GWAUNZA
JA:
This is an appeal against the whole of the judgment of the High
Court, handed down on the 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$900,000-00 [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 overpayment 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 overpayment 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 pre-trial 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 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, p1009;
“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……”
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
Mr
Mpofu
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.
Mr
Magwaliba
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, 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, Mr Magwaliba
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 $900,000-00
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.” (my
emphasis)
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$900,000.00 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$900,000.00 being
overpayment to the first defendant; and/or
(b)
The first
defendant
was unjustly enriched in the sum of US$900,000.00 being overpayment
to the first defendant.” (my emphasis)
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 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 para 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 ……….” (my emphasis)
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$900,000.00;
(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 para 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.” (my
emphasis)
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.
Mr
Magwaliba
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 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?” (my emphasis)
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 PTC 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 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 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 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….'”
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, 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,
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 Mr Magwaliba
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 (already cited) did not rule out
the introduction of a new cause of action in the circumstances
stipulated therein.
Mr
Mpofu
for
the appellant, correctly contends that the provisions of Rule 132 are
subservient to those of Rule 134 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
relates to proposed amendments generally, Rule 134 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.
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 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.
Mr
Mpofu
in this respect correctly cites the following apposite dictum
from the case of In
Coutts & Co v Ford & Anor
1997 (1) ZLR 444 (H) at 443B where CHIDYAUSIKU J (as he then was)
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) at 836C-E;
”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.
GUVAVA
JA: I
agree
MAVANGIRA
JA: I
agree
Mtetwa
& Nyambirai,
applicant's legal practitioner
Mbidzo,
Muchadehama & Makoni,
respondent's legal practitioners
1.
See also Barrows & Anor v Chimphonda 1999 (1) ZLR 58 (S) 62G-63A
2.
See Power Coach Express (Pvt) Ltd v Martin Millers and Engineers HH
121-2010
3.
As set out in Commercial Union Assurance Co. Ltd v Waymark NO 1995
(2) SA 73 T
4.
Taken from the case of Four
Tower Investments (Pty) Ltd v Andres 2005 (3) SA 39 (N) at 44
