
latter’s trust account to the former’s trust account.
Lombard’s
immediate response in a letter dated 28 July 2006 was to say that
all funds held in trust had been paid over to Bra
ϋckman
n
Jooma Attorneys. When KHL demanded payment from Bra
ϋckman
n
Jooma they immediately said they had paid over the funds to
Wingate-Pearse on his instructions. In his answering affidavit
Rousseau
says that when Eliot asked that the funds held in trust by
Rousseau Nell and Lombard be paid to him, he, Rousseau, said he must
first discuss this with Wingate-Pearse. Rousseau denies that he
undertook to pay the funds to KHL trust account. Rousseau says
that
at that stage neither he nor Rousseau Nell and Lombard was acting on
behalf of Wingate-Pearse. This is borne out by the notice
of
withdrawal as attorneys dated 2 June 2006 and the correspondence
already referred to.
[13] The
applicant has not referred to any authority that an attorney becomes
personally liable for payment of a debt where he fails
to pay over
to a client’s creditor an amount held by him on behalf of his
client in his trust account. The contrary appears
to be true. An
attorney who holds an amount of money in his trust account on behalf
of a client is obliged to use it for no other
purpose than he is
instructed by the client. It is trite that it must always be
available to the client. In
Law Society, Transvaal v Matthews
1989 (4) SA 389
(T)
at 394 the court said:
‘
I
deal now with the duty of an attorney in regard to trust money.
Section 78(1) of the Attorneys Act obliges an attorney to
maintain
a separate trust account and to deposit therein money held or
received by him on account of any person. Where trust
money is
paid to an attorney it is his duty to keep it in his possession
and to use it for no other purpose than that of the
trust. It is
inherent in such a trust that the attorney should at all times
have available liquid funds in an equivalent amount.
The very
essence of a trust is the absence of risk. It is imperative that
trust money in the possession of an attorney should
be available
to his client the instant it becomes payable. Trust money is
generally payable before and not after demand.
See
Incorporated
Law Society, Transvaal v Visse and Others; Incorporated Law
Society, Transvaal v Viljoen
1958 (4) SA 115
(T)
at
118F-H. An attorney’s duty in regard to the preservation of
trust money is a fundamental, positive and unqualified duty.
Thus
neither negligence nor wilfulness is an element of a breach of
such duty:
Incorporated Law Society, Transvaal v Behrman
1977 (1) SA 904
(T)
at 905H. It is significant
that in terms of s83(13) of the Attorneys Act a practitioner who
contravenes the provisions relating
to his trust account and
investment of trust money will be guilty of unprofessional conduct
and be liable to be struck off
the roll or suspended from
practice’.
These
principles obviously apply to any person who deposits funds in an
attorney’s trust account – see
Hirschowitz Flionis v
Bartlett and Another
[2006] ZASCA 23
;
2006 (3) SA 575
(SCA)
and
Du
Preez v Swiegers
[2008] ZASCA 42
;
2008 (4) SA 627
(SCA).
[14] The
applicant’s counsel requested the court to reject Rousseau’s
evidence with regard to the conversation on 20 July 2006
and find
that he had given the undertaking alleged by the applicant in its
founding affidavit. He submitted that Rousseau was
not a credible
witness. Reference was made to the role played by Rousseau in
preparing the agreement containing the warranty referred
to when
Rousseau knew it to be false, seemingly assisting Wingate-Pearse to
perpetrate a fraud on the first respondent, either
by allowing the
document to be presented to the first respondent without
qualification or by not informing the first respondent
about the
existence of the applicant’s pending claim against First Auto and
the plea filed in the High Court which contradicts
what Rousseau
says in these proceedings. All these matters indicate that Rousseau
is not honest or credible. The problem which
arises is twofold.
First, the version put up by Rousseau is probable. His undisputed
evidence is that neither he nor the second
respondent was acting on
behalf of Wingate-Pearse and that it was Wingate-Pearse’s funds in
the second respondent’s trust account.
In these circumstances it
is improbable that an attorney would simply pay over a client’s
funds held in the attorney’s trust
account without obtaining
instructions from the client to effect such payment. The legal
position of the attorney with regard
to trust money heightens the
probability. Second, Eliot’s allegations with regard to the
telephone conversation are not borne
out by his actions and the
contemporaneous documents. If Eliot had formed the impression that
Rousseau was dishonest and was not
to be trusted and he had just
obtained an undertaking from Rousseau to pay the applicant’s claim
the reasonable and prudent thing
to do would be to record the
undertaking immediately and send it to Rousseau. This Eliot did not
do. He allowed five days to
elapse and then sent Rousseau a letter
which does not confirm an undertaking to pay the applicant’s claim
against East Auto –
either by Rousseau or the second respondent or
East Auto – and merely requests that funds held in trust by the
second respondent
be transferred to KHL’s trust account. It is
not even stated that the funds will be transferred to pay the
applicant’s claim
against East Auto. Apart from these problems,
it appears that the applicant and/or Eliot choose to view the facts
as they would
like them to be rather than as they are in reality.
In this regard I refer to the allegations made regarding the
stipulatio alteri
and the earmarking of funds for the
applicant which will be considered later. I am therefore not
satisfied that the applicant’s
factual averments about the
telephone conversation on 20 July 2006 are inherently credible or
that Rousseau’s allegations are
so far-fetched or clearly
untenable that I would be justified in rejecting them on the papers
– see
Plascon-Evans Paints Ltd v Van Riebeeck Paints (Pty)
Ltd supra
at 635B-C.
[15] The
applicant’s counsel concluded his argument by requesting the court
to refer the dispute relating to the undertaking (and
possibly other
matters) for oral evidence in terms of Rule 6(5). In view of the
matters referred to I am of the view that the
probabilities are
heavily in favour of the second and third respondents’ version and
that I should not accede to the request
– see
Kalil v
Decotex (Pty) Ltd and Another
1988 (1) SA 943
(A)
at
979H-J
.
[16] With
regard to the cause of action based on the
stipulatio alteri
the
applicant relies on Rousseau’s letter to Brandmuller of 26 April
2005 in which Rousseau stated that we place an amount of
R193 000 in
trust in order to cover the capital and costs. While acknowledging
that this ‘undertaking’ was given to the first
respondent and
not the applicant the applicant contends that it was clearly a
stipulation for the applicant’s benefit. The applicant
submits
that this undertaking was accepted by the applicant by its conduct
after the undertaking was given and at the latest on
20 July 2006
when Eliot telephoned Rousseau to advise him that judgment had been
granted against East Auto and to request that
the second and third
respondents make payment to the applicant of the sum of R193 000. I
do not agree that an undertaking was
given or, if it was, that it
was for the benefit of the applicant and that the applicant accepted
the undertaking.
[17] A
contract may be validly entered into for the benefit of a third
party and if the third party accepts the stipulation made
in his
favour he can sue upon it. It is clear that if the third party
wishes to enforce the stipulation in his favour he must
accept it.
Until he has notified his decision to the
promissor
there is
no v
inculum juris
between them. The third party may accept
the stipulation at any time while it remains open – see
Mutual
Life Insurance Co of New York v Hotz
1911 AD 556
at
567;
Crookes NO and Another v Watson and Others
1956
(1) SA 277
(A)
at 291B-F;
Joel Melamed and Herwitz v
Vorner Investments
[1984] ZASCA 4
;
1984 (3) SA 155
(A)
at 172A-D.
[18] The
applicant’s first difficulty is the interpretation of the letter.
It does not in its terms promise anything let alone
payment to the
first respondent. There is also no suggestion in the letter that it
is intended to operate in favour of any third
party. The letter was
written in reply to Brandmuller’s letter referring to
Wingate-Pearse’s breach of warranty and demanding
that
Wingate-Pearse rectify the breach by paying the applicant.
Wingate-Pearse was clearly not prepared to do this and Rousseau’s
letter makes this clear. On the face of it, Rousseau’s letter
indicates that the money was placed in trust as some kind of

security. That is what Rousseau refers to in his letter to KHL of
26 April 2005. The applicant’s second difficulty is that even
if
the letter could be construed as a stipulation in favour of the
applicant there is no evidence that the applicant accepted it.
At
no stage was this conveyed to Rousseau and even when Eliot and
Rousseau had their conversation on 20 July 2006 Eliot did not
refer
to the stipulation.
[19] With
regard to the applicant’s cause of action that the funds were
earmarked for the applicant so that the applicant became
the owner
of the funds or at least had a claim to ownership of the funds no
authority has been referred to in support of this contention.
For
present purposes I shall assume that this is a valid cause of
action. On the evidence it is not disputed that the funds were
held
in trust on behalf of Wingate-Pearse. That being so, the second and
third respondents were obliged to manage the funds strictly
in
accordance with his instructions even if he was no longer their
client – see
Hirschowitz Flionis v Bartlett and Another
supra
paragraph 21, 22 and 30;
Du Preez and Others v
Swiegers supra
paragraph 19. In so far as the applicant
relies on Rousseau’s letter to Brandmuller of 26 April 2005 this
does not in any way
indicate that the funds were earmarked for the
applicant. The rest of the evidence simply does not establish that
the funds in
the second respondent’s trust account were earmarked
for payment to the applicant and that the second respondent was
obliged
to pay them to the applicant – see
Smith v Daniels
and Another
1997 (4) SA 711
(SECLD)
at 714G-715B.
[20] The
applicant has failed to make out a case against the second and third
respondents and its claim against the second and third
respondents
must be dismissed.
[21] I
have already ruled that the applicant is not entitled to make out a
new case for delictual damages in its replying affidavit.

Nevertheless it must be pointed out that the applicant’s case is
based primarily on the judgments of
Hirschowitz
and Flionis v Bartlett and Another supra
and
Du Preez and Others v Swiegers supra,
both of
which involved claims against attorneys who received and held funds
in trust for the plaintiff. That is clearly not the
case here.
Furthermore, as already pointed out, in law the second and third
respondents were obliged to give effect to the depositor’s
instructions.
[22] Finally,
the question of Roussea’s conduct must be considered. On the face
of it he acted dishonestly and unprofessionally
in preparing the
agreement for the sale of the members interest in East Auto, well
knowing that the warranty in respect of existing
or pending
litigation was untrue, in allowing this to be conveyed to the first
respondent and thereby assisting in the perpetration
of a fraud on
the first respondent. On the face of it he also seems to have filed
a plea in the High Court in the case of
Andre Gross v J.J.
Rousseau
Case No 39551/2007 which contradicts what he says
in this application. This conduct should be investigated by the Law
Society and
appropriate steps taken against Rousseau if this is
found to be necessary.
Order
[23] The
following order is made:
I The
first respondent is ordered to pay to the applicant the sum of R234
732,28 together with interest thereon at the rate of
15,5 % per
annum from 3 July 2007 to date of payment;
II The
first respondent is ordered to pay the applicant’s costs of suit
in respect of the applicant’s case against the first
respondent.
III The
applicant’s claim against the second and third respondents is
dismissed with costs.
IV The
registrar is requested and directed to send a copy of this record
together with the judgment in this matter to the President
of the
Law Society of the Northern Provinces to investigate the conduct
of Mr Johannes Jacobus Rousseau who practises in Middelburg
in the
light of this judgment.
_______________________
B.R. SOUTHWOOD
JUDGE OF THE HIGH COURT
CASE NO:
36949/08
HEARD ON: 1
April 2009
FOR THE
APPLICANT: ADV. S.W. DAVIES SC
INSTRUCTED BY:
Ms T. van Straaten of Friedland Hart &
Partners
FOR THE FIRST
RESPONDENT: Mr. A.P. Brandmuller
INSTRUCTED BY:
Mr. A.P. Brandmuller of Brandmullers
Attorneys
FOR THE 2
ND
AND 3
RD
RESPONDENTS: ADV. I. VERMAAK-
HAY
INSTRUCTED BY:
Ms D. Janse van Vuuren of Rita Jordaan
Attorneys
DATE OF
JUDGMENT: 16 April 2009