D F Scott (EP) (Pty) Ltd v Golden Valley Supermarket (134/2001) [2002] ZASCA 48; [2002] 3 All SA 1 (A) (23 May 2002)

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D F Scott (EP) (Pty) Ltd v Golden Valley Supermarket (134/2001) [2002] ZASCA 48; [2002] 3 All SA 1 (A) ; 2002 (6) SA 297 (SCA) (23 May 2002)

Reportable
Case No 134/2001
In
the matter between:
D F SCOTT (EP) (PTY) LIMITED
Appellant
and
GOLDEN VALLEY SUPERMARKET Respondent
Coram: HARMS, CAMERON and NUGENT JJA
Heard: 6 & 15 MAY 2002
Delivered: 23 MAY 2002
Subject: Application and interpretation of Magistrates’
Courts’ rule 54.
JUDGMENT
HARMS JA/
HARMS
JA:
[1] This appeal concerns an aspect of Magistrates’
Courts’ rule 54. The rule deals with actions by and against
partners, a person
carrying on a business in a name or style other
than that person’s own name, and by or against an unincorporated
company, syndicate
or association. It primarily permits these
‘entities’ to sue and be sued without citing the ‘real’
parties (such as the
individual partners) by name. But, as some
Roman once remarked,
nomen est omen
: citing a party under that
party’s alias may be risky. As far back as 1930, this Court had
the occasion to express its dismay
at the rule (
Parker v Rand
Motor Transport Co and Another
1930 AD 353
361; see also
Rees
v Feldman
1927 TPD 884).
At the same time the hope was expressed
that it may be found expedient to substitute a simpler and less
confusing system of rules.
No such luck. The principles underlying
the rule were later incorporated in Uniform rule 14. To complicate
matters the two rules,
without a discernible rationale, are not the
same. Even the meaning of words differ. For instance, the word
‘firm’ is used
in rule 54 to refer to a partnership whereas it is
defined in rule 14 to refer to a business, carried on by its sole
proprietor under
a name other than that person’s own. Although
this judgment concerns rule 54, the term will be used in the rule 14
sense.
[2] The plaintiff (the present appellant) issued summons
in the magistrate’s court for the district of Somerset East for
payment
for goods sold and delivered during January and February
1997. The defendant was cited as ‘Golden Valley Supermarket’ and
the
summons called upon
‘die eienaar, Golden Valley
Supermark, ‘n firma wat handel dryf te Golden Valley, Somerset Oos’
to do what summonses usually require of defendants. In
due course an appearance to defend was entered on behalf of the
‘defendant’.
The attorney on behalf of the defendant sought
further particulars and these were supplied.
[3] The defendant, through the attorney, filed a plea,
which, from the outset, contained the following defence:
‘1.1 Golden Valley Supremarket is
tans die eiendom van die Golden Valley Ventures BK en is gemelde
beslote korporasie dus die verweerder
in hierdie aksie;
1.2 Gedurende die tydperk 30 Oktober 1996 tot 4 Maart
1997 het ene meneer Wayne Vye die perseel, toerusting en meublement
van Golden
Valley Supermarket gehuur by die verweerder en het
persoonlik handel gedryf onder die naam van Golden Valley
Supermarket.’
[4] The plea was in accordance with Magistrates’
Courts rule 19(5). It provides –
‘
(a) For the purposes of this rule “defendant”
includes a person upon whom a summons has been served and who alleges
that
he is not the defendant cited in the summons and enters
appearance to defend on that ground. The court may on hearing of any
such
defence order costs to be paid to or by such person as if he
were a party to the action.
(b) If such defence be sustained the
court, instead of dismissing the summons, may, if moved thereto by
the plaintiff, allow any necessary
amendment and order that it be
served upon the real defendant.’
[5] The case went to trial on substantially this issue.
The plaintiff’s case was that the close corporation and not Mr
Wayne Vye
was liable to it. The defendant’s evidence was in
accordance with the plea and the Magistrate in the event upheld the
plea, finding
that the plaintiff all along knew that Mr Wayne Vye,
and not the close corporation, was its debtor. The claim was
consequently dismissed
with costs.
[6] The plaintiff appealed to the Full Bench
(
DF
Scott (EP) (Pty) Ltd v Golden Valley Supermarket
[2001] 1 All SA
303
(E) per Kroon J and Govender AJ). For purposes of the appeal the
plaintiff accepted the Magistrate’s factual findings but argued
that, in spite thereof, it was entitled to judgment against ‘Golden
Valley Supermarket’. In this regard the plaintiff relied
upon rule
54 and the judgment of the Cape Full Court in
Farm Fare (Pty) Ltd
v Fairwood Supermarket
1986 (4) SA 258
(C) 262C-E. The Court
below nevertheless dismissed the appeal but granted the necessary
leave to appeal to this Court where the
issue remains whether on the
facts judgment can be entered against ‘Golden Valley Supermarket’.
[7] The record before the Court below was somewhat
defective and the learned Judges were consequently unaware of the
fact that after
the filing of the plea the plaintiff had served a
notice, purportedly under rule 54(1), requiring of the defendant to
provide it
with the names and addresses of the persons who had been
the partners of the firm at the time the cause of action arose. The
response
accorded with the plea and stated that Mr Wayne Vye had been
the sole proprietor of the business at the time.
[8] Rule 54 provides as follows –
‘
(1) Any two or more persons claiming or being
sued as co-partners may sue or be sued in the name of the firm of
which such persons
were co-partners at the time of the accruing of
the cause of action. In any such case any party may by notice require
from the party
so suing or sued a statement of the names and places
of residence of the persons who were at the time of the accruing of
the cause
of action co-partners in any such firm.
(2) The party receiving such notice shall, within
10 days after receipt thereof, deliver the statement required.
(3) When the names of the partners are so declared,
the action shall proceed in the same manner and the same consequences
in
all respects shall follow as if they had been named in the
summons; but all the proceedings shall nevertheless continue in the
name
of the firm.
(4) Any person carrying on business in a name or
style other than his own name may sue or be sued in such name or
style as if
it were a firm name; and so far as the nature of the case
will permit, all the provisions of this rule relating to proceedings
against
firms shall apply.
(5) The provisions of this rule shall also mutatis
mutandis apply to an unincorporated company, syndicate or
association.
(6) When action has been instituted by or against a
firm or by or against a person carrying on business in a name or
style other
than his own name or by or against an unincorporated
company, syndicate or association in the name of the firm or in such
name or
style or in the name of the company, syndicate or
association, as the case may be, the court may on the application of
the other
party to the action made at any time either before or after
judgment on notice to a person alleged to be a partner in such firm
or
the person so carrying on business, or a member of such company,
syndicate or association, declare such person to be a partner, the
person so carrying on business or a member, as the case may be, and
on the making of such order the provisions of subrule (3) shall
apply
as if the name of such person had been declared in a statement
delivered as provided in subrule (2).’
[9] The approach to and interpretation of the rule are
subject to a number of trite propositions, which in the context of
the appeal
nevertheless require emphasis. Rules of court are
designed to ensure a fair hearing and should be interpreted in such a
way as to
advance, and not reduce, the scope of the entrenched fair
trial right (s 34 of the Constitution;
De Beer NO v North-Central
Local Council and South-Central Local Council and Others (Umhlatuzana
Civic Association Intervening)
[2001] ZACC 9
;
2002 (1) SA 429
(CC) 439). The
rule deals with procedure and not with substantive law (
Simpson’s
Motors v Flamingo Motors
1989 (4) SA 797
(W) 797I). It does not
turn a partnership or firm into a different entity or into a juristic
person, existing separately from its
members or owner (
Parker
supra
357
in fine
). It does not create rights or
liabilities which otherwise would not have existed (
Ahmed v
Belmont Supermarket
1991 3 SA 809
(N)). Also, it does not
override other rules of more basic and general application. For
instance, legal proceedings cannot commence
against any party unless
that party is notified by means of an initiating process; if not, the
proceedings are null and void (
Dada v Dada
1977 (2) SA 287
(T)
288C-F). Further, actions have to be commenced by a summons with a
call upon the defendant (rule 5(1)), who must be properly
identified
(rule 6(5)), the process must be served upon the defendant, and the
defendant must be given the opportunity to defend
the case and to
file a plea setting out the nature of the defence.
[10] If, as in this case, someone
carries on business in a name or style other than that person’s
own, he may be sued in that name
(rule 54(4)). It is important to
note the use of the present tense in the opening phrase of the
sub-rule: ‘any person carrying
on business’ (
Maisel v Anglo
African Furnishing Co
1931 CPD 223
225). In this regard it
differs from sub-rule (1), which deals with partnerships and where
past facts (who were partners at the
time the cause of action
accrued?) might be relevant. In other words, the provisions of
sub-rule (4) can be used only to determine
the true identity of the
defendant before court. (The citation of the defendant in the
summons, by the way, was of the present owner
of the business.) It
is of little consequence that the other provisions of the rule apply
to a case covered by this sub-rule because
that is only the position
‘so far as the nature of the case will permit’.
Maisel
(
loc
cit
)
1
explained that –
‘
[t]he nature of the case will not
permit [the provision] to apply when action is instituted at a time
when B owns a business upon
a cause of action which accrued when A
owned the business. In such a case, if plaintiff has a cause of
action against B at all, he
must elect whether to sue A or B. He
cannot issue summons against the firm name, and serve it on B, and
then, on a disclosure by
B that A was the owner of the business when
the cause of action accrued, claim that A is a party to the action. A
and B, not being
partners, cannot both be defendants in the action,
and if A is the real party sued, then the disclosure of A's name made
by B is
not a disclosure by the 'party sued' in terms of Order 7,
Rule 6 (1) [the present rule 54(1)] and consequently the Rule cannot
apply.’
[11] This statement is, in my view,
correct and directly applicable to this case. The plaintiff’s
notice under rule 54(1) was ill
conceived. At that stage the
plaintiff knew from the plea who the defendant before the court was
and who (according to the defendant)
the owner of the firm was when
the cause of action accrued. Even on the plaintiff’s version it
was not a partnership. The request
to disclose the name of the
partners was in the circumstances misplaced. The plaintiff had
chosen its target, namely the close corporation,
albeit by using its
alias. The defendant, as mentioned, filed a plea under rule 19(5)
and on that the plaintiff joined issue. A
plea in that form entitled
the defendant to have the dispute as to the identity of the defendant
settled, something the Magistrate
did. The plaintiff did not apply
under par (b) of the sub-rule for an amendment of the claim and
service upon the ‘real’ defendant.
Under these circumstances, as
the Magistrate correctly held, the reliance on rule 54(4) was
misplaced and out of order. See
Rustenburg Kloof Kiosk v
Friedland, Hart, Cooper & Novis
1973 (2) SA 130
(T) 134.
[12] As mentioned, the plaintiff in the
face of all this, pinned its hopes on
Farm Fare
, a judgment
which in differing degrees was not kindly received by other courts
(
Simpson’s Motors v Flamingo Motors
supra
;
Ahmed v
Belmont Supermarket supra
;
PK Stores (Pty) Ltd t/a Eric’s
Spar v Mike’s Kitchen
1994 (2) SA 322
(O)). Before quoting the
salient passage from the judgment, some factual background. The
plaintiff sued a firm under its business
name. Ms Noor signed the
power of attorney for the entering of appearance and, in opposing the
summary judgment application, described
herself as the proprietor of
the firm. The defence was that the firm had purchased goods from the
plaintiff on a cash basis only
and that there could consequently not
have been any amounts due to the plaintiff. On that issue the matter
went to trial. To the
plaintiff’s surprise, the defendant called a
witness – not Ms Noor – who alleged out of the blue that one
Hassan and not Ms
Noor had been the owner at the relevant time. The
trial court upheld this ‘defence’ and dismissed the claim. The
Full Court,
instead of dealing with the matter only on the simple
basis that the trial court had erred in upholding a defence, which
had not
been pleaded or properly ventilated, proceeded to consider
whether or not a plea by the defendant that the owner at the relevant
time was Hassan and not the present owner would have been excipiable
(at 261I-J). It found that it would.
[13] The judgment in
Farm Fare
explained this finding (at 261J-262E) –
‘
Moreover in founding his judgment on
the alleged transfer and retransfer of the business, the trial Judge
denied plaintiff the benefit
of the provisions of Rule 14 in terms of
which plaintiff chose to sue, and inflicted on it a defendant which
plaintiff had never
itself selected. Plaintiff at no stage in the
proceedings purported to sue Miss Noor instead of (the possibly
mythological) Hassan.
Rule 14 (2) provides in so many words that a
firm may be sued in its own name. The plaintiff need not allege the
name of the proprietor.
The plaintiff may, but is not obliged to,
attempt to discover who wore the mask of the firm name at the
"relevant date"
- apparently the date when the cause of
action arose. . . .
Where such information is not
forthcoming, whether or not it has been called for, nothing prevents
judgment being given against the
firm as cited. A judgment in that
form limits to the assets of the business the source from which
plaintiff may recover the judgment
debt. . . . It is irrelevant who
was the proprietor at the "relevant date". Normally when a
business is sold, that includes
the assets, goodwill and
liabilities.’
[14] The basic premise, namely that a
plea in this form would have been excipiable is, at least as far as
magistrates’ courts are
concerned, wrong. As stated, rule 19(5)
provides in terms for such a plea. It is difficult to see why the
position would be different
in the High Court. The passage quoted
also contains some statements that have to be qualified. It is
correct that the manner in
which the case was handled had deprived
the plaintiff of its procedural rights under uniform rule 14 but it
is not entirely accurate
to state that the trial court inflicted a
defendant upon the plaintiff whom the plaintiff had not selected.
The plaintiff had chosen
the firm, which means that it had chosen the
owner of the firm. On the pleadings and in the light of other
factors it was common
cause that the owner was Ms Noor. The
plaintiff was, accordingly, entitled to judgment as prayed and
judgment should have been issued
against the firm. In the light of
the common cause facts execution would then have been against the
goods of Ms Noor. The error
of the trial court was that it permitted
the raising of an issue, which the defendant on record was not
entitled to raise at that
stage.
Cf
Engelbrecht and Another
v Visentin: in re Visentin v Clensatron South Africa and Others
1997 (2) SA 241
(W).
[15] Although it is correct, as stated
in
Farm Fare
, that judgment may be entered against a firm,
whether or not the name of the owner has been disclosed, this general
proposition does
not take account of the case where the identity of
the owner of the business is in issue. If the owner of the firm
before court
is one person but the plaintiff wishes to hold another
liable under that name, the identity of the proprietor at the date
concerned
is, contrary to the impression created by the Full Court’s
judgment, highly relevant.
[16] The last sentence quoted is also
incorrect to the extent that it states that when a business is sold
it generally includes the
liabilities. Liabilities can only be
transferred by means of a delegation, an agreement to which the
creditor is a party. The sentence
is also out of context. In
deciding whether a defence is excipiable, a court cannot have regard
to what agreements ‘normally’
contain.
[17] It follows that
Farm Fare
cannot be relied on to support the plaintiff’s argument. Counsel
was asked about the object of the present exercise: what does
the
plaintiff wish to do with a judgment against ‘Golden Valley
Supermarket’? The frank response was that the plaintiff wishes
to
execute on the goods of Mr Wayne Vye after having him declared the
person who carried on business under that name at the time
the cause
of action had arisen under rule 54(6) which has been quoted above.
If this were possible, as counsel conceded, it would
mean that the
rule transformed firms into legal entities separate and apart from
their owners. It would also mean that a judgment
would be effective
against someone who was not a party to the litigation.
[18] This is not the effect of this badly drafted
sub-rule. The problem is that, as is the case of the whole of the
rule, a rule
drafted to deal with partnerships (where the partnership
has assets separate from those belonging to the individual partners)
was
made applicable to individuals who trade under an alias (where
all the assets vest in the same estate).
2
Nevertheless, the sub-rule cannot give the plaintiff what it wants.
To the extent relevant, it provides that when action has been
instituted against a person carrying on business in a name or style
other than his own, the court may on application of the plaintiff
made at any time either before
or after judgment
on notice to
a person alleged to be the person so carrying on business, declare
such person to be the person so carrying on business.
Once again,
the provision is limited to the person who, at the time of the
summons, was carrying on the business under that name.
The effect is
that if the issue arises as to who the person behind the
persona
is, the court may determine that issue. It does not mean that
someone who is (or was) not before court is suddenly transformed into
a judgment debtor. Any other interpretation would render the
sub-rule
ultra vires
.
[19] The courts below were consequently correct in not
granting judgment against ‘Golden Valley Supermarket’. It
remains to record
that there was no appearance for the respondent
when the appeal was called on 6 May. The matter stood down and later
that morning,
by agreement, was postponed to 15 May 2002. Since the
non-appearance was due to the negligence of the respondent’s
Grahamstown
attorneys, they were then ordered to pay the appellant’s
wasted costs
de bonis propriis
on the attorney and client
scale. The appeal is dismissed with costs.
__________________
L T C HARMS
JUDGE OF APPEAL
AGREE:
CAMERON JA
NUGENT JA
1
Followed in
The Fifty Six Dry Cleaners v Capitol Electric Co
1962 (3) SA 529
(T).
2
For the history of sub-rule (6):
Xakana v Elliot Brothers
(Queenstown) (Pty) Ltd
1967 (4) SA 724
(E) 727E-H.