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[2014] ZAWCHC 187
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Burger And Wallace Construction (Pty) Ltd v Ballprop Ten (Pty) Ltd (1153/2005) [2014] ZAWCHC 187 (9 December 2014)
REPUBLIC OF SOUTH
AFRICA
IN THE HIGH COURT
OF SOUTH AFRICA
(WESTERN
CAPE DIVISION, CAPE TOWN)
Case
number: 1153/2005
DATE:
09 DECEMBER 2014
In
the matter between:
BURGER
& WALLACE CONSTRUCTION (PTY) LTD
...................
Plaintiff
And
BALLPROP
TEN (PTY)
LTD
........................................................
Defendant
JUDGMENT
DELIVERED ON 9 DECEMBER 2014
Before:
The Hon. Mr Justice Binns-Ward
BINNS-WARD
J:
[1]
Proceedings in this matter commenced when
the summons was issued at the beginning of 2005. The plaintiff
claimed an amount of R461335,25
from the defendant for services
rendered. The defendant admitted the claim, but pleaded a claim in
reconvention against the plaintiff
in the amount of over R98 million.
[2]
The claim in reconvention was founded on an
alleged breach of contract.
It was the defendant's case that
the parties had concluded a joint venture agreement in April 2001 to
develop certain land in the
Muizenberg area (
erven
159848 and 159850)
referred to as ‘the Ogden erven’.
The ‘relevant terms’ of the joint venture agreement were
pleaded in paragraph
3 of the defendant's claim in reconvention in
the following manner:
3. The relevant
terms of the joint venture agreement between the Defendant and the
Plaintiff were
inter alia
as follows:
3.1 the Defendant
would attend to the rezoning, subdivision and other issues concerning
the development of the relevant erven with
the intention to subdivide
and develop approximately 600 erven in total and to sell these by
plot and plan;
3.2 the Plaintiff
would obtain and/or arrange the necessary finance for the project and
furthermore see to the site services for
each plot for which service
the Plaintiff was to be paid a market-related fee for its services
rendered;
3.3 the Defendant
would act as building contractor and build the dwellings for the plot
and plan purchasers;
3.4 the Defendant
and the Plaintiff would each be entitled to half of the profit
generated by the sale of these plots to purchasers;
3.5 the Defendant
would be entitled to all profit for the building work done in
accordance with the agreement of the parties;
3.6
the joint venture agreement would be undertaken in the name of a
company to be nominated as the purchaser of the Ogden erven.
The defendant
alleged that the plaintiff had reneged on the agreement by
contracting with third parties to develop the erven. In
its plea in
reconvention, the plaintiff denied the conclusion of a joint venture
agreement, as alleged. In the alternative, and
to the extent that the
court might hold that the agreement had been concluded, the plaintiff
pleaded that:
3.1 In and during
June or July 2001 and with the knowledge of the Plaintiff, Defendant
caused a company, Defacto Investments 12
(Pty) ltd (“
Defacto”
)
to be nominated as the purchaser of the Ogden properties in terms of
an agreement of sale which Defendant, as purchaser, had previously
concluded with the owner of those properties;
3.2
On 19 July 2001 New Invest 212 (Pty) Ltd (“
New Invest”
)
purchased the entire shareholding of Defacto and pursuant to such
transaction Defendant (again, with the knowledge of the Plaintiff)
caused; alternatively acquiesced in the transfer of the entire
shareholding of that company to New Invest;
3.3
In the premises the Defendant’s conduct, as set out above,
constituted; alternatively entailed a waiver and/or abandonment
of
all rights against the Plaintiff in terms of the joint venture
agreement.
[3]
After the pleadings had closed the parties
decided that there should be a separation of issues within the
meaning of rule 33(4)
of the Uniform Rules. To that end they
took an order by agreement on 27 August 2008 before S. Olivier AJ in
the following
terms:
BY
OOREENKOMS TUSSEN DIE PARTYE:
word
’n bevel in die volgende terme gelas:
1.
Dat in terme van Hooggeregshofreël
33(4) gelas word dat die meriete van die teeneis wat onder bovermelde
saaknommer ingestel
is, geskei word van kwantum en dat slegs die
meriete van vermelde teeneis by die verhoor wat op 4 September 2008
begin, bereg en
afgehandel word;
2.
Dat die aanhoor van getuienis ten opsigte
van die kwantum opgeskort word tot tyd en wyl die meriete van die
saak beslis is; en
Dat
koste oorstaan vir latere beregting.
The
order did not define what precisely was comprehended by ‘the
merits’ (‘die meriete’). Considered as
a whole,
however, it seems reasonably clear from the context, more
particularly the provisions of paragraph 2 of the order, that
the
term was intended to cover all the issues in the case except the
extent of the defendant’s alleged damages in the sense
discussed in paragraph [12], below.
[1]
It certainly comprehended the issues of whether or not the joint
venture agreement had been concluded, whether it had been reneged
on,
as alleged, and whether there had been a waiver or abandonment by the
defendant of its rights, as alleged by the plaintiff
in the
alternative to its denial of the conclusion of the agreement. The
issue of waiver or abandonment of contractual rights advanced
in
terms of the plaintiff’s plea in reconvention was necessarily,
and indeed expressly, predicated on the existence of a
legally valid
contract.
[4]
The
‘merits’ went to trial before Saldanha J. The learned
judge handed down a comprehensive judgment running to 61 pages
on 26
April 2010. It was recorded in paragraph 1 of the judgment that
the trial had been preceded by several interlocutory
applications,
which included ‘various applications for the amendment of the
pleadings’. The pleadings were also
amended during the
course of the trial. The learned judge also recorded that
‘[a]fter the delivery of argument on the
merits the defendant
brought a further application for the amendment of its claim in
reconvention. The application was opposed
and was aborted at
the hearing thereof’. The judgment held that the
defendant had established on a balance of probability
that the joint
venture agreement had been concluded and that it had been breached by
the plaintiff in the manner alleged.
[2]
The trial court found ‘no merit in the plaintiff’s
alternative plea to the defendant’s claim in reconvention
that
the defendant had waived or abandoned its claim to the rights under
the joint venture agreement’.
[3]
It made an order in the following terms: ‘The defendant’s
claim [in reconvention] is upheld with costs save for
the costs of
the aborted application for amendment’. The effect of
that determination in the context of the separation
of issues ordered
by Olivier AJ would appear to leave only the matter of the
defendant’s damages to be decided in the
action.
[5]
The
judgment of the trial court was taken on appeal to the Supreme Court
of Appeal. The judgment on appeal,
Burger
& Wallace Construction (Pty) Ltd v Ballprop Ten (Pty) Ltd
[2011] ZASCA 136
(23 September 2011), has been published on the
SAFLII website.
[4]
The
appeal was dismissed. The appeal court’s judgment
confirmed the trial court’s finding as to the conclusion
of the
joint venture agreement. That court held that what had been
described in the trial court’s judgment as a breach
of the
agreement had in fact been a repudiation. It also held that the
defendant’s claim in reconvention, properly
construed, had
indeed alleged a repudiation of the agreement rather than a
breach.
[5]
[6]
The matter currently before the court is an
application by the plaintiff to amend its plea in reconvention by
substituting it with
a pleading that would contain the following
allegations in response to the indicated paragraphs of the
defendant’s amended
claim in reconvention:
AD
PARAGRAPHS 3 AND 4 THEREOF
2.
It was one of the
naturalia
,
alternatively
, a tacit or
implied term, of the joint venture agreement that its common object
was to make a profit (“
common object”
).
3.
The joint venture agreement was concluded subject to the tacit,
alternatively
, implied, resolutive condition that it would
have been reasonably possible to obtain subdivision of erven 159848
and 159850 into
approximately 600 single residential erven suitable
for a “plot and plan” development in accordance with the
applicable
planning and environment laws;
4.
It was never reasonably possible to obtain subdivision in accordance
with the applicable planning and environmental laws of erven
159848
and 159850 into single residential erven suitable for a “plot
and plan” development at all;
5.
Alternatively, if it were possible to obtain such subdivision at all,
it was never possible in respect of approximately 600 such
erven;
6.
In the premises the joint venture agreement was void, and of no force
or effect;
7.
Subject to the aforegoing, these paragraphs are admitted.
AD PARAGRAPH 5
THEREOF
8.
The joint venture agreement was void for the reasons set forth above.
9.
It is admitted that the defendant contracted with third parties to do
a development on the said erven.
10.
In the premises the plaintiff’s breach of the joint venture
agreement was irrelevant.
AD
PARAGRAPH 6 THEREOF
11.
The joint venture agreement was void for the reasons set forth above.
12.
Alternatively, had sub-division of erven 159848 into single erven
suitable for a “plot and plan” development have
been
possible at all, then:
12.1
subject to detailed design, the final erf sizes employed and the
final efficiencies of layout, the maximum number of single
residential erven which could have been developed for sale by plot
and plan on erven 159848 and 159850 together would have been
approximately 300; and
12.2
undertaking a “
plot and plan”
development on
approximately 300 erven would not have been profitable, and the
common object of the joint venture would not have
been achieved
thereby.
13.
In the premises, the joint venture would have terminated due to the
impossibility of achieving its common object for reasons
beyond the
control and not due to the fault of either party,
alternatively
,
it would have been lawfully terminated by agreement,
further
alternatively
, it would have been law fully terminated by the
plaintiff.
14.
In the premises, the defendant would never have derived any profit
from the joint venture agreement.
15.
In the circumstances, all the allegations contained herein are
denied.
AD
PARAGRAPH 7 THEREOF
16.
For the reasons set out above, the plaintiff denies that a total of
600 units could or would have been developed on erven 159848
and
159850.
17.
The plaintiff has no knowledge of the manner in which the defendant’s
alleged damages have been calculated, made up and
arrived at, and
denies all the allegations in that regard.
AD
PARAGRAPHS 8 AND 9 THEREOF
18.
Save for admitting demand, all of the remaining allegations are
denied.
[7]
The defendant objected to the proposed
amendment. It contended in its notice of objection that:
1.
The proposed amendments contained in
paragraphs 2 to 11 of the plaintiff’s contemplated substitute
plea relate to the merits
of the counterclaim which have already been
finally determined and that this court thus lacks the power to try
the matters they
purport to raise for determination.
2.
The proposed amendments contained in
paragraphs 12-14 of the contemplated substitute plea are premised on
the alleged additional
terms which may not now be introduced
following the determination of the counterclaim, and are in any event
inconsistent with the
finding already made that the joint venture
agreement existed and was breached.
3.
The proposed amendments in paragraphs 15
and 16 of the contemplated substitute plea are objectionable to the
extent of the words
‘in the circumstances’, which
predicate its content on that of the preceding paragraphs which are
objectionable for
the reasons set out in 1 and 2, above.
[8]
The proposed substitute plea essentially
seeks to raise the issue of initial impossibility of performance.
The allegation
in paragraphs 6, 8 and 11 that the joint venture
agreement was void, read with the allegations in para 13, were
plainly formulated
with regard to the principles applicable to the
determination of the voidness of ostensibly concluded contracts on
the basis of
impossibility of performance (as to which see, for
example, RH Christie and GB Bradfield
The
Law of Contract in South Africa
6ed. at
pp. 97-99). The plaintiff’s counsel, quite
correctly, did not suggest that the judgment of Saldanha J
did
not finally determine the issues in the action sent to trial before
the learned judge pursuant to the ruling in terms of rule
33(4) by
Olivier AJ. They argued that the issue sought to be introduced
by means of the substitute plea had not been considered
in the trial
and to allow its introduction would not ‘undermine’ the
judgments of either the trial or the appeal court.
As
to the finding by Saldanha J, confirmed on appeal, that a binding
joint venture agreement, as alleged in the claim
in reconvention, had
been concluded, the plaintiff’s counsel referred to the
treatment of the subject of initial impossibility
in AJ Kerr
The
Principles of Contract
6ed. at pp.
237-238, where the learned author states ‘In addition there are
cases where performance is not impossible, but
where, if the result
sought is to be achieved, the form of performance which is possible
is so different from that which was contemplated
as not to be within
the scope of the contract. In these cases,
just
as in those on absolute impossibility, there is nothing wrong with
the contract
: but it does not come into
existence (if the necessary circumstances do not exist at the time
agreement is reached), or….’
(underlining supplied for
emphasis). They contended that the allegations sought to be
introduced concerning impossibility of performance
did not imply that
there had been anything ‘wrong with the contract’ and
thus did not bring the intended plea into
conflict with what the
trial court had determined and the appeal court had confirmed when
upholding the defendant’s allegation
concerning the conclusion
of the joint venture agreement.
[9]
I do not agree that the issue of initial
impossibility of performance that the plaintiff seeks to introduce in
the second stage
trial of the action does not conflict with the
determinations already made. The trial and appeal courts also
found that the
agreement had been repudiated and that the defendant
had not waived or abandoned its rights under the contract.
Necessarily
implicit in the latter two findings was a determination
that there had been a legally binding agreement in place. It is
impossible
to repudiate non-existent obligations, or to obtain
contractual rights capable of waiver or abandonment from a contract
that is
legally a nullity. The allegations concerning initial
impossibility that the plaintiff now seeks to introduce thus come
down,
in essence, to a withdrawal of concessions or admissions that
were implied in the formulation of its plea when the merits went to
trial.
[10]
In my judgment the argument advanced on
behalf of the plaintiff in any event proceeded on an incorrect
premise. It essentially
ignored the effect of the order made in
terms of rule 33(4). Its effect was to direct that the issues on the
pleadings were to
be decided in two separate and self-contained
trials. Saldanha J was charged with determining ‘the
merits’
in a first stage trial. I have already treated, in
paragraph [3]
above, of the meaning of the
term in the context of the ruling made by Olivier AJ. Any defence
that the plaintiff wished to raise
concerning the existence of the
agreement had to be raised as part of ‘the merits’.
The defence now sought to
be advanced that the agreement was void for
initial impossibility of performance certainly does not fall within
the meaning of
‘quantum’, being the aspect of the claim
stood over for the trial of the remaining issues in the action.
Trying it
would entail re-opening ‘the merits’.
[11]
It
seems to me that what the plaintiff is seeking to do by introducing
at this stage the allegation that the contract was void is
essentially equivalent to that which the defendant sought
unsuccessfully to do in
David
Hersch Organisation (Pty) Ltd and Another v Absa Insurance Brokers
(Pty) Ltd
1998 (4) SA 783
(T). That matter also concerned a contractual
claim.
In
its plea the defendant denied that an agreement had been entered into
and accordingly denied that there had been a breach of
the agreement
and that the plaintiffs had suffered damages as a result of the
breaches alleged.
[6]
The
plaintiffs obtained an order in terms of rule 33(4) that the issues
formulated in the pleadings be decided separately. The
order
provided:
(1)
In terms of Rule 33(4) all the issues other than those referred to in
para 2 below shall be determined during the hearing which
is to
commence on 23 April 1997.
(2)
The issue of the quantum of the plaintiffs’ damages as
formulated in para 14 of the particulars of claim shall stand over
for determination at a later stage.
(3)
The order does not preclude the parties from canvassing the issue of
what damages were in the contemplation of the parties at
any material
time.
[7]
The
first stage hearing took place before Sutherland AJ, who found,
amongst other matters, that a contract, as alleged, had been
concluded. Before the matter went to trial on the reserved
question of the quantum of the plaintiff’s damages, the
defendant applied to amend its plea to allege that the contract had
been cancelled. The application was refused by Southwood J.
At 787C-H, the learned judge reasoned as follows:
The
effect of the order made in terms of Rule 33(4) was that the issues
on the pleadings would be resolved in two separate and self-contained
trials. See
Schmidt Plant Hire (Pty) Ltd v Pedrelli
1990 (1)
SA 398
(D) at 408H--I and 408B-C. The order made by Sutherland AJ
after the hearing on the issues other than quantum was a final
decision
(ie it could not be corrected or altered or set aside by the
trial Judge at a later stage of the trial) and it was (or should have
been) definitive of the rights of the parties. See
SA Eagle
Versekeringsmaatskappy Bpk v Harford
(supra at 789B and 792C-H);
Marsay v Dilley
[1992] ZASCA 114
;
1992 (3) SA 944
(A) at 962C-H;
Schmidt
Plant Hire (Pty) Ltd v Pedrelli
(supra at 407A-D). As a final
decision the order was appealable. See
Van Streepen & Germs
(Pty) Ltd v Transvaal Provincial Administration
1987 (4) SA 569
(A) at 583H--I;
SA Eagle Versekeringsmaatskappy Bpk v Harford
(supra at 792H);
Marsay v Dilley
(supra at 962C-E). A
Court which has given such a final decision is
functus officio
and cannot thereafter grant an amendment of the relevant pleadings.
See
Firestone South Africa (Pty) Ltd v Genticuro AG
1977 (4)
SA 298
(A) at 306F-G;
Govender v Hassim
1994 (1) SA 304
(D) at
305G-H;
Randfontein Estates Ltd v Robinson
1921 AD 515
at 519.
In
Schmidt Plant Hire (Pty) Ltd v Pedrelli
(supra) where a
separation of issues had been ordered in terms of Rule 33(4) and the
Court had given judgment on the question of
liability it refused to
allow an amendment of the pleadings relating to the question of
liability. The Court considered that the
grant of the amendment would
bring about a re-opening of the issues which had already been
finalised at the earlier hearing and
found that it had no power to
grant such an amendment (at 407A--D). I respectfully agree with the
reasoning and conclusion of the
Court on that issue.
The
approach adopted by Southwood J appears to me to be correct, with
respect. It is directly in point in the current matter.
[12]
The judgment thus far disposes of the
application adversely to the plaintiff insofar as paragraphs 2 to 11
of the proposed substitute
plea in reconvention is concerned. The
plaintiff’s counsel submitted that even were I to arrive at the
conclusion I have
reached in respect of those paragraphs, paragraphs
12 to 17 nevertheless go to quantum and plead issues that are triable
in the
second stage trial contemplated by the order in terms of rule
33(4). I agree. The observations about ‘quantum’
made by Van Zyl J
(Schoeman and Dambuza JJ concurring)
in
delivering the judgment of the Full Court in
Road
Accident Fund v Krawa
2012 (2) SA 346
(ECG), at para 37, albeit in the context of separation of the
issues of liability and quantum in a road accident compensation
claim, are pertinent in this respect in my view. The learned
judge stated:
…
..the
statement in
Tolstrup
[
Tolstrup NO v Kwapa
NO
2002
(5) SA 73
(W)] that the issue of ‘quantum’ or ‘damages’
pertains to ‘how much’ is payable, creates the
impression
that the enquiry at the trial relating to damages must always be
confined to a simple numerical assessment of the damages
in terms of
money. To do so is to limit the words ‘quantum’ and
its equivalent ‘damages’, as these
terms are used
interchangeably in the context of a separation of issues, to the
narrow legal definition thereof, namely the monetary
equivalent of
loss or damage ‘awarded to a person with the object of
eliminating as fully as possible his past as well as
future damage’.
This approach loses sight of the fact that where on the
pleadings the allegation that the plaintiff
has suffered damage or
loss is in dispute, the enquiry relating to damages in the context of
a separation of issues into merits
and quantum consists of two
facets, namely the existence of loss or damage, and the assessment of
the amount thereof. …
As
Grosskopf JA in
Santam Insurance Co Ltd v Fourie
[1996] ZASCA 122
;
[1997 (1) SA
611
(A), at 614F] correctly remarked, ‘before coming to the
computation of loss one must first ascertain whether any loss at all
has in fact been suffered’. The words ‘damages’
and ‘quantum’ would accordingly bear a wider
meaning in
this context than simply the computation of loss or damage which has
been found to exist’. (Footnotes omitted.)
[13]
The defendant’s counsel did not
dispute that the feasibility of earning a profit out of the joint
venture agreement was a
relevant aspect of the quantum stage of the
trial. They submitted, however, that the manner in which this
issue was proposed
to be pleaded by the plaintiff in its proposed
substitute plea was inextricably bound up with its allegations of
voidness for impossibility
of performance. In this regard they
pointed to the employment in the paragraphs of the proposed plea
directed at quantum
of expressions such as ‘In the premises…’,
‘In the circumstances…’ and ‘For the reasons
set out above,..’ Their argument was that the plaintiff should,
if it wished to persist with the allegation that a profit
could not
have been made from the joint venture agreement, reformulate its
substitute plea to advance the point shorn of any implication
that
the agreement was void. Their contention in this regard seems
to me to be sound.
[14]
I do not think it is appropriate for the
court to reformulate paragraphs 12 to 16 of the proposed substitute
plea in reconvention
to meet the findings of the court on the
objections raised by the defendant to the plaintiff’s proposed
amendments.
The more appropriate course would be to refuse the
application and leave it to the plaintiff, if so advised, to devise
any reformulation
of its plea in reconvention it might wish to
advance its defences on the ‘quantum’ issue in a manner
that would be
permissible.
[15]
In the result the application is dismissed
with costs. The parties were agreed that the costs of two
counsel were reasonably
incurred. I share that view. It
is directed that the costs shall include the fees of two counsel.
A.G.
BINNS-WARD
Judge
of the High Court
Date of hearing:
4 December 2014
Date of judgment
9 December 2014
Plaintiff’s
counsel: W.R.E. Duminy SC
R.J. Howie
Defendant’s
counsel: M.W. Janisch
Coriaan De
Villiers
Plaintiff’s
attorneys: Hogan Lovells (SA) incorporated as Routledge Modise Inc.
Defendant’s
attorneys: Werksmans Attorneys (Tyger Valley)
[1]
Cf.
Tolstrup
NO v Kwapa NO
2002 (5) SA 73
(W) at 77D-E.
[2]
Paragraph 102 of the trial court’s judgment.
[3]
Paragraph 101 of the trial court’s judgment.
[4]
http://www.saflii.org/za/cases/ZASCA/2011/136.html
.
[5]
As to the distinction between repudiation and breach, see e.g.
RH
Christie and GB Bradfield
The
Law of Contract in South Africa
6ed. at pp. 538-540.
[6]
David
Hersch
at 784 I.
[7]
David
Hersch
at 784J-785B.