About SAFLII
Databases
Search
Terms of Use
RSS Feeds
South Africa: Kwazulu-Natal High Court, Pietermaritzburg
SAFLII
>>
Databases
>>
South Africa: Kwazulu-Natal High Court, Pietermaritzburg
>>
2024
>>
[2024] ZAKZPHC 99
|
|
Tiger Consumer Brands Limited v Sandragasan and Others (1955/2023P) [2024] ZAKZPHC 99 (31 October 2024)
IN
THE HIGH COURT OF SOUTH AFRICA
KWAZULU-NATAL
DIVISION, PIETERMARITZBURG
CASE
NO: 1955/2023P
In
the matter between:
TIGER
CONSUMER BRANDS LIMITED
PLAINTIFF
and
AMARADEVAN
DERICK SANDRAGASAN
FIRST DEFENDANT
CORRADO
TRADING CC t/a
NURSCON
PLASTIC MANUFACTURERS
SECOND
DEFENDANT
ZUBER
YUNUS DOSANI
THIRD DEFENDANT
SUHEL
YUNUS DOSANI
FOURTH DEFENDANT
JUDGMENT
MLABA
J
Introduction
[1]
The plaintiff instituted legal proceedings against the first to
fourth defendants claiming damages
in the sum of R56 426 146,
which allegedly arose as a result of collusion by the defendants to
overcharge the plaintiff
for goods sold to it between May 2017 and
August 2022.
[2]
The defendants initially served the plaintiff with a notice to remove
the cause of complaint on
30 May 2023 and the plaintiff replied
thereto on 23 June 2023. On 10 July 2023, the plaintiff served the
defendants with its amended
particulars of claim. On 20 October 2023,
the defendants served the plaintiff with a notice of exception to its
amended particulars
of claim, claiming that the particulars of claim
fail to disclose a cause of action, as the damages claimed cannot be
assessed
or pleaded to, and that the contractual damages do not
appear from the contract/agreement that the plaintiff relies upon.
The issue
for determination accordingly relates to the exceptions
raised by the defendants.
Background
[3]
The first defendant was employed by the plaintiff as a commodity
manager on 27 April 2016 and
his main duty was to procure the
plaintiff’s group packaging requirements or solutions. As an
employee, the first defendant
was subject to the plaintiff’s
policies, which he allegedly breached when he committed several acts
of dishonesty. The second
defendant is a former service provider of
the plaintiff, which was introduced to the plaintiff by the first
defendant during the
scope of his duties as a commodity manager. The
third and fourth defendants are the co-members and the
directing/controlling minds
of the second defendant, the third
defendant being the Chief Executive Officer and the fourth defendant
the Financial Manager.
[4]
In its particulars of claim, the plaintiff averred that the first
defendant, as its employee,
was subject to its company policies,
including, but not limited to, the Code of Ethics, Disciplinary Code
and Anti-Bribery Code,
but had contravened these policies in that he
had involved himself in corruption, criminality, and dishonesty.
Among what the plaintiff
established during the investigation was the
following:
(a)
The first defendant gave preference to the second defendant, causing
the plaintiff to suffer damages
of at least R18 million;
(b)
He failed to declare that his daughter was employed by the second
defendant;
(c)
He forewarned the second defendant of an impending surprise audit and
provided the defendants
with the plaintiff’s internal and
confidential information;
(d)
He received substantial benefits from the second defendant, including
a family trip to Dubai for
his 50
th
birthday celebration
in July 2016, which trip was fully paid for by the second defendant,
and a family trip to Mauritius in July
2017; and
(e)
He conspired and colluded with the second, third, and fourth
defendants to overcharge the plaintiff
for packaging material.
[5]
Following this investigation, the plaintiff lodged criminal
complaints against the first defendant
and further put him on
precautionary suspension. The first defendant was charged with
several offences involving dishonesty, corruption,
conflict of
interest, and breach of the disciplinary code, and was called to a
disciplinary enquiry that was scheduled for 24 and
25 January 2022.
He, however, resigned prior to the date of the hearing and the
plaintiff accepted the resignation but reserved
its rights.
[6]
The plaintiff alleged that the second defendant had, following the
procurement facilitated by
the first defendant, supplied the
plaintiff with flexible packaging to the value of R860 million. From
October 2016 to May 2018,
the procurement was regulated by five
letters of award concluded between the plaintiff and the second
defendant, and thereafter
by two Master Supply Agreements concluded
on 29 November 2018 and 14 August 2020. The plaintiff averred that as
a supplier, the
second defendant owed the plaintiff a duty to refrain
from perpetrating fraud and theft upon the plaintiff and forming
corrupt
relationships with the first defendant or any employee of the
plaintiff.
[7]
The plaintiff’s alternative claim is a contractual cause of
action based on the five letters
of award,
[1]
and the Master Supply Agreements concluded on 29 November 2018 and 14
August 2020.
[2]
In terms of
clause 10.1, read together with clause 10.3.1.4 of the Master Supply
Agreement, the second defendant would charge the
plaintiff prices of
comparable products which are supplied by other suppliers in the open
market, which prices were to be market-related,
cost-effective, and
competitive in the industry and open market. The Master Supply
Agreement further provided that the second defendant
would not bribe
or corrupt any employee of the plaintiff to approve or authorise it
to overcharge the plaintiff for the supplied
goods.
[8]
The plaintiff submitted that it duly complied with its obligations in
terms of the various agreements
and paid all amounts claimed by the
second defendant. The second defendant, however, breached the Master
Supply Agreement when
it overcharged the plaintiff, bribed the first
defendant to authorise such overcharges, formed a corrupt
relationship with the
first defendant, perpetrated fraud and theft
against the plaintiff, and colluded with the first defendant to the
detriment of the
plaintiff.
[9]
The claim against the third and fourth defendants is in terms of
section 64 of the Close Corporations
Act
[3]
for reckless and fraudulent carrying on of the business of the second
defendant. The plaintiff seeks an order declaring them personally
responsible for the second defendant’s liability to the
plaintiff in the amount of R56 426 146.
[10]
The plaintiff submitted therefore that the first, second, third, and
fourth defendants conspired and colluded
with each other by
defrauding and perpetrating theft and fraud against it, enabling the
second defendant to overcharge the plaintiff
for goods/packaging
materials with prices that were not market-related, cost-effective,
and competitive as those charged in the
industry and the open market.
As a result, the plaintiff suffered damages to the value of
R56 426 146. The plaintiff
attached an overcharge schedule
detailing the computation of the overcharges for the products
supplied, invoiced, and paid to the
second defendant, as well as the
estimated overcharge amounts.
[4]
[11]
The plaintiff sought judgment against the first, second, third, and
fourth defendants, jointly and severally,
the one paying the other to
be absolved for:
(a)
Payment of the amount of R56 426 146.
(b)
Interest on the aforesaid amount at the prescribed rate a
tempore
morae
.
(c)
Costs of suit on an attorney and own client scale, including costs of
senior counsel.
(d)
An order in terms of section 64 of the Close Corporation Act, to
declare the third and fourth
defendants personally liable for the
claim amount.
Defendants’
submissions
[12]
I now turn to the exceptions raised by the defendants. The first
defendant submitted that the claim amount
is alleged to be
cumulative, and the specific supplies alleged to have been
overcharged over a five-year period are not identified.
It was
further submitted that the amount charged, as compared to the
market-related price of the items supplied, is not clearly
stipulated
to enable the first defendant to see the amount overcharged in
respect of each supply. He further states that there
is therefore no
link between the claim amount, the supplies that were allegedly
overcharged, and their market-related price. As
a result of this, it
is impossible to discern any factual basis for the plaintiff’s
estimated losses. The first defendant
submitted that the particulars
of claim do not disclose a cause of action and seeks an order
upholding the exception, together
with costs.
[13]
The second, third, and fourth defendants also raised an exception to
the plaintiff’s particulars of
claim and submitted that the
damages cannot be assessed or pleaded to because the plaintiff failed
to specify the nature and quantity
of the goods that were allegedly
overcharged. The plaintiff also failed to state what the respective
market-related prices were
that they were supposed to have charged in
respect of the goods. They stated that the plaintiff has the onus to
prove that its
method of calculation is the appropriate one, and that
it must clearly set out the damages to enable the defendants to
assess the
quantum thereof. The defendants averred that the
plaintiff’s particulars of claim failed to sustain a cause of
action, thereby
causing prejudice and embarrassment to the defendants
in pleading to the particulars of claim.
Plaintiff’s
reply to the defendants’ exception
[14]
The plaintiff submitted that on 30 May 2023, the defendants served
their notice to remove the cause of complaint
dated 29 May 2023 and
the plaintiff served its reply dated 21 June 2023 as well as the
notice of amendment. On 10 July 2023, the
plaintiff served its
amended particulars of claim, and its reply dated 21 July 2023 to
address the defendants’ complaints.
Notwithstanding the above,
the defendants served their notice of exception dated 20 October
2023, in which they raised identical
issues that the plaintiff had
addressed in its reply.
[15]
The plaintiff averred that the exceptions were a repetition of the
defendants’ notice to remove the
cause of complaint, and that
its amended particulars of claim addressed the defendants’
exceptions. Paragraph 27 of the plaintiff’s
particulars of
claim was deleted in its entirety and substituted with a paragraph
detailing the specific products that are alleged
to have been
overcharged. The paragraph reads as follows:
‘
27.
The first
defendant is accordingly liable to the
plaintiff in the cumulative amount of R56 426 146. 00 for
overcharging the plaintiff
prices for the period May 2017 to August
2022, for goods/ packaging material, for the below mentioned products
(“the products”)
which prices were not market related,
were not cost-effective and were not competitive prices as charged in
the industry and open
market, which cumulative amount is made-up as
follows:
27.1 DAVITA-
BENNY:
R44 685 567.00
27.2 TASTIC- AUNT CAROLINE:
R 5 614 789.00
27.3 TASTIC-
RICE:
R 1 727 073.00
27.4 TASTIC-
PASTA:
R 3 485 038.00
27.5
ALBANY-TINKIES:
R 263 442.00
27.6 STB
SMOOTHIES:
R 650 237.00
TOTAL
R56 426 146.00’
[16]
An overcharge schedule was also supplied, detailing specific products
and their specifications, the period
in which such goods were
supplied, the quantity supplied, the total amount invoiced and paid
to the second defendant, and the estimated
overcharges by the second
defendant.
[5]
The schedule
provides as follows:
Item
No
Business Unit
Product
Period
Quantity Supplied
by Nurscon (kg)
Total amt invoiced
& paid to Nurscon
Estimated
overcharged by Nurscon
1.
Davita
Benny
May 2017-
Aug 2022
9 321 495
R676 817 168.00
R44 685 567.00
2.
Tastic
Aunt Caroline
May 2017 –
Aug 2022
1 421 672
R71 254 330.00
R5 614 789.00
3.
Tastic
Rice
Oct 2017 –
Aug 2022
251 582
R21 588 410.00
R1 727 073.00
4.
Tastic
Pasta
Aug 2019 –
Aug 2022
1 231 335
R87 125 953.00
R3 485 038.00
5.
Albany
Tinkies
May 2018 –
Aug 2022
131 662
R9 859 273.00
R263 442.00
6.
STB
Smoothies
Dec 2020 –
Aug 2022
258 483
R9 289 103.00
R650 237.00
TOTAL CLAIM
R56 426 146.00
[17]
The plaintiff submitted that it had complied with the provisions of
Uniform Rule 18(10), by particularising
its claim in a manner that
will enable the defendants to reasonably assess the quantum of its
claim. The defendants themselves
have a duty to compute and determine
what the reasonable assessment of the damages sustained by the
plaintiff is. The plaintiff
submitted further that the first
defendant is in a position to do so as he has intimate knowledge to
ascertain and establish whether
the plaintiff’s assessment of
damages is correct and also what the reasonable assessment of the
damages is.
[18]
The plaintiff submitted further that in respect of its claim against
the second, third, and fourth defendants,
it also relied on the
implied, alternatively tacit, terms of the Master Supply Agreement.
According to the plaintiff, notwithstanding
the express provisions of
clause 10.3.1.4 of the Master Supply Agreement, it was an implied
term of the letters of award and Master
Supply Agreement that in
charging the plaintiff prices for the goods/packaging material, the
second defendant would charge the
plaintiff market-related,
cost-effective, and competitive prices, as charged in the industry
and open market.
[19]
Clause 10 of the Master Supply Agreement makes provision for price
reviews and adjustments. Clause 10.3.1.4
reads as follows:
‘
The
price adjustments shall be subject to the prices at which comparable
products are supplied by other suppliers in the open market’.
[20]
The plaintiff submitted in conclusion that the amended particulars of
claim established a sustainable cause
of action against the
defendants and they were not prejudiced in pleading thereto.
The
law
[21]
In
Tongaat
Hulett Limited and others v Staude and others
[6]
the court stated as follows:
‘
[
17]
The object of all pleadings is to provide a succinct statement of the
grounds, set forth shortly and concisely, upon which a
claim is made
or resisted. Allegations pleaded as fact must be taken as true for
the purposes of an exception. A charitable test
is generally used on
exception and the pleader is entitled to a benevolent interpretation.
A court may uphold an exception only
if it is satisfied that the
cause of action or conclusion of law cannot be sustained on every
interpretation that can be placed
on the pleaded facts.
…
[31]
In the final analysis, whether a pleading is excipiable is largely an
issue of discretion as to whether the allegations have
been pleaded
with sufficient particularity, that is the
facta
probanda
required to be pleaded by a plaintiff to properly
appraise the other party of the case he has to meet, which is not
vague
and embarrassing, and which if established at the trial by
the
facta probantia
, or the evidence, could result in
judgment in favour of the plaintiff
.’
(Footnotes omitted.)
Simply
put, the pleadings must be so phrased that the other party may
reasonably and fairly be able to plead thereto, and the cause
of
action must appear clearly from the factual allegations made.
[22]
The onus rests on the plaintiff to set out the damages claimed in a
manner that will enable the defendants
to reasonably assess the
quantum thereof. However, ‘[t]he burden rests on an excipient,
who must establish that on every
interpretation that can reasonably
be attached to it, the pleading is excipiable’.
[7]
The excipient must ‘satisfy the court that the conclusion of
law for which the plaintiff contends cannot be supported on
every
interpretation that can be put upon the facts’.
[8]
[23]
In
Mackenzie
v Farmers’ Co-operative Meat Industries Ltd,
[9]
the Appellate Division (as it then was) defined cause of action 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
the
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.’
[24]
It is trite that a pleading is ‘excipiable on the basis that no
possible evidence led on the pleadings
can disclose a cause of
action’.
[10]
The object
of a pleading is to define the issues so as to enable the other party
(and the court) to know what case has to be met.
[11]
[25]
In
Telematrix
(Pty) Ltd t/a Matrix Vehicle Tracking v Advertising Standards
Authority SA
,
[12]
the court stated that ‘[e]xceptions should be dealt with
sensibly. They provide a useful mechanism to weed out cases without
legal merit’.
Evaluation
[26]
The plaintiff relies on the Master Supply Agreements entered into
between it and the second defendant. The
agreements are not in
dispute and the terms thereof are clear and unambiguous. The first
defendant was the principal point of contact
between the plaintiff
and the second defendant. The plaintiff also relies on the first
defendant’s employment contract, together
with the policies
that the first defendant was subject to during his employment at the
plaintiff. The third and fourth defendants
are the directing and
controlling minds of the second defendant.
[27]
The first defendant’s main duties were to source and procure
suppliers of packaging materials for the
plaintiff. He procured the
services of the second defendant and during the period from May 2017
to August 2022, the first defendant
was responsible for the
negotiation and approval of prices to be charged by the second
defendant for goods supplied to the plaintiff.
The first and second
defendants are therefore best placed to reasonably assess the quantum
of damages claimed by the plaintiff.
The fourth defendant, who is the
financial manager of the second defendant, is also best placed to
assess such damages, so is the
third defendant.
[28]
The second defendant charged for goods supplied to the plaintiff and
it received payment thereof after the
first defendant had approved
its invoices. In terms of the first defendant’s employment
contract with the plaintiff, he had
a duty to ensure that the goods
he procured were priced in line with comparable prices in the
industry, and that the prices were
cost-efficient as well as
market-related. He ought therefore to have knowledge of the
comparable prices of the goods he approved
payment for, and the same
applies to the second defendant, who is also in the industry.
[29]
It is trite that the plaintiff is not required to set out its claim
in such a manner to enable the defendant
to ascertain whether or not
the plaintiff’s assessment of the quantum is correct; the
defendants have themselves a duty to
compute and work out what is a
reasonable assessment of the damages sustained by the plaintiff.
[13]
[30]
As was stated in
Adise
v Minister of Defence and Military Veterans
:
[14]
‘
Plaintiff’s
claim need only be pleaded in such a manner that will supply the
defendant with the necessary facts which will
enable the defendant to
reasonably assess the quantum of the damages claimed.’
[31]
In the plaintiff’s amended particulars of claim, the
computation of the claim amount is contained in
the schedule, which I
have referred to in paragraph 16 above. The schedule clearly
identifies the products or goods supplied and
received, the periods
in which the goods were supplied, the amounts charged and paid for
the goods, and the estimated overcharge.
In my view, the schedule
addresses the defendants’ complaints as they are set out in
their notices of exception. It contains
sufficient particularity to
enable the defendants to plead.
[32]
Counsel for the first defendant, Mr Stokes SC, relied on
Boxer
Superstores (Pty) Ltd v Humeat Import and Export (Pty) Ltd and
another
(‘
Boxer
’)
[15]
and argued that the plaintiff had not identified the specific
invoices that contained an overcharge. Counsel for the second to
fourth defendants, Mr Chohan SC, also argued that the plaintiff had
not identified the specific invoices in relation to which the
products were overcharged. As a result, the defendants could not even
tender an amount to settle the claim. He argued that the
plaintiff
had to state what the market-related price was in order to state what
the overcharge was.
[33]
The complaint in
Boxer
was that there was no clear relationship demonstrated between the
first defendant’s invoices and the amounts charged through
the
invoices from To Be Sales 5 CC. The plaintiff in that case argued
that the matter was to be considered against a backdrop of
the
alleged collusion by the defendants to increase prices by some secret
formula known only to them and that if the plaintiff
knew of the
formula, it would have made specific allegations to demonstrate the
formula. The plaintiff’s question therefore
was whether the
defendants should be allowed to complain of a lack of particularity
and deprive the plaintiff from pursuing a claim
where enough had been
said to support a cause of action.
[16]
The court decided in
Boxer
that the exceptions were well-taken, as the alleged bribes and
kickbacks relied upon were not identified, and contained over 2 000
invoices which lacked details of the misrepresentation relied upon by
the plaintiff, thereby rendering the particulars of claim
vague and
embarrassing, as well as being lacking in averments necessary to
sustain a cause of action.
[34]
In this case, however, the amended particulars of claim, as well as
the overcharge schedule, identify the
products overcharged (set out
in paragraph 27), the period during which they were supplied (namely
May 2017 to August 2022), the
amounts charged (set out in paragraph
27), and the estimated overcharges (set out in the overcharge
schedule). In my view, given
this information and the defendants’
intimate knowledge of their products as well as similar products in
the industry in
which they conducted business, they should be able to
ascertain whether the plaintiff’s assessment of the quantum is
correct
or not. Furthermore, the defendants would be able to obtain
further particulars and details during the discovery stage.
[35]
This case is therefore distinguishable from
Boxer
as the
invoices that the plaintiff relies upon for the claim amount as a
result of the alleged corrupt relationship between the
defendants in
this matter relate to the invoices for the specific and identified
products for the period from May 2017 to August
2022. Furthermore, as
submitted by counsel for the plaintiff, Mr Ramdhani SC, the first
defendant was issued with a notice to attend
a disciplinary enquiry
wherein his relationship with the second to fourth defendants for the
period from July 2017 to 4 October
2021 was cited as being the reason
for the plaintiff’s loss of R18 million for incurring more
expenditure than it should
have through a more competitive packaging
supplier. The first defendant did not seek any clarification to the
charges but he opted
to resign.
[36]
As to the basis of the plaintiff’s second claim, I note that
the letters of award as well as the Master
Supply Agreements are not
in dispute. Clauses 9 and 10 of the Master Supply Agreements
regulated the prices between the parties
in the event of a price
review or adjustment. The plaintiff however relied on the implied,
alternatively tacit, terms of the Master
Supply Agreements and that
the second defendant would not bribe or corrupt any of the
plaintiff’s employees. It is alleged
that the first defendant’s
relationship with the second to fourth defendants, however, caused
the first defendant to benefit
from the second to fourth defendants
and the plaintiff to suffer damages. Considering that the defendants
may seek and obtain further
particulars in this regard, surely, they
would not be prejudiced in pleading hereto.
[37]
A court must ‘not look at a pleading “with a magnifying
glass of too high power”’.
[17]
‘Unless the excipient can satisfy the court that there is a
real point of law or a real embarrassment, the exception should
be
dismissed.’
[18]
[38]
As indicated above, I am persuaded that the plaintiff’s amended
particulars of claim contain sufficient
particularity to appraise the
defendants of the case that they must meet.
Costs
[39]
In determining the issue of costs, I considered the usual position
that they follow the result. The plaintiff
and first to fourth
defendants were represented by senior counsel. The plaintiff
submitted that the costs should include those
of senior counsel,
while the defendants submitted that they are to include costs of two
counsel. In the circumstances, costs of
senior counsel will be
allowed.
Order
[40]
In the result, I make the following order:
1.
The first defendant’s exception is dismissed with costs,
including the costs of senior
counsel.
2.
The second to fourth defendants’
exception is dismissed with costs, including the costs
of senior
counsel.
MLABA
J
Appearances
Date
of hearing:
25
April 2024
Date
of judgment:
31
October 2024
For
the plaintiff:
Adv.
D Ramdhani SC
Instructed
by:
Norton
Rose Fulbright South Africa Inc.
C/O
Stowell & Co
295
Pietermaritz Street
Pietermaritzburg
031 582
5639
sarah@stowell.co.za
For
the first defendant:
Adv.
A Stokes SC
Adv.
RR Kisten
Instructed
by:
Pather
and Pather Attorneys
170
Peter Brown Drive
22
Montrose Park Blvd
Pietermaritzburg
031 304
4212
sivi@patherandpather.co.za
For
the Second to Fourth Defendants:
Adv.
M A Chohan SC
Adv.
R Blumenthal
Instructed
by:
Shaheed
Dollie Inc
48
Twickenham Avenue
Auckland
Park, Johannesburg
011
482 9933
reception@sdollieinc.co.za
secretary@sdollieinc.co.za
[1]
Annexures
‘TCB3’ to ‘TCB7’.
[2]
Annexures ‘
TBC8’
to ‘TCB9’.
[3]
Close
Corporations Act 69 of 1984 (‘
Close Corporations Act&rsquo
;).
[4]
Annexure
‘TCB1.A’.
[5]
The
papers, Volume 1, page 28.
[6]
Tongaat
Hulett Limited and others v Staude and others
[2023]
ZAKZPHC 4.
[7]
Tembani
and others v President of the Republic of South Africa and another
[2022] ZASCA 70
;
2023 (1) SA 432
(SCA)
para
14.
[8]
Ibid.
[9]
Mackenzie
v Farmers’ Co-operative Meat Industries Ltd
1922
AD 16
at 23.
[10]
McKelvey
v Cowan NO
1980
(4) SA 525
(Z) at 526D-E.
[11]
Molusi
and others v Voges NO and others
[2016]
ZACC 6
;
2016 (3) SA 370
(CC) para 28;
Minister
of Safety and Security v Slabbert
[2009] ZASCA 163
;
[2010] 2 All SA 474
(SCA) para 11.
[12]
Telematrix
(Pty) Ltd t/a Matrix Vehicle Tracking v Advertising Standards
Authority SA
2006
(1) SA 461
(SCA) para 3.
[13]
D E van Loggerenberg
Erasmus:
Superior Court Practice
(RS
23, 2024) at D1
Rule 18
-
19
to
18
-
20
.
[14]
Adise
v Minister of Defence and Military Veterans
[2023]
ZAGPPHC 732 para 19.
[15]
Boxer
Superstores (Pty) Ltd v Humeat Import and Export (Pty) Ltd and
another
(KZD)
unreported case no D3387/2018 (3 October 2022).
[16]
Ibid
para 45.
[17]
Southernport
Developments (Pty) Ltd (previously known as Tsogo Sun Ebhayi (Pty)
Ltd) v Transnet Ltd
2003
(5) SA 665
(W)
para
6.
[18]
4
Lawsa
3 ed
para 342.