African Bank Limited v Thasol Investments CC and Others (35660/2002) [2015] ZAGPPHC 608 (2 September 2015)

IN THE HIGH COURT OF SOUTH AFRICA

(GAUTENG DIVISION, PRETORIA)

Case Number: 35660/2002

DATE: 2/9/2015

In the matter between:

AFRICAN BANK LIMITED

PLAINTIFF

And

THASOL INVESTMENTS CC

1ST DEFENDANT

MAPONYA LEDWABA & MAZWAI

2ND DEFENDANT

PRATT LUYT & DE LANGE

3RD DEFENDANT

SOLOMON POROMA MOHALE

4TH DEFENDANT

JUDGMENT

Fabricius J,

1.

African Bank instituted action against the four Defendants based on a number of grounds including rectification and breach of contract. In terms of a Court order of November 2014 the dispute concerning the locus standi of African Bank and the correct identity of the Plaintiff as defined in the Pleadings (as also amended) was separated in terms of Rule 33 (4) from the remaining issues. The Plaintiff in this case is either African Bank, or Compufin, or African Bank as represented by its

curator. Details of this process are pleaded in par. 1 (b) of Plaintiff’s amended Particulars of Claim and I do not intend

simply repeating those allegations in this judgment. The Second and Fourth Defendants filed a special plea challenging the locus standi of the Plaintiff in its various forms. The question to be decided is, having regard to a proper interpretation of certain agreements,

whether Compufin or African Bank have the necessary locus standi. The first agreement marked “Plea 1” was entered into between various parties in November 1998. This was the agreement that was in force when action was instituted by African Bank on 3 January 2003. The second agreement referred to as “Plea 2” was entered into between various parties in December 2003. It is clear from the wording of the second agreement that both agreements must be read together and certainly not in isolation. Both agreements are lengthy and very detailed, but do make sound commercial sense if read together.

2.

On behalf of Plaintiffs, having regard to the specific special pleas, it was contended that the Second and Third Defendants had adopted a “bifurcated approach”. On the one hand they contend that Compufin did not acquire the right to sue the Second and Third Defendants because:

2.1

Plaintiff’s claim against the Second Defendant is for contractual damages based on an alleged negligent performance of a mandate as Conveyancer;

2.2

The claim against the Third Defendant, a local Conveyancer, was for contractual damages based upon an alleged agreement of mandate allegedly negligently performed. In the alternative, a claim for delictual damages existed;

2.3

Those claims by African Bank against Second and Third Defendants did not fall within the ambit of what was transferred by African Bank to Compufin in terms of s. 54 of the Banks Act, this transfer, having been restricted to the rights of recovery of African Bank against the First Defendant in terms of its loan and mortgage bond to Compufin;

2.4

Therefore the said claims by African Bank against the Second and Third Defendants have remained with African Bank. On the other hand, Second and Third Defendants deny that African Bank has locus standi to pursue the claims against the Second Defendant, but this was done on a different basis, namely that:

a) In terms of the underlying agreement pursuing to which a s. 54 transfer took place, the entire book debt of African Bank was ring-fenced and the said consortium assumed the responsibility of collecting the book debt and bore the risk inherent in the collection and liquidation of the book debt;

b) Therefore, as at the date of the institution of the action by African Bank against the Second and Third Defendants during January 2003, the right to institute the claims pertaining to the book debt vested in the Consortium, not in African Bank;

c) Should the Consortium wish African Bank to make a claim in its own name, then they could do so pursuant to the agreement, but then African Bank would be acting as agents for the Consortium and these agents were not parties to the proceedings and to have been joined;

d) Alternatively, if the Consortium does not require to be joined then “the Plaintiff’s claim” against the Second and Third Defendants, is an action for damages arising from a breach of mandate, alternatively, a breach of duty of care, and does not relate to amounts owing to African Bank by a customer and therefore (so alleges the Second and Third Defendants) the Plaintiff lacked locus standi to institute a damages claim when the action was instituted in January 2003.

3.

Plaintiff’s Counsel submitted that these contentions are contradictory and mutually destructive in that:

3.1

If as the Second and Third Defendants contend, the claims against them for damages arise out of circumstances not constituting book debts transferred in terms of the underlying s. 54 transactions, then it follows in fact, law and logic that those claims must have remained with African Bank, in which case they would not be subject to the underlying agreements;

3.2

Further, if those claims were not subject to the underlying agreements then it makes no sense to suppose that the Consortium parties, as parties to that agreement (which on Second and Third Defendant’s allegations have nothing to do with the claims against them), should be joined;

3.3

Clearly the argument that the claims against the Second and Third Defendants falls outside of that agreement is destructive of any notion of joinder of the Consortium;

3.4

Further, there is then no reason in fact, law or logic why African Bank should not be entitled to sue for those claims against the Second and Third Defendant if they fall outside of the said underlying s. 54 agreements. The preliminary hurdle raised by the Second and Third Defendants that it was the curator who had to sue, has been overcome by the substitution of the curator as the party on behalf of African Bank pursuant to Uniform Rule 15. Similarly the dilatory defence of non-joinder of the Consortium parties to the underlying agreements cannot possibly apply if the claims against the Second and Third Defendants do not fall under that agreement.

4.

It was submitted that it followed that if the Second and Third Defendants were correct that the claims against them fell outside the said underlying s. 54 agreements, then they would have no defence to the locus standi of the curator of African Bank. If however they were wrong in these contentions then it would follow that Compufin would be the correct Plaintiff and would have locus standi in that:

4.1

In terms of the underlying s. 54 agreements Compufin has taken cession of African Bank’s claims; that cession formed part of the s. 54 (Banks Act) transfer which had the effect of an automatic substitution of Compufin and as the party in the place of African Bank.

See: ABSA Bank Ltd vs Van Biljon and Another 2000 (1) SA 1163 (W) at Headnote and par. 17 and 18.

4.2

The subsequent cession from Compufin occurred after litis contestatio and has no effect on the litigation which continues in the name of Compufin, it being taken that the cessionary cedes not his or her interest in the claim but in the result of the litigation and as the subject matter of the cession is res litigiosa, and the cession itself does not transfer the right to prosecute the action to the cessionary.

4.3

Insofar as the Second and Third Defendants may argue that the Consortium parties hold the rights to claim against the Second and Third Defendants this is plainly not so as (on a proper interpretation of the agreements – see further below) they were mere managers and did not own the asset comprising the claim against the Second and Third Defendants.

5.

These contentions were not made in the alternative and could therefore not both be correct. Either African Bank would have locus standi or Compufin would have locus standi. Since both African Bank and Compufin were before this Court in the Plaintiff’s alternative

formulations, it would simply be a choice of one or the other which in turn would involve a proper interpretation of the said s. 54 agreements.

6.

As far as interpretation of the agreements is concerned, one would have to follow the approach stipulated in Natal Joint Municipal Pension Fund vs Endumeni Municipality 2012 (4) SA 593 (SCA) at par. 18. Having regard to the definitions of “the debtor’s book” and on a narrow construction rather than a wider construction, it is my view that African Bank had retained locus standi throughout. It is clear from the mentioned agreements that the parties thereto specifically agreed that there would be no out-and-out cession of either the debtor’s book or the ring-fenced business. So much was expressly said in the second agreement. Having regard to clauses 5.3, 11 and 12 of the first agreement, it is clear that the book debts and ring-fenced business remained in the ownership of African Bank and were merely managed and to be collected on its behalf by a division of Compufin (LMS). These paragraphs must also be read together with par. 4 of Schedule 3 to the second agreement. Further regard must be had to clause 16 of the second agreement which deals with a PUT option. This option would not have been possible, according to Plaintiff’s Counsel, unless

African Bank had retained ownership of the debtor’s book and ring-fenced business. I agree with that contention. I therefore agree that African Bank has locus standi because of the fact that the claim against the conveyancers fall outside of the ambit of the said agreement.

7.

I do not intend to deal with all of the other contentions advanced on behalf of the Second and Third Defendants which in my view cannot be upheld in the light of the express wording of the two agreements read together.

Accordingly both special pleas are dismissed with costs including the costs of Senior Counsel.

_____________________________

JUDGE H.J FABRICIUS

JUDGE OF THE GAUTENG HIGH COURT, PRETORIA DIVISION

Case number: 35660/02

Counsel for the Plaintiff:

Adv Harpur

Instructed by: Lynn & Main Inc

Counsel for the 2nd and 3rd Defendants: Adv E. Labuscagne SC

Instructed by: Savage Jooste & Adams

Date of Hearing: 11 & 12 August 2015

Date of Judgment: 2 September 2015 at 10:00