IN THE HIGH COURT OF SOUTH AFRICA
WESTERN CAPE DIVISION, CAPE TOWN
Case No: 3449/2022
In the matter between:
TRACETEC (PTY) LTD Applicant /Plaintiff
and
BUSINESS EQUIPMENT ASSET FINA NCE (PTY) LTD Responden t/Defendant
Heard on: 29 January 2025
Delivered Electronically on: 29 April 2025
JUDGMENT
___________________________________________________________________
LEKHULENI J
Introduction
[1] This is an opposed application in terms of Rule 28(4) of the Uniform Rules, in
which the plaintiff seeks leave to amend its particulars of claim in accordance with its
notice to amend in terms of Rule 28(1) dated 31 May 2024. The plaintiff also applies
in terms of Rule 6(15) of the Uniform Rules of Court, alternatively in terms of the
common law for paragraphs 8 to 18 of the defendant's answering affidavit in the
application for leave to amend to be struck out on the basis that the allegations in
those para graphs constitute argument and are accordingly irrelevant. The defendant
opposed both applications.
Relevant Background
[2] The plaintiff issued a summons against the defendant for payment of
R3,392,340.00, including VAT plus interest thereon arising from an oral agreement
concluded in 2017. The plaintiff has also instituted two alternative claims against the
defendant arising from the same agreement. The plaintiff pleaded in the particulars
of claim that during 2016, the plaintiff, Ultrackit Manufacturers CC ("Ultrackit"), and
the defendant, duly represented by authorised representatives, concluded an oral
contract in terms of which Ultrackit Manufacturers undertook to develop and
manufacture purpose -built fully functional and fit for purpose beacons for use by the
plaintiff as part of the technology required by the plaintiff to conduct its
radiofrequency vehicle tracking busine ss.
[3] According to the plaintiff, in terms of that agreement, the plaintiff undertook to
place a written order or written orders, with Ultrackit for the supply by Ultrackit to the
plaintiff exclusively of the beacons so ordered. The plaintiff agreed to pay for the
beacons ordered from Ultrackit through a financier, who would pay Ultrackit directly
on behalf of the plaintiff. Pursuant thereto, in September 2017, the defendant and the
plaintiff, duly represented by authorised representatives, concluded an oral
agreement in terms of which the defendant undertook to finance the purchase price
of the beacons. The plaintiff asserted that the defendant undertook to finance the
purchase price of the beacons on the basis that the defendant would conclude a
suppli er agreement with Ultrackit in terms of which the defendant would buy the
beacons from Ultrackit on behalf of the plaintiff at a price agreed between the plaintiff
and Ultrackit.
[4] In addition, in terms of the said agreement, the defendant and the plai ntiff
would conclude the defendant's Standard Master Rental Agreement in terms of
which the plaintiff would rent the beacons from the defendant against payment of the
monthly rental provided for in the Master Rental Agreement, which agreement was to
be ame nded to provide for the transfer of ownership of the beacons by the defendant
to the plaintiff upon payment by the plaintiff of all the rental provided for in the Master
Rental Agreement. Pursuant to this agreement, on 28 September 2017, the plaintiff
placed two separate orders for the beacons, amounting to a total of two hundred
beacons, to be financed by the defendant monthly over a period of 36 months.
Following this order, the plaintiff and defendant concluded a Master Rental
Agreement concerning the be acons.
[5] The written Master Rental Agreement provided that at the end of the 36 -
month period , full ownership of the goods would be transferred by the defendant to
the plaintiff on condition that the plaintiff has made all payments in full. The plaintiff
asserted further that it had paid all rentals payable to the defendant in terms of the
Master Rental Agreement and became entitled to the transfer of ownership of the
beacons from the defendant to the plaintiff. However, the beacons that were
supposed to form the subject matter of the Master Rental Agreement concluded
between the plaintiff and the defendant did not exist at the time of the conclusion of
such agreements. Accordingly, the performance undertaken by the parties in terms
of the Master Rental Ag reement was not possible at the time of the conclusion of the
contract.
[6] The plaintiff asserted that Ultrackit did not develop or manufacture the
beacons ordered by the plaintiff. On 12 January 2021, the plaintiff received the
Accounts Payable Transactions Statement of Ultrackit's account with the defendant
(the plaintiff's financier of the beacons) from the defen dant by email. The plaintiff
stated that from the Accounts Payable Transactions Statement, it appeared that the
defendant had not paid Ultrackit the amount of 2.4 million excluding VAT, being the
purchase price of the beacons agreed by the plaintiff and Ul trackit, on the conclusion
of the supplier agreement between the defendant and Ultrackit. Instead, the
defendant had paid only R1,721, 739.31 excluding VAT, to Ultrackit, as reflected in
the Accounts Payable Transaction Statement.
[7] The plaintiff asser ted that before receiving the Accounts Payable Transactions
statement, it was of the bona fide and reasonable belief that the defendant had paid
the full purchase price of the beacons, as agreed between the plaintiff and Ultrackit
and as financed in terms of the Master Rental Agreement. Subsequently, the plaintiff
sought information from the defendant to enable it to institute legal proceedings
against Ultrackit for the non -delivery of the beacons. The plaintiff also sought copies
of invoices from the defen dant, including copies of invoices from Ultrackit to the
defendant. The defendant dismissed the plaintiff's request for this information,
stating, amongst others, that the terms of the supplier agreement were not relevant
to the plaintiff's claim as the pl aintiff was not a party thereto.
[8] The plaintiff stated that there was no indication at the time of any fraudulent
misrepresentation by the defendant that led to the conclusion of the oral agreement.
Subsequently, the plaintiff decided to institute acti on against the defendant. The
plaintiff posits that based on the information at its disposal when the summons was
issued, the plaintiff's claim against the defendant was formulated based on the basis
set out in the particulars of the claim. The plaintiff w as in possession of the Accounts
Payable Transaction statement, which reflects the payments made by the defendant
to Ultraçkit. According to the plaintiff, this statement seemed to indicate that the
defendant (the financier) had not paid the purchase price of the beacons as agreed
by the plaintiff and Ultrackit.
[9] The plaintiff’s main claim against the defendant was that as the beacons did
not exist at the time of the conclusion of the agreement and the performances
undertaken by the parties in terms of the agreement were not possible at the time of
contracting , the agreements were invalid from the outset and that the obligation of
the defendant to transfer ownership of the beacons to the plaintiff at the end of the
36 months was physically impossible.
[10] In the circumstances, the plaintiff asserted that the defendant was unjustifiably
enriched at the expense of the plaintiff as the plaintiff had made payment to the
defendant of all instalments payable in terms of the Maste r Rental Agreements,
entitling the plaintiff to claim repayment of the total amount paid to the defendant in
terms of the Master Rental Agreement. In the alternative, the plaintiff claimed the
difference between the aggregate of the instalments paid to the defendant in terms
of the Master Rental Agreement and the total amount paid by the defendant (the
financier) to Ultrackit.
[11] In its plea dated 23 June 2022, the defendant pleaded that it was at all
material times contemplated by the parties that the d efendant would purchase the
beacons from Ultrackit at the most favourable prices that could be secured by the
defendant from Ultrackit. Furthermore, the defendant pleaded that it was a tacit term
of the Master Rental Agreements that the defendant would buy the beacons from
Ultrackit at the most favourable price that the defendant could secure. Additionally,
the defendant pleaded that it had made payments of the purchase price of the
beacons to Ultrackit. The defendant stated further that the payments made b y the
plaintiff to the defendant and by the defendant to Ultrackit were made in accordance
with the terms of the Master Rental Agreement.
[12] The plaintiff requested further particulars to the plea. Amongst others, the
plaintiff requested the defendant indicate whether it bought the beacons from
Ultrackit and, if so, at what price the defendant had bought them from Ultrackit. The
plaintiff also requested the defendant to indicate whether the price at which the
defendant had purchased the beacons from Ult rackit was the most favourable price
and, if so, whether the defendant negotiated such price with Ultrackit. In answer to
the plaintiff's request for further particulars, the defendant indicated that, indeed, the
purchase price was negotiated by one Wayne Robertson on behalf of the defendant
with Robert Austin of Ultrackit. According to the defendant, the purchase price was
the most favourable prize that the defendant could obtain from Ultrackit.
[13] The defendant stated in response to the request for further particulars that the
negotiations between the defendant and Ultrackit about the price for the beacons
were verbal and were conducted in September 2017. The discussions were that
Ultrackit would supply the beacons to the plaintiff, and the defendant would pay
Ultrackit's purchase price on a drawdown basis. Further, the beacons would be
manufactured, supplied and delivered directly to the plaintiff by Ultrackit as and when
they were manufactured. In response to the plai ntiff's questions as to whether the
defendant paid the purchase price of the beacons to Ultrackit by way of a single
payment or in instalments, the defendant asserted that the defendant made payment
of the purchase price to Ultrackit on a drawdown basis. T he aggregate amount
constituting the purchase price of the beacons is R1.969,035.09.
[14] Pursuant to the defendant's response to the plaintiff's request for further
particulars that the defendant never had any intention of complying with the
provisions o f the oral agreement pleaded in paragraph four of the plaintiff's
particulars of claim particularly that the defendant will conclude a supplier agreement
with Ultrackit in terms of which the defendant will purchase the beacons from
Ultrackit at the price a greed between the plaintiff and Ultrackit , the plaintiff stated that
the defendant had misrepresented to the plaintiff that it would conclude a supply
agreement with Ultrackit on the terms agreed by the plaintiff and Ultrackit,
particularly on the pricing of the beacons.
[15] To this end, the plaintiff proposed amending the particulars of claim to insert
its new main claim, which is based on misrepresentation. In the proposed
amendment, the plaintiff avers that at the time of the conclusion of the oral
agreement pleaded in the particulars of claim, the defendant knew that its
representation to the plaintiff that the defendant will conclude a supplier agreement
with Ultrackit in terms of which the defendant would purchase the beacons from
Ultrackit at the price agreed between the plaintiff and Ultrackit was false and that the
defendant never intended to and never concluded a supplier agreement with
Ultrackit on such terms. Instead, the defendant agreed with Ultrackit at a price
favourable to the defendant despite its agreement wit h the plaintiff to the contrary.
The plaintiff points out that it was unaware of the relevant facts (the alleged
misrepresentation) on which the new main claim (in terms of the proposed
amendment) is based when the original particulars of claim were prepar ed. It only
became aware of the alleged misrepresentations after the defendant's plea was filed
and a response to the further particulars was delivered.
[16] In the plaintiff's view, the misrepresentation was calculated to induce the
plaintiff to conclud e the oral agreement pleaded in the particulars of claim and,
pursuant thereto, to conclude the Master Rental Agreement with the defendant. In
the proposed amendment, the plaintiff accordingly claims cancellation of the oral
agreement and the Master Rental Agreement. The plaintiff also sought to introduce a
second alternative claim in terms of the amendment. In this alternative claim the
plaintiff seeks rectification of the Master Rental Agreement to reflect the intention of
the parties that the beacons tha t were supposed to form the subject matter of the
Master Rental Agreement had not been manufactured by Ultrackit at the time of the
conclusion of the agreement or the commencement date of the agreement and as
such, the Master Rental Agreement contained pro visions that do not reflect the
common intentions of the parties which resulted in the parties signing the Master
Rental Agreement in the bona fide but mistaken belief that it recorded a true
agreement between them.
[17] To this end, the plaintiff avers that the defendant breached the Master Rental
Agreement as rectified in that the defendant at the end of the 36 months as provided
for in the Master Rental Agreement and after the plaintiff had made all payments as
provided for in the agreement, failed to transfer ownership of the beacons to the
plaintiff. Accordingly, the plaintiff seeks an order to cancel the Master Rental
Agreement and claims repayment of all amounts paid to the defendant in terms of
the said agreements, which payments constitute damages allegedly suffered by the
plaintiff.
The Defendant’s Objection
[18] The defendant objected to the plaintiff’s proposed amendment and stated that
the plaintiff is precluded by the doctrine of election from amending the particulars of
claim . The defendant averred that the existing particulars of claim encompass
causes of action based on impossibility of performance , unjust enrichment and
breach of contract. The defendant asserts that i n terms of the proposed amendment,
the plaintiff belatedly seeks to introduce entirely new c auses of action based on
fraudulent misrepresentation in respect of the proposed new main claim, and
rectification, cancellation and restitution of amounts paid by the plaintiff to the
defendant in terms of the proposed new second alternative claim .
[19] The defendant's primary objection to the proposed new main claim for
rescission and restitution of the Master Rental Agreements based on alleged
misrepresentations is that, in terms of the doctrine of election, the plaintiff was faced
with a choice whether to uphold these contracts or to cancel them. The defendant
postulated that the notional innocent party is put to an election. Such a party may
elect to keep the co ntract alive and claim damages or to cancel the contract and
claim restitution and or damages. The defendant asserted that there are two
components of the doctrine of election. First, the innocent party must exercise the
election within a reasonable period of becoming aware of the misrepresentation.
Secondly, once the innocent party makes the election, it is bound by it. The innocent
party cannot thereafter change its mind.
[20] The defendant further stated that one of the original causes of action in the
plaintiff's particulars of claim includes a claim for breach of the Master Rental
Agreement s and damages. According to the defendant, the plaintiff accordingly
elected to enforce the obligations created by the Master Rental Agreements. The
defendant posits that the plaintiff did not, in the original particulars of claim, as they
presently stand, make any averment that the Master Rental Agreement s had been
cancelled, nor was such cancellation claimed. Put differently, the defendant stated
that the plaintiff, by its own words or conduct, elected to uphold the Master Rental
Agreements instead of cancelling them. In the defendant's view, the plaintiff belatedly
seeks to cancel the Master Rental Agreements through the proposed amendment.
[21] The defendant mentioned that the plaintiff is prevented from doing so for the
following reason: Firstly, having made the election to uphold the Master Rental
Agreements and to claim damages thereon, the plaintiff is bound by that election.
According to th e defendant, the plaintiff cannot both approbate and reprobate.
Secondly, the defendant claimed that the plaintiff had failed to make the election to
cancel the Master Rental Agreement within a reasonable time. It has been almost
two and half years since t he combined summons was issued. According to the
defendant, no facts are pleaded in the proposed amendment which would
satisfactorily explain the unreasonable delay. More so, the plaintiff did not plead
when it became aware of the purported misrepresentati on and or the true facts. The
defendant denied all the allegations of fraud that the plaintiff levelled against it.
[22] In this regard , the defendant claims that despite the unsubstantiated
protestation to the contrary, the plaintiff clearly had knowled ge of all the relevant
facts before the institution of the action and that the plaintiff made a binding election
to uphold the Master Rental Agreement s by seeking to enforce the allegations
created thereby in the combined summons. In doing so , the plaintif f consciously
chose not to pursue proceedings based on fraud, as the plaintiff belatedly attempts
to do now . Consequently, the defendant prayed that the application for amendment
be dismissed with costs including the cost s of counsel on scale B .
The plaintiff ’s application to strike out
[23] The plaintiff applied to strike out paragraphs 8 to 18 of the defendant's
answering affidavit in the application for leave to amend. According to the plaintiff,
these paragraphs const itute argument and are, accordingly, irrelevant. The plaintiff
stated that it would be prejudiced if such allegations were allowed to remain in the
answering affidavit.
Applicable legal principles and discussion.
[24] For convenience, I consider it proper to first deal with the plaintiff's application
to strike out the disputed paragraphs in the defendant's answering affidavit, as that
application is relevant to determining the application for leave to amend. Rule 6(15)
of the Uniform Rules provides that the court may on application order to be struck
out from any affidavit any matter which is scandalous, vexatious or irrelevant, with an
appropriate order as to costs, including costs as between attorney and client. The
court may not grant such an application unless it is satisfied that the applicant will be
prejudiced if the application is not granted.
[25] The main ground upon which this application is predicated is that the
averments in these paragraphs constitute arg ument. A court may in terms of its rules
strike out from any affidavit any matter which is scandalous, vexatious, or irrelevant
(the latter including argumentative matters) but will not do so unless it is satisfied that
the applicant will be prejudiced in the conduct of his case if it is not granted .1
[26] I have considered the averments in the impugned paragraphs and do not
agree that these paragraphs are irrelevant or argumentative as alleged or at all. In
my view, the paragraphs the plaintiff seeks to strike out are the basis upon which the
opposition is predicated. In other words, the paragraphs the plaintiff complains of are
the basis of the defendant's objection to the notice to amend. Paragraphs 8 to 18 of
the defendant's answering affidavit explain why it is of the view that the plaintiff is
prevented from introducing a new cause of action based on misrepresentation
through an application to amend as the plaintiff is bound by the election it had made
when it issued the summons against the defendant.
[27] The defendant asserts in these paragraphs that having made an election to
uphold the Master Rental Agreements and to claim damages thereon, that election
binds the plaintiff. Furthermore, in these paragraphs, the defendant pointed out that
the plai ntiff failed to make an election to cancel the Master Rental Agreement within
a reasonable time and that it is not correct that the plaintiff became aware of all the
relevant facts on 17 February 2023 as these averments are contradicted by the
pleadings an d the necessary documents filed of record. In my view, these
paragraphs detail the fact that the plaintiff made its election and is bound by it. The
case pleaded by the plaintiff in the summons is the case that the defendant was
called to meet and the plai ntiff cannot change its mind at this late stage.
[28] To my mind, these paragraphs are not argumentative and should not be
struck out. They serve the function of both delineating the defendant's case in the
manner of pleadings and containing the necessary factual averments to sustain the
defendant's case. Mos t importantly, the plaintiff did not establish prejudice that it
would suffer in the conduct of its case should the paragraphs remain. As pointed out
by Mr Cutler, the defendant's counsel, the plaintiff's application is hyper -technical. In
1 Swissborough Diamonds Mines (Pty) Ltd and Others v Government of the Republic of South Africa
and Others 1999 (2) SA 279 (T) at 337B; See also Parow Municipality v Joyce & McGregor (Pty) Ltd
1973 (1) SA 937 C) at 939 C -D.
Msunduzi Municip ality v Natal Municipal Pension/Provident Fund and Others,2 it was
held that the striking out procedure was never intended to allow a party to gain an
advantage based on technicalities.
[29] Given all these considerations, the plaintiff’s application to strike out
paragraphs 8 to 18 of the defendant’s answering affidavit must fail. Against this
backdrop, I turn to consider the plaintiff’s application to amend.
[30] It is common cause that the plaintiff’s particulars of claim as they stand now
encompass causes of action s based on impossibility of performance, unjust
enrichment and breach of contract. In the plaintiff’s particulars of claim, the plaintiff
assert s that the beacons that were supposed to form the subject matter of the
Master Rental Agreement s concluded between the plaintiff and the defendant did not
exist at the time of the conclusion of such agreements. Ex facie the pleadings itself,
the performance undertaken by the parties in terms of the Master Rental Agreements
was thus not possible at t he time of contracting . The plaintiff pleaded that the
defendant is liable to restore to the plaintiff all payments received by the defendant
from the plaintiff on the basis that the defendant has been unjustifiably enriched at
the expense of the plaintiff and the plaintiff impoverished by the receipt of such
payments by the defendant .
[31] In the proposed amendment, the plaintiff seeks to introduce a new cause of
action based on fraudulent misrepresentation (the proposed new main claim) and
rectification, cancellation and restitution of amounts paid by the plaintiff (the new
second alternative claim). As foreshadowed above, the defendant opposed the
amendment on the basis that in terms of the doctrine of election, the plaintiff was
faced with a choice whet her to uphold these contracts or to cancel them. The
defendant fervently asserted that the plaintiff in the combined summons sought to
enforce the Master Rental Agreements with a claim for damages and not to cancel
them. In the defendant's view, the plaint iff made an election and is bound by it and
cannot change its mind at this late stage.
2 2007 (1) SA 142 (N) at para 8.
[32] It is t rite that a party to a contract who has been induced to enter into such a
contract by means of fraudulent misrepresentation will lose his right to repudiat e if,
with knowledge of the fraud, he thereafter does any act which may be construed to
be an affirmation of the contract or fails to repudiate it within a reasonable time. In
other words, an innocent party to a contract induced by fraud has an election to
abide the contract, or to rescind it.3 Trollip JA, as he then was, observed in Feinstein
v Niggli and Another that the innocent party induced by fraud has an election to
abide by the contract or to rescind it. This is known as the doctrine of election.
Where a plaintiff affirms the contract by claiming damages in lieu of specific
performance instead of cancelling it, there is an onus on the plaintiff to plead ; in so
doing, he was unaware of the fraud.
[33] In other words, the plaintiff must demonstrate that it was unaware of the facts
underlying the fraudulent misrepresentation. The party alleging a waiver of a
contractual right retains throughout the proceedings the overall onus of proving that
the other party had full knowledge of the right when he allegedly abandoned it.4 The
doctrine of election generally involves a waiver: one right is waived by choosing to
exercise another right , which is inconsistent with the former. Indeed, election and
waiver have been equated as being species of the same general legal concept.5 The
doctrine of election also arises in the context of a breach of contract, where the
innocent party is similarly faced with an election to keep the contract alive and claim
damages or to cancel the contract and claim restitution and/or damages.
[34] Put d ifferently, once a breach that justifies cancellation has occurred, the
innocent party is faced with an election: either to affirm or to cancel the contract. An
innocent party is, of course, never obliged to cancel, and he or she need not make
an election immediately – the innocent party has a reasonable period of time in
which to do so.6 An election, once made, is however final and irrevocable unless the
other party consents to its reversal.7 Thus, if the innocent party elects to uphold the
contract, he or she cannot thereafter change his or her mind and cancel the contract,
3 Feinstein Naggli and Another 1981 (2) SA 684 (A) at 697 – 698.
4 Netlon Ltd and Another v Pacnet (Pty) Ltd 1977 (3) SA 840 (A) at 872 G -873H.
5 Moyce v Estate Taylor 1948 (3) SA 822 (A).
6 Oatorian Properties (Pty) Ltd v Maroun 1973 (3) SA 779 (A) at 785.
7 Bowditch v Peel & Magill 1921 AD 561 at 572 -3; Culverwell v Brown 1990 (1) SA 7 (A) at 17.
unless the other party commits a fresh breach justifying cancellation . Enforcement
and cancellation, being inconsistent with each other or mutually exclusive, the
innocen t party must make an election between them and cannot both appropriate
and reprobate the contract.8
[35] As discussed above, the plaintiff's claim as presently pleaded encompasses
causes of action based on impossibility of performance, unjust enrichment, and
breach of contract. The plaintiff elected to enforce the obligations created by the
Master Rental Agreements. The plaintiff did not claim cancellation of the agreements.
Instead, the plaintiff sought damages for specific performance. The plaintiff elected to
uphold the contracts by claiming specific performance instead of cancelling them.
[36] In the notice to amend, the plaintiff seeks to cancel the Master Rental
Agreements based on misrepresentation, a new cause of action. The plaintiff asserts
that it was not aware of the true facts of the misrepresentation until the defendant's
plea was filed. The plaintiff also asserts that it was only when the defendant
answered the request for further particulars on 17 February 2023 that it became
apparent that the defendant never intended to comply with the provisions of the oral
agreement pleaded in paragraph 4 of the particulars of claim.
[37] In my view, this cann ot be correct. From the plaintiff's founding affidavit, the
discovered documents filed, as well as the correspondence exchanged by the
parties before the summons was issued, contradict the plaintiff's version that it was
not aware of the fraud at the time the summons was issued. As pointed out by Mr
Cutler, the defendant expressly pleaded in its plea that the true agreement was that it
would buy the beacons from Ultrackit at the most favourable price that could be
secured by the defendant from Ultrackit. Th e defendant's plea was delivered on 23
June 2022. Evidently, the argument that the plaintiff only became aware when the
further particulars were filed on 17 February 2023 cannot be correct. Simply put, the
defendant made it clear in its plea delivered in J une 2022 that the true agreement
between the parties was that it would buy the beacons for the plaintiff from Ultrackit
at a cheaper price.
8 Segal v Mazzur 1920 CPD 634 at 644 – 645.
[38] Furthermore, from the discovered documents, in particular items 50 and 49 of
the plaintiff's discovery documen ts, it is clear that the defendant provided the
information that the plaintiff requested. From these documents, the plaintiff knew or
should have known that there was a difference between the amounts paid by the
plaintiff to the defendant and the amount pa id by the defendant to Ultrackit. The
suggestion that the plaintiff only became aware of the defendant's alleged fraudulent
conduct after the delivery of the plea and further particulars cannot be correct. Item
50 of the discovered documents indicated that the defendant did not pay 2.4 million
plus VAT. This information was at the disposal of the plaintiff at the time the
summons was issued.
[39] A careful consideration of all the documents filed clearly demonstrates that the
plaintiff had knowledge of all the relevant facts before the institution of the action and
that the plaintiff made a binding election to uphold the Master Rental Agreements by
seeking to enforce the obligations created thereby in the combined summons. In
doing so, the plaintiff consciously chose not to pursue proceedings based on fraud,
as the plaintiff belatedly seeks to do now. The plaintiff made its election, and it is
bound by it.
[40] Most importantly, in the founding affidavit, the plainti ff asserts that based on
the information at the plaintiff's disposal at the time of the issuing of the summons,
the plaintiff's claim against the defendant was formulated on the basis set out in the
particulars of claim as it stands now. The plaintiff furt her asserted that it possessed
the Accounts Payable Transactions statement, which reflects the payment made by
the defendant to Ultrackit, which statement came to the plaintiff's knowledge on
about 12 January 2021 . The plaintiff further stated that this st atement seemed to
indicate that the defendant had not paid the purchase price of the beacons as
agreed by the plaintiff and Ultrackit upon the conclusion of the supplier agreement
between the defendant and Ultrackit, as agreed between the plaintiff and the
defendant.
[41] This assertion supports the defendant’s version that the plaintiff was aware
that the defendant had not remitted the payment to Ultrackit in accordance with their
agreement. Furthermore, the documents that were discovered, particularly it ems 44
and 45, demonstrate that the plaintiff's CEO, Stephen Leggatt, repeatedly asserted
that the defendant and Ultrackit, were implicated in an alleged fraud against the
plaintiff. He also indicated that both civil and criminal proceedings would be pursu ed
against them. I have noted the argument presented by Mr Malan, the counsel for the
plaintiff, regarding the defendant's assertion that the plaintiff possessed sufficient
knowledge of the pertinent facts to allege fraud based on the email sent by Mr
Legg att, the Chief Executive Officer of the plaintiff. Mr. Malan contends that this
assertion lacks factual support. According to Mr Malan, in the email, Mr Leggatt
referred to the fraudulent conduct of Ultrackit and not to the defendant's fraudulent
misrepres entation as pleaded in the proposed new main claim. I do not agree with
this proposition.
[42] For completeness, in item 45 of the email dated 14 May 2021, Mr Leggatt
stated as follows:
‘Please therefore be advised that in the light of your repeated evasions, our
attorneys instructions are now to assume your company was part of the
alleged fraud of R2m plus interest and therefore will be part of the summons
to sue for recovery of the mone y paid to UTtrackit, plus damages. Please also
be advised that criminal charges are to be laid against all parties with the
Serious Commercial Crimes Division of SAPS and in your company’s case
also with the FSCA. I will defer this serious set of actions u ntil the end of
today in case your company changes its mind and provides the information or
explanation to which we are entitled.’ (emphasis added)
[43] In my view, the plaintiff had the necessary facts to allege fraud in the main
claim at the time of the issuing of the summons. Notwithstanding, the plaintiff
determinedly chose not to pursue proceedings based on fraud but on specific
performance. The plaintiff ’s counsel argue d that there was never such an election to
cancel the Master Rental Agreement as the plaintiff did not, by means of an
alternative claim, purport to uphold the Master Rental Agreement . This argument , in
my view , cannot be correct.
[44] In the first alternative claim set out in paragraph 16 of the particulars of claim,
the plaintiff seeks damages for specific performance. The plaintiff did not seek to
cancel the contract. A claim for specific performance underscores the importance of
main taining the contract alive, as it ensures that both parties remain committed to
their obligations and expectations. The plaintiff, by its conduct, elected to uphold the
Master Rental Agreement instead of cancelling it. Accordingly, the plaintiff is bound
by its election.
[45] I am mindful that the primary object of allowing an amendment is to obtain
proper ventilation of the dispute between the parties and to determine the real issues
between them so that justice may be done.9 I am also cognizant that th e practical
rule adopted in respect of amendments is that amendments will always be allowed
unless the application to amend is mala fide or unless such amendment will cause
an injustice to the other side, which cannot be compensated by costs.10 However, in
my view, in contractual disputes, where a party makes an election arising from a
breach of contract, he is bound by his election. He cannot thereafter seek to
introduce a new cause of action inconsistent with his election through an application
to amend. The plaintiff sought to hold the defendant to the contract, claiming
damages, and that election binds it.
[46] Even if I am wrong in my finding, I am of the view that the argument raised by
the plaintiff in its founding affidavit that it was only when th e defendant answered the
request for further particulars on 17 February 2023 that it became apparent that the
defendant never had any intention to comply with the provisions of the oral
agreement pleaded in paragraph 4 of the particulars of claim , is mista ken and is at
variance with the pleadings filed of record. In paragraph 27.6 of the defendant's plea,
the defendant pleaded that in terms of the agreement, the defendant would purchase
the beacons from U ltrackit at the most favourable price that the defend ant could
secure. The plea was served upon the defendant on 24 June 2022. At the very least,
the defendant was aware on 2 4 June 2022 that the true agreement, according to the
9 Cross v Ferreira 1950 (3) SA 443 (C) at 447; YB v SB 2016 (1) SA 47 (WCC) at 51C -D.
10 Moolman v Estate Moolman 1927 CPD 27 at 29; Villa Crop Protection (Pty) Ltd v Bayer Intellectual
Property GmbH 2024 (1) SA 331 (CC) paras 64 – 67 and 87.
defendant, was that it would acquire the beacons from U ltrakit at the most favourable
price that could be secured by the defendant from Ultrackit.
[47] I am also of the view that there is prejudice that the defendant will suffer if the
amendment is granted. The plaintiff seeks to introduce new causes of action that are
completely different from the case the defendant has previously been required to
meet. The application will give rise to a new case altogether if granted. The
defendant notes in the answering affidavit that this will require fresh evidence,
including n ew preparation and discovery. There is also a possibility that evidence
that was not previously relevant to the causes of action pleaded in the original
summons but which would be relevant to the proposed amended causes of action
has been lost.
[48] Addit ionally, the defendant may not know the whereabouts of witnesses
whose testimony could be relevant if the proposed amendment with a new cause of
action is granted. After all, the pleadings have closed, and it is incontestable that the
defendant has preserv ed evidence and secured witnesses for a case that the plaintiff
pleaded in the summons, which differs significantly from the one the plaintiff intends
to introduce through the proposed amendment. The indications are thus that the
prejudice the defendant wi ll suffer if the amendment is granted is of such a profound
nature that it cannot be cured by a postponement or through a cost order.
[49] Given all these considerations, I am of the view that the plaintiff’s application
for leave to amend must fail.
Costs
[50] As a general rule , costs follow the result, and successful parties should be
awarded their costs.11 One of the fundamental principles of costs is to compensate a
successful litigant for the expenses incurred in unjustly hav ing to initiate or defend
litigation. I have considered, the complexity of th is matter; and the value of the claim
11 Union Government v Gass 1959 4 SA 401 (A) 413.
raised in the pleadings, and I am of the view that co sts should be awarded in favour
of the defendant on scale B.
Order
[51] In the result , the following order is granted :
51.1 The application to strike out as well as the application for leave to
amend are hereby dismissed .
51.2 The plaintiff is ordered to pay the costs of this application, including the
cost of coun sel on scale B.
________________________
LEKHULENI JD
JUDGE OF THE HIGH COURT
APPE ARANCES
For the plaintiff: Mr Malan
Instructed by: Alant Gell and Martin Inc
For the Defendant: Mr Cutler
Instructed by: Asherson s Attorneys