Botha v Edward Leonard Nzabandzaba Inc and Others (718/2012) [2013] ZANWHC 63 (22 August 2013)

IN THE NORTH WEST HIGH

COURT

MAFIKENG

CASE NO.: 718/2012

In the matter between:

GERHARDUS STEPHANUS BOTHA .................................Plaintiff

and

EDWARD LEONARD NZABANDZABA INC. ...........1st Defendant

Registration Number 2005/022127/21

EDWARD JOHANNES LEONARD ..........................2nd Defendant

MARETHA SCHOLTZ ...............................................3rd Defendant

MADELEIN BRAZELLE (Now Greyling) .................4th Defendant

SARAH S JEANERHUYSE .......................................5th Defendant

KGOELE J

DATE OF HEARING : 13 JUNE 2013

DATE OF JUDGMENT : 22 AUGUST 2013

FOR THE PLAINTIFF :

PISTOR J SC

FOR THE DEFENDANT :

KRUGER TP

REASONS FOR JUDGMENT

KGOELE J:

[1] On the 13 June 2013 the following order was granted by this court in this matter:-

THAT: The exception by the defendants (excipients) be and is hereby dismissed;

THAT: The excipients (the first, second and third defendants) be and are hereby, jointly and severally the one paying the other to be

absolved, ordered to pay the costs, such costs to include the costs consequent upon the employment of a Senior Counsel.

[2] The reasons for the order follow hereunder.

[3] In May 2012 the plaintiff instituted an action against five defendants.

In essence, the allegations of the plaintiff in the particulars of claim can be summa­rised as follows:

3.1. The first defendant is an incorporated firm of attorneys;

3.2. At all relevant stages the second, third, fourth and fifth Defendants were practising attorneys and the first defendant was repre­sented by the second and fourth defendants;

3.3. In 2006 the second defendant, in his capacity as a practising attorney with the first defendant, introduced the plaintiff to an investment opportunity in a company belonging to and in control of an individual by the name Sarel van Niekerk, who was an existing client of the first defendant at the time;

3.4. The investments opportunity entailed that the plaintiff would advance money to entities of which Mr Sarel van Niekerk was in control of and at an interest rate of 25% per annum;

3.5. The funds invested by the plaintiff in the aforementioned entities would be utilised by the entities in property developments.

3.6. In 2006 an oral agreement came into existence between the plaintiff and the first defendant, in terms whereof the first defendant

accepted instructions from the plaintiff to perform a number of professional services to the plaintiff as the plaintiff’s

attorney, including:-

3.6.1. To evaluate and investigate whether the entities belonging to or in control of Van Niekerk was financially sound enough to lend money to;

3.6.2. To investigate and establish whether Van Niekerk was financially sound enough to sign as a surety for the loan made by the plaintiff to the entities belonging to Van Niekerk, alternatively the entities of which Van Niekerk had control of;

3.6.3. To advise the plaintiff as to the risks involved in entering into such loans, and ensuring that the plaintiff obtained sound, proper and safe security for all amounts lent by the plaintiff to the entities belonging to or in control of van Niekerk;

3.6.4. By informing the plaintiff of any risks that might develop as soon as rea­sonably possible;

3.6.5. Drafting sound and proper agreements and/or documents to ensure that the security provided by Van Niekerk and/or his companies is in place and duly registered in the Deeds Office;

3.6.6. By ensuring a repayment of the capital and interest to the plaintiff from the proceeds of transfers of immovable properties belonging to Van Niekerk’s companies, or Van Niekerk himself. The third defendant, alternatively the fourth defendant as practising attorneys with the first defendant acted as the conveyancing attorneys;

3.7. It was an implied term of the agreement between the parties that the defen­dants would perform the services in a proper and professional manner and without negligence, and that the defendants would protect the interest of the plaintiff as good, and as far as possible;

3.8. The plaintiff in paragraph 15 of the particulars of claim alleges that in September 2008 the plaintiff and Van Niekerk, on the advice of the defendant (this is clearly a reference to the first defendant) entered into an agreement in terms of which the plaintiff advanced an amount of R2.5 million to a company under control of Van Niekerk, VNP Projects (Pty) Ltd;

3.9. The plaintiff further alleges that the first, alternatively the second, further alternatively the fourth defendants breached the agreement and was negligent in the per­formance of their mandate in one or more of the following respects:

3.9.1. Notwithstanding the fact that a power of attorney was signed empowering the relevant defendants to register a first mortgage bond over the property belonging to Van Niekerk, no such bond was registered;

3.9.2. There was a failure to inform the plaintiff of existing bonds over the immovable property;

3.9.3. There was a failure to register any mortgage bond over the immovable property in favour of the plaintiff;

3.9.4. The plaintiff was falsely advised that the loan had no risks and that it was properly secured;

3.9.5. There was a failure to register and/or endorse a cession of Van Niekerk’s shares in another company, notwithstanding the fact that a cession agree­ment to that effect was drafted;

3.9.6. The plaintiff was falsely advised that the cession of Van Niekerk’s shares in the other company had been affected and was in fact duly registered, where as no such registration and/or endorsement occurred;

3.9.7. There was a failure to pay an amount of R200 000.00 per unit sold and trans­ferred from another company;

3.9.8. There was a failure to inform the plaintiff of the impossibility of the transfer of an amount of R200 000.00 per unit sold as the units were encumbered in favour of another party, Investec;

3.9.9. By advising the shareholders and directors of another company to liquidate the entity, without informing the plaintiff of the said advice;

3.9.10. By the failure to exercise such care and skill that could reasonably be expected of an average competent attorney.

[4] The crux of the plaintiff’s allegations against the defendants is contained in para­graph 18 of the particulars of claim. That particular paragraph explains that the plaintiff, acting on the poor advice of the first, alternatively the second and further alternatively the fourth defendants lent an amount of R2.5 million to VNP Project (Pty) Ltd and Van Niekerk, who were clients of the first defen­dant.

[5] The plaintiff therefore contends that as a result of this negligent advice the plaintiff suffered damages in the amount of R2.5 million and interest. Only the first and third defendants filed an exception against the particulars of claim. It is important to record at this stage that the exception has not been brought on the basis that the particulars are vague and embarrassing, but upon the basis that the particulars do not disclose a cause of action.

[6] It is trite law that the excipients have to show that the pleading is excipiable on every interpretation that can reasonably be attached to it. See: Theunisen and Andere v Transvaalse Lewende Have Kooperasi Bpk 1988 (2) SA 493 (A) at 500 E-F; First National Bank of Southern Africa Ltd v Perry No. & Others 2001 (3) SA 960 (SCA) at 965 D.

[7] Secondly, the plaintiff is confined to the facts alleged in the particulars of claim. See: First National Bank matter supra at 965 D – E. Furthermore, any averment in a pleading must, for the purposes of an exception, be assumed to be true and correct. See: Minerals & Quarries (Pty) Ltd v Henckert en ‘n andere 1967 (4) SA 77 (SWA) at 81 E to F and Saaiman and Others v Minister of Safety and Security & Another 2003 (3) SA 496 (O) at 503 A.

[8] In the first seven paragraphs of their exception the first to third defendants merely recorded what was alleged in the particulars of claim. The sting in the exception commences only at paragraph 8 of the exception.

[9] In paragraph 8 of the exception it was submitted by the defendant’s counsel that the plaintiff had not alleged in their particulars of claim that the mandate given to the first defendant in 2006 extended to the written contract concluded in 2008. Therefore, according to the defendants there is no casual link between the mandated and the advice to enter into the agreement. The mandate, defendant’s counsel submitted, emanated from the plaintiff whilst the advice to enter into the agreement originated from the defendants. Despite this discrepancy, the plaintiff alleges that the defendants breached their mandate and builds his whole claim around that breach.

[10] This contention in the exception loses sight of what was alleged in paragraphs 15 and 18 of the plaintiff’s particulars of claim.

10.1. In paragraph 15 of the particulars of claim it was pertinently alleged that the plaintiff had entered into the agreement with Van Niekerk on the advice of the defendant. The “defendant” in this context is clearly intended to be a reference to the defendant as stated in the previous two paragraphs of the particulars of claim and that in terms of that agreement the amount of R2.5 million was advanced to VNP Projects (Pty) Ltd.

10.2. In paragraph 18 of the particulars of claim it was pertinently alleged that the plaintiff had advanced the amount of R2.5 million to VNP Projects (Pty) Ltd and Van Niekerk under circumstances where he had acted upon the poor advice given to him by the first,

alternatively the second, further alternatively the fourth defendants.

[11] In my view, Paragraphs 15 and 18 therefore draw a direct link between the 2006 contract between the plaintiff and the first defendant, in terms whereof the first defendant accepted a mandate to give the plaintiff good advice, and the contract concluded in 2008 in terms whereof the plaintiff invested the R2.5 million into the company of Van Niekerk. Given the fact that on exception the pleading is to be read generously, the first and third defendants must show that the pleading is excipiable “on every interpretation that can reasonably be attached to it”. Reasonable interpretation that can be attached to paragraph 18 is that it indeed draws a direct link between the agreement in terms whereof the first defendant accepted to give the plaintiff good investment advice, and the fact that the plaintiff then, acting on that advice, invested the money which subsequently was lost. There is consequently no merit in what is contended for in paragraph 8 of the excep­tion.

[12] In paragraph 9 of the exception it was alleged that none of the grounds alleged for constituting a breach of the oral agreement are included in the terms of the mandate given to the first defendant. However, a comparison between paragraphs 13 and 16 of the particulars of claim reveals the contrary. Paragraph 13 contains the terms of the mandate and paragraph 16 contains the grounds upon which the mandate was breached. In evaluating therefore whether a cause of action has been disclosed, one has to compare and evaluate whether the breaches alleged in paragraph 16.1 to 16.7 can be traced back to the terms alleged in paragraph 13. An evaluation of these two paragraphs, namely 13 and 16, reveals that each of the subparagraphs in paragraph 16 can indeed be traced back to the terms of the agreement. For example:

12.1. The allegations in paragraph 16.1 of the particulars of claim can be traced back to what was alleged in paragraph 13.1.3;

12.2. The allegations in paragraph 16.2 of the particulars of claim can also be traced back to what was alleged in paragraph 13.1.3;

12.3. What was alleged in paragraph 16.3 can be traced back to paragraph 13.1.5;

12.4. What was alleged in paragraph 16.4 can be traced back to paragraph 13.1.2;

12.5. Paragraph 16.5 can be traced back to paragraph 13.1.5;

12.6. Paragraph 16.6 can be traced back to paragraph 13.1.5;

12.7. Paragraphs 16.7 and 16.8 can be traced back to paragraphs 13.1.3 and 13.1.5;

12.8. Paragraph 16.9 can be traced back to paragraph 13.1.6.

[13] In paragraph 10 of the exception certain features of the power of attorney are addres­sed by the defendants. The contention is that a power of attorney does not contain the name of the person who allegedly was supposed to register the bond. It is, with respect, in my view, irrelevant what is recorded or what is not recorded in the power of attorney, because in para­graph 16.1 of the particulars of claim the failure of the relevant defendants pertaining to the security is dealt with.

[14] In paragraph 11 of the exception the alleged shortcomings pertaining to the duty to register or to endorse the cession are dealt with. Again this is a matter dealt with in paragraph 16.5 of the particulars of claim and it is not necessary for the plaintiff to explain in the particulars of claim how and where the cession ought to have been endorsed and dealt with by the defendants. This is clearly a matter that could be clarified later with a request for further particulars, and it is clear that the defendants are in fact in a position to file a plea on the particulars of claim as they stand.

[15] In paragraph 12 of the exception a point is made that the plaintiff does not allege that the defendants were parties to the written agreements concluded between the plaintiff and Van Niekerk, and further that, the defendants knew or were aware of the terms of the written agreements.

[16] The simple answer to this point is that when reading the particulars of claim it is apparent that the relevant defendants were not supposed to be parties to the agreement concluded between the plaintiff and Van Niekerk. The allegation of the plaintiff against the defendants is that they advised the plaintiff to enter into an agreement with Van Niekerk so that the contention really is that the defendants should have known what was to be recorded in any investment agreement concluded between the plaintiff and Van Niekerk and should have assisted the plaintiff in ensuring that the agreements are properly drawn and that the plaintiff’s interests are fully protected. It becomes clear that it was consequently never contemplated that the defendants would be a party to such an agreement between the plaintiff and Van Niekerk.

[17] In paragraph 13 of the exception it is contended, towards the middle of the paragraph, that the plaintiff alleges that the damages are claimed on the basis that the plaintiff would have made the investment but would have enjoyed adequate alternative security. A reading of the particulars of claim however makes it clear that the plaintiff’s case is that if he was properly advised he would never have made the investment. A further contention is also made that the plaintiff does not allege that the parties actually or presumptively contemplated that such damages would probably result from the breach. The excipients allege that such damages are not general damages but extrinsic damages. Again, it is clear from reading the particulars of claim that the plaintiff is aware of this requirement pertaining to special damages. It was pertinently alleged in paragraph 22 of the particulars of claim that the damages were within the contemplation of the parties when the contract was concluded and that the contract was entered into on the basis of such knowledge. On this basis extrinsic damages may be recoverable. See: Holmdene Brickworks (Pty) Ltd v Roberts Construction Co Ltd 1977 (3) SA 670 (A) at 687 and Thompson v Barclays Bank DCO 1969 (2) SA 160 (W) at 164

[18] In the heads of argument filed on behalf of the excipients a point is taken that in the particulars of claim reference, in some parts, is made only to “the defendant” and there is no identification of which specific defendant reference is made to. An excipient is for purposes of the exception confined to the grounds of exception raised in the exception. See: Inkin v Borehole Drillers 1949 (2) SA 366 (A) at 373 Feldman No v Emi Music SA (Pty) Ltd; Feldman No v Emi Music Publishing SA (Pty) Ltd 2010 (1) SA 1 (SCA) at 5A. The fact that there was merely a reference in some parts of the particulars of claim to the defendant was not a complaint raised

in the exception. It therefore appears as if the excipients are now trying to allege that the particulars of claim are vague and

embarrassing. However, this was not the basis upon which the exception was taken. Defendants are in any event barred from now excepting on the basis that the particulars of claim are vague and embarrassing since they failed to comply with the requirements of the first proviso in Rule 23(1) of the Uniform Rules of Court.

[19] From all of the aforementioned considerations, this court arrived at the conclusion that there was no merit in the exception filed by the first to third defendants and that it ought to be dismissed with costs.

____

A M KGOELE

JUDGE OF THE HIGH

COURT

ATTORNEYS:

FOR THE PLAINTIFF : VAN

ROOYEN TLHAPI WESSELS

FOR THE DEFENDANT :SMIT

STANTON INC

( 1ST TO 3RD DEFENDANT)

: MINCHIN & KELLY ATT

(4TH TO 5TH DEFENDANT)

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