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IN THE HIGH COURT OF SOUTH AFRICA
WESTERN CAPE DIVISION, CAPE TOWN
CASE NO: 17335/2022
In the matter between:
L[…] A[…] C[…] Plaintiff / Respondent
And
J[…] C[…] First Defendant
FREDERICK PAULSE STEYN INC Second Defendant
FREDERICK PAULE STEYN Third Defendant
INSITU CONSTRUCTION (PTY) LTD Fourth Defendant
PROPERTY FUTURES CC Fifth Defendant
THE RETAIL MAGAZINE CC Sixth Defendant
MOIGYN (PTY) LTD Seventh Defendant
Before the Honourable Ms Acting Justice Mthimunye
Date of hearing: 22 August 2024
Delivered Electronically: 9 September 2024
JUDGMENT
MTHIMUNYE, AJ
Introduction
[1] This is an exception application in which the First to Seventh Defendants
except to the Plaintiff’s particulars of claim on the basis that it lacks averments to
sustain a cause of action and that the matter is res judicata.
[2] Initially, the two issues in dispute were whether the plaintiff failed to disclose a
cause of action and whether the matter was res judicata. On 18 July, the plaintiff filed
a notice to amend her particulars of claim, setting out in detail her claim for damages
and a prayer for a proper accounting to determine the true and correct value of the
joint estate of the plaintiff and the first defendant at the time of divorce. The
Defendants did not object to the amendment of the Plaintiff’s particulars of claim and
by agreement between the part ies, the court granted the Plaintiff’s application to
amend her particulars of claim.
[3] Accordingly, the defendants’ complaint regarding the failure of the Plaintiff’s
particulars of claim to disclose a cause of action was then removed and the court
was only seized in determining whether the action of the Plaintiff was res iudicata.
[4] For convenience, I will refer to the parties as they are cited in convention.
Background
[5] The Plaintiff and the First Defendant concluded and signed a divorce
settlement agreement on 16 October 2019, which was subsequently made an order
of the court. On 14 October 2022, t he Plaintiff instituted a claim for damages arising
from an alleged fraudulent misrepresentation of the First, Second or Third Defendant
during the negotiations and signing of the settlement agreement.
[6] The Fourth Defendant (Insitu Construction (Pty) Ltd, Fifth Defendant (Property
Futures CC, Sixth Defendant (The Retail Magazine) and Seventh Defendant (Moigyn
(Pty) Ltd) were financial entities in which the First Defendant had either directly or
indirectly profitable interest which, according to the Plaintiff, formed part of the joint
estate. The First to the Seventh Defendants then entered an appearance to defend
the action. The First, Fourth, Fifth, Sixth and Seventh Defendants raised an
exception on the grounds that the particulars of claim of the Plaintiff failed to disclose
a cause of action and that the matter was res iudicata . This exception was
electronically served on the Plaintiff on 15 February 2023.
[7] Similarly, the Second and Third Defendants also raised an exception on the
grounds that particulars of claim of the Plaintiff lacks averments which are necess ary
to sustain the cause of action . They served their notice of exception on the Plaintiff
on February 2023 to remove the cause of the complaint.
[8] As a result of the Plaintiff ’s failure to remove the cause of the complaint , the
Defendants set the matter down for hearing. Subsequent thereto, the Plaintiff filed a
notice of opposition in relation to both exceptions. The exception brought by the
Second and Third Defendants for a lack of critical averments were su bsequently
withdrawn.
[9] On the day the exception was to be heard , the parties agreed to the
amendment of the Plaintiff’s particulars of claim being made an order of court .
Consequently, the complaint that the Plaintiff’s particulars of claim failed to disclose a
cause of action was removed and the issue of res iudicata remained to be
determined. I now turn to deal with the averments made in the Plaintiff’s amended
particulars of claim.
Plaintiff’s Amended Particulars of Claim
[10] It is common cause that the Plaintiff and the First Defendant were married in
community of property. They entered into a settlement agreement on 16 October
2019 which was made an order of court on 14 October 2022. The Plaintiff i n her
amended particulars of claim pleaded that the misrepresentations made by the First,
and /or Second (as the agent of the First Defendant) and/or Third Defendant were
false and intended to mislead the Plaintiff into entering into a divorce settlement
agreement. The Plaintiff further avers that as a result of the Defendants ’ false
misrepresentations, she was coerced into accepting the terms of the said settlement
agreement reflecting the incorrect total gross assets of the joint estate of the First
Defendant and herself.
[11] Furthermore, that at the time these fraudulent misrepresentations were made
by the First and Third Defendant, she was unaware that the First Defendant owned
undisclosed immovable property and other assets.
[12] The Plaintiff asserts that if she had known the real and current status of the
joint estate, she would not have agreed to the settlement as it is. She believed that
the joint estate only included the following:
12.1 An immovable property known as […] O[…] Grove, V […] Heights,
Brackenfell, of which , in terms of the settlement agreement , she was to
remain a joint owner and continue to reside on the property . Furthermore, in
terms of the suspensive condition of the s ettlement agreement, if the Plaintiff
should remarry or become involve d in a co -habitive relationship, the property
is to be sold and the proceeds of the sale to be divided equally between the
Plaintiff and the First Defendant. In addition, the Plaintiff w as to be liable for
the municipal rates, homeowner’s insurance, general and major repairs of the
said property.
12.2 An immovable property situated at […] S[…] Close, V […] Heights,
Brackenfell, of which i n terms of the settlement agreement the First
Defendant were to retain sole and exclusive ownership of the said property.
The Third Defendant, (FPS Attorneys) were appointed to effect transfer of the
Plaintiff’s undivided quarter share of said property to the First Defendant.
12.3 An amount of R400 000.00 (Four hundred thousand rand) that was in
the joint bank account of the parties, which were to be withdrawn and retained
by the First Defendant.
12.4 Furthermore, a Suzuki Ignis motor vehicle which would remain in her
possession and in terms o f the settlement agreement the outstanding amount
of the instalment sale agreement were to be settled by the First Defendant
upon the divorce between the parties.
[13] The following paragraphs of the Plaintiff’s amended particulars of claim sums
up the basis for her claim as follows:
“9. At the time that the misrepresentations were made the First
Defendant owned undisclosed immovable property and other assets
of value either directly or indirectly via and in various entities,
including but not limited to Insitu Construction (Pty) Ltd, Property
Futures CC, The Retail Magazine CC and Moigyn (Pty) Ltd. Plaintiff
was by virtue of her marriage in community of property with the First
Defendant a fifty percent owner of these assets or the value of the
assets.
10. If the Plaintiff was aware of the true and correct position she would
never h ave entered into the settlement agreement. Accordingly, the
Plaintiff has suffered damages arising from the fraudulent
misrepresentations of the First Fourth, Second and or Third
Defendants the quantum of which is unknown to the Plaintiff.
Wherefore Plaintiff prays for an order against the First Defendant on the following
terms:
(a) That the First Defendant personally and in his capacity as the
controlling interest in the entities referred to in clause 9 above, account
to the Plaintiff for the assets, liabilities and financial records of his
personal estate and those entities referred to in clause 9 above as 16
October 2019 within a time as determined by the honourable court.
(b) That there be a proper debatement of account s to determine the true
and correct value of the joint estate of Plaintiff and the First Defendant
at the time of divorce.”
[14] The Plaintiff further sought relief in her amended particulars of claim in terms
of the following prayers:
“(a) That the First Defendant personally and in his capacity as the
controlling interest in Fourth, Fifth , Sixth and Seventh Defendants
account to the Plaintiff for the assets, liabilities and financial records of
his personal estate and those the Fourth, fifth, Sixth and Seventh
Defendants as 16 October 2019, within a time determined by the
honourable court.
(b) That there be a proper debatement of account to determine the true
and correct value of the joint estate of Plaintiff and First Defendant at
the time of divorce.
[15] As a result, the plaintiff prayed for an order against the First, Second and / or
Third Defendant, jointly and severally or on such terms as the Honourable court
deems fit for payment of the outstanding balance together with costs and interest.:
Submissions by the parties
Defendants’ submissions
[16] The Defendants submitted that the allegations of fraud made by the Plaintiff
was vague and unsubstantial. Further that the Plaintiff cannot use these allegations
to launch an action for damages as the matter had already been adjudicated on by
another court when the divorce settlement agreement was made an order of court. In
other words, meaning that the matter is res iudicata. The Defendants referred the
court to paragraph 10 of the Supreme Court of Appeal judgment of Moraitis
Investments (Pty) Ltd v Montic Diary (Pty) Ltd (799/2016) [2017] ZASCA 54 (18
May 2017), where the court was seized with deciding whether the grounds advanced
by the applicant justified the rescission of the consent judgment.
“[10] In my view that was not the correct starting point for the enquiry,
because it ignored the existence of the order making the agreement an order
of court. Whilst terse the order was clear. It read:
’The Agreement of Settlement signed and dated 05 Sept ember 2013 is made
an order of court.’
For so long as that order stood it should not be regarded. The fact that it was
a consent order, is neither here nor there. Such an order has exactly the same
standing and qualities as any other court order. It is re s judicata as between
the parties in regard to the matters covered thereby. [3] The Constitutional
Court has repeatedly said that court orders may not be ignored. To do so is
inconsistent with s 165(5) of the Constitution, which provides that an order
issued by the court binds all people to whom it applies . [4] The necessary
starting point in this case was therefore whether the grounds advanced by the
applicants justified the rescission of the consent judgment. If they did not then
it had to stand and questions of the enforceability of the settlement agreement
became academic.”
[17] The Defendants contended that, akin to the current case, a settlement
agreement was signed by the First Defendant and the Plaintiff and subsequently
made an order of the court on 04 November 2019 by Hlophe JP, as he then was . In
addition, they argued that the settlement agreement, which formed the basis of the
plaintiff's claim, is not just an ordinary contractual agreement, but rather a legitimate
standing order of the court.
[18] The Defendants further submitted that the Plaintiff must have a right to claim
in order to be able to seek the following relief, that:
(a) The First Defendant renders the accounts of the Fourth, Fifth, Sixth
and Seventh to the Plaintiff in order for the Plaintiff to determine the
Defendants assets, liabilities and financial records which they held in the First
Defendants personal estate; and
(b) There be a proper debatement of these accounts in order to determine
the true and correct value of the joint estate as at the time of divorce.
[19] Additionally, the Defendants submitted that the Plaintiff should have applied to
court to have the court order of 4 November 2019 set aside, varied or amended on
the alleged grounds of fraud claimed by the Plaintiff . However, t he defendants
admitted that this is not the relief sought by the plaintiff from this court.
[20] In conclusion , the Defendants submitted that the case made out by the
Plaintiff in her amended Particulars of Claim is fatally flawed while the original
dispute between the parties remains res iudicata. Furthermore, they submitted based
on their submissions made to this court, their exception on behalf of the First, Fourth,
Fifth, Sixth and Seventh Defendant should be upheld with costs.
Plaintiff’s submissions
[21] Counsel for the Plaintiff submitted that firstly the court in considering whether
the exception should be upheld or dismissed, the court need to take cognisance of
the fact that we are dealing with a matter where the parties were married in
community of pro perty and that the joint estate was not divided equally due to a
misrepresentation perpetuated by the First Defendant and / or the Third Defendant.
[22] Further that the Plaintiff in paragraphs 11.1 to 11.9 of her amended Particulars
of claim succinctly s ets out on what her claim is based. Counsel further submitted
that it is clear by looking at the Deed of Settlement that was made an order of court
on 4 November 2019, no mention is made of the other shares or entities owned by
both Plaintiff and the First Defendant at the time of the dissolution of the joint estate.
[23] Counsel further submitted that this was as a result of the misrepresentation of
the attorney, the Third Defendant who had a vested interest in the outcome of the
case.
[24] Counsel referred the court to Eke v Parsons (CCT214/14) [2015] ZACC 30,
where Mr Parsons sought an order directing Mr Eke to pay a fixed sum of money
which was a debt owing in terms of the parties’ sale agreement. He submitted that
the Constitutional Court held that a settlement agreement is like any order once it
has been made an order of court.
[25] Counsel for the Plaintiff submitted that contrary to what the Defendants have
argued, the Plaintiff in this matter is not seeking to set aside or rescind the court
order granted on 4 November 2019 , but i nstead seeks damages on new facts that
came to light after the settlement agreement between the parties had been made an
order of court. He passionately submitted that as a result of the information that was
previously withheld from the Plaintiff , she did not receive her full fifty percent of the
joint estate as per their marriage regime of in community of property.
[26] He further submitted that the reason they are seeking the relief for a
debatement of the assets is because the Plaintiff is unaware what the correct value
of the assets were in 2019 and this has to be established in order to quantify their
claim for damages.
[27] In conclusion, counsel submitted that the relief sought by the Plaintiff is that
the First, Fourth, Fifth, Sixth and Seventh Defendants be held liable jointly and
severally, the one absolving the other. He requested that the exception be dismissed
with costs, including all costs of previous occasions on a scale C.
Issues to be determined
[28] The issue to be determined by this court is res iudicata.
Applicable Legal Principles:
[29] The principles applicable in the adjudication of exceptions are well
established.
“An exception is a pleading in which a party states his objection to the
contents of a pleading of the opposite party on the grounds that the contents
are vague and embarrassing or lack averments which are necessary to
sustain the specific cause of action or the specific defence relied upon.
(Herbstein and Van Winsen – The Civil Practice of the High Courts and
Supreme Court of Appeal of South Africa 5th Ed, 2009 Chapter 22 p630)
“An exception is a legal objection to the opponent’s pleading. It complains of a
defect inherent in the pleading: admitting for the moment that all the
allegations in a summons or plea are true, it asserts that even with such
admission the pleading does not disclose either a cause of action or a
defence, as the case may be. It follo ws that where an exception is taken, the
court must look at the pleading excepted to as it stands” (Erasmus Superior
Court Practice D1- 293).
[30] An exception is a process where the court weeds out claims without legal
merits. Furthermore, it is to prevent a claim or defence being persisted with on
pleadings that are vague and embarrassing. Ponnan, JA observed in Luke M
Tembani and Others v President of the Republic of South Africa and Another
[2022] ZASCA 70, 2023 (1) SA 432 (SCA) (20 may 2022) at para 14 that:
“[14] Whilst exceptions provide a useful mechanism ‘to weed out cases
without legal merit’, it is nonetheless necessar y that they be dealt with
sensibly. 8. It is where pleadings are so vague that it is impossible to
determine the nature of the claim or where pleadings are bad in law in
that their contents do not support a discernible and legally recognised
cause of action, that an exception is competent. 9. The burden rests on
an excipient, who must establish that on every interpretation that can
reasonably be attached to it, the pleading is excipiable. 10 The test is
whether on all possible readings of the facts no c ause of action may be
made out; it being for the excipient to 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.”
[31] When a special plea of exception is raised by a Defendant relying on res
iudicata, the onus is on the Defendant to prove (a) that a final and definitive prior
judgment or order; has been, (b) given in litigation to which the current parties or
their privie s were parties; and (c) the cause of action in both cases must be the
same, and the same relief must , or may, have been in both cases . Technical
Systems (Pty) Ltd and RTS Industries and Others (5288/2020) WCHC (1 March
2021) at para 15.
[32] I pause to point out, that the inherent jurisdiction of the High Court does not
include the right to tamper with the finality of judgments, other than in specific
circumstances provided for in the rules or common law. This is because of the
importance of l itigation being brought to finality and because a court becomes
functus officio once it has pronounced a final judgment. It is however a trite principle
of our law that the privity and sanctity of a contract should prevail. Parties are to
observe and perfo rm in terms of their agreements and should only be allowed to
deviate therefrom if it can be demonstrated that the contract is tainted with fraud or a
particular clause in the agreement is unreasonable and or so prejudicial to a party
that it is against public policy. Against this background I will now turn to deal with the
issue of res iudicata.
Analysis
[33] In the instant case, ex facie the amended particulars of claim , it is clear that
the relief sought by the Plaintiff is not the same when the settlement order was made
an order of court. Furthermore, the parties in the claim for damages, is not the same
parties as they appeared in the divorce proceedings. Pre viously, the divorce case
was between the Plaintiff and the First Defendant. Before the court now it is different
parties. This is diametrically opposed to the requirements of res iudicata . W e are
dealing in the present matter with a claim for damages as a result of a fraudulent
misrepresentation, whereas the previous matter on which the court adjudicated were
the patrimonial consequences of the parties’ marriage. It is apparent that c ertain
entities which were part of the Plaintiff and the First Defendant joint estate w as not
included in the original settlement agreement that was made an order of court on 4
November 2019.
[34] The Plaintiff’s amended particulars of claim clearly contain averments alleging
all the material facts that give rise to an enforceable claim for damages that is based
on misrepresentation or conduct of the Defendants that resulted in the Plaintiff not
being aware of the full gross value of the joint estate at the time she entered into the
settlement agreement. The plaintiff clearly sets out that she was made to believe that
the assets mentioned in the settlement agreement was the only assets in the joint
estate. It cannot therefore be said that the cause of action raised by the Plaintiff is
res iudicata under the circumstances. It is completely predicated on a different cause
of action.
[35] It is trite that a misrepresentation is a false statement of a material fact by one
party which affects the other party’s dec ision in agreeing to a contract. If the
misrepresentation is discovered, the contract can be declared void. The Plaintiff has
raised all the facts in her amended particulars of claim, and I am satisfied that a
cause of action has been made out.
[36] For the excipient to be successful in his defence , he needs to show that even
if evidence was presented sufficient to prove the facts set out in the pleading s, no
cause of action or defence would be disclosed. I do not agree with the argument
raised by the Defendants that the plaintiff’s action for damages against the
defendants is res iudicata.
[37] I am more incline d to agree with counsel for the Plaintiff that this is a new
action for damages due to a misrepresentation made by the First Defendant and / or
the Third Defendant as his agent . It must be emphasised that the First Defendant
and the Plaintiff were married in community of property and that the entities
mentioned at paragraph 7.5 to 7.9 in the amended particulars of claim was neve r
part of the settlement agreement that was made an order of court on 4 November
2019. In MD v ND (A176/2023) [2023] ZAWCHC 304 (29 November 2023), para 32
were I said:
“It bears emphasis that the consequences of the marriage in
community of property entered into by the appellant and the
respondent was that they became co -owners in undivided and
indivisible half shares of all the assets and liabilities they had at the
time of their marriage as well as the assets and liabilities they acquired
during the marriage. (See Heaton J and Kruger H South African Family
Law 4ed (2017) at 62.) Expressed differently, upon marriage, the
parties' separate estates automatically merged into one joint estate.
Upon dissolution of the marriage, all liabilities had to be settled from
the joint estate, and the balance of the joint estate, including their
respective pension interests, had to be distributed equally between
them or as they otherwise agree”
[38] Taking into consideration that this is a considerable larg e part of the joint
estate that was excluded at the time the settlement agreement was entered into by
the parties.
[39] I find no merit in the Defendants ’ argument that this matter has already been
adjudicated by this court. Even though the parties are the same and the Plaintiff's
claim for damages is a result of the settlement agreement that was made a court
order on 4 November 2019, the relief sought in t he damages action is different. This
was explained in the matter of Technical Systems (Pty) Ltd (supra) From the
pleadings and all the documents attached thereto placed before this court is not in
dispute that the disputed financial entities were not incor porated in the settlement
agreement that was incorporated into the final divorce order.
[41] It is evident from the Plaintiff’s amended particulars of claim that if the Plaintiff
had known the true and exact facts about the status of the joint estate, she would not
have entered into the settlement agreement.
[42] Our law is clear that i n terms of the law of contract, the Plaintiff only has to
prove the existence of the fraudulent misrepresentation, once she has done so she
can elect whether to resile from the agreement or to continue with the agreement. It
is clear from the submissions of counsel for the Plaintiff that the Plaintiff do not intend
to vary or rescind the original court order dated 4 November but merely intends to
sue the Defendants for damages by defrauding her of her full and correct half share
of the joint estate.
[43] In Namasthethu Electrical (Pty) Ltd v City of Cap e Town and Another
(201/2019) [2020] ZASCA 74 (29 June 2020) at para 29 , the Supreme Court of
Appeal made the following observation:
“29 It is trite that fraud is conduct which vitiates every transaction known to
the law. In affirming this principle, this court, in Esorfranki Pipelines (Pty) Ltd,
referred with approval to Lord Denning’s dicta in Lazarus Estates Ltd v
Beasley, when he said:
‘No court in this land will allow a pers on to keep an advantage which he has
obtained by fraud. No judgment of a court , no order of a Minister, can be
allowed to stand if it has been obtained by fraud. Fraud unravels everything.
The court is careful not to find fraud unless it is distinctly plea ded and proved;
but once it has been proved it vitiates judgments, contracts and all
transactions whatsoever…”
[44] I am of the view that the present case falls into the realm of the circumstances
described in Namasthethu [supra] mentioned above. It is apparent t hat the Plaintiff
had suffered loss as she alleged she acted on the basis of a fraudulent
misrepresentation by the Defendants when she entered into the settlement
agreement that was made an order of court . I, further find that t he averments made
by the Plaintiff in he r amended particulars of claim is sufficient for the purposes of
instituting a claim for damages and is raising a bona fide cause of action against the
exception raised by the Defendants’.
[45] A court has a statutory power and discretion to override any agreement when
it is contrary to public policy. Public Policy requires that this court afford the Plaintiff
an opportunity to be placed in possession of the financial documents requested in
order for her to establish what the true and correct value of the joint estate was on
the date of divorce, in orde r for her to be able to quantify her claim for damages.
That being the case the Defendants’ exception that the matter is res iudicata is
misconceived. The Defendants have failed to establish that the particulars in support
of a claim for damages were excipiable. I am inclined to agree with the Plaintiff this is
a new action based on a fraudulent misrepresentation by the First and / or Third
Defendant as his legal representative at the time settlement agreement was entered
into. It is on this basis that the exception of the Defendants is dismissed.
[46] Counsel for the Plaintiff correctly pointed out that neither of the cases referred
to by him or the Defendants related to any of the circumstances as before this court
as the Constitutional Court in Eke [supra] did not concern an action for damages on
a settlement agreement that had been fraudulently conclu ded and subsequently
made an order of court , but rather on whether the parties contracting outside of the
context of litigation may approach the court via a rescission application and request
the court that their agreement be made an order of court.
[47] The issue of whether the Plaintiff can claim damages arising form a fraudulent
misrepresentation based on a settlement agreement that was made an order of court
is not for this court to decide and will be dealt with by the court seized with the trial.
[48] Therefore, for the reasons alluded to about and the principles laid down in the
authorities mentioned above, it follows that the exception must be dismissed. The
Plaintiff seeks a punitive cost order. In the exercise of my discretion I do not believe
that such an order is appropriate.
The following order is made:
[49] The Defendant’s exception is dismissed with costs on the scale as between
party and party as taxed or agreed, including cost s of previous occasions and
including cost to counsel on scale B.
____________________
MTHIMUNYE, AJ