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[2010] ZAWCHC 5
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Jones and Another v Vorster & Steyn Incorporated and Others (5766/06) [2010] ZAWCHC 5 (26 January 2010)
IN
THE HIGH COURT OF SOUTH AFRICA (WESTERN CAPE HIGH COURT, CAPE TOWN)
Case
No: 5766/06
In
the matter between:
MAARTEN
PETRUS ALBERTUS JONES
First
Plaintiff
ANNAMARIE
JONES
Second
Plaintiff
and
VORSTER
& STEYN INCORPORATED
First
Defendant
ST
MICHAEL INTERIORS CC
t/a
JUMBO BUILDING & RENOVATING
Second
Defendant
ST
MICHAEL PIERRE KOTZE
Third
Defendant
GOLD
BAY PROPERTIES 29 CC
Fourth
Defendant
JUDGMENT
DELIVERED ON 26 JANUARY 2010
YEKISO,
J
INTRODUCTION
[1]
The first and the second plaintiffs have instituted an action out of
this court against the first, second, third and fourth defendants,
jointly and severally, the one paying the other to be absolved, for
payment of an amount of R300,000-00, being in respect of damages
allegedly suffered by the plaintiffs arising from an alleged payment,
without authority, by the first defendant to the second defendant
of
an amount of R300,000-00 entrusted to it by the plaintiffs.
DESCRIPTION
OF THE PARTIES
[2]
[2.1.]
The plaintiffs are Maarten Petrus Albertus Jones and Annamarie Jones,
first and second plaintiffs respectively, who are married
to each
other and residing at 18 Compagne Crescent, Strand,in the Province of
the Western Cape.
[2.2.]
The first defendant is Vorster & Steyn Incorporated, a company
duly incorporated in terms of the laws of the Republic
of South
Africa, conducting practice as attorneys, notaries, conveyancers,
administrators of estates and sworn translators at Mitchell
House,
16 Mitchell Street, Hermanus,in the Province of the Western Cape.
[2.3.]
The second defendant is St Michaels Interiors CC, a close
corporation with limited liability, incorporated in terms of the
laws of the Republic of South Africa, carrying on trade as Jumbo
Building and Renovating, having its principal place of business
at
923 Buffels Road, Pringle Bay, in the province of the Western Cape.
[2.4.]
The third defendant is St Michael Pierre Kotze, an adult male person
of 923 Buffels Road, Pringle Bay, in the province of
the Western
Cape. The third defendant is the sole member of the second
defendant.
[2.5.]
The fourth defendant is Golden Bay Properties 29 CC, similarly a
close corporation with limited liability, duly incorporated
in terms
of the laws of the Republic of South Africa, having its registered
office at 287 Lynwood Road, Menlo Park, in the province
of Gauteng
and having its principal place of business at 923 Buffels Road,
Pringle Bay, in the province of the Western Cape.
The fourth
defendant was added as the fourth defendant in these proceedings in
terms of the Order of this Court issued on 27 June
2006.
BACKGROUND
TOWARDS INSTITUTION OF THE PROCEEDINGS
[3]
[3.1.]
On 30 October 2004, and at the Strand, the first and the second
plaintiffs each concluded three separate written agreements
with the
second and the fourth defendants, St Michael Interiors CC and Golden
Bay Properties 29 CC, respectively. The second and
the fourth
defendants were each represented by the third defendant when all
three sets of agreements were concluded.
[3.2.]
The respective written agreements were an agreement of purchase and
sale, in each case, in terms of which each plaintiff
purchased from
the fourth defendant a vacant piece of land in an anticipated
residential development marketed under the name "St
Michael's
Nest".
[3.3.]
The second written agreement, in each case, entailed a building
agreement, concluded with the second defendant, in terms
of which
the second defendant undertook to erect a dwelling on each vacant
piece of land purchased by each plaintiff from the fourth
defendant.
[3.4.]
The third such written agreement entailed an acknowledgement of
debt, by each plaintiff, in favour of the second defendant
in terms
of which each plaintiff acknowledged himself/herself to be truly and
lawfully indebted to the second defendant in a specified
amount of
money, the
causa
in
respect of each acknowledgement of debt being described "as per
part of the building agreement". The three separate
written
agreements are briefly elaborated on in the paragraphs which follow.
THE
ACKNOWLEDGEMENT OF DEBT
[4]
[4.1.]
This agreement, in each case, is under the heading "Acknowledgement
of Debt". In terms thereof, the first plaintiff
bound himself
to be truly and lawfully indebted to the second defendant in an
amount of R200,000-00 "as per part of the building
agreement".
There is no indication in the written agreement, in the instance of
first plaintiff, as regards when and how the
aforementioned amount
had to be repaid nor any indication of consequences which would
ensue in the event the debtor defaulting.
[4.2.]
In the instance of the second plaintiff, she bound herself to be
truly and lawfully indebted to the second defendant in an
amount of
R100,000-00 similarly "as per part of the building agreement".
In the case of the second plaintiff, the aforementioned
amount of
R100,000-00 is indicated as being repayable on date of bond
approval.
THE
PURCHASE AND SALE AGREEMENT
[5]
The plaintiffs, in each case, concluded a purchase and sale
agreement with the fourth defendant in terms of which each plaintiff
purchased from the fourth defendant a vacant piece of land. In the
case of the first plaintiff the property purchased is described
as
Erf 10, "St Michael's Nest" and, in the case of the second
plaintiff, the property purchased is described as "Unit
19 St
Michael's Nest". In each case, the purchase consideration is in
an amount of R200,000-00 payable on date of transfer
of the
properties concerned in the names of the respective purchasers. In
terms of clause 9.2 thereof, the transfer, in each case,
would be
effected by attorneys
Vorster
& Steyn, Mitchell House, 16 Mitchell Street, Hermanus. The
seller, in each instance, was the fourth defendant, Golden
Bay
Properties 29 CC.
THE
BUILDING AGREEMENT
[6]
The building agreements, in each case, provide for the erection of a
dwelling on each vacant piece of land purchased. In each
case the
builder, who is the second defendant, undertook to carry out the
building works on the property at a consideration of
R340,000-00 in
the instance of the first plaintiff and, in the instance of the
second plaintiff, at a consideration of R299,900-00.
In terms of
clause 1.1 of the agreement the builder undertook to carry out and
complete the work, at its sole risk, cost and expense
according to
the plans, elevations and specifications annexed to the Building
Agreement.
[7]
The marketing of the proposed development was undertaken by Seeff
Properties, a well-known organisation in auctions, marketing
and
property development. In the instance of this matter Seeff
Properties were both marketing and sales agents for the developer
in
the proposed development. All the agreements referred to in the
preceding paragraphs were concluded at the business premises
of
Seeff Properties as agents for the developer. The transferring
attorneys, as indicated in clause 9.2 of the agreement, were
indicated as being attorneys Vorster & Steyn, the first
defendant in these proceedings. Their address was indicated as being
Mitchell House, 16 Mitchell Street, Hermanus and their telephone and
fax numbers were indicated as being (028) 313 0033 and (028)
312
3348. The names of the transferring attorneys as well as their
telephone and fax numbers thus also feature in the marketing
of the
proposed property development.
PAYMENTS
INTO THE TRUST ACCOUNT OF FIRST DEFENDANT
[8]
When offering to purchase the vacant pieces of land, both the first
and the second plaintiffs indicated to the sales agent,
Mr Kuhn,
that they had available amounts of R200,000-00 and R100,000-00
respectively, as deposits towards the purchase price of
the
properties and the building works to be undertaken thereon.
According to the evidence of Mr Jones, the amounts of R200,000-00
and R100,000-00 referred to in the Acknowledgement of Debt and the
subsequent payment into the trust account of the first defendant
of
the total amount of R300,000-00 was at the backdrop of a discussion
pertaining to payment of a deposit and the costs of the
building
works to be undertaken on the vacant pieces of land purchased.
[9]
According to the evidence of Mr Jones, sometime during December
2004, he and his wife were called upon to pay the amounts of
R200,000-00 and R100,000-00, respectively, which each one of them,
on the occasion of the conclusion of the agreements, had indicated
they had available to pay. The required amount of R300,000-00 was
paid by way of two payments into the trust account of first
defendant, Vorster & Steyn Incorporated: an amount of R75,000-00
paid by the second plaintiff on 4 January 2005, such payment
having
been made by way of a bank guaranteed cheque; an amount of
R225,000-00 paid by the first plaintiff on 7 January 2005, such
payment having been made by way of an internet bank transfer. When
called upon to make the required payments, the first plaintiff
insisted that such payment be made in an interest-bearing trust
account whereupon the sales agent, in the person of Mr Kuhn,
furnished
him with the trust account details of the transferring
attorneys in the persons of attorneys Vorster & Steyn
Incorporated.
In the meantime the plaintiffs were informed that
transfer of the relevant properties in their respective names would
be effected
towards the end of January 2005 and that building works
on the properties concerned would be completed towards the end of
April
2005.
[10]
In the meantime, and as per conditions attached to their respective
purchase and sale agreements, both the first and the second
plaintiff applied for home loans with Absa Bank the proceeds of
which would be utilised towards payment of the balance of the
purchase price. In the instance of the first plaintiff, a home loan
in an amount of R340,000-00 was approved. Attorneys Vorster
&
Steyn Inc were instructed to attend to the registration of the bond
per a letter addressed to them dated 29 December 2004.
In the
instance of the second plaintiff, a bond in an amount of R399,900-00
was approved and, similarly, attorneys Vorster &
Steyn Inc were
instructed to attend to the registration of the relevant bond per
letter dated 10 January 2005.
PAYMENT
TO SECOND DEFENDANT
[11]
The third defendant had become aware of payments made, first, by the
second plaintiff, of an amount of R75,000-00 made on 4
January 2005
into the trust account of attorneys Vorster & Steyn Incorporated
who, as has already been pointed out, are first
defendant in these
proceedings.
According
to the evidence of Mr Bierman, a director in the aforementioned firm
of attorneys, the third defendant, who it appears
was a client in
the firm at that stage, called at the first defendant's offices and
demanded that an amount of, initially, R75,000.00-00
paid into the
first defendant's trust account by the second plaintiff be paid to
him on the basis that it was paid into the firm's
trust account in
discharge of an indebtedness due to him. In proof of this assertion,
so Mr Bierman states in his evidence, the
third defendant produced
the acknowledgements of debt referred to in paragraph [4] of this
judgment. On the strength of these acknowledgements
of debt, Mr
Bierman authorised three payments to the second defendant, those
being payment to the second defendant of an amount
of R75,000-00, by
way of cheque no 6889 dated 7 January 2005; a further payment to the
second defendant of an amount of R200,000-00,
by way of cheque no
6896 dated 13 January 2005; and a further payment to the second
defendant of an amount of R25,000-00, by way
of cheque no 6897 dated
13 January 2005, all such payments totalling an amount of
R300,000-00 which is the subject of a claim in
this action.
[12]
In the meantime, the plaintiffs kept on enquiring from Mr Kuhn, a
sales and marketing agent, as regards the delay in the transfer
of
the vacant pieces of land into their respective names and the delay
in the commencement of the building development. As at 27
June 2005
no transfer had as yet taken place despite several advices that
those would have occured towards the end of January 2005
and no
building works had commenced despite similar advices that those
would have been completed towards the end of April 2005.
Under the
circumstances both plaintiffs felt that their patience had been
thoroughly exhausted and felt that they had no option
but to resile
from the agreements concluded.
[13]
By way of a joint letter dated 27 June 2005, the plaintiffs
addressed a letter to Mr Kuhn of Seeff Properties advising that
they
were cancelling all the agreements concluded in view of the
unacceptable delays in effecting the required transfer, commencement
and the completion of the development project. Mr Kuhn communicated
the plaintiffs' notice of cancellation to the third defendant.
The
response received was that the third defendant refused to cancel the
agreements. Once the plaintiffs were informed that the
third
defendant refused to cancel they consulted their legal
representative in the person of Mr Le Roux. On 14 July 2005 the
plaintiffs
were informed, for the first time according to first
plaintiff's evidence tendered at trial, that the total amount of
R300,000-00
entrusted to the first defendant had since been paid by
the first defendant to the second defendant and that such payment
had been
made as far back as January 2005. By way of separate
actions, the first and the second plaintiffs instituted actions out
of this
court against the first, second and the third defendants for
the recovery of the amounts each plaintiff deposited into the first
defendant's trust account.
PLAINTIFFS'
CASE ON THE PLEADINGS
[14]
As has already been pointed out in the preceding paragraph, the
first and the second plaintiffs initially instituted separate
actions against the defendants, in the instance of first plaintiff,
for recovery of an amount of R200,000-00 and, in the instance
of
second plaintiff, for recovery of an amount of R100,000-00, such
actions having been instituted out of this court under case
no:
12740/2005 and 12741/2005, respectively. The said actions were
subsequently consolidated into one action in terms of rule 11
of the
Uniform Rules of Court per an order of court issued on 27 June 2006.
[15]
As against the first defendant, the plaintiffs' claim is based on an
allegation that the first defendant, acting beyond the
scope of its
mandate as an attorney and agent for the plaintiffs, paid to the
second defendant an amount of R300,000-00 entrusted
to it by the
plaintiffs without authority to do so or without the plaintiffs
having consented thereto.
[16]
In the course of trial the plaintiffs amended their particulars of
claim by introducing an alternative cause of action based
on an
alleged breach of duty of care allegedly owed by the first defendant
to the plaintiffs thus bringing the plaintiffs' alternative
cause of
action within the realm of delict. In their claim, in its amended
form, the plaintiffs pleaded, as an alternative cause
of action,
that if it is found that the first defendant did not act as an
attorney or agent for plaintiffs in effecting payment
to the second
defendant of the aforementioned amount of R300,000-00, then, in that
event, the first defendant breached its duty
of care owed by it to
the plaintiffs to ensure that the amount of R300,000-00 paid into to
the first defendant's trust account
was retained, as part payment of
the purchase price owed to the fourth defendant, in an interest
bearing trust account; the first
defendant breached its duty to
ensure that the aforementioned amounts, on the date that transfer of
the properties were registered
in the names of the plaintiffs, were
paid over to the fourth defendant; and, if, for whatever reason,
[17]
transfer did not take place, the first defendant breached its duty
to ensure that the aforementioned amounts were repaid to
the
plaintiffs with interest.
[18]
As against the second defendant, the plaintiffs' claim is for
recovery of an amount of R300,000-00 paid to it by the first
defendant on the basis that such payments were made to the second
defendant without it being entitled to such payment resulting
in the
second defendant being unduly enriched, at the expense of
plaintiffs, as a result of such payment.
[19]
As against the third defendant the plaintiffs' claims are based on
an allegation that the third defendant, through collection
and
receipt from the first defendant of the amounts claimed, acted
fraudulently, alternatively, recklessly and further alternatively,
grossly negligent and that such conduct constitutes abuse of
corporate juristic personality attracting personal liability as
contemplated
in section 65, alternatively, section 69 of the Close
Corporation Act, 69 of 1984.
[20]
Apart from the first defendant, none of the other defendants
attended trial in defence of claims against them as pleaded, the
third defendant's attendance at trial, in person, having been
limited to the first day of a trial which lasted somewhat six court
days.
FIRST
DEFENDANT'S DEFENCE
[21]
The plaintiffs' claim, in the main, is based on an alleged
contractual relationship between the plaintiffs and the first
defendant
as their attorney and agent and that the amount claimed
was paid to the second defendant in breach of that contractual
relationship.
To this leg of the plaintiffs' claim the first
defendant denies having acted as attorneys for the first and second
plaintiff in
any form of a contractual relationship, pleading that
the amount paid into the first defendant's trust account was paid
pursuant
to the acknowledgements of debt concluded between the
plaintiffs and the second defendant, St Michael's Interior CC,
trading as
Jumbo Building and Renovating and that the first
defendant's trust account was nominated for purposes of payment of
the amounts
due to the second defendant as contemplated in clause 5
of the respective acknowledgements of debt. Thus, first defendant
denies
that there existed any contractual relationship between it
and the plaintiffs, thus putting first and second plaintiff to proof
thereof.
[22]
As for the claim based on the alleged breach of duty of care, the
first defendant pleaded that this aspect of the plaintiffs'
claim,
based as it is on delict, was introduced as an alternative cause of
action by an amendment served on the first defendant
by plaintiffs
on 11 July 2008; that the claim based on delict introduced a new
cause of action different from the initial claim
based on contract;
that the plaintiffs became aware of the existence of the debt, which
is a subject of this claim, as far back
as January 2005; that the
plaintiffs, through exercise of reasonable care, should have or
ought to have acquired knowledge of the
existence of the debt by not
later than June 2005; and that, as at the date of service of an
amendment introducing the alternative
cause of action on 11 July
2008, this aspect of the plaintiffs' claim had already become
prescribed as contemplated in
section 12
of the
Prescription Act, 68
of 1969
. This defence is advanced by way of a special plea to the
plaintiffs' alternative claim based on an alleged breach of duty of
care.
[23]
In the alternative, the first defendant pleaded that if it is found
that the first defendant, in effecting payment of the amount
claimed
to the second defendant, was negligent as alleged in paragraphs 9.3
and 10.3 of the plaintiffs' amended consolidated particulars
of
claim, and that the first defendant is liable to pay plaintiffs'
claim, such liability falls to be reduced by virtue of the
provisions of section 1 of the Apportionment of Damages Act, 34 of
1956 due regard had to the degree the plaintiffs were at fault
in
relation to the damages suffered. These defences will be considered
in relation to the plaintiffs' claims, as pleaded.
THE
CONTRACTUAL CLAIM
[24]
As correctly pointed out by
Mr
Oosthuizen SC,
for
the first defendant, in his submissions and argument before me that
at this day and age of our legal development it has been
established
beyond dispute that a contract only comes into being when there is
consensus between the contracting parties as regards
the subject
matter, the terms and conditions thereof. When it comes to tacit
contracts, our law requires of the party seeking to
rely on such a
contract to show, by a preponderance of probabilities, unequivocal
conduct, which is capable of no other reasonable
interpretation,
that the parties intended to and did in fact contract on the terms
alleged. Thus, it must be proved that there
was in fact
consensus
ad idem.
It
has been held in authorities such as
Roberts
Construction Co Ltd v Dominion Earthworks (Pty) Ltd
1968(3)
SA 255(A) that a party relying on a tacit contract must set out, in
its pleadings, the facts from which such contract is
to be inferred.
[25]
As further correctly pointed out in the first defendant's
submissions, in the instance of this matter, the plaintiffs have
neither pleaded, nor attempted to prove, any facts unequivocally
showing that the parties, that is the plaintiffs and the first
defendant, had reached
consensus
ad idem
in
relation to the alleged contract. There being no proof, or reliance,
on a tacit contract, what then next has to be determined
is whether
an express contract was concluded and, if so, whether the conclusion
of such express contract has been proven.
[26]
It is, similarly, a matter of trite law of contract that a contract
comes into being by an offer and acceptance, coupled with
a
deliberate intention to be bound by the terms and conditions
thereof. In the instance of this matter, first plaintiff says it
in
so many words that there absolutely was no communication between the
plaintiffs and the first defendant, either before or after
payment
of the funds into the trust account of the first defendant nor was
there any communication to the plaintiffs by the first
defendant
after payment of such funds. Indeed, there is no evidence, in the
matter before me, of any offer or acceptance thereof
or, of any
discussions, negotiations or correspondence between the parties on
basis of which there can be any suggestion of a conclusion
of an
express contract between the plaintiffs and the first defendant.
[27]
I am thus unable, on the basis of the principles set out in the
preceding paragraphs and on the basis of evidence tendered
at trial,
to find that there was in existence, as between the plaintiffs and
the first defendant, a contractual relationship as
the plaintiffs
seek to allege in their particulars of claim. It therefore follows
that the plaintiffs' claim, based on an alleged
contract, ought to
fail.
ST
MICHAEL'S NEST DEVELOPMENT
[28]
The interaction between the first defendant and the third defendant,
St Michael Pierre Kotze, ostensibly representing the second
defendant, St Michael Interiors CC, as regards the payments based on
the acknowledgements of debt, obviously cannot be looked at
in
isolation. It obviously has to be looked at in the light of the
entire evidence tendered at trial, the extent, magnitude and
the
marketing of the proposed development. The first defendant, as
transferring attorneys, were aware of the extent and magnitude
of
the proposed development.
[29]
At a pre-trial conference held on Monday, 23 June 2008, the parties
agreed to compile a bundle of documents which each one
of the
parties might use at trial. It was agreed between the parties that
such documents would be admitted for what they purport
to be, but
without necessarily admitting the truthfulness of the contents
thereof. One such document is a document referred to
as "sole
marketing and sales mandate" contained at page 782 of bundle B
placed before court by the parties. A reference
to this document
will be made in paragraphs which follow.
[30]
On 17 September 2004 and at the Strand the second defendant, as a
developer, concluded a "sole marketing and sales mandate"
with Seeff Properties for the marketing and sale of 20 units in a
property situate at the Main Road, Strand, fully described and
commonly known as Erf 25113, Main Road, Strand. The marketing and
sale of the units in the aforementioned property was part of
a
property development undertaken by the second defendant. In the
definition clause of the "sole marketing and sales mandate",
the term "development" is defined as "the
development of the property previously referred to as St Michael's
Nest". Similarly, the term "transferring attorneys"
in the definition clause is defined as meaning "Vorster
&
Steyn Attorneys, 16 Mitchell Street, Hermanus, Ref: C J Bierman".
The agreement was signed by the third defendant, ostensibly
in his
capacity as the sole member of the second defendant. Seeff
Properties had the sole mandate to market and sell the 20 units
in
the envisaged development. The implementation of the development
would be preceded by transfer of the land in question from
the owner
thereof, Saayman Property Trust, to the fourth defendant, Golden Bay
Properties 29 CC, who, in turn, on basis of a suspensive
condition,
sold the individual units to the prospective purchasers. The
transfer of the properties from the Saayman Property Trust
to the
fourth defendant, and from the fourth defendant to the individual
purchasers would be undertaken by the first defendant.
[31]
Clause 6 of the "sole marketing and sales mandate"
provides "if an agreement of sale of a unit makes provision
for
the payment of a deposit, the said deposit shall be paid immediately
to the developers' transferring attorneys' trust account.
Any
interest earned on a deposit will accrue for the benefit of the
purchaser prior to registration of transfer". The
implication of this clause is that payments received from purchasers
were to be held in an interest bearing trust account and any
interest earned would accrue to the purchaser who, invariably, would
be the depositor of such funds. The three separate agreements
concluded by each plaintiff and the fourth defendant (purchase and
sale agreement) and the second defendant (the building agreement
and
the acknowledgement of debt) were concluded within the context of
and in anticipation of the proposed development. Seeff Properties
is
designated as "the agent" in the "sole marketing and
sales mandate". The developer signed its portion of
the
agreement on 6 October 2004 and ostensibly at the offices of the
first defendant. The commissioning stamp of Coenraad Johannes
Bierman is affixed on the portion of the document designated for
signature by a second witness.
[32]
According to the evidence of Mr Jones payments of the respective
amounts of R75,000-00 and R225,000-00 were towards payment
of the
deposits despite an explanation by Mr Kuhn to both plaintiffs on the
day each one of them signed the three separate agreements,
that the
amounts reflected in each acknowledgement of debt represented the
difference between acquisition costs of the vacant pieces
of land
and home loans to be procured. Once the aforementioned payments were
received by the first defendant, these were credited
to the account
of St Michael Interiors CC. No separate ledger accounts were opened
in respect of each such payment. Both in terms
of receipt numbers
53423 and 53438 dated 4 January 2005 and 7 January 2005,
respectively, such payments are indicated as being
for the account
of St Michael's Nest. There is no indication on the receipts
themselves that such payments were in respect of an
acknowledgement
of debt or discharge of a liability arising therefrom. The receipts
were not posted to the respective depositors
of the funds, but were
retained in a general file relating to the St Michael's Nest
development. What has thus been stated in this
paragraph constitutes
a background towards payment of an amount of R300,000-00 into the
trust account of the first defendant.
DUTY
OF CARE
[33]
At the outset, it has to be pointed out that funds deposited into an
attorney's trust account do not form part and parcel of
that
particular legal practitioner's private estate. Section 78(7) of the
Attorneys Act, 53 of 1979 provides that no amount standing
to the
credit of any practitioner's trust account shall be regarded as
forming part of the assets of the practitioner or may be
attached on
behalf of any creditor of such practitioner.
[34]
As pointed out in paragraph [27] of this judgment the first
defendant was aware of the St Michael's Nest development project.
In
terms of the "sole marketing and sales mandate" document
the first defendant was appointed "the transferring
attorneys"
in the entire development project. In terms of clause 6 of the "sole
marketing and sales mandate" document
it is required of the
first defendant, in those instances where an agreement of purchase
and sale makes provision for payment of
a deposit, that such
deposits be paid immediately to the first defendant's trust account;
that such deposits be held in an interest
bearing trust account and
any interest earned to accrue to the benefit of the purchaser. The
funds deposited and received on 4
January 2005 and 7 January 2005
were clearly marked for the account of St Michael's Nest. Once such
deposits were received, these
would have prompted the first
defendant to investigate if such funds were intended for payment of
a deposit as contemplated in
clause 6 of the "sole marketing
and sales mandate" in which event the funds would have had to
be dealt with in a manner
provided for in clause 6 of the "sole
marketing and sales mandate". An enquiry from each depositor
would have clarified
the purpose of the deposits and whether such
deposits would have had to be dealt with in terms of clause 6 of the
"sole marketing
and sales mandate".
[35]
The amount of R300,000-00 was paid out in bits and pieces and in
drips and drabs as indicated in paragraph [11] to the second
defendant ostensibly on the strength of the acknowledgements of debt
given to Mr Bierman of the first defendant firm by the third
defendant. Each acknowledgement of debt stipulates that each debtor
is truly and lawfully indebted to the second defendant in amounts
specified therein "as per part of the Building Agreement".
The building agreement referred to was not amongst the documents
handed over to Mr Bierman by the third defendant. As the
transferring attorneys in the development project the first
defendant
was aware, in as much as the individual units in the
proposed development had not as yet been transferred to the
individual purchasers,
that building operations in the proposed
development had not yet commenced. Despite this, the first defendant
did not refer to
the building agreement to ascertain under what
circumstances each depositor is liable to the second defendant "as
per part
of the Building Agreement" when the building operation
itself had not yet commenced, let alone not a single unit had as yet
been transferred to each individual purchaser.
[36]
The amount of R75,000-00 was paid into the trust account of the
first defendant by the second plaintiff on 4 January 2005.
In the
instance of the second plaintiff, the acknowledgement of debt
stipulates that the amount due, which, in her instance, is
in an
amount of R100,000-00, is payable on date of bond approval. A letter
from Absa Bank advising of approval of the bond is dated
10 January
2005, yet the amount of R75,000-00 deposited into the trust account
of first defendant was paid to the second defendant
by way of cheque
no 6889 dated 7 January 2005, somewhat three days before the date of
a letter advising of the approval of the
bond. There is no evidence
on record to suggest that earlier approval of the bond was
communicated to the first defendant or evidence
by way of a file
note or correspondence to indicate that an enquiry was made, before
10 January 2005, whether the bond was approved
or not. Clearly, the
payment of an amount of R75,000-00 to the second defendant on 7
January 2005, deposited by second plaintiff
on 4 January 2005, was
made outside of the first defendant's authority or mandate to do so.
[37]
The evidence of Mr Bierman, of the first defendant's firm, is to the
effect that prior to making payments to the second defendant,
there
was communication with the plaintiffs to verify if indeed the
deposits made were in discharge of liability arising from the
acknowledgements of debt. This communication was ostensibly made
through Mr Bierman's secretary in the person of Ms Oberholzser.
Ms
Oberholzser does indeed confirm in her evidence that she did make
such communication with plaintiffs; that at that stage the
firm did
not have the plaintiffs' telephone numbers; that such communication
was by way of the third defendant's cellphone who
had dialled the
plaintiffs' number before handing over the cellphone to Ms
Oberholzser; that the person Ms Oberholzser spoke to
indeed
confirmed that the deposits made were in discharge of liability
arising from the acknowledgments of debt although Ms Oberholzser
could not recall as regards which of the plaintiffs she had spoken
to. Once Ms Oberholzser received such confirmation, she communicated
same to Mr Bierman who subsequently authorised payment to the second
defendant. Once again, there is no evidence, either by way
of
correspondence or file note, other than Mr Bierman and Ms
Oberholzser's
ipse
dixit,
to
suggest that mandate to effect payment was indeed received. Mr Jones
denies in his evidence having received such communication
from the
first defendant's personnel.
[38]
A duty on an attorney to account, limited to the attorney's client,
derives from rule 14.3.7 of the rules of the Cape Law Society.
But
when funds have been entrusted to an attorney by a third party with
a specific mandate as regards how such funds have to be
utilised and
applied, there is a duty on an attorney concerned to account to the
depositor of such funds that the funds so deposited
have been
utilised and applied in accordance with such mandate. Howie P made a
similar observation in
Du
Preez & Others v Zwiegers
[2008] ZASCA 42
;
2008
(4) SA 627
(SCA) para 21 at p632 when he observed that an attorney
into whose trust account money is paid owes a duty to the depositor
even
if the depositor is not an existing client of the practice.
That duty entails dealing with such funds in such a way that harm is
not negligently caused to the depositor. Failure to do so
constitutes unprofessional conduct as contemplated in rule 14.3.14
of
the rules of the Cape Law Society which enjoins the members of
the profession to refrain from doing anything which could or might
bring the attorneys' profession into disrepute.
[39]
Even on a simple collection matter, there is a duty on an attorney
to account to the debtor, from time to time, as regards
how the
funds deposited by the debtor have been utilised and applied,
inclusive of any legal costs deducted from such funds and,
ultimately, to reflect any balance outstanding which is due and
payable. Not only is this good practice, but it is standard practice
in any firm of attorneys of repute. No such account was made in the
instance of this matter nor was any communication addressed
to each
plaintiff to indicate whether the funds deposited were dealt with in
accordance with the mandate given. As the Supreme
Court of Appeal
observed in
Hirschowitz
Flionis v Bartlettt & Another
[2006] ZASCA 23
;
2006
(3) SA 575
(SCA) para [30] at p589 the legal convictions of the
community would undoubtedly clamour for liability to exist in these
circumstances.
[40]
Payment of funds on the basis of a similar acknowledgement of debt
is not without precedent in the first defendant's practice.
A letter
by the first defendant dated 7 January 2005 (see page 533 of bundle
B) addressed to attorneys Webber Wentzel Bowens suggests
that the
first defendant were placed in funds by the aforementioned firm of
attorneys which were ostensibly paid out in terms of
an
acknowledgement of debt. Once such funds were paid out, ostensibly
in terms of the acknowledgement of debt, the first defendant
addressed a communication to the aforementioned attorneys
confirming payment of such funds in terms of the
acknowledgement
of debt. This is good and standard practice. In the
instance of this matter, no such communication was addressed to
either of the
plaintiffs.
[41]
The plaintiffs, in their amended particulars of claim, allege that
the first defendant owed the plaintiffs a duty of care to
ensure
that the funds paid into the first defendant's trust account would
be retained as part payment of the purchase price; that
such funds
would be paid over to the fourth defendant on date of transfer of
the properties in the names of the plaintiffs; and
that payment of
such funds by the first defendant to the second defendant before the
date of transfer breached the duty of care
owed by the first
defendant to the plaintiffs.
[42]
Neethling et al:
Law
of Delict:
5
th
Edition p137 note that in the determination of a question whether a
duty of care was owed, the criterion was traditionally whether
a
reasonable person in the position of the defendant would have
foreseen that his conduct might cause damage to the plaintiff.
The
authors go on to observe that this issue (the duty issue) is a
policy-based value judgment in which foreseeability plays no
role as
to whether interests should be protected against negligent conduct.
In
Administrateur,
Natal v Trust Bank van Afrika Bpk
1979
(3) SA 824
(A) 833 the court emphasized that the "duty issue"
is not at all concerned with reasonable foresight; it has to do with
a range of interests which the law sees fit to protect against
negligent violation.
[43]
In
Knopp
v Johannesburg City Council
1995
(2) SA 1(A)
27 it was stated as follows:
"For
present purposes ... the difference between the two elements of a
duty of care is perhaps more aptly described by Milner:
Negligence
in Modern Law, at 230 'The duty concept in negligence operates at
two levels. At one level it is fact based, at another
it is policy
based. The fact based duty of care forms part of the enquiry whether
the defendant's behaviour was negligent in the
circumstances. The
whole enquiry is governed by the foreseeability test, and "duty
of care" in this sense is a convenient
but dispensable concept.
In the phraseology of our law the "policy based or notional
duty of care" is more appropriately
expressed as a 'legal
duty', in consonance with the requirement of wrongfulness as an
element of delictual liability."
[44]
Although the concept "duty of care" has consistently been
applied by our courts it has been a subject of much debate
and
criticism by academics and legal commentators (See Joubert:
The
Law of South Africa
Volume
8 Part 1 para 116; Neethling
et
al supra
p137)
The authors in Neethling
et
al
note
that our courts sometimes use the duty of care concept as a synonym
for a legal duty as used in determining wrongfulness and
that, to
avoid the confusion, it would be preferable to describe the duty
involved in the test for wrongfulness as a "legal
duty"
(and not as a duty to take care). Adopting the approach as set out
in this and the two preceding paragraphs, I shall
now proceed to
determine if the first defendant owed the plaintiffs a duty of care
as alleged.
[45]
In the instance of the matter before me, Mr Bierman was presented
with signed acknowledgements of debt in respect of each plaintiff.
In each instance, the amount allegedly due is described as being
due: "as per the building agreement". A reference to
the
building agreements, in each case, indicates an amount agreed upon
to undertake building operations. Nowhere in the building
agreements, in each instance, is it indicated that the amounts
specified therein, being costs of building works, are immediately
due and payable. Mr Bierman, as a transferring attorney, should have
known that the contemplated building operations had not as
yet
commenced, so that the underlying cause of the debtors'
indebtedness, in each case, had not as yet come into existence. The
amounts allegedly due would be immediately due and payable only on a
specific agreement to the effect that such funds are immediately
due
and payable even though the building operations had not as yet
commenced or even though the creditor had not as yet performed
its
part of the obligation.
[46]
Mr Bierman, as a transferring attorney, ought to have known that the
piece of land, on which building operations would be undertaken,
was
still registered in the name of the Saayman Trust; that the seller
of the units, the fourth defendant, had not yet performed
in the
form of transfer of the individual units to each plaintiff; that
whatever building agreements concluded between the parties
would
have been subject to plaintiffs being owners of the units concerned
and that, therefore, whatever costs of building operations
agreed
upon, would not have been immediately due and payable in the absence
of a specific agreement to the contrary.
[47]
In my view, the fact that there is reference to the building
agreement in the instance of each acknowledgement of debt should
have prompted Mr Bierman, in the first instance, to refer to the
building agreement itself to ascertain if indeed the amounts agreed
upon in respect of costs of building operations were immediately due
and payable despite the fact that the building operations
themselves
had not as yet commenced and, in the second instance, to ascertain
from each debtor if the amounts specified in each
acknowledgement of
debt was immediately due and payable despite the fact that building
operations had not as yet commenced. In
the circumstances of this
matter, Mr Bierman, as a transferring attorney in the project, had a
legal duty do so, and this is over
and above the duty to ascertain
if the funds so deposited fell outside the provisions of clause 6 of
the "sole marketing and
sales mandate", and that such
funds could be dealt with differently.
[48]
Directing an employee to enquire from each debtor if the funds could
be paid out, without even a reference to the building
agreement,
which is the underlying cause of the debtors' indebtedness, is just
not good enough and does not constitute good practice.
I therefore
find that Mr Bierman, in his capacity as a director in the first
defendant firm, had a legal duty, in the form of a
duty of care, to
have first established from each plaintiff if the funds deposited in
the firm's trust account were immediately
due and payable to the
second defendant, particularly in view of a reference to "the
building agreement" as the underlying
causa
in
each acknowledgement of debt. Thus I find that the first defendant
has failed to discharge the legal duty owed by it to the
plaintiffs
at the time and, as such, such failure constitutes gross negligence.
PRESCRIPTION
[49]
As has already been pointed out in paragraph [21] of this judgment
the plaintiffs' alternative claim, based on the alleged
breach of
duty of care, was introduced as an alternative cause of action by an
amendment to the consolidated particulars of claim
served on the
first defendant on 11 July 2008. To this alternative claim, and by
way of a special plea, the first defendant pleaded
that the
plaintiffs were aware of the facts from which the debts arise as far
back as January 2005; that, in any event, the plaintiffs,
by
exercise of reasonable care, ought to or should have been aware of
the existence of the facts from which the debts arise by
no later
than June 2005; and that, in view thereof, at the time the
plaintiffs' amended consolidated particulars of claim, introducing
a
new cause of action as they did, were served on the first defendant
on 11 July 2008, the plaintiffs' claim, based on delict,
had already
become prescribed.
[50]
In advancing this defence it is submitted on behalf of the first
defendant that the plaintiffs were aware that they each signed
an
acknowledgement of debt for an amount representing the difference
between the acquisition costs of the land and the amount of
bond to
be procured; that the plaintiffs acquired this knowledge on 30
October 2004, the latter being a date each plaintiff signed
an
acknowledgement of debt; and that they were aware that they had paid
the amounts due in terms of the acknowledgements of debt
into first
defendant's trust account in discharge of their liabilities arising
from such acknowledgements of debt.
[51]
The plaintiffs, on the other hand, and in reply to the first
defendant's special plea, deny that they became aware of the facts
from which the debts arise as far back as January 2005 as contended
or, alternatively, by no later than June 2005. The plaintiffs
thus
persist with their assertion contained in paragraph 21 of the
amended consolidated particulars of claim that they became aware,
for the first time, of the payment of the amounts of R200,000-00 and
R100,000-00 to the second defendant on 14 July 2005.
[52]
I have already stated elsewhere in this judgment that the underlying
cause of the amounts allegedly due in terms of the acknowledgements
of debt is the building agreement. I have further already stated
elsewhere in this judgment that, on a proper perusal and
consideration
of the building agreements, there is nothing therein
to indicate, or which justifies an interpretation or conclusion that
the amounts
specified in the acknowledgements of debt were
immediately due and payable despite the fact that the units of land,
on which building
operations would be undertaken, had not as yet
been transferred to the plaintiffs or that the amounts specified in
the building
agreements were immediately due and payable despite the
fact that the building operations had not yet commenced. There is no
evidence
on record to suggest that the plaintiffs agreed to expose
themselves to the risk of liability in circumstances where the
second
defendant had not as yet discharged its part of the
obligation or had not as yet rendered its part of the performance.
To suggest
that the plaintiffs ought to or should have been aware
that a deposit of the funds into the trust account of the first
defendant
was to discharge their obligation to the second defendant
in terms of the acknowledgements of debt is to read into the
building
agreements a term or condition which the plaintiffs had not
agreed to. It should be recalled that the building agreements are
the
underlying cause of the plaintiffs' alleged indebtedness.
[53]
In paragraph [37] of this judgment I stated that when funds have
been entrusted on an attorney, not necessarily by a client,
but by a
third party which is a member of the public, with a specific mandate
as regards how such funds have to be utilised and
applied, there is
a duty on an attorney concerned to account to the depositor of such
funds as regards how such funds have been
utilised and applied. This
is a duty which arises
ex
lege,
by
virtue of holding an office of an attorney dealing with public funds
and that failure to discharge this duty constitutes unprofessional
conduct as contemplated in rule 14.3.14 of the rules of the Cape Law
Society. No such account, in the instance of this matter,
was given
to each plaintiff as regards how their funds deposited into the
firm's trust account were utilised; whether such funds
were utilised
and applied in accordance with the mandate given and, in the
instance of this matter, confirmation of the telephonic
mandate that
funds so deposited had to be paid to the second defendant. Had the
first defendant rendered the necessary account,
the plaintiffs would
have been aware during January 2005 and, in any event, by no later
than June 2005, that the funds so deposited
had since been paid out
to the first defendant.
[54]
It will be recalled that Mr Jones, the first plaintiff, stated in
his evidence that once they were called upon to pay what
he refers
to in his evidence a deposit, he insisted that such deposits be
paid, not in a private account, but in a trust account
to ensure
that the funds so deposited would be protected. Once the funds were
paid into a trust account the plaintiffs felt that
the funds were
sufficiently secured. It would thus be unreasonable to have expected
of the plaintiffs to telephone the transferring
attorneys, from time
to time, to ascertain if the funds had not been paid out when even
the development project to which the funds
were linked had not as
yet commenced in the first place.
[55]
In the light of what has been stated in this and the two previous
paragraphs it cannot, by any stretch of imagination, be found
that
the plaintiffs ought to have been aware of the existence of the
facts out of which the debts arose during January 2005 or
by no
later than June 2005. It therefore, follows in my view, that the
first defendant's special plea of prescription cannot be
upheld.
APPORTIONMENT
OF DAMAGES
[56]
In paragraph [47] of this judgment I held that the first defendant
had a legal duty to have first established from each of
the
plaintiffs if the amounts allegedly due in terms of the
acknowledgements of debt were immediately due and payable in view of
a reference therein to the building agreement as the
causa
for
the alleged indebtedness. I simultaneously found, in the
aforementioned paragraph, that the first defendant failed to
discharge
this legal duty on its part and that such failure
constituted negligence. In the likely event of this finding, it was
submitted
on behalf of the first defendant that whatever extent of
the first defendant's liability could be, same falls to be reduced
by
virtue of the provisions of section 1(1)(a) of the Apportionment
of Damages Act.
[57]
Section 1(1)(a) of the Apportionment of Damages Act provides as
follows:
"1(1)(a):
Where any person suffers damage which is caused partly by his own
fault and partly by the fault of any other person,
a claim in
respect of that damage shall not be defeated by reason of fault of
the claimant but that the damages recoverable in
respect thereof
shall be reduced by the court to such an extent as the court may
deem just and equitable having regard to the degree
in which
claimant was at fault in relation to the damage."
The
plaintiffs' claim against the first defendant is based on delict to
which the provisions of the Apportionment of Damages Act
do apply.
[58]
The submission for apportionment in the event of the first defendant
being found negligent, as has happened in the instance
of this
matter, is based on a contention that the plaintiffs were guilty of
at least three separate and distinct acts of negligence
all of which
causally contributed to the damages suffered, these being:
[58.1.]
They signed contractual documentation indicating that these amounts
were owed to the second defendant well knowing that
the
documentation was important and would be relied on by other parties
to the transaction. The contention is thus the plaintiffs
willingly
and openly signed documents which created an erroneous impression as
to their contractual intentions.
[58.2.]
They failed to contact the first defendant to issue instructions as
regards how the funds deposited into the first defendant's
trust
account were to be utilised and applied.
[58.3.]
The plaintiffs instituted defective proceedings for the attachment
of funds due to the second defendant which were held
in first
defendant's trust account subsequent to damages being caused.
[59]
As regards the contention that the plaintiffs signed documentation
indicating that the amounts specified were owing to the
second
defendant and that the documents could be relied on by other
parties, including the first defendant, the following should
be
noted: the acknowledgements of debt were not signed in isolation;
the acknowledgements of debt were part of a series of documents
signed by the plaintiffs, these being a purchase and sale agreement
and the building agreement, each one being a separate document
but
constituting one composite transaction; at the time the
acknowledgements of debt were signed, Mr Kuhn explained to each
plaintiff
that the documents they were about to sign, and which they
eventually signed, were acknowledgements of debt and that the
amounts
specified therein represented the difference between the
acquisition costs of the respective units and home loans to be
procured;
Mr Kuhn did not say to each plaintiff that the amounts
specified in each acknowledgment of debt was owed and immediately
due and
payable. According to the evidence of Mr Kuhn, he himself
constantly communicated with Mr Bierman, as well as Mr Kotze, the
third
defendant, as regards the use of such documentation and that
at any given point in time the understanding between all of them was
that the amounts specified in the acknowledgements of debt
represented the difference between the costs of acquiring the
individual
units and the home loans to be procured. According to Mr
Kuhn, Mr Bierman was aware of the entire sets of documents and the
significance
thereof long before payment was effected to the second
defendant. Mr Kuhn stated it clearly in his evidence that he was
greatly
surprised to learn that payment was made to the second
defendant on the strength of the acknowledgements of debt at a stage
when
the development project had not even commenced.
[60]
The evidence of Mr Bierman that he had discussed the interpretation
of the document with his partner, ostensibly in isolation
of the
other composite documents, and concluded that payment to the second
defendant could be made on basis thereof is, with the
greatest of
respects, unconvincing. Mr Bierman goes further and denies that
there ever were any discussion between him and Mr Kuhn
despite the
fact that he was a transferring attorney in the entire project. The
evidence of Mr Bierman that he first became aware
of the
acknowledgements of debt when same were presented to him by Mr Kotze
just simply cannot be believed. Thus I do find that
Mr Bierman, at
the time of payment to the second defendant of funds deposited into
his firm's trust account, should have been aware
that the funds so
deposited could not have been immediately due and payable and that
there is no way he could have been misled
by the contents of the
acknowledgements of debt that such funds were immediately due and
payable.
[61]
As regards the contention that the plaintiffs failed to contact the
first defendant to issue instructions as regards how the
funds
deposited into the firm's trust account were to be utilised and
applied, the following should be noted: during December 2004
the
plaintiffs were, according to the evidence of Mr Jones, called upon
to pay the required deposits; when called upon to do so,
he
immediately pointed out to his wife and Mr Kuhn, that no way should
such funds be paid into a private account; he suggested
to Mrs Jones
that such funds be deposited into a trust account as he was aware
that if that happens, not only would their funds
be protected, but
that their funds would be repaid to them in the event the
transaction falling through. Mr Jones made a similar
suggestion to
Mr Kuhn when they called on him to make the required payment
whereupon Mr Kuhn furnished them with the trust account
details of
the first defendant. That the funds were paid into the first
defendant's trust account was as suggested by Mr Kuhn and
the
plaintiffs did not, out of their own volition, select the first
defendant's trust account for purposes of payment of the required
deposit. Once that had happened they laboured under what ultimately
turned out to have been a false sense of security and did not
see a
need to contact the first defendant with a view to ensuring if the
funds were securely held. In the circumstances under which
the funds
were deposited, in my view, there was no need on the part of the
plaintiff to contact the first defendant to give instructions
as
regards how such funds were to be utilised.
[62]
As regards the contention that the plaintiffs instituted defective
proceedings for the attachment of funds due to the second
defendant,
it ought to be borne in mind that those proceedings were not
instituted to mitigate the plaintiffs' damages or to recover
damages
which they thought were due to them. These would still have to be
proved in a trial in due course. The defective proceedings
were
instituted to attach funds due to the second defendant as security
for the satisfaction of a judgment debt in the event the
plaintiffs
were successful in their contemplated action for damages,
particularly in view of the fact that it had since become
apparent
to the plaintiffs that the second defendant was, in any event, a
so-called "close corporation of straw". To
suggest that
the defective proceedings contributed causally to the damages
suffered is to view such defective proceedings entirely
out of
context. More so, the damage to the plaintiffs had already been
caused so that it is difficult to fathom how the defective
proceedings could have mitigated such loss when same had already
occurred as distinct to providing security for satisfaction of
a
judgment debt in the event the plaintiffs' claim being successful in
their contemplated action. In the event the attachment proceedings
would have been successful, the funds so attached would not have
constituted damages recovered but such funds would only have been
available as a source to satisfy a judgment debt in the event of the
plaintiffs being successful in their contemplated action and,
as
already stated, would not have constituted recovery of damages. In
my view, therefore, none of the factors mentioned in paragraph
[57]
of this judgment causally contributed to the plaintiffs' damage so
that the provisions of section 1(1)(a) of the Apportionment
of
Damages would not apply.
THE
POSITIONS OF THE OTHER DEFENDANTS
[63]
As has already been pointed out elsewhere in this judgment
initially, the plaintiffs based their claim against the first
defendant
on an alleged breach of contract. In paragraph [26] of
this judgment I held that a claim against the first defendant, based
on
contract, cannot be sustained for reasons stated in the
aforementioned paragraph but, in paragraph [47] of this judgment I
held
that the first defendant is liable to the plaintiffs in delict
based on breach of duty of care which the first defendant owed to
the plaintiffs.
[64]
The second defendant (since liquidated) was a close corporation
incorporated in terms of the Close Corporation Act. As a juristic
person, the second defendant could not act on its own but could do
so only through the instrumentality of its members or persons
with
authority to act on its behalf. The claim against the second
defendant boils down thereto that the second defendant received
payment from the first defendant in circumstances where it was not
entitled to such payment with the consequence that the second
defendant became unduly enriched at the expense of plaintiffs.
[65]
But the second defendant did not act on its own when it procured
payment from the first defendant. It acted through the
instrumentality
of its sole member, in the person of the third
defendant, St Michael Pierre Kotze who procured funds from the first
defendant fraudulently
and in circumstances where the third
defendant was aware that the second defendant was not entitled to
such funds. The conduct
of the third defendant in procuring such
funds, on behalf of the second defendant, in circumstances where the
third defendant was
aware that the second defendant was not entitled
to such funds, in circumstances constituting fraud, constituted
abuse of corporate
juristic personality which renders him personally
liable for any consequential damage arising from such fraudulent
conduct as contemplated
in section 65 of the Close Corporation Act.
I therefore direct that third defendant be held liable, in his
personal capacity, for
such damage as may have been caused to the
plaintiffs arising from his fraudulent conduct.
[66]
As regards the fourth defendant, it is quite apparent on basis of
evidence tendered at trial that it did not render performance
of its
obligation in terms of the purchase and sale agreement and,
consequently, the conduct of the plaintiffs in cancelling the
purchase and sale agreements appears perfectly justified. However,
there is no evidence to suggest that the funds fraudulently
procured
from the first defendant were passed over to the fourth defendant so
that, in the circumstances of this matter, there
is no basis for an
order of
restitutio
in integrum
as
against the fourth defendant. In the instance of the fourth
defendant, the remedy available to the plaintiffs appears to be
limited to a mere declaration that the contract of purchase and sale
concluded between the plaintiffs and the fourth defendant has
since
been validly cancelled.
[67]
On the basis of the facts I found to have been proved I hold that
the first defendant is liable to the plaintiffs on the basis
of
breach of duty of care the first defendant owed to the plaintiffs.
As regards the third defendant, St Michael Pierre Kotze,
I hold that
he is personally liable in respect of any claims, based on undue
enrichment, that the plaintiffs may have against the
second
defendant on the basis of abuse of corporate juristic personality.
For the record, I must state that to the extent that
payment was
made to the second defendant, without the latter having rendered its
part of the performance, resulted in the second
defendant having
been unduly enriched at the expense of the plaintiffs to the extent
of the damage suffered. The second defendant's
liability is thus of
a quasi-contractual nature.
[68]
Thus, whereas the first defendant's liability to the plaintiffs is
based on delict, the second defendant's liability, which
is
attributed to the third defendant, is based on a quasi-contract.
The first, second and third defendants thus cannot be joint
wrongdoers, in delict,
vis-a-vis
the
plaintiffs' damages. This is so because the basis of their
respective liabilities are different. Whereas the first defendant
is
liable to the plaintiffs in delict, the second and third defendants'
respective liabilities are not, based as they are on unjust
enrichment and abuse of corporate juristic personality,
respectively.
[69]
But it is important to note that both the conduct of the first and
the third defendants caused the same harm to both plaintiffs.
The
liabilities of the first and the third defendants not only arise
from substantial and similar facts, they arise from the same
facts
in circumstances where the first and the third defendants are, so to
speak, co-wrongdoers. Their respective liabilities arise
from the
same facts and their respective conducts caused the same harm. In my
view, there is no reason why they should not be held
to be jointly
liable. Thus, although the first and the third defendants are not
joint wrongdoers in delict, the facts and the circumstances
of this
matter justify an order of joint and several liability. To the
extent the remedy or order of joint and several liability
may have
been limited to joint wrongdoers to the cause of action, in my view,
such a remedy or order ought to be extended to cover
circumstances
where the parties are cowrongdoers in circumstances where their
respective conducts attract different basis
of liability but arise
from the same set of circumstances.
[70]
The matter of quantum of each plaintiff's claim has at no stage in
the proceedings been a matter of serious dispute, so that
the
quantum of each plaintiff's claim may be taken as having been
proved. At the time of the institution of this action, the first
plaintiff claimed an amount of R203,842-47 being the capital amount
deposited into the first defendant's trust account, together
with
interest thereon at the rate of 3,75% per annum reckoned from 13
January 2005 up to the date of the institution of the proceedings.
In as far as the second plaintiff is concerned, the amount claimed
at the time of the institution of these proceedings is an amount
of
R101,793-15 being the capital amount deposited into the first
defendant's trust account, together with interest thereon at the
rate of 3,75% per annum reckoned from 13 January 2005. As already
mentioned the quantum of the aforementioned amounts was not disputed
in these proceedings so that these may be taken as proved. Thus, in
my view, each plaintiff is entitled to the amount claimed.
This
brings me to the order I have to make in the light of what I have
found in this judgment on the basis of evidence tendered
at trial.
[71]
In the result I make the following order:
[71.1.]
The third defendant is declared to be personally liable in respect
of the obligations of the second defendant, arising from
undue
enrichment, in terms of section 65 of the Close Corporation Act, 69
of 1984.
[71.1.1.]
As regards the first plaintiff, the first and the third defendants
are ordered to pay the first plaintiff an amount of
R203,842-47,
jointly and severally, the one paying the other to be absolved.
[71.1.2.]
Interest on the aforementioned amount of R203,842-47, at the
prescribed rate of interest, from date of issue of summons
until
date of payment.
[71.1.3.]
Costs of suit, as between party and party, drawn on a high court
scale, duly taxed or as agreed.
[71.2.]
[71.2.1.]
As regards the second plaintiff, the first and the third defendants
are ordered to pay the second plaintiff an amount
of R101,793-15,
jointly and severally, the one paying the other to be absolved.
[71.2.2.]
Interest on the aforementioned amount of R101,793-15, at the
prescribed rate of interest, from date of issue of summons
until
date of payment.
[71.2.3.]
Costs of suit, as between party and party, drawn on a high court
scale, duly taxed or as agreed.
N.J.
YEKISO, J