YourTrade 26 CC v MEC: Department of Health: Northern Cape and Another (1450/2006) [2006] ZANCHC 54 (3 November 2006)

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[2006] ZANCHC 54
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YourTrade 26 CC v MEC: Department of Health: Northern Cape and Another (1450/2006) [2006] ZANCHC 54 (3 November 2006)

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IN
THE HIGH COURT OF SOUTH AFRICA
(Northern
Cape Division)
Case
Nr: 1450/2006
Case
Heard: 27/10/2006
Date
delivered: 3/11/2006
In
the matter between:
YOUR TRADE 26 CC Plaintiff
and
MEC: DEPARTMENT OF HEALTH:
NORTHERN CAPE Defendant
and
SEKUNJALO MEDICAL LOGISTICS
(PTY) LTD Third Party
Coram:
Olivier J
JUDGMENT
OLIVIER
J:
The
plaintiff, Your Trade 26 CC, issued summons against the defendant,
the MEC of the Department of Health, Northern Cape Province,
for the
delivery of shelves (of which the plaintiff claims to be the owner),
alternatively for payment of R400 000,00 (the
alleged value of
the shelves). The defendant denies that the plaintiff is the owner
of the shelves. In its plea it alleges that
it is indeed the lawful
owner thereof, having purchased it from Sekunjalo Medical Logistics
(Pty) Limited (the third party).
The
defendant, seeking to join the third party, issued a notice in terms
of Rule 13. When that notice was excepted to by the third
party the
defendant filed a notice of amendment thereof, by means of which the
defendant basically seeks to substitute its original
Rule 13 notice
with a new Rule 13 notice, together with an annexure (
“the
annexure”
) thereto.
The third party has lodged an objection to the proposed amendment
and the defendant is now applying for an order that
the amendment be
allowed.
NOTICE OF AMENDMENT
According
to the notice of amendment the defendant’s attempt to join the
third party is, very broadly speaking, to the effect
that, should it
be found that the plaintiff is indeed the lawful owner of the
shelves, and should the defendant then be ordered
to deliver the
shelves to the plaintiff (or to pay to the plaintiff the value
thereof), the defendant would claim from the third
party certain
relief upon
“facts and
circumstances”
set out
in the annexure.
The
defendant’s main claim against the third party, as set out in
paragraphs 11 to 20 of the annexure, is based on misrepresentation,
the allegation being that the third party misrepresented itself to
the defendant as being the lawful owner of the shelves. In
paragraph 14 of the annexure the defendant declares that it
“will
claim the purchase price of R199 750,00, which it paid to the
Third Party,
as
damages
from the
Third Party (my emphasis)”,
and according to paragraphs 15 and 16 of the annexure it also
intends claiming certain consequential damages.
The
defendant’s alternative claim is based on a warranty against
eviction and is simply for the restitution of the purchase price
that it had allegedly paid to the third party for the shelves.
The
annexure is concluded with prayers for payment of the amount of
R364 750,00 (being the purchase price of R199 750,00
allegedly paid to the third party and the amount of the
consequential damages), alternatively payment of the amount of
R199 750,00.
OBJECTIONS TO
AMENDMENT
Briefly
summarised the third party’s objections are as follows:
According
to the
“amended”
rule 13 notice the defendant intends claiming the relief against
the third party
“in
terms of Rule 13(1)(a) and/or (b)”
.
The third party’s objection is that the claims for the payment
of money would not be competent in terms of Rule 13 (1) (a)
and
that the reference to this subrule would render the third party
notice excipiable.
It
is trite that an amendment will normally not be granted if it would
render a pleading excipiable (see
Barnard
v Barnard
2000 (3) SA
741
(C) at 754F) and the same would obviously apply to a proposed
amendment to a Rule 13 notice (see
Mercantile
Bank Ltd v Carlisle and Another
2002 (3) SA 886
(W) at 889D-E).
Secondly
it is stated that
“the
proposed amendment lacks averments necessary to sustain a cause of
action”
. The gist of
this objection is that, because the defendant’s main claim is for
damages, the defendant’s allegation of a
“misrepresentation”
(on the part of the third party) is insufficient and that the
defendant should have alleged either an intentional (fraudulent)
or
negligent misrepresentation; the contention on behalf of the third
party being that, while innocent misrepresentation is
also a
recognised form of misrepresentation, it cannot found a claim for
damages and that an allegation that the
“misrepresentation”
was either fraudulent of negligent would have been essential to
sustain a cause of action for damages.
The
third objection is that the defendant’s proposed main claim has
not yet vested and that Rule 13 does not provide for the
joinder of
a third party on the basis of a claim which has not yet vested and
a cause of action which has not yet arisen. This
objection is
based on the defendant’s allegation (in paragraph 13 of the
annexure) that it will only be entitled to cancel
(the alleged
agreement with the third party) and claim damages once the Court
has made a finding that the defendant never became
the lawful owner
of the shelves,
“by
reason of the fact that the Third Party was not the lawful owner
thereof”.
The
third party furthermore contends that the defendant’s alternative
claim is vague and embarrassing. This objection is based
upon the
fact that, while it is stated in paragraph 21 of the annexure that
the alternative claim is dependent upon the defendant
being ordered
to deliver the shelves to the plaintiff (which would imply that the
defendant is at this stage still in possession
of the shelves), it
is elsewhere alleged that the defendant
“has
been evicted”
The
fifth objection is that, until the defendant has indeed been
evicted from possession of the shelves, the alternative claim
could
not have vested in the defendant and that Rule 13 does not provide
for the joinder of parties on the basis of contingent
claims. This
objection is very similar to the third objection.
UNIFORM RULE 13
It
is necessary at this stage to take a closer look at the provisions
of Rule 13, and more specifically subrule 1 thereof:
“
(1) Where a party
in any action claims –
as
against any other person not a party to the action (in this rule
called a “third party”) that such party is entitled, in
respect
of any relief claimed against him, to a contribution or
indemnification from such third party, or
any
question or issue in the action is substantially the same as a
question or issue which has arisen or will arise between such
party
and the third party, and should properly be determined not only
between any parties to the action but also as between such
parties
and the third party or between any of them,
such
party may issue a notice, hereinafter referred to as a third party
notice, as near as may be in accordance with Form 7 of the
First
Schedule, which notice shall be served by the sheriff”
.
The
authors of
Erasmus:
Superior Court Practice
(Farlam
et al
,
at B1-109)
state
that
“All that can be
sought under the rule by one alleged wrongdoer against another is an
apportionment of fault in the form of a
declaratory order”
.
On behalf of the defendant reference has however been made to
IPF
Nominees (Pty) Ltd v Nedcor Bank Ltd (Basfour 130 (Pty) Ltd, Third
Party)
2002 (5) SA 101
(W), as support for the contention that monetary claims are
competent under Rule 13.
What
is immediately apparent when regard is had to the cases referred to
in
Superior Court
Practice
is that they
all concerned matters where the third parties were indeed joined on
the bases that the defendants were entitled to
a contribution or
indemnification from them, either delictually (as joint wrongdoers)
or contractually (as insurers).
The
same applies to
Luthuli v
Santam Insurance Company Ltd and Another
1977 (2) SA 97
(D), to which I was also referred. In all of these
matters, therefore, the defendants’ claims for contributions or
indemnification
were contingent upon the findings in the matters
between them and the plaintiffs.
The
facts in the
IPF
case were different from those in the
Luthuli
case (and in the cases referred to in
Superior
Court Practice
). In
that case the plaintiff’s claim against the defendant was based on
negligence, while the defendant’s claim against the
third party
was based on enrichment, alternatively contract. The defendant’s
claim was in no way dependent upon the findings
in the matter
between it and the plaintiff. The defendant did not claim a
contribution or an indemnification, but indeed payment
of an amount
of money with which the third party’s account had earlier been
credited.
Claassen
J
found that there was
“no reason in principle
why a judgment sounding in money cannot be issued against a third
party joined under subRule 13 (1) (b)”
,
but not under subrule (a) of Rule 13 (1) (at 116C-D and 118E-F).
THIRD AND FIFTH
OBJECTIONS
When
the facts of the
IPF
case are, however, compared with those in the present matter it is
clear that they are distinguishable. In the present case both
the
main claim and the alternative claim against the third party are
entirely dependent upon findings by the Court that the plaintiff
is
the lawful owner of the shelves, that the third party had never been
the lawful owner thereof and that the defendant is therefore
obliged
to deliver the shelves to the plaintiff.
The
manner in which the defendant’s claims are formulated makes it
clear that it will be only then that the defendant will suffer
damages or that it will lose possession. Until then there can
therefore be only one possible issue between the defendant and the
third party, and that is who the owner of the shelves was at the
relevant stage.
Whether
the third party had made a misrepresentation and whether the
defendant had suffered damages because thereof could, on the
defendant’s own version (as set out in the annexure), not become a
“question or issue”
before the Court has made an adverse finding regarding ownership.
The
same applies to the defendant’s alternative claim. Whether it had
been an implied term of the purchase contract that the
third party
(and not the plaintiff – see paragraph 23 of the annexure) had
warranted against eviction could, again on the defendant’s
own
construction, not become a
“question
or issue”
between the
third party and the defendant before the defendant is by order of
the Court evicted from possession of the shelves.
Accordingly,
and as already mentioned, it is only the matter of ownership that
could, on both the defendant’s causes of action
(as set out in the
annexure), at this stage be regarded as a
“question
or issue”
substantially the same as the main issue between the plaintiff and
the defendant.
Had
the defendant merely claimed (
vis-a-vis
the third party) a declaratory order regarding ownership (at the
time when the alleged purchase contract was concluded), the third
party would have found it very difficult to object to a joinder in
terms of Rule 13.
What
the defendant is, however, effectively attempting to do, is to join
the third party on the basis that the defendant and the
third party
must then be permitted to traverse a number of issues which have not
yet even arisen between them (and which would
have no relevance at
all to the plaintiff). I cannot for a moment imagine that Rule 13
could have been intended to have such results.
CAUSE OF ACTION
It
could be argued that the defendant’s causes of action have not yet
arisen, because at this stage no damages have been suffered
by the
defendant, nor has it been evicted of the shelves (compare
Philotex
(Pty) Ltd v Snyman and Others
1994 (2) SA 710
(T)).
Mr
Halgryn, who appeared on behalf of the defendant, argued that the
words
“or will arise”
in subrule (b) of Rule 13 (1) entitle the defendant to follow this
course. I disagree. When these words are read in context it
is
plain that they refer to a
“question
or issue”
that will
arise, and not to a cause of action which will at some point in the
future arise.
Mr
Halgryn’s reliance upon the
Luthuli
case in this regard is also misplaced. In that case it was the
defendant’s claim that was contingent upon the Court finding
in
favour of the plaintiff, and not its cause of action. The cause of
action of the defendant in that case would have arisen at
the moment
of the collision, and not only when the Court found in favour of the
plaintiff.
During
argument Mr Halgryn relied on the cases of
Mercantile
Bank Ltd v Carlisle and Another, supra
,
Sarkady v De Paiva and
Another
1977 (1) SA 157
(T) and
Montana Steel
Corporation (Pty) Ltd v New Zealand Insurance Company (South
Africa) Ltd and Another
1975 (4) SA 339
(W) as authority for the proposition that it would
be competent to join a third party for a judgment sounding in money
on the basis
of a cause of action which had not yet completely
arisen or vested in the defendant.
In
my view the facts of these matters are distinguishable from those in
the matter at hand. In the
Mercantile
Bank
case the plaintiff
sued the defendant (Mercantile Bank) on a contractual basis for the
payment of funds which the defendant had
allowed to be withdrawn by
or on behalf of,
inter
alia
, Crespin-Hue. The
defendant joined Crespin-Hue as a third party. The defendant’s
claim against the third party was that
“Should
the plaintiff’s case against the defendant be sustained then the
amounts paid were not due or owing to the recipient
thereof”
.
In
the first place there is no indication that the defendant in that
case claimed judgments sounding in money in its third party
notice.
In fact, it appears as though the relief claimed was
“to
be indemnified by the third party against any payment that it may be
ordered to make to the plaintiff”
.
The claim against the third party in that case therefore purported
to be based on Rule 13 (1) (a) (whereas in the present matter
the
defendant’s claims are based on Rule 13 (1) (b)).
It
furthermore seems clear that, although Mercantile Bank would only
proceed with its claim against the third party in the event
of the
plaintiff’s case succeeding against it, its cause of action
(enrichment) would actually already have arisen at the stage
when
the third party received the money. In the present matter the
defendant’s cause of action for its main claim will only
be
complete at the moment when it actually suffers damages, in other
words when it is ordered to deliver the shelves to the plaintiff
or
to pay its value to the plaintiff. The cause of action in the
defendant’s alternative claim will only arise at the moment
when
it is evicted from possession by an order of the Court.
I
find it hard to understand how the
Sarkady
case could be seen as support for Mr Halgryn’s proposition. In
that case the claim against the third party was based upon Rule
13
(1) (a) and the relief claimed was an indemnity in terms of an
agreement between the defendant and the third party. In the
present
matter the defendant’s claims are for judgments sounding in money
and are based on the provisions of Rule 13 (1) (b).
The
facts of the
Montana
Steel
case were that the
plaintiff (the insured) had claimed damages from the defendant (the
insurer) in terms of an insurance contract.
The defendant denied
liability and pleaded a material non-disclosure on the part of the
person who had negotiated the insurance
contract on the plaintiff’s
behalf. The plaintiff then issued a third party notice to join the
agent on the basis that, should
it be unable to recover its damages
from the defendant because of such non-disclosure, the third party
would be liable for its
damages.
There
is, in the first place, no indication that the plaintiff’s claim
against the third party was for a judgment sounding in
money and not
merely for a declaratory order. Secondly, and even if it is to be
assumed that the claim against the third party
in that matter was
indeed for a judgment sounding in money, it is quite clear that the
plaintiff’s cause of action against the
third party in that matter
would have arisen when such non-disclosure took place (and not only
at the stage when the Court found
it to have taken place). It was
only the prosecution of the defendant’s claim that was contingent
upon the Court findings in
favour of the plaintiff.
CONVENIENCE
It
could also not by any stretch of the imagination be argued that it
would be convenient for the plaintiff to become involved in
a trial
where its ownership and the value of the shelves are no longer the
only issues, but where it will have to listen to evidence
regarding
the alleged misrepresentation, the terms of the alleged purchase
contract and the defendant’s consequential damages.
Insofar
as the procedure under Rule 13 could be likened to that under Rule
11 (consolidation of actions – see the
IPF
case at 118), it is difficult to conceive how such a
“consolidated”
trial could be
“convenient”
in the sense of connoting
“not
only facility or expedience or ease, but also appropriateness in the
sense that
(the)
procedure would be convenient if, in all the circumstance of the
case, it appears to be fitting and fair to the parties concerned”
(see
Mpotsha v Road
Accident Fund and Another
2000 (4) SA 696
(C) at
700I-J).
In
the
IPF
case
Claasssen J
stated that the
“objects
of the rule are to prevent multiplicity of actions and to enable the
court to settle disputes between all parties to
them in one action
and to prevent the same question from being tried twice with
possibly different results”
(at 117I). In the present matter it is only the question of
ownership that could (in the absence of a joinder) end up being
“tried twice”
and it is only in that sense that a failure to join could result in
a multiplicity of actions. The other potential issues (between
the
defendant and the third party) would not otherwise be relevant in
the matter between the plaintiff and the defendant and would
therefore not, in the absence of a joinder, end up being tried
twice.
Insofar
as it might have been held in the
IPF
matter that a
“complete”
joinder in terms of Rule 13 (like was done in that case, and
therefore a joinder in respect of all the issues between the
defendant
and the third party) would always be in order even if only
one of the issues between the defendant and the third party is
substantially
the same as the issue/s between the plaintiff and the
defendant, and irrespective of what other issues there might be
between the
defendant and the third party (and which would then also
have to be dealt with in the trial between the three parties), I
find
myself in respectful disagreement.
In
my opinion the defendant should therefore have joined the third
party for the purposes of a declaratory order on the question
of
ownership only. It could then, in the event of a finding that the
third party had never been the owner of the shelves, have
instituted
its claim for damages, alternatively for restitution of the purchase
price, armed with the declaratory order (compare
the
Luthuli
case and
Callender-Easby
and Another v Grahamstown Municipality and Others
1981 (2) SA 810
(E)).
In
the circumstances the third party’s third and fifth objections
(paragraphs 7.3 and 7.5 above) are in my view well-founded.
FIRST OBJECTION
This
makes it unnecessary to consider the first objection, but I must say
that I would otherwise have regarded it as without any
merit at all.
The use of the phrase
“and/or”
in these circumstances would have entitled the defendant to rely on
Rule 13 (1) (b), and the reference to subrule (a) would not
have
rendered the Rule 13 notice excipiable.
FOURTH
OBJECTION
The
same applies to the fourth objection (paragraph 7.4 above). It is
absolutely clear what the defendant’s case was intended
to be and
the so-called contradiction could not be said to render the notice
either vague or embarrassing.
SECOND
OBJECTION
This
brings me to the objection that the
“proposed
amendment lacks averments necessary to sustain a cause of action”
.
In view of what has already been found above it is also not
necessary to deal with this objection in any detail.
It
is clear that the defendant’s main cause of action is for damages
on the grounds of misrepresentation. It is trite that there
are
three recognised forms of misrepresentation in our law,
viz
fraud, negligent misrepresentation and innocent misrepresentation.
An innocent misrepresentation cannot found a claim for consequential
damages (see
Indrieri v
Du Preez
1989 (2) SA 721
(C) at 729A). For some reason the defendant has merely alleged a
misrepresentation on the part of the third party, without specifying
whether it had been a fraudulent or a negligent misrepresentation.
It
was submitted (on behalf of the defendant) that the word
“misrepresentation”
could only mean intentional misrepresentation and in this regard I
was referred to the fact that the definition of
“misrepresent”
in
Chambers Thesaurus,
Chambers Cambridge
includes
“belie,
distort, falsify, misstate, misquote”
.
Apart
from the fact that
“misstate”
is defined in the
Concise
Oxford Dictionary
as
meaning to
“make wrong
or inaccurate statements”
(which could clearly also happen negligently or innocently), it is a
fact that intentional misrepresentation is not the only form
of
actionable misrepresentation in our law. There is, as already
mentioned, also two other forms of actionable misrepresentation
and
each of the three forms of actionable misrepresentation has its own
peculiar elements and requirements.
The
definitions of the word
“misrepresentation”
in the
Engels-Afrikaanse
Regswoordeboek
of
Hiemstra en Gonin (2
nd
edition) and in their
Trilingual
Legal Dictionary
(3
rd
edition) make it clear that it could connote not only intentional
misrepresentations, but also
“innocent”
misrepresentations. It
cannot therefore be said that the word
“misrepresentation”
,
as pleaded in the annexure to the proposed third party notice, could
only be interpreted as referring to an intentional
misrepresentation.
Mr
Halgryn submitted that, even if the misrepresentation had to be
taken to have been an innocent one, the defendant would be entitled
to restitution of the purchase price on the basis of the Aedilitian
remedies. That is not, however, how the defendant chose to
plead
its case against the third party. Its main claim is not for the
restitution of the purchase price. It is for damages and
the
purchase price merely forms a part of the total amount of damages
claimed.
The
defendant’s failure to specify the form of misrepresentation would
not, however, in my view, have been sufficient to render
the
proposed Rule 13 notice excipiable on the basis of a lack of
averments necessary to sustain the main cause of action. The
test
for an exception on this basis would be whether the word
“misrepresentation”
could not on any of its possible interpretations sustain such a
cause of action. If so, an exception on this basis would fail
(see
Callender-Easby and
Another v Grahamstown Municipality and Others, supra,
at 813A).
I
am, however, of the view that this failure would have rendered the
third party notice, as a pleading, at least vague and embarrassing
and I cannot see how it could be expected of a Court to allow an
amendment which would, on the face of it, cause an embarrassment
to
parties who have to consider and respond to such a pleading.
While
Mr Halgryn persisted with his argument that it had not been
necessary to plead whether the alleged misrepresentation had been
intentional, negligent or innocent, he later applied, in the course
of his argument, for an amendment to insert into the annexure,
as
paragraphs 12.1, 12.2 and 12.3, the following averments:
“
a. ‘The
representation was material and would have influenced a reasonable
person to enter into the contract.’ and
‘
The
representation was intended to induce the Defendant to enter into
the transaction.’ and/or
‘
The
Third Party knew that the representation was false.’”
This
application (in other words for the amendment of the notice of
amendment) was not opposed and was accordingly granted. Mr
Halgryn
argued that the insertion of these allegations remedied the problem
regarding the form of misrepresentation the defendant
intended to
rely upon and that the inserted averments would make it clear that
the defendant would rely on a negligent misrepresentation
“and/or”
on an intentional misrepresentation. Apart from the fact that it is
inconceivable how a misrepresentation could be both negligent
“and”
intentional at the same time, the amendment effectively put an end
to Mr Halgryn’s argument that the defendant might have relied
on
an innocent misrepresentation. It is plain that it had never been
the intention of the defendant to rely on an innocent
misrepresentation.
Be
that as it may, in view of the conclusion to which I have already
come as regards the third party’s third and fifth objections,
the
defendant’s application for amendment dated 7 July 2006 has
to fail. There is no reason why the normal rule should
not be
applied as far as costs are concerned and the costs should therefore
follow the result.
In
the premises the following order is made:
The application for
amendment dated 7 July 2006 is dismissed with costs.
________________________
C
J OLIVIER
JUDGE
NORTHERN
CAPE DIVISION
For
the Defendant: Adv L Halgryn
Instructed
by: Fletchers Attorneys, KIMBERLEY
For
the Third Party: Adv C H Botha
Instructed
by: Duncan & Rothman, KIMBERLEY