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[2013] ZAWCHC 169
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ABSA Bank Ltd v Zalvest Twenty (Pty) Ltd and Another (00/0000) [2013] ZAWCHC 169; 2014 (2) SA 119 (WCC) (6 November 2013)
THE HIGH COURT OF SOUTH AFRICA
(WESTERN CAPE HIGH COURT)
Case No: 4620/13
In the matter between: Reportable
ABSA BANK LTD
PLAINTIFF
And
ZALVEST TWENTY
(PTY) LTD
FIRST
DEFENDANT
MARK WILLIAM
ATKINSON
SECOND
DEFENDANT
Coram
: TRAVERSO DJP & ROGERS J
Heard: 4 NOVEMBER 2013
Delivered: 6 NOVEMBER 2013
______________________________________________________________
JUDGMENT
______________________________________________________________
ROGERS J:
This is an exception by the defendants against the
plaintiff’s particulars of claim. The plaintiff’s claim
is based
on a mortgage loan agreement pursuant to which a mortgage
bond was registered in its favour over a sectional title unit in
Gordons
Bay near Cape Town. The plaintiff alleges that the first
defendant, the principal debtor, is in default and thus seeks
judgment
against the first defendant in an amount of R1 550 329,33
(plus interest as from 12 February 2013) together with an order
declaring the property specially executable. The plaintiff seeks to
hold the second defendant liable, jointly and severally with
the
first defendant, on the basis of a suretyship signed by the former.
The essential complaint in the exception is that the
plaintiff has failed to annex to its particulars of claim the
mortgage loan
agreement.
The relevant allegations made in this regard by the
plaintiff in its particulars of claim are the following:
[a] During 2005 and in Cape Town the
plaintiff and the first defendant concluded a written mortgage loan
agreement in
terms whereof the plaintiff lent to the first defendant
a capital amount of R1,4 million repayable in monthly instalments
that
are currently R14 116,97.
[b] The mortgage loan agreement was destroyed
in a fire at the plaintiff’s Midrand premises on or about 28
August
2009. Despite a diligent search the plaintiff cannot find a
copy of the mortgage loan agreement.
[c] The best available evidence of the terms
and conditions contained in the mortgage loan agreement are provided
by
the standard mortgage loan agreement regularly used by the
plaintiff at the time it concluded its agreement with the first
defendant,
those terms and conditions being the same as the ones
contained in the agreement concluded with the first defendant. The
plaintiff
annexes to its particulars of claim as ‘A’ a
copy of the standard mortgage loan agreement, and seeks condonation
as
far as needs be of its failure to annex a true copy of the
agreement.
[d] In terms of the mortgage loan agreement,
the loan was secured by mortgage bond SB17497/2005 passed at Cape
Town on
30 September 2005. Further particulars of the mortgage bond
are provided and a copy thereof is annexed to the particulars of
claim
as ‘B’.
[e] Various material terms of the mortgage
loan agreement were incorporated in the mortgage bond. The plaintiff
sets
out the particular terms on which it relies.
The summons was issued on 27 March 2013. On 10 July
2013 the defendants delivered an exception in the following terms:
‘
1. The
Plaintiff’s cause of action against the Defendants is said to
arise from the breach by the First Defendant,
as principal debtor, of
the terms of an alleged written mortgage loan agreement.
2. No true copy, or
any part thereof, is annexed to the particulars of claim as the
Plaintiff is required to do in terms
of Rule 18(6) of the High Court
Rules.
3. The allegation in
paragraph 4.3 of its particulars of claim, that a copy of the
mortgage loan agreement cannot be
found despite a diligent search, is
an acknowledgement by the Plaintiff that the basis for the cause of
action is missing.
4. Accordingly, the
particulars of claim lack the necessary averments to sustain an
action inasmuch as the Plaintiff’s
cause of action does not
appear
ex facie
therefrom.
5. The Plaintiff’s
claim against the First and Second Defendants therefore falls to be
dismissed with costs.’
I draw attention to the fact that the exception does
not complain that the terms of the agreement have been
insufficiently pleaded.
Possibly the defendants could have contended
that the particulars of claim were vague and embarrassing for
failing to allege
what terms the mortgage loan agreement contained
in regard to the rate of interest or the initial instalment.
However, no notice
to that effect was served in terms of rule 23(1).
The exception is squarely based on a contention that because the
plaintiff
is unable to annex a copy of the written loan agreement it
has no cause of action.
The defendants referred in argument to a notice of
amendment which the plaintiff delivered on the 30 July 2013 and
later abandoned.
The amended particulars of claim would have
inserted an allegation that details pertaining to the specific
transaction with the
first defendant were captured on the
plaintiff’s electronic systems, and that these captured
details enabled the plaintiff
to plead the specific terms contained
in the particulars of claim. While this shows that the plaintiff
might have been able to
allege the evidential source of its
allegations, the exception is not concerned with that question. It
is unnecessary to decide
whether this further allegation in the
proposed amendment should have been contained in the original
particulars of claim.
Confining myself to the original particulars of claim
and the complaint in the exception, I have no doubt whatsoever that
the
exception is misconceived. Rule 18(6) states that a party who in
his pleading relies upon a contract shall state whether the contract
is written or oral and when, where and by whom it was concluded; and
if the contract is written a true copy thereof or of the
part relied
on in the pleading shall be annexed to the pleading. In the present
case the plaintiff has alleged that the mortgage
loan agreement was
a written contract and has made allegations as to when, where and by
whom it was concluded. What the plaintiff
has not done is to annex a
copy of the agreement. The plaintiff has explained in its
particulars of claim that it is unable to
annex a copy because the
document was destroyed in a fire and no other copy can be found.
We were referred to various cases in which the purpose
and importance of rule 18(6) have been discussed. We were also
referred
to cases which hold that, even in the case of a simple
summons, rule 17(2)(b) read with form 9 requires a plaintiff who
relies
on a written contract to annex a copy to the summons (most
recently in this division, see the full bench judgment in
Absa
Bank Ltd v Van Rensburg
2013 (5) SA 173
(WCC)). Save for
Moosa
& Others NNO v Hassam & Others NNO
2010 (2) SA 410
(KZP), with which I shall deal presently, none of the cases cited to
us in argument dealt with the situation where the plaintiff
was
unable to annex a copy of the written contract because it had been
destroyed or lost. In particular,
Absa Bank Ltd v Studdard &
Another
[2012] ZAGPJHC 26 and
Absa Bank Ltd v Nicholas &
Another
[2013] ZAWCHC 58
were cases where the plaintiff had
issued a simple summons containing no allegations regarding the loss
or destruction of the
relevant loan agreement.
The rules of court exist in order to ensure fair play
and good order in the conduct of litigation. The rules do not lay
down the
substantive legal requirements for a cause of action nor in
general are they concerned with the substantive law of evidence. The
substantive law is to be found elsewhere, mainly in legislation and
the common law. There is no rule of substantive law to the
effect
that a party to a written contract is precluded from enforcing it
merely because the contract has been destroyed or lost.
Even where a
contract is required by law to be in writing (eg a contract for the
sale of land or a suretyship), what the substantive
law requires is
that a written contract in accordance with the prescribed
formalities should have been executed; the law does
not say that the
contract ceases to be of effect if it is destroyed or lost.
In regard to the substantive law of evidence, the
original signed contract is the best evidence that a valid contract
was concluded
and the general rule is thus that the original must be
adduced. But there are exceptions to this rule, one of which is
where
the original has been destroyed or cannot be found despite a
diligent search. In such a case the litigant who relies on the
contract
can adduce secondary evidence of its conclusion and terms
(see
Singh v Govender Brothers Construction
1986 (3) SA 613
(N) at 616J-617D). There are in modern law no degrees of secondary
evidence (ie one does not have to adduce the ‘best’
secondary evidence). While a photocopy of the lost original might be
better evidence than oral evidence regarding the conclusion
and
terms of the contract, both forms of evidence are admissible once
the litigant is excused from producing the original. In
Transnet
Ltd v Newlyn Investments (Pty) Ltd
2011 (5) SA 543
(SCA) a
defendant, in opposing its eviction from certain premises, relied
inter alia
on a written addendum to the lease agreement. The
defendant did not annex the addendum to its plea, alleging that a
copy of the
addendum was not in its possession and was last in the
possession of the plaintiff. The original addendum was not adduced
in
evidence. The question whether an addendum had ever been
concluded was hotly disputed. The Supreme Court of Appeal held that
in the circumstances of the case the defendant was excused from
producing the original and found that the execution and terms of
the
addendum had been sufficiently proved by oral testimony (see
particularly at paras 4-5 and 17-19). Even in the case of wills,
the
loss or destruction of a deceased’s will does not preclude an
interested party from proving that a valid will was executed
and
what its terms were, and upon such proof the court will under its
common law powers direct that the estate be administered
in
accordance with such terms (see, for example,
Nell v Talbot NO
1972 (1) SA 207
(D) at 209H-210E;
Ex parte Porter
2010
(5) SA 546
(WCC) para 12).
That then is the substantive law. The rules of court
exist to facilitate the ventilation of disputes arising from
substantive
law. The rules of court may only regulate matters of
procedure; they cannot make or alter substantive law (
United
Reflective Converters Pty Ltd v Levine
1988 (4) SA 460
(W) at
463B-E and authority their cited). The court is, moreover, not a
slave to the rules of court. As has often been said,
the rules exist
for the courts, not the courts for the rules (see
Standard bank
of South Africa Ltd v Dawood
2012 (6) SA 151
(WCC) para 12). The
following passage from
Khunou & Others v M Fihrer & Sons
(Pty) Ltd & Others
1982 (3) SA 353
(W) at 355F-356A bears
repetition:
‘
The
proper function of a Court is to try disputes between litigants who
have real grievances and so to see to it that justice is
done. The
rules of civil procedure exist in order to enable Courts to perform
this duty with which, in turn, the orderly functioning,
and indeed
the very existence, of society is inextricably interwoven. The Rules
of Court are in a sense merely a refinement of
the general rules of
civil procedure. They are designed not only to allow litigants to
come to grips as expeditiously and as inexpensively
as possible with
the real issues between them, but also to ensure that the Courts
dispense justice uniformly and fairly, and that
the true issues which
I have mentioned clarified and tried in a just manner.
Of course the
Rules of Court, like any set of rules, cannot in their very nature
provide for every procedural situation that arises.
They are not
exhaustive and moreover sometimes not appropriate to specific cases.
Accordingly the Superior Courts retain an inherent
power exercise
double within certain limits to regulate their own procedure and
adapted, and, if needs be, the Rules of the Court
according to the
circumstances. This power is enshrined in s 43 of the Supreme
Court Act 59 of 1959.’
1
A rule which purported to say that a party to a written
contract was deprived of a cause of action if the written document
was
destroyed or lost would be
ultra vires
. But the rules say
no such thing. Rule 18(6) is formulated on the assumption that the
pleader is able to attach a copy of the
written contract. In those
circumstances the copy (or relevant part thereof) must be annexed.
Rule 18(6) is not intended to compel
compliance with the impossible.
(I may add that it was only in 1987 that rule 18(6) was amended to
require a pleader to annex
a written copy of the contract on which
he relied. Prior to that time the general position was that a
pleader was not required
to annex a copy of the contract –
see, for example,
Van Tonder v Western Credit Ltd
1966 (1) SA
189
(C) at 194B-H;
South African Railways & Harbours v Deal
Enterprises (Pty) Ltd
1975 (3) SA 944
(W) at 950D-H.)
Rule 27(3) provides that the court may on good cause
shown condone any non-compliance with the rules. I am by no means
certain
that a party in the position of the plaintiff in the present
case needs to rely on rule 27(3). On a proper interpretation of rule
18(6) itself, there is arguably a necessary implication that a copy
need not be attached if it is impossible for the pleader
to do so,
though to avoid an objection to the particulars of claim the pleader
should explain the inability. To say that the
court could in its
discretion under rule 27(3) condone the non-annexing of a copy (in
circumstances where the plaintiff is unable
to attach a copy)
implies that the court could notionally in such circumstances
refuse
to condone the non-annexing. I rather doubt whether a rule
conferring such a power would be valid.
However, I need not finally decide that point because,
if it is unsound, rule 27(3) confers the necessary power of
condonation.
The defendants’ exception is not that a power of
condonation exists but should not be exercised in the present case
or
that the plaintiff should as a matter of procedure have launched
a substantive application on affidavit for condonation rather
than
making explanatory averments in the particulars of claim. The
defendants’ assertion is that the plaintiff’s
inability
to annex a copy deprives it of a cause of action. That assertion is
wrong.
The defendants’ counsel placed strong reliance on
the judgment of Swain J in
Moosa supra
. In that case the
plaintiff’s sued 31 defendants on the strength of a written
agreement relating to the sale of shares.
The plaintiffs alleged in
their particulars of claim that were not in possession of a signed
copy of the agreement but that to
the best of their knowledge the
agreement was in the possession of the 34
th
defendant
(against whom no relief was sought but who was cited by virtue of
any interest he might have). The plaintiff’s
made a number of
detailed allegations as to what the written agreement contained. The
31 defendants brought an application in
terms of rule 30(2)(b),
contending that the plaintiffs’ failure to comply with rule
18(6) by annexing a copy of the agreement
was an irregular step.
Swain J said that the written agreement was a ‘vital link in
the chain of’ the plaintiffs’
cause of action against
the 31 defendants and that in order for the plaintiffs’ cause
of action to be properly pleaded
it was necessary for the written
agreement to be annexed to the particulars of claim: ‘In the
absence of the written agreement
the basis of the [plaintiffs’]
cause of action does not appear
ex facie
the pleadings’
(para 18).
The learned judge proceeded to say that an allegation
that a party is not in possession of the written agreement
constitutes ‘an
acknowledgement that the basis for the cause
of action advanced is lacking’ or ‘that a link in the
chain of the cause
of action advanced is missing’. Such an
allegation thus did not constitute compliance with rule 18(6) nor
did it excuse
the non-compliance. It would not even constitute
compliance, or excuse non-compliance, if the party alleged that it
had taken
steps without success to obtain a copy or if the party
annexed an incomplete or unsigned draft (para 19). Swain J said that
it
was thus clear that a party who bases its cause of action upon a
written agreement must obtain a true copy thereof before advancing
its claim (para 20).
He immediately added, however, that ‘this is not
to say that a failure to annex a written agreement relied upon may
never
be condoned in terms of rule 27(3)’ but that good cause
would have to be shown (para 21):
‘
Relevant
considerations would be the steps taken to obtain a copy of the
written agreement and the prospects of the written agreement
being
pertained in the future. That a true copy will be available before
the issues arising therefrom have to be determined will
be of
particular importance in this regard. In addition any prejudice to
the opposing party caused by the failure to annex the
agreement to
the pleading would have to be considered. Of significance in this
regard would be whether the pleading concisely and
clearly sets out
the terms relied upon in the written agreement upon which the cause
of action is based, and is not excipiable.
The above factors are not
exhaustive and each case will have to be decided upon its individual
merits.’
In considering the particular circumstances in
Moosa
,
Swain J observed that the plaintiffs, in their answering papers in
the rule 30 application, had not averred that they had requested
a
copy of the agreement from the 34
th
defendant; the
plaintiffs merely alleged that they were not in possession of a true
copy. It appeared from the defendants’
replying affidavit in
the rule 30 application that on 13 May 2009 (which must have been
shortly before summons was issued, because
the rule 30 application
was heard in November 2009) the 34
th
defendant had
supplied a copy of the agreement to the 3
rd
plaintiff and
a fax in proof of this assertion was annexed. The plaintiffs were
invited to file a supplementary affidavit dealing
with this
averment, which invitation the plaintiffs declined. The plaintiffs
had not sought condonation for their failure to
annex a written copy
of the agreement. In those particular circumstances, the learned
judge concluded that the defendants were
entitled to relief in terms
of rule 30 and he directed the plaintiffs to remedy the irregularity
within 15 days of service of
the order. (This relief must have been
granted on the supposition that the plaintiffs were indeed in
possession of a copy of
the agreement and could thus remedy the
non-compliance.)
The
Moosa
case is for several reasons
distinguishable from the present one. Firstly, the defendants in
Moosa
did not contend by way of exception (as the defendants
do in the present case) that the plaintiffs lacked a cause of action
because
they were unable to annex a copy of the written agreement;
they contended that the failure to annex the agreement was an
irregular
step, and they launched an application on affidavit to
make good that contention. The court was placed in possession of
information
on affidavit which indicated that the plaintiffs were
indeed in possession of a copy of the agreement. Second, the
plaintiffs
in
Moosa
did not, as the plaintiffs have done in
the present case, seek condonation for their failure to annex a copy
of the agreement.
Third, the explanation offered by the plaintiffs
in
Moosa
was a bald allegation that they were not in
possession of a copy of the agreement, whereas in the present case
the plaintiff has
alleged that the mortgage loan agreement was
destroyed in a fire on a specified date and that despite a diligent
search the plaintiff
has been unable to find a copy of the
agreement. Given the nature of exception proceedings, the
plaintiff’s allegation
as to the destruction of the mortgage
loan agreement and the inability to locate a copy must be accepted
as true.
The present case can thus be distinguished from
Moosa
.
The latter case is not authority for the proposition that a
plaintiff is deprived of its cause of action merely because it is
unable to annex a copy of the agreement to its pleading. I have no
difficulty in accepting the correctness of Swain J’s
ultimate
conclusion in the rule 30 application which served before him,
having regard to the particular facts disclosed in the
affidavits.
However, there are passages in his judgment which suggest that rule
18(6) applies even where it is impossible for
the plaintiff to annex
a copy of the written agreement on which he relies; that even in
such a case the plaintiff requires condonation
in terms of rule
27(3); and that the court might refuse condonation if it appeared,
for example, that a true copy of the agreement
would not be
available by the time of the trial. I respectfully consider that
this is going too far. If it is impossible for
the plaintiff to
produce the written contract or a copy thereof, the law allows him
to prove the execution and terms of the written
contract by other
evidence. A rule of procedure cannot deprive the plaintiff of his
cause of action or of his right to adduce
secondary evidence of the
contract, though the rules would still require the plaintiff to
plead with appropriate particularity
the conclusion of the contract
and its terms.
I also, with respect, disagree with the learned judge’s
proposition that ‘[i]n the absence of the written agreement
the basis of the [plaintiffs’] cause of action does not appear
ex facie
the pleadings’ (para 18). If a plaintiff
pleads the conclusion of a written contract and the terms relevant
to his cause
of action, the cause of action will appear
ex facie
the particulars of claim. That, after all, is how causes of
action based on written contracts were legitimately pleaded prior to
the amendment of rule 18(6) in 1987, at a time when there was no
procedural requirements to annex the written contract. What
is true
is that since 1987 a plaintiff who fails to annex the written
contract will (at least in the absence of a properly pleaded
explanation) be in breach of rule 18(6).
To the extent that the plaintiff requires the
condonation sought in para 4.5 of the particulars of claim, that
request is not
before us. If the defendants consider that
condonation is necessary and if they wish to oppose condonation, a
court could give
procedural directions for the filing of affidavits.
Alternatively the request for condonation in the particulars of
claim could
be tried as a separated issue in terms of rule 33(4).
However, and unless the plaintiff’s allegations concerning the
loss
of the document by way of fire are untrue, the only other
persons who are likely to be in possession of a copy of the mortgage
loan agreement are the defendants themselves. At this stage we do
not know that the defendants do
not
have a copy of the
agreement. If they do have a copy of the agreement, they would
obviously receive short shrift in opposing
condonation. If they,
like the plaintiff, do not have a copy, I have already explained why
in my view the plaintiff would not
be non-suited. This would either
be because rule 18(6) does not apply to such a case or because
condonation in terms of rule
27(3) could not properly be refused.
(In
Absa Bank Ltd v Dumisani Hans Inc & Another
[2013]
ZAWCHC 70
Cloete J granted condonation in similar circumstances (see
para 19), though there the bank was able to annex an unsigned copy
of the alleged written agreement. In
Absa Bank Ltd Wagner &
Another
Case 4085/2013, where the plaintiff’s allegations
regarding the mortgage loan agreement appear to have been identical
to
its allegations in the present case, Blignault J in summary
judgment proceedings rejected the defendant’s complaint that
the agreement had not been annexed to the particulars of claim.)
Mr Mundell SC, who appeared for the defendants together
with Ms Buikman, retreated in oral argument from the extreme
position
that a plaintiff who is unable to annex a copy of the
written contract can never have a cause of action. His submission in
oral
argument was that a litigant in the plaintiff’s position
should first apply for condonation by way of application and then
plead in its particulars of claim that its failure to annex a copy
of the contract has already been condoned by the court. However,
that procedural objection was not contained in the exception.
Furthermore, the objection (if sound) would, I think, have to be
taken in terms of rule 30 or rule 30A (unless the conclusion and
terms of the written contract were too vaguely pleaded, in which
case it might also be appropriate to serve a notice in terms of rule
23(1)). What cannot appropriately be done is to serve an
exception
contending that the particulars of claim disclose no cause of
action; the non-compliance with rule 18(6) is unrelated
to the
question whether there is or is not a cause of action. The elements
of the cause of action are determined by substantive
law. Mr Mundell
SC was compelled, in response to a question from the court, to
acknowledge that on his argument the granting
by the court of
condonation for the failure to annex a copy of the written contract
would be an element of, and complete, the
plaintiff’s cause of
action. For reasons I have already explained, I reject that
argument.
The judges of this division (and no doubt of other
divisions) will be very familiar with the allegations made by the
plaintiff
in the present case regarding the destruction of documents
in the fire which took place on 28 August 2009. Hundreds if not
thousands
of default and summary judgments have been granted in
favour of this particular plaintiff where it has made similar
allegations.
While this does not affect the principle, it does
highlight the absurdity of the defendants’ contention,
implying as it
does that a very large part of the plaintiff’s
debtors book (running no doubt to billions of rands) was, overnight,
rendered
irrecoverable merely because the plaintiff’s
documents were destroyed in a fire. It is gratifying to be able to
conclude
that the law is not such an ass.
I would dismiss the exception with costs. Although the
legal point raised by the exception has not occasioned this court
any difficulty,
it is of sufficient importance to the plaintiff that
the engaging of two counsel was justified. The defendants themselves
engaged
two counsel.
TRAVERSO DJP:
I concur. The exception is dismissed with costs
including the costs of two counsel, the defendants to be jointly and
severally
liable for such costs.
______________________
TRAVERSO DJP
______________________
ROGERS J
APPEARANCES
For Excipients/Defendants: Mr ARG Mundell SC & L
Buikman
Instructed by:
Korbers Inc
Unit 6A, Graphic Centre
5 Buiten Street
Cape Town
For Respondent/Plaintiff: Mr RS van Riet SC & Mr RB
Engela
Instructed by:
Fourie Basson & Veldtman
3
rd
Floor Toplin House
219 Voortrekker Road
Parow
THE HIGH COURT OF SOUTH AFRICA
(WESTERN CAPE HIGH COURT)
Case No: 4620/13
In the matter between: Reportable
ABSA BANK LTD
PLAINTIFF
And
ZALVEST TWENTY
(PTY) LTD
FIRST
DEFENDANT
MARK WILLIAM
ATKINSON
SECOND
DEFENDANT
Coram
: TRAVERSO DJP & ROGERS J
Heard: 4 NOVEMBER 2013
Delivered: 6 NOVEMBER 2013
For Excipients/Defendants: Mr ARG Mundell SC & L
Buikman
Instructed by:
Korbers Inc
Unit 6A, Graphic Centre
5 Buiten Street
Cape Town
For Respondent/Plaintiff: Mr RS van Riet SC & Mr RB
Engela
Instructed by:
Fourie Basson & Veldtman
3
rd
Floor Toplin House
219 Voortrekker Road
Parow
1
The
inherent power of superior courts to protect and regulate their own
process is now located in s 173 of the Constitution.