This is an appeal against the whole of the judgment of the High
Court handed down on 22 May 2013. This was a matter in which the court
granted the respondent leave to further amend its declaration.
The background to the matter may be summarised as follows:
On
6 July 2004, the respondent issued summons against the appellant and
Saturn Trading and Investments Limited (“Saturn Trading”) jointly and
severally and in solidum for payment of US$900,000 [Nine Hundred
Thousand United States Dollars]. The respondent alleged, that, this
amount represented overpayment of a loan advanced to Saturn Trading for
onward lending to third parties.
In terms of their alleged
agreement, the respondent purported that Saturn Trading would receive
repayments directly from the third parties concerned, and, if any
over-payment occurred, such would be refunded to the respondent.
Allegedly, in breach of the parties agreement, Saturn Trading failed to refund money which had been overpaid to it.
The
respondent then sued Saturn Trading in the High Court, claiming, in its
declaration, that, it had been unjustly enriched by the overpayment at
the respondent's expense. Further in that suit, the respondent sued the
appellant on the grounds that as director, agent, or alter ego of Saturn
Trading, he was fully aware of the transactions in question, and,
hence, had a duty of care towards the respondent. In breach of that
duty, the respondent charged that the appellant had carried out Saturn
Trading's business negligently, recklessly, fraudulently and without due
care resulting in the respondent suffering loss in the amount claimed.
It
is common cause that both Saturn Trading and the appellant defended the
suit, disputing the existence and terms of the alleged loan agreement,
the alleged over-payment, and any duty of care whatsoever towards the
respondent, on the part of the appellant.
At the pre-trial
conference which was held on 26 September 2006, the respondent obtained
leave, with the consent of the appellant, to amend its declaration by
the deletion of a certain paragraph and its substitution with another.
After
the pretrial conference, the matter was set down for trial on 29
January 2007, but, for reasons which are not apparent from the papers,
it was postponed sine die.
Some ten months later, on 30 November
2007, the respondent's legal practitioners wrote to the appellant's
legal practitioners requesting their consent to further amend its
declaration.
The appellant's legal practitioners did not accede to the request.
This
prompted the respondent to file an application for leave to amend its
declaration in terms of Order 20 Rule 132 of the High Court of Zimbabwe
Rules 1971. According to the respondent, this was in order to clarify
the existing causes of action.
The appellant opposed the
application on the basis, that, the amendment had come late in the day,
since it was being made four (4) years after the action was originally
instituted, and, as such, the new causes of action which the amendment
sought to bring had prescribed.
The court a quo granted the
respondent leave to amend its declaration, and any other pleadings which
they wished to have amended.
The appellant was aggrieved by this decision and filed this appeal.
Before
I turn to address the issues raised by the appeal, it is important to
note, that, in this appeal, the Court is being called upon to interfere
with the exercise of a discretion by the judge a quo.
The judge correctly stated as follows in this respect:
“In our law, granting or refusal of leave to amend is a matter entirely in the discretion of the court.”
That
the court has this discretion is evident in Rule 132 of Order 20 of the
High Court Rules. The Rule provides, that, the court may allow a party, at any stage of the proceedings, to amend his pleadings and that:
“..,
all such amendments shall be made as may be necessary for purposes of
determining the real question in controversy between the parties.”
While
Rule 132 of the High Court Rules is made subject to Rule 134, I do not
find the latter Rule to be applicable to the circumstances of this case,
since it specifically deals with an amendment to the pleadings that has
the effect of including or substituting a cause of action arising after the issue of summons.
This has not been claimed in casu.
This
court, however, has the power to interfere with the exercise of the
court a quo's discretion in appropriate circumstances, as aptly
explained as follows in HERBSTEIN & Van WINSEN, 5th ed…,.;
“The
court, on appeal, will interfere where the exercise of the discretion
has not been proper, or has been based upon a wrong principle, or upon a
wrong view of the facts; where the court has purported to exercise its
discretion without sufficient legal grounds for doing so….,.”
See also Barrows & Anor v Chimphonda 1999 (1) ZLR 58 (S)…,.
The
appellant contends, that, the court a quo improperly exercised its
discretion in granting the respondent leave to amend its declaration.
This is because, he further contends, the court relied not only on wrong
principles of the law, it also failed to take into account a crucial
and relevant factor, that is, the issue of prescription.
As is
evident from the appellant's grounds of appeal, the two issues on the
basis of which it is alleged that the court a quo improperly excercised
its discretion relate to the question of whether or not the proposed
amendment raised new causes of action, and, if so, whether, in the
circumstances of the case, the new causes of action had prescribed.
Whether or not the amendment brings about new causes of action
Counsel
for the appellant argued, that, the court a quo should not have granted
leave to amend the declaration for the reason that the amendment has
the effect of introducing unjust enrichment, fraudulent
misrepresentation, and theft, as new causes of action.
Counsel
for the respondent, on the other hand, contends that leave to amend was
correctly granted by the court a quo in terms of Rule 132 of the High
Court Rules, which permits amendments in respect of any cause of action.
Despite
his initial submission that all the allegations had been pleaded in the
original declaration and that the amendment merely sought to clarify
these allegations, counsel for the respondent, during the hearing,
conceded that theft was indeed sought to be introduced as a new cause of
action.
He argued, in respect of personal unjust enrichment of
the appellant, and fraud, that the proposed amendment was aimed only at
clarifying the claims originally made in the initial declaration.
The
court a quo was persuaded by the submissions made in this respect for
the respondent, as is evident from the following remarks on p6 of its
judgment:
“The first respondent (appellant in casu)…, submitted
that the averment that he was unjustly enriched personally was not
contained in the original declaration, and that, its introduction at
this stage is prejudicial to him because that claim has prescribed.
I do not agree.
The
applicant's claim has always been for payment of $900,000 against the
second respondents (sic) jointly and severally. The first respondent had
already been roped in on the allegation of negligence, fraud and
acting without due care. Unjust enrichment had already been pleaded,
and, it is the clarity of that pleading which was lacking. To my mind,
there is therefore a pressing need to effect an amendment that would
properly ventilate the real dispute between the parties.”…,.
A
closer look at the disputed claims of fraudulent misrepresentation and
unjust enrichment, as articulated in the original declaration, would, in
my view, assist in the determination of whether or not they constituted
new causes of action.
The respondent (as plaintiff) in its declaration pleaded as follows:
“By reason of the said overpayment, the first defendant has been unjustly enriched in the sum of US$900,000 at the expense of the plaintiff.
At
all material times, the second defendant (appellant in casu) was the
director and/or agent for the first defendant and was fully aware of the
aforesaid contract between the plaintiff and the first defendant.
In the exercise of his duties, the second defendant was negligent in one or more of the following:
(a) He carried first defendant's business recklessly; and/or
(b) He carried first defendant's business negligently; and/or
(c) He carried first defendant's business fraudulently; and/or
(d) He carried first defendant's business without due care.
By reason of the said negligence of the second defendant:
(a) The plaintiff suffered loss/damages in the sum of US$900,000 being overpayment to the first defendant; and/or
(b) The first defendant was unjustly enriched in the sum of US$900,000 being overpayment to the first defendant.”…,.
Fraudulent Misrepresentation
What
is evident from this claim, on a strict interpretation of the simple
meaning of the words employed, is that the basis for suing the appellant
jointly and severally with Saturn Trading, in so far as the alleged
fraudulent representation is concerned, was the perception that he was
negligent by virtue of having 'fraudulently' run the business of Saturn
Trading. Further, one may understand the words to evince a perception
that the appellant was also 'negligent' by virtue of 'negligently'
running the affairs of Saturn Trading.
There is, in my view, no doubt that this part of the claim was clumsily drafted.
It
not only seeks to define fraudulent behaviour as 'negligence' it also
nonsensically seems to suggest that one may be 'negligent' by acting
negligently!
The respondent itself conceded this shortcoming on
its part when it stated in its application in the court a quo, that, the
claims had been 'insufficiently and imperfectly' pleaded in its
original declaration.
Be that as it may, it is apparent that the
question of fraudulent representation linked to the appellant was one
that exercised the minds of both the respondent and the appellant,
although it was not succinctly and clearly articulated in the
declaration.
Evidence of the appellant's appreciation of the
issue is found in the joint plea of the appellant and Saturn Trading a
quo, where the former categorically denied that he had acted
'recklessly, negligently or fraudulently' in carrying out Saturn
Trading's business 'as alleged or at all'.
Also evident from the
papers is the fact, that, consequently, the respondent sought to hold
the appellant jointly liable with the respondent for the amount sought.
This much is particularised, firstly, in paragraph 13 of the
respondent's declaration, and, secondly, in the relief sought therein.
Paragraph 13 read, in relevant part, as follows:
“By
reason of the said breach of the term(s) of the contract by the first
defendant and/or negligence of the second defendant and the
consequential loss/damages and/or unjust enrichment the first defendant and the second defendant became liable to the plaintiff in the sum of….,.”…,.
The
import of this paragraph, as well as of the relief sought, could not
have been lost on the appellant. The relief sought read as follows:
“WHEREFORE,
the plaintiff herein claims, against the first defendant and the second
defendant, jointly and severally and in solidum the one paying the
other to be absolved:
(a) Payment of the sum of US$900,000;
(b)
Interest thereon at the rate of the Treasury Bills of the Federal Bank
of the United States of America calculated from the 1st day of October
2002 to date of payment, both dates inclusive; and
(c) Costs of suit.”
Viewed
from this whole perspective, I find there is little, if anything, to
fault in the judge a quo's finding that the appellant had already been
'roped' in on the allegation of, among others, fraudulent
misrepresentation.
Consequently, I do not find fault with the
judge's finding that there was need to effect an amendment in this
particular respect, in order to facilitate a proper ventilation of the
real dispute between the parties.
The evidence before the court
shows, that, the real dispute between the parties concerned the alleged
joint liability of the appellant and Saturn Trading, arising from the
appellant's performance of his duties as director of the latter, for the
payment of the sum claimed.
Unjust Enrichment
As
already indicated, the learned judge a quo took the view that unjust
enrichment (of both the appellant and Saturn Trading') had 'already'
been pleaded and all that remained was to clarify the said pleading.
The
basis of this finding was paragraph 10 of the joint plea of the
appellant and Saturn Trading, which was a response to the respondent's
allegation (in its declaration) that the second defendant, Saturn
Trading, had been unjustly enriched as a consequence of the appellant's
conduct in running its affairs.
The appellant and Saturn Trading responded as follows in their plea:
“10. Ad Para 8 (Alternative Claim)
This is disputed. The defendants deny that they were enriched as alleged in the sum of USD900,000 or at all. The 2nd Defendant denies this and puts the Plaintiff to the proof thereof.”…,.
While,
on the face of it, one may conclude that the appellant pleaded to a
claim not made against him, I find the real significance of his response
to be the insight it gave as to what, in the appreciation of the
parties, was the real dispute between them.
As in the case of the
alleged fraudulent misrepresentation, this appreciation could only have
been buttressed by the relief that the respondent sought, jointly,
against the appellant and Saturn Trading, which I have already cited
above.
Counsel for the respondent invited the court to draw an
inference, that, the claim of unjust enrichment against the appellant
was pleaded in the first declaration, from the fact that the parties
agreed that the issues to be put before the trial judge included the
personal liability of the appellant.
He contends that such an
agreement, reflected in the parties joint pre-trial conference minute
('PTC minute') suggests that the appellant had knowledge that the
allegation of unjust enrichment was being made against him together with
Saturn Trading.
I find there is merit in this contention, but,
only to the extent that it gives an insight into what the appellant's
perception of what the case confronting him, was.
The specific
issue sought to be determined, in relation to unjust enrichment, as set
out in the pretrial conference minute (PTC minute) read:
“(5)(a) Whether the Defendants
have been unjustly enriched in anyway and whether the Plaintiff is
entitled to recover any amount from them on the basis of unjust
enrichment?”…,.
A joint pre-trial conference
minute is not meant to form part of the evidence to be considered by the
court in determining the matter before it. Agreements reached and
recorded in a pre-trial conference minute are primarily concerned with
what issues the parties have agreed the trial judge should consider and
determine at the trial.
Thus, a pretrial conference minute's
value lies in streamlining the issues relevant for a proper
determination of the dispute between the parties.
While the
agreed issues should, and must, arise from the facts alleged and/or
disputed in the pleadings, the written evidence tendered, and the law
that is said to be applicable, I find that implicit in the contents of
the pre-trial conference minute (PTC minute) in casu, was the suggestion
that the parties were ad idem as to the seemingly expanded nature of
the real dispute between them.
This is because, on the basis of
that minute, which they have not abandoned, the parties expected the
court a quo to consider and determine aspects of the dispute that had
not been properly articulated in the respondent's declaration.
While
the need to address this anomaly between the pretrial conference minute
(PTC minute) and the respondent's declaration may further justify the
amendment sought, I find that that the amendment would also serve to
properly align the PTC minute to the declaration, and other evidence,
before the court, thereby facilitating a proper ventilation of the
issues in dispute.
It appears to me, that, in respect of both the
claim of fraudulent misrepresentation and unjust enrichment levelled
against the appellant personally, the parties appear to have enlarged
the scope of the dispute between them in a manner not matched by the
specific issues alleged and pleaded to.
To bridge this gap, I
find that the respondent properly resorted to Rule 132 of the High Court
Rules, whose purpose, clearly, is to give the court the discretion to
allow the amendment of pleadings for purposes of having the real dispute
between the parties properly ventilated and determined.
I find in this respect, that, the following remarks are apposite:
“In this regard, NEWTON THOMPSON J remarked as follows in the case of Vos v Cronje and Dumminy;
'That the court is not bound by strict pleadings when the parties themselves have enlarged the issues is beyond argument….,.'”
See Power Coach Express (Pvt) Ltd v Martin Millers and Engineers HH121-10.
Applied
to the circumstances of this case, I find that the parties expansion of
the issues for determination, in the manner outlined above, was
properly taken into account by the court a quo.
To the extent
that one does not 'expand' on what is not already in existence, I am
satisfied that these two claims did not constitute new causes of action.
Thus,
the question of prescription, in so far as the fraudulent
misrepresentation and unjust enrichment of the appellant were concerned,
did not arise.
The claims were neither new causes of action, nor were they prescribed.
I
am satisfied, that, the learned judge correctly applied Rule 132 of
Order 20 of the High Court Rules, cited above, and that, in doing so, he
did not make any error in exercising the discretion imposed on him.
The
court a quo, in addition, properly considered other principles
governing amendments to pleadings, as set out in Commercial Union
Assurance Co. Ltd v Waymark NO 1995 (2) SA 73 T, among them:
(i) Whether the amendments sought raised a triable issue.
(ii) Existence or otherwise of mala fides on the part of the respondent in seeking the amendments in question.
(iii) The possibility, or lack thereof, of prejudice being visited on the appellant by virtue of the amendment sought.
(iv) The timeliness or otherwise of the application.
I
respectfully agree with the court's reasoning in determining these
factors in favour of the respondent and against the appellant.
The
fact that the parties, through their pleadings, evinced the common
misconception that the scope of the dispute was wider than had actually
been articulated in such pleadings, in my view, clearly justified such a
determination.
I find, in particular, that the amendment
concerned was not one that would have caused the appellant any
prejudice, given that he had already demonstrated a readiness to defend
himself against claims, albeit poorly articulated, that sought to impute
to him personal liability for the amount claimed.
South African authorities suggest, that, a certain relaxation of the rules relating to amendments of pleadings is now evident in that country's courts. This approach is captured in these remarks, taken from the case of Four Tower Investments (Pty) Ltd v Andres 2005 (3) SA 39 (N)…, which also address the question of prejudice to the respondent:
“Decisions in the reported cases tend to show, that, there has been a gradual move away from an overly formal approach. It is a development which is to be welcomed if proper ventilation of issues in a case is to be achieved, and, if justice is to be done. In line with this approach, courts should therefore be careful not to find prejudice where none really exists.”
I find these remarks to be fully apposite to a determination based on the circumstances of this case. The approach enunciated therein is one that I find to be commendable and worthy of emulation by our courts.
Thus, when all is told, I am satisfied that the court a quo properly granted leave for the respondent's declaration to be amended so as to better define the two claims of fraudulent representation and unjust enrichment alleged against the appellant. In that way, a proper ventilation of the real dispute between the parties would be facilitated.
Theft
I turn now to deal with the allegation of theft levelled against the appellant.
I have indicated already, that, counsel for the respondent conceded that this indeed constituted a new cause of action, sought to be introduced for the first time through the amendment applied for by the respondent.
The allegation of theft, direct or indirect, is conspicuous by its absence from the respondent's original declaration.
The question that arises now, is, whether the introduction of a new cause of action, in circumstances such as these, is allowed in terms of the rules of the High Court.
The respondent contends, that, Rule 132 of the High Court Rules (already cited) did not rule out the introduction of a new cause of action in the circumstances stipulated therein.
Counsel for the appellant, correctly, contends that the provisions of Rule 132 of the High Court Rules are subservient to those of Rule 134 of the High Court Rules, which provides as follows:
“A summons or declaration may, with the leave of the court or a judge, be amended to substitute or to include a cause of action arising after the issue of summons.
Provided that in the opinion of the court or judge, such an amendment does not change the action into, or add to it, an action of a substantially different character which would more conveniently be the subject of fresh action.”
My reading of the two provisions, together, suggests that while Rule 132 of the High Court Rules relates to proposed amendments generally, Rule 134 of the High Court Rules refers specifically to proposed amendments seeking to substitute causes of action arising after the issue of the summons in question.
It would thus appear, as correctly contended for the respondent, that, there is no provision that specifically prohibits or qualifies proposed amendments that seek to introduce a new cause of action that would have arisen before the summons were issued.
In casu, the fact that the alleged theft occurred before the summons in question was issued, is not disputed.
The issue, rather, is that the claim had, as of the date of the filing of the application to amend the declaration, prescribed.
One can envisage a cause of action which, albeit arising before the summons in question are issued, has nevertheless not prescribed at the time an amendment is sought to include it in the same summons.
This, in my view, is the type of amendment that may appropriately be considered in terms of Rule 132 of the High Court Rules.
Different considerations come into play, however, where the new cause of action sought to be introduced, has prescribed as of the date of the filing of the application.
Rule 132 of the High Court Rules is not to be read as allowing a court to order amendments to pleadings in a manner that would effectively resuscitate a cause of action that has, by law, prescribed.
Clearly, subsidiary legislation cannot undermine or alter substantive law.
Counsel for the appellant, in this respect, correctly cites the following apposite dictum from the case of In Coutts & Co. v Ford & Anor 1997 (1) ZLR 444 (H)…, where CHIDYAUSIKU J…, stated as follows:
“Thus, the clear intention of the legislature, as expressed in the above provision, is to make prescription a matter of substantive law as opposed to procedural law. The above provision clearly extinguishes the debt as opposed to merely barring the remedy.”
The same point was aptly articulated by the court as follows in the case of Evins v Shield Insurance Co. Ltd 1980 (2) SA 814 (A)…,.;
”Where the plaintiff seeks, by way of amendment, to augment his claim for damages, he will be precluded from doing so by prescription if the new claim is based upon a new cause of action and the relevant prescriptive period has run….,.”
On the basis of the law and authorities on prescription, it was clearly not open to the respondent in casu to seek an amendment to its declaration, whose effect would have been to introduce a prescribed cause of action - that is theft.
It follows, that, the judge a quo misdirected himself in disregarding this relevant fact and ordering the amendment in question.
This court can, therefore, properly interfere with the judge's discretion in this respect.
In the final result, the appeal ought to succeed only to that extent, while the rest of the appeal, having no merit, ought to be dismissed.
However, since the appellant has partially been successful in its appeal, I consider it fair and just that it be ordered to pay only a part of the costs.
It is accordingly ordered as follows:
1. The appeal is allowed in part.
2. Paragraph 1 of the order of the court a quo is amended by the addition of the following:
“Provided that all reference to the claim of theft against the second defendant personally is expunged from the said annexure 'D'.”
3. The rest of the appeal be and is hereby dismissed.
4. The appellant shall pay only two thirds of the costs of this appeal.
