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[2018] ZASCA 78
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Magnum Simplex International (Pty) Ltd v MEC Provincial Treasury, Provincial Government of Limpopo (556/17) [2018] ZASCA 78 (31 May 2018)
THE
SUPREME COURT OF APPEAL OF SOUTH AFRICA
JUDGMENT
Not
reportable
Case
No: 556/17
In
the matter between:
MAGNUM
SIMPLEX INTERNATIONAL (PTY)
LTD
APPELLANT
and
THE
MEC PROVINCIAL TREASURY,
THE
PROVINCIAL GOVERNMENT OF LIMPOPO
RESPONDENT
Neutral
Citation:
Magnum
Simplex v The MEC Provincial Treasury
(556/17)
[2018] ZASCA 78
(31 May 2018)
Coram:
Lewis and Mathopo JJA and Hughes AJA
Heard:
15 May 2018
Delivered:
31 May 2018
Summary:
Application to
amend counterclaim in terms of Rule 28(1) of the Uniform Rules –
claims for damages and not specific performance
– amendment of
counterclaim did not introduce a new cause of action – no
prejudice.
ORDER
On
appeal from
:
Gauteng Division of the High Court, Pretoria (Mabuse J) sitting as
court of first instance):
1
The appeal is upheld with costs such costs to include the costs of
two counsel.
2
The order of the high court is set aside and substituted with the
following:
2.1
‘The defendant’s amendment is granted with costs.’
JUDGMENT
Mathopo
JA (Lewis JA and Hughes AJA concurring):
[1]
This appeal concerns an application for leave to amend its
counterclaim by the appellant (defendant in the court a quo) during
the trial. The main action is still pending in the Gauteng Division
of the High Court Pretoria (the high court). The trial which
was set
down from 28 February to 4 March 2016 proceeded before Mabuse J.
After the respondent had led the evidence of several witnesses
and
before closing its case, the appellant served and filed a notice to
amend its counterclaim by increasing the amount originally
claimed
from R50 315 884.87 to R250 million. The respondent
objected to the amendments. The high court upheld the
objection.
Dissatisfied with that decision, the appellant unsuccessfully applied
for leave to appeal. This appeal is with the leave
of this court.
[2]
The evidence led at the trial is not before us, the parties having
adopted an approach that such evidence is not necessary for
the
proper determination of this appeal. We have, however, been able to
rely on the pleadings and affidavits filed during the application
for
the amendment.
[3]
A brief background to this matter is as follows: On 17 November 2009,
the respondent issued summons against the appellant in
the court a
quo. In the particulars of claim the respondent sought payment of all
the amounts advanced to the appellant arising
from a written contract
concluded between the parties which comprised two main parts namely,
a project agreement and a licence
agreement.
[4]
In the original counterclaim, the pleaded case of the appellant was
founded on the allegation that the respondent breached or
alternatively repudiated the agreement by refusing or neglecting to
make payment of the licence fees as set out in schedules 1,
2 and 3
of the agreement. The appellant averred that it was entitled to claim
damages from the respondent because the latter had
retained parts of
the Finest System Software provided by the appellant and continued
using it without compensating the appellant.
It further alleged that
the damages claim was based on the licence agreement and included
claims for interest which was to be recalculated
to reflect the
accrued interest instead of the initial interest claimed at the time
when the original counterclaim was delivered.
These claims were
purely for damages. In the consequential amended special plea, plea
and counterclaim it was specifically pleaded
as follows in paragraphs
29.6.5 and 29.6.6.:
‘
29.6.5
the plaintiff is unjustly enriched with the system;
29.6.6
the defendant has suffered damages in providing the services pursuant
to the representations.’
The
factual allegations underpinning the appellant’s case was
unaltered. What it sought to change were only the dates, interest
and
the increased quantum which consequently affected the original amount
claimed.
[5]
In response to the appellant’s notice of amendment the
respondent filed a notice in terms of Rule 28(3) of the Uniform
Rules
of Court, advising the appellant of its objection to the proposed
amendment and setting out various grounds in support of
its
objection. Two of the grounds of opposition to the amendment were of
a formal nature namely, that there had been an inordinate
or
unexplained delay on the part of the appellant in seeking the
amendment. It was also contended that the amendment was not bona
fide
because the appellant waited for the respondent’s witnesses to
testify before bringing the proposed amendment and if
the amendment
were granted, the respondent would be prejudiced as it
would have to recall all its witnesses. In addition,
it was contended
that the proposed amendment was for specific performance of a
contract which was lawfully terminated. Finally
the respondent
submitted that the cause of action which the appellant sought to
introduce did not exist at the time of the filing
of the plea and
thus constituted a new cause of action.
[6]
The high court accepted the respondent’s arguments and adopted
the approach that both agreements were intrinsically linked
and
dependent on each other, and that termination of one included the
other. It characterised the appellant’s claim as one
founded
upon a terminated contract and reasoned that granting the amendment
would be tantamount to enforcing rights or obligations
from a
non-existent contract. It found that because the agreement had been
cancelled the appellant would not be entitled to claim
any licence
fees. As to the objection about the new claims or causes of action,
the high court held that the old and new claims
did not arise from a
single source and each of the claims for payment were based on a
separate cause of action with its own prescriptive
period.
[7]
Before us the appellant principally based its argument on three
grounds. Firstly, it contended that the proposed amendment is
bona
fide and merely initiated to amend dates and amounts in order to
update its quantification without introducing a new cause
of action
or amending any allegations or facts upon which its original cause of
action was premised. Secondly, the proposed amendment
was not
predicated on the project agreement but submitted that the
contemplated amendment was based on the annual licence fees
and
support fees together with interest as a result of the respondent’s
continued use of the software. The argument advanced
was that the
appellant had suffered damages because the respondent failed or
refused or neglected to compensate the appellant for
the continued
use of the software despite the agreement being cancelled. Thirdly,
it contended that no prejudice would be suffered
by the respondent
because it conducted its case on the basis that the appellant was not
entitled to any compensation beyond 2008
and 2010. Finally, it was
submitted that recalling witnesses who have already testified will
not affect the respondent’s
case and the proposed increased
quantum would not disturb the respondent’s pleaded case.
[8]
The main thrust of the respondent’s argument is that the
proposed amendment was for specific performance of the lawfully
terminated agreement. Furthermore, the respondent contended that the
cause of action which the appellant sought to introduce did
not exist
at the time of the filing of the plea and constituted a new claim.
The respondent submitted that the proposed amendment
was not made
bona fide in order to vindicate a triable issue. It argued that by
allowing the amendment, it would be prejudiced
and such prejudice
cannot be cured by an appropriate cost order or a postponement.
[9]
Against this background I turn to the issue of whether or not the
high court had correctly upheld the objection. The principles
applicable to this issue have been set out in numerous cases.
In
Caxton
Ltd & others v Reeva Forman (Pty) Ltd & another
[1990] ZASCA 47
;
1990
(3) SA 547
(A) Corbett CJ stated at 565G:
'Although
the decision whether to grant or refuse an application to amend a
pleading rests in the discretion of the Court, this
discretion must
be exercised with due regard to certain basic principles.'
The
following statement by Watermeyer J, as he then was, in
Moolman v
Estate Moolman & another
1927 CPD 27
at 29 has been accepted
and followed as reflecting the situation in our law:
'The
question of amendment of pleadings has been considered in a number of
English cases. See for example:
Tildesley v Harper
(10 ChD
393)
;
Steward v North Met Tramways Co
(16 QBD 556)
and the
practical rule adopted seems to be that amendments will always be
allowed unless the application to amend is
mala fide
or unless
such amendment would cause an injustice to the other side which
cannot be compensated by costs, or in other words unless
the parties
cannot be put back for the purposes of justice in the same position
as they were when the pleading it is sought to
amend was filed.'
In
Rosenberg v Bitcom
1935 WLD 115
at 117 Greenberg J, as he then
was, stated:
'Although
it has been stated that the granting of the amendment is an
indulgence to the party asking for it, it seems to me that
at any
rate the modern tendency of the Courts lies in favour of an amendment
whenever such an amendment
facilitates the proper ventilation
of the dispute between the parties
.'
In
Zarug v Parvathie NO
1962 (3) SA 872
(D) at 876C Henochsberg J
held:
'An
amendment cannot however be had for the mere asking. Some explanation
must be offered as to why the amendment is required and
if the
application for amendment is not timeously made, some reasonably
satisfactory account must be given for the delay.'
Caney
J stated in
Trans-Drakensberg Bank Ltd (under Judicial Management)
v Combined Engineering (Pty) Ltd and Another
1967 (3) SA 632
(D)
at 641A:
'Having
already made his case in his pleading, if he wishes to change or add
to this, he must explain the reason and show
prima facie
that
he has something deserving of consideration, a triable issue
;
he cannot be allowed to harass his opponent by an amendment which has
no foundation. He cannot place on the record an issue for
which he
has no supporting evidence, where evidence is required, or, save
perhaps in exceptional circumstances, introduce an amendment
which
would make the pleading excipiable.'
And
at 639B:
'The
mere loss of the opportunity of gaining time is not in law prejudice
or injustice. Where there is a real doubt whether or not
prejudice or
injustice will be caused to the defendant if the amendment is
allowed, it should be refused, but it should not be
refused merely in
order to punish the plaintiff for his neglect.
'
And
at 642H:
'In
my judgment, if a litigant has delayed in bringing forward his
amendment, this in itself, there being no prejudice to his opponent
not remediable in the manner I have indicated, is no ground for
refusing the amendment.'
[10]
In my view the proposed amendment does not introduce separate causes
of action, or any new cause of action. It merely seeks
to add further
items of damages arising from the same cause of action. Differently
put, the appellant is only revising the
quantification of the
original claim. The original claim remained the same and unaffected
by a plea of prescription. Therefore,
the argument that the appellant
should have instituted a separate claim because the licence fees are
paid annually in advance and
when each anniversary of the claim falls
due is misplaced. It is unconscionable to expect the appellant to
institute separate claims
for each year of the default under
different case numbers. The contemplated amendment adds nothing to
the case originally pleaded
in the counterclaim. The original
averments stood unaltered. Strictly speaking, the amendment sought is
merely arithmetic. The
proposed amendment is clearly distinct
from an amendment introducing a new cause of action.
[11]
If the amendment is granted no prejudice or injustice would occur
because the parties would be put back in the same position
as they
were when the pleadings sought to be amended were filed. On the other
hand, if the amendment is refused a substantial portion
of the
appellant’s claim will be extinguished. On the face of it such
prejudice would have the effect of disposing of the
bulk of the
appellant’s claim before the appellant could lead evidence. The
proposed amendment would not put the respondent
in a worse position
than it would have been if the pleading in its amended form had been
filed in the first instance. There will
not be any new evidence
required to disprove the appellant’s counterclaim. I say this
because the respondent led its case
on the basis that the appellant
was not entitled to anything beyond 2008 and 2010 and misconstrued
the fact that the applicant’s
claim was one of damages and not
specific performance.
[12]
In my view any notion that the appellant’s claim was not a
damages claim is negated by paragraphs 29.6.5 and 29.6.6 of
the
appellant’s consequential amended special plea, plea and
counterclaim. As correctly submitted by counsel for the appellant,
the claim had always been one for damages and not specific
performance. And it was founded upon the same breach which was part
and parcel of the original right of action.
[13]
There is one more important observation to make. As to whether the
agreements are interlinked or dependent upon each other
is an issue
that requires proper ventilation and evaluation by the trial court.
This issue cannot be decided during interlocutory
proceedings.
[14]
I cannot see how the granting of the amendment can cause the
respondent any prejudice which cannot be cured by a costs order
or
postponement. The respondent can still recall all its witnesses if
necessary and proceed with the trial without any prejudice.
It
follows that the high court erred in refusing the proposed amendment.
For these reasons the appeal must succeed.
[15]
It is ordered that:
1
The appeal is upheld with costs such costs to include the costs of
two counsel.
2
The order of the high court is set aside and substituted with the
following:
2.1
‘The defendant’s amendment is granted with costs.’
________________________
R
S Mathopo
Judge
of Appeal
APPEARANCES:
For
appellant:
P Mokoena SC
E
Mokutu
Instructed
by:
Werksmans
Attorneys, Pretoria
Symington
& De Kok, Bloemfontein
For
respondent: J Nxusani SC
H C
Janse van Rensburg
Instructed
by:
Rudman
Attorneys, Pretoria
Horn &
Van Rensburg, Bloemfontein