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 and
Investments Limited 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 and Investments Limited 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 and
Investments Limited, 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 Investments
Limited 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 and 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 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 page
6 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 and Investments Limited, insofar 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 and Investments Limited. 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 and Investments Limited 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 particularized, 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 and
Investments Limited - 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 and
Investments Limited) 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 and Investments Limited, 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 and Investments Limited - 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 and Investments Limited.
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 pre-trial conference 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 pre trial 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 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 pre trial conference 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 pre-trial conference 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…,.'”
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…, 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…, 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 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.
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….,.
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.
