Lombard Insurance Company Ltd v McCrae (09093/2013) [2018] ZAGPJHC 497 (16 August 2018)

REPUBLIC OF SOUTH AFRICA

IN THE HIGH COURT OF SOUTH AFRICA

GAUTENG LOCAL DIVISION, JOHANNESBURG

Case Number: 09093/2013

Not reportable

Not of interest to other judges

In the matter between:

LOMBARD INSURANCE COMPANY LTD Plaintiff

and

GORDON ANDREW McCRAE Defendant

JUDGMENT

FISHER J:

Introduction

[1] This is an application in terms of rule 33(4). I will refer to the parties as “plaintiff” and “defendant. In essence, I am asked to decide whether a plea of prescription as well as other associated issues raised in the plea on the merits,

should be determined separately and first.

Background

[2] The plaintiff claims payment of R23 595 250 from the defendant. The obligation pleaded is accessory and has its origin in a principal liability which arises commonly known as an "on demand” guarantee. The guarantee was issued by the plaintiff in favour of Sociéte des Mines de Loula, SA (“SDML”) on behalf of MDM Ferroman (Pty) Limited (“MDM”).

[3] As part of the contractual arrangement between the parties involved, MDM executed a counter-indemnity in favour of the plaintiff. The defendant in turn executed a deed of suretyship in favour of the plaintiff in terms of which he bound himself as surety and co-principal debtor for payment to the plaintiff. It is this latter obligation which is the subject of the action in issue.

[4] The guarantees were called upon by SDML. There was a dispute raised by SDML in relation to the liability of the plaintiff to SDML. This dispute was referred to arbitration proceedings. Such arbitration proceedings were subsequently settled on the basis that the plaintiff made payment to SDML of a reduced amount of US$3 million (the obligation under the guarantee being US$7 million).

[5] The plaintiff pleads that, in the circumstances, MDM became liable in terms of the counter indemnity. In 2006 in MDM was liquidated. The plaintiff claimed payment from defendant in accordance with the deed of suretyship.

The issues which are sought to be separated

[6] The defendant relies on a special plea of prescription in addition to its claim on the merits. The plea of prescription is based on the fact that demand was made upon the guarantee on January 2006 and the contention that it was on this date that the plaintiff became entitled to claim payments from MDM and from the defendant under the suretyship. The summons was served on 13 March 2013 which is seven years after the date of the 2006 demand. The defendant contends that the claim against him has thus become prescribed.

[7] There are further issues which are also singled out in this application for separate determination. Such issues emerge from what is pleaded in paragraphs 21, 22, and 25 of the defendant’s plea. In these paragraphs the defendant pleads that his position was prejudiced in that the plaintiff paid under the guarantees when it was not obliged to do so.

[8] There is a further complication raised in relation to this obligation to pay. The amount paid allegedly under the guarantee was paid at a time when the plaintiff and SDML were involved in litigation relating to the obligation to pay. There was then a settlement agreement entered into in the course of this litigation and the payment was made pursuant to this settlement. The defendant alleges that this payment was made in accordance with the settlement and that it was not made under the guarantee.

[9] The plaintiff contends that the proposed separation is appropriate and convenient. It argues that the liability under the guarantee is not assailable with reference to any underlying cause for the guarantee. It argues that the fact that there was compliance with the terms of the guarantee meant that there was liability thereunder and that this can and should be dealt with separately.

[10] The defendant appeared in person. He argued that the factual complex relating to the pleas of prescription and the plea on the merits was so significantly interwoven as to make it convenient to deal with all the issues in one hearing. He argued that it was necessary, inter alia, that the payments under the settlement agreement could be understood with reference to the relative obligations of the parties.

Relevant legal principles

[11] In the case of Denel (Edms) Bpk v Vorster[1] Nugent JA stated:

“In many cases, once properly considered, the issues will be found to be inextricably linked, even though, at first sight, they might appear to be discrete. And even where the issues are discrete, the expeditious disposal of the litigation is often best served by ventilating all the issues at one hearing, particularly where there is more than one issue that might be readily dispositive of the matter.”

[12] In Consolidated News Agencies v Mobile Telephone Networks[2] and in relying on the aforesaid passage in Denel the following comments were made ( per Navsa JA and Hurt AJA):

“[89] Before concluding, we are constrained to make the comments that follow. Piecemeal litigation is not to be encouraged. Sometimes it is desirable to have a single issue decided separately, either by way of a stated case or otherwise. If a decision on a discrete issue disposes of a major part of a case, or will in some way lead to expedition it might well be desirable to have that issue decided first.

This court has warned that, in many cases, once properly considered, issues initially thought to be discrete are found to be inextricably linked. And even where the issues are discrete, the expeditious disposal of the litigation is often best served by ventilating all the issues at one hearing. A trial court must be satisfied that it is convenient and proper to try an issue separately.” (Footnotes omitted)

Discussion

[13] It seems to me that a hearing of the entire factual complex will be beneficial if not necessary for a proper determination of the

matter. The fact that the claim is based on a hierarchy of obligations which are part of a broader contractual context militates

against the granting of the order sought. I am not persuaded that a separation of the issues along the lines proposed by the plaintiff

will necessarily be more convenient than a holistic hearing. Nor am I persuaded that a holistic ventilation of all issues will result in a significantly more protracted determination of the issues. In fact, it seems inevitable that an attempt to try the proposed issues separately will lead to a broader enquiry.

[14] Thus I decline to exercise my discretion in favour of directing a separation at this stage of the proceedings.

Costs

[15] The attempt made to limit the issues was, to my mind, not without prospects. In the circumstances it is proper that the costs be determined after the final weighing of the issues.

Order

[16] I order as follows:

1. The application is dismissed;

2. The costs of the application are reserved for determination by the trial court.

________________________________

FISHER J

HIGH COURT JUDGE

GAUTENG LOCAL DIVISION

Date of Hearing: 31 July 2018.

Judgment Delivered: 16 August 2018.

APPEARANCES:

For the Plaintiff: Adv J Daniels SC.

Instructed by: Frese, Moll and Partners.

For the Defendant: The Defendant appeared in person..

[1] 2004 (4) SA 481 (SCA) at 485

[2] 2010 (3) SA 382 (SCA)