Standard Bank of South Africa Limited v Mare (21028/2012) [2014] ZAGPJHC 7 (8 February 2014)

REPUBLIC OF SOUTH AFRICA

IN THE SOUTH GAUTENG HIGH COURT

JOHANNESBURG

CASE NO: 21028/2012

DATE: 08 FEBRUARY 2014

In the matter between:

STANDARD BANK OF SOUTH AFRICA LIMITED.........................................Plaintiff

And

PETRONELLA JOHANNA ELIZABETH MARE..........................................Defendant

J U D G M E N T

THOMPSON, AJ:

[1] In this matter the plaintiff, the Standard Bank of South Africa Limited, claims damages for fraudulent misrepresentation from its erstwhile employee, Ms Petronella Mare, the defendant. Philken Building Construction (Pty) Ltd (“PBC”), a client of the plaintiff, was engaged in the business of property development. It went in liquidation in mid-1999 at about which time the plaintiff and the defendant parted ways.

[2] It is common cause that the defendant was employed by the plaintiff as a manager responsible for the banking relationship between the plaintiff and PBC and that her duties included the preparation of applications to the plaintiff on behalf of such clients for credit facilities and, once, approved to ensure compliance with the terms and conditions of the approved finance.

[3] The defendant in her plea amplified on what her duties were. She says that her main function was to confirm the existence of the relevant pre-sales of sectional titles units which involved auditing such pre-sales by inspecting and being satisfied that there existed: (i) a completed and signed offer to purchase agreement (“OTP”); (ii) proof of payment of the deposit amount as indicated in each OTP, and which amount had been deposited with The Real Mandate Company (Pty) Ltd (“Mandate) and/or the conveyancing attorneys which were to attend to the transfer of sectional title units; and (iii) a communication from a South African recognised financial institution, to confirmed that the application for bond finance by the purchaser/s had been approved in principle by such financial institution.

[4] The matter concerns the role played and representations made by the defendant to the plaintiff in securing finance for PBC for what was referred to in evidence as its Lakeside development which comprised a number of sectional title units.

[5] The provision of finance to PBD commenced with the defendant’s preparation a facility application, a copy of which, it is common cause, is annexed to the particulars of claim marked “POC1” (“the facility application”). She testified that she commenced preparing the document on the 1st of July 2008 but that thereafter it would have undergone a number of variations until it was finally signed by her on 11 July 2008. The defendant alleges that the facility application was prepared by her and by Mr Robert Pienaar her superior.

[6] The facility application was for a nine month development loan facility of R15, 100, 000 allowing for interest to be capitalised monthly. The purpose of the facility was to part finance the acquisition of properties, the installation of infrastructure and services, as well as the development of sixty sectional title units in Lakeview. The granting of the loan, according to the facility application was subject to a number of conditions, one of which was ‘Confirmation of pre-sales of 52 sectional title units with a minimum net sales income of R15,100,000 (after VAT, sales commission of 3% plus VAT), prior to the first draw on the facility being authorised.’ Later on in the same facility application it is stated under the heading ‘Market/Saleability’ that ‘The sale prices for the units vary between R339, 000 and R339, 500 per unit. The client already sold out the development, which reflects that the market prices are acceptable in the market’. The same representation is repeated later: ‘Pre-sales will cover the loan facility, however this development is sold out.’ The facility application concludes with the comment by the defendant that ‘We recommend that PFD [Property Finance Division] grant a loan facility in the amount of R15, 100, 000 (Fifteen Million One Hundred Thousand Rand), subject to the terms and conditions per paragraph 5.’ The pleaded defence was that the representations were true.

[7] In order to prove the representations were untrue and that there had in fact been no pre-sales the plaintiff called a number of witnesses. The first witness was Mr Pello, a liquidator of PBC, who testified that he had not seen any pre-sales agreements, was not aware of any deposits made in terms of such pre-sales agreements, and had not received any objections to the sale of the development by any purchasers of units therein.

[8] Then the plaintiff called a Mr van Heerden, a practising attorney. The relevance of his evidence, in part at least, lay in the further particulars provided by the defendant in answer to the following two questions:

‘Does the defendant allege that she was provided with proof of payment of the deposit amount as indicated in each OTP which she examined?

If so, what precisely did such proof consist of in each instance? If such proof was written, a copy of the writing is required.’

[9] The answer to the first question was in the affirmative and the answer to the second question was:

‘Receipts issued by Mandate and/or its attorneys Dykes Van Heerden and/or EFT bank confirmation payments (to Mandate as and/or Dykes Van Heerdent and/or bank confirmation payments (to Mandate and/or Dykes Van Heerden) and/or deposit vouchers indicating payments to Mandate and/or Dykes Van Heerden.’

[10] Mr van Heerden, of Dykes Van Heerden, said he never received any such deposits. I have no reason to disbelieve him.

[11] The plaintiff called Mr van der Merwe, also a qualified attorney, who said he was briefed to proceed with the opening of the sectional title register for the Lakeview development, but, that as a matter of practice, this would usually only be opened on the first transfer of a unit. There were, according to him, no transfers of any units in the Lakeview development.

[12] The defendant’s attorney, Mr Cameron, who appeared for her at the trial, accepted down the line that the Lakeview development had not been fully sold out and that there were in fact no pre-sales as contemplated in the facility application. The representations in the facility application were indubitably misrepresentations as the defendant was driven to concede, a belated stance that was diametrically opposed to her pleaded case that the representations were true.

[13] It is common cause on the pleadings that Mr Harty, an employee of the plaintiff, believed the defendant’s representation in the facility application that the development had been sold out and acted thereon. Mr Harty was also called to give evidence on behalf of the plaintiff. He was superior to the defendant in the plaintiff’s employment structure. He was referred to the various representations in his evidence in chief. His evidence made it clear that when he considered the facility application he regarded these representations as being material and that without pre-sales in the amounts expressed having in fact been achieved, the prospects of the application being supported by him or anybody else in the plaintiff acting in his position at the time would be high unlikely, if not nothing. I found him to be a reliable witness. In my opinion, the representations are self-evidently material.

[14] Having considered the facility application and acting on the strength of the representations contained therein, Mr Harty appended his signature to the application in support thereof on 11 July 2008. He added:

‘Experienced developer. Good guarantor backing and owner of the construction company. Pre-sales driven. Lower end of the market. Small units. Supported [Development a mirror of “Honeydew”]’.

[15] Clearly the fact that the development was pre-sales driven was material for him lending his support to the application. He explained that after he had appended his signature in support of the facility application it was forwarded to Credit.

[16] Ms Naidoo was the head of the Credit Department and her decision was final. On the pleadings it is common cause that she believed the representation that the Lakeview development was sold out and she acted upon the representation. She was also called as a witness and I found her too to be a reliable witness. Her evidence, in summary, was that she, having been employed by the plaintiff since 1980, in her capacity as head of Credit Evaluation Management considered the facility application and regarded the representations as to pre-sales as material. She as the ultimate decision maker in the plaintiff’s hierarchy in regard to this application then agreed to the granting of a facility by appending her signature thereto on 14 July 2008, adding the comments:

‘Client well known to SBP (Standard Bank Properties)

The property is in a good location.

Deal is fully pre-sale driven.

The aspects of LGD (loss given default), PD (probability of default), EAD (exposure at default) and ROE (return on equity have been suitably covered and acceptable.

Agreed subject to FICA, and favourable bank reports.’

[17] She explained that thereafter the agreed facility application would be referred to the Legal Department and that they, and this is common cause, on the same day issued the facility letter, a copy of which is attached to the particulars of claim, dated 14 July 2008, marked “PC2” (“the facility letter”). It was a term of the facility letter that the plaintiff would not be obliged to make any advance under the facility letter until the plaintiff had received confirmation to its satisfaction of acceptable pre-sales of 52 sectional title units with net sales income of at least R15 100 000.

[18] The next important step in the chronology of events leading up to the next set of misrepresentations is the audit of the pre-sales which lay at the heart of the matter. Pre-sales were defined as having at least three (there were more) essential characteristics which coincide exactly with what the defendant says she was obliged to establish during her audit of pre-sales, essentially, that the sale agreement, OTP, in question had been concluded, that the deposit had been paid, and that a financial institution had agreed to provide finance.

[19] The defendant’s evidence in chief, when she testified the first time, was that about the end of July or the beginning of August 2008 Mr Vickers, of The Real Estate Mandate Company (Pty) Ltd (“Mandate”) which was responsible for the marketing and sale of the units in the Lakeside development, telephoned her and told her that he was ready for her to attend the audit, but when she went to his office, he was not ready for her. Approximately a week and a half later, Mr Vickers again telephoned her to tell her that he was ready for the audit to take place. She attended at his office where she was presented with a box containing documents which he took out and placed on his desk while he worked at his computer. After giving her the documents, he printed a copy of a spreadsheet which he handed to her to enable her to complete the audit. She proceeded to verify the documents against

the spreadsheet ticking off items on the spreadsheet. It should be mentioned that although the defendant’s attorney, Mr Cameron,

advised that the defendant would say that Mr Vickers emailed her the spreadsheet prior to the meeting (and this was what was put to Mr Vickers) the defendant made no mention of the emailing of the spreadsheet to her when she gave evidence for the first time. Her evidence in regard to how the audit was carried out was fairly detailed.

[20] Mr Vickers, who was called by the plaintiff and gave evidence before the defendant gave her evidence, denied the defendant’s version of events concerning the alleged audit carried out by the defendant. According to him there was no such audit, there were no pre-sales to audit and he did not email any spreadsheet containing the details of the alleged pre-sales to the defendant.

[21] Mr Cameron put to Mr Vickers, on the second day of the trial that he had a ‘...a black secret...’ namely that ‘Ms Mare now believes that these documents that were shown to her by [by Vickers] were false OTPs [offers to purchase] where he played a hand in it, either in compiling thereof personally or getting other staff to do it’. The documents which Mr Cameron put to Mr Vickers were forged, were confined to the OTPs. This line of defence was completely at variance with the defendant’s pleaded defence.

[22] The defendant was recalled. In her evidence then she said that she was emailed the spreadsheet by Mr Vickers and that she saved it in a file named Gavin (Mr Vicker’s first name). She attended the premises of the plaintiff in order to attempt to retrieve this email, the drawdown applications for Lakeview and the record of her disciplinary inquiry. None of these were found. She said, in summary, that these files had been wiped out and that she was told that her files which she was able to recover had been reconstructed.

[23] The misrepresentations contained in the facility application, were, after the alleged audit, repeated and perpetuated in the further documentation that was required by the plaintiff before physically advancing the funds under the facility letter. These

misrepresentations were contained in a document termed the Building Conditions Checklist (“the checklist”).

[24] It is common cause on the pleadings that on or about 19 August 2008 the defendant represented in the checklist, to Mr Pienaar, on behalf of the plaintiff, that PBC had achieved 52 acceptable pre-sales of sectional title units with a net sales income of at least R15 100 000 in accordance with the requirements of the facility letter. It is also common cause on the pleadings that Mr Pienaar, on behalf of the plaintiff, acted upon this representation and on the strength thereof approved the checklist.

[25] Ms Griffiths, a credit compliance manager within the plaintiff, who was called by the plaintiff gave evidence to the effect that she considered the quantity surveyor’s report in confirming her support of the first drawdown under the facility.

[26] Ms Naidoo, as head of Credit as far as this facility application is concerned, on or about 19 August 2008, considered the Building Conditions Checklist which was signed by the first defendant and which expressly stated that PBC had achieved 52 acceptable pre-sales with a net income of at least R15 100 000 in accordance with the facility letter. On the strength of this document, and after confirmation from two Credit representatives that the request for payment had been approved and all the terms and conditions had been complied with, she agreed to the payment of the first draw down under the facility agreement. She pointed out that her authorisation was important for it was the first advance. There would have to be confirmation of the terms and conditions for that advance, including confirmation of the pre-sales.

[27] The misrepresentation that all the terms and conditions of the facility letter had been complied with was repeated in the declaration which the defendant signed for the first drawdown under the facility. Had the first advance not been made, the further advances under the facility letter, which totalled about R14 million, would not have been made either. It is common cause on the pleadings that during the period from 30 July 2008 to 15 December 2008 the plaintiff allowed PBC to make the following six draw downs on the facility totalling R13, 870,000 (R9, 355,079.74 on 27 August 2008; R2, 330,431.13 on 26 September 2008; R927, 175.78 on 13 October 2008; R479, 484.38 on 27 October 2008; R657, 806.97 on 28 November 2008 and R120 000.00 on 15 December 2008). The evidence of the plaintiff’s witnesses, Ms Naidoo, Ms Griffiths and Mr Pienaar, was to the effect that when the subsequent draw downs were approved they were approved on the basis that the representations as to the pre-sales were true.

[28] In short, the representations, contained in the facility application and the confirmed checklist, were material and induced the plaintiff to grant the facility application, to approve the checklist and to approve the subsequent drawdowns thereunder. At the heart of all of this was the representation that the requisite pre-sales were in place, which they were not.

[29] As the matter progressed the defendant was driven to concede that there were in fact no pre-sales that she had allegedly audited and that the representations in the facility application, the checklist and the correspondence leading up to the first draw down (which representations also formed the basis of the subsequent drawdowns) were not true, as she had originally pleaded, but were false: they were misrepresentations.

[30] The defendant having had to concede that the development was not sold out and that there were in fact no pre-sales was driven to embark upon two new defences, neither of which was raised in her plea as originally formulated and neither of which, in my view, have any merit. Both of the new defences assume that the representations were not true, that is that they were misrepresentations; about that there can be no controversy.

[31] The first new defence was a defence anticipated in terms of the defendant’s application for leave to amend which was served on the plaintiff’s attorneys on the evening of the first day of trial. In terms of that notice of intention to amend she sought to introduce a defence based on the allegation that by appending her signature to the checklist she only confirmed that she had checked the documents in the paragraph indicating the “Pre-sales” and three other categories of documents provided for opposite clauses 6.4.1, 6.4.2 and 6.5.2 in the checklist. In that notice she sought to introduce a paragraph in which the ‘Defendant records that all of the other initials under the column titled ‘PFC’ in [the checklist] are not hers and presumes that these are the initials of Robert Pienaar who falsified the initials of the Defendant to appear to be those of the Defendant when they were not so.’

[32] The notice went on to record that the various other conditions for the advance of facilities, such as for instance, an approved site development plan, had not been satisfied. The defendant in the notice intended to deny that the documents other than those checked by her ever existed and that, accordingly, the conditions to which these documents relate ‘were not met and accordingly the Plaintiff should not have paid any draw amounts to PBC’.

[33] In short, the defendant sought to raise a defence that the relevant documents relating to conditions other than those for which satisfaction she had vouched did not exist, that these other conditions were not fulfilled and that as they were not fulfilled ‘the Plaintiff, and more particularly its various departments, should never have authorised any draw down payment amounts to PBC and accordingly’, the defendant suggested, there would be no claim against her.

[34] The attempt to raise this novel defence was made late in the day, during the trial, without any affidavit in support of the allegations contained in the notice, which included an allegation of fraud against Mr Pienaar, and without any proper explanation as to why it was only raised during the course of the trial and not earlier. I refused this first application for leave to amend.

[35] Moreover, the anticipated defence appears to be legally misconceived. At the risk of stating the obvious, the plaintiff’s claim is one in delict based on fraudulent misrepresentation; it is not a claim for specific performance of a contract which would usually require satisfaction of all the suspensive conditions. Given the nature of the plaintiff’s claim, the satisfaction or otherwise of the contractual conditions attaching to the facility with PBC is in itself irrelevant. The nature of the anticipated defence raised in notice is far from clear.

[36] The issue of causation, factual or legal, is not even mentioned; and by legal causation I intend to refer to the issue of whether or not a plaintiff’s conduct is sufficiently closely related to the damage as to be regarded as the legal or proximate cause. Nor is it clear whether the defendant intends to assert that the plaintiff was negligent in paying out when the conditions had not been satisfied or perhaps that it was subject to fraud/s perpetrated on it by its other employees No reliance placed on the Contributory Negligence Act, 34 of 1956, which raises its own issues.

[37] One just does not know what the nature of the intended defence is. The obscure nature of the pleaded defence was in itself, in my view, a good ground for refusing the application to amend in terms of the first notice. I would go so far as to say that the nature of the intended defence is so opaque as to render it excipiable.

[38] To have allowed a defence of this nature of would, in my view, have been severely prejudicial to the plaintiff given that it would not have been able to prepare to meet it, not at least without further clarification of what the defence was all about. (An affidavit from the defendant might have helped, but that was not forthcoming.)

[39] Be that as it may, Mr Cameron, for the defendant, said on the third day of the trial that he no longer persisted with that amendment and he would argue the point as if it were one of exception. This attitude calls into question of whether or not the defendant is as a matter of procedure entitled to rely on this defence which has not been pleaded.

[40] Insofar as the defendant wished to argue the matter on a pure exception basis then any evidence in support of the point would be irrelevant. Exception procedure is only appropriate if the pleading itself is legally objectionable; the court is not concerned to look at any facts.

[41] Insofar as the defendant did wish to rely on any evidence in support of this defence then the short answer to the defence is that it was not pleaded and accordingly the defendant cannot rely on it. What was advanced on behalf of the defendant appeared involve a reliance upon both fact and law, although the defence still eludes me.

[42] In any event the issues raised by the defence of non-fulfilment of all the conditions for an advance under the facility were certainly not properly canvassed in evidence with the plaintiff’s witnesses. Given the obscure nature of the defence it is not clear precisely what was to have been canvassed with the plaintiff’s witnesses.

[43] Mr Cameron suggested that as far as the new defence based on non-satisfaction of the conditions for advance was concerned, the plaintiff bore the onus of proving positive satisfaction of each condition stipulated in the facility letter. He advanced this contention on basis of the defendant’s broad denial in the plea that the plaintiff suffered damages as a result of acting upon the misrepresentations, even though the plea does not mention the alleged non-satisfaction of the other conditions which have nothing whatsoever to do with the misrepresentations with which we are concerned in this matter.

[44] His argument was that the plaintiff had to prove positive satisfaction of each condition, even though this was not specifically raised in the plea. I do not agree; otherwise I would be effectively condoning a trial by ambush. If the defendant wished to raise a defence based on non-satisfaction of the other conditions (and the legal relevance of such an allegation remains unclear) then at the very least the pleadings had to raise this issue. Only then, when the nature of the defence was clarified, if it could be, would it be appropriate to address and determine the issues of onus or the duty to adduce evidence in rebuttal.

[45] For these reasons alone the first new defence as formulated in the first notice should not be entertained and should be dismissed.

[46] At the resumed hearing of this matter in January 2014 the defendant made an application to call Mr Pello, the liquidator of PBS whom the defendant had already cross-examined. The purpose of his evidence, I was informed, was to prove that one of the conditions for the granting of the facility had not been fulfilled. That evidence is irrelevant to any pleaded issue and the application was dismissed. The evidence would not, in my opinion, be admissible on the basis that this issue had already been canvassed properly with all the witnesses with whom it should properly have been canvassed. It was not.

[47] Although in view of what I have said above, it is not strictly necessary to have regard to the evidence, in case there may be any doubt as to the correctness of the decision dismissing the first new defence based on the non-fulfilment of conditions, it might be useful to point out that the defendant, in her own evidence, was emphatic that by the time she appended her signature to the checklist all the conditions for the advance of the facility had been met; indeed, she explained that, Mr Pienaar, her senior, would never have signed off on the checklist if they had not been. She accepted that if he signed then all was in order and it would appear to be utterly irrelevant as to who in the plaintiff’s administration checked precisely what. There was no suggestion by her in evidence that Mr Pienaar acted fraudulently or improperly. That allegation was not persisted with.

[48] The first new defence which at first appeared to be based on the fraud of Mr Pienaar was still born. But then the defendant raised another defence, also base on fraud, but this time the fraud of another third party, namely Mr Vickers of Mandate. An application to amend to introduce this defence was dismissed first time round, but the same defence was later resurrected in the circumstances dealt with below.

[49] The defendant moved for an amendment by the addition to the plea of a new paragraph 45 to read as follows:

‘45. In the event that it is determined that PBC had not sold out the Lakeview development and/or PBC had not sold 52 acceptable pre-sales of sectional title units with a net income of at least R15 100 000 and that the representations by the Defendant to the Plaintiff in this regard were incorrect, then the Defendant avers that:-

45.1 all her representations to the Plaintiff were innocent;

45.2 she was misled by Vickers, representing PBC, who produced for the purposes of the pre-sales audit by the Defendant documents which were false;

45.3 the Defendant was not aware, and could not reasonably have been aware, that the documents produced by Vickers were false.’

[50] I refused the amendment to introduce this second new defence primarily because there was no affidavit evidence to explain why this new change of tack had occurred, why it was brought at such a late stage and also because it appeared to me to be too vague. The documents which were allegedly false were referred to in the vaguest of terms. Mr Cameron’s attitude was that he would renew his amendment after the defendant had given her evidence.

[51] Mr Cameron at that stage also made an application to recall Mr Vickers (who, as mentioned above, denied that any audit on the pre-sales was carried out because there were no pre-sales) to put to him that he had falsified all the documentation which formed the basis of the audit. I refused this request primarily because the version to be put to him was irrelevant as it was not pleaded and the application for the amendment had not been granted for the reasons stated above.

[52] The second new defence, what was called the “duping defence”, was later read directly into the record by the defendant from her original application to amend. At the resumed hearing in January 2014 I raised the issue of the introduction of the duping defence with the parties. Mr Rubens SC representing the plaintiff indicated that it could be treated as if it were part of the pleadings, although there had been an objection to it at first. Of course, this does not mean that there was any concession that the issue had been properly canvassed in evidence, which it was not. It was sensible allow the issue to be raised thereby avoiding any further waste of time on interlocutory applications. Mr Ruben’s attitude to the duping defence was fully set out in his heads of argument which assumed that the defendant would advance it at the resumed hearing, which heads I am grateful for having received before the resumed hearing as I had requested.

[53] The onus rested on the defendant to prove the alleged fraud on the part of Mr Vickers, that is to prove that he produced 53 sets of fraudulent documents, 159 in total, each set comprising a signed OTP, some form of proof of payment of the deposit, and confirmation from a financial institution that it would finance the purchase, being the three types of documents the defendant said she would audit. In my view the defendant has failed to prove the alleged fraud on the part of Mr Vickers.

[54] There are a number of established objective facts which suggest that the second defence was something of a last minute manufacture. First, there is no acceptable explanation as to why it was only raised well into the hearing. The defendant sought to persuade the court that it was only after she had heard the evidence of certain of the plaintiff’s witnesses that she realised, as Mr Cameron put it, ‘she had been duped’. This version does not square with her other evidence that she realised that there were in fact no sales when the action was instituted against her and she signed for it. She says she telephoned Mr Laubscher of PBC who told her there were no pre-sales. She also said that when Mr Laubscher told her there were no pre-sales, she nevertheless ‘believed that there were sales until it was proved otherwise to me’; but she went on to say that it was proven otherwise to her when Mr Cameron told her that there were no pre-sales at a coffee shop one day in 2012. There is no satisfactory explanation as to why this second defence was not introduced long before the commencement of the trial. It was not even raised in the first notice of intention to amend, dealt with above.

[55] Second, this defence was not properly canvassed with Mr Vickers whom the defendant accuses of fraudulently manufacturing 159 third party documents. All that was put to him was that he had a black secret and that he had forged the OTPs; no mention was made of the other documents, the deposit slips which would have to have been forged as emanating from the purchasers or their banks, and the documents from the financial institutions recording their willingness to finance the purchasers of the sectional title units. Mr Cameron in fact advised the court after the application to amend was dismissed for the first time, but after the defendant had given some evidence that she had been duped by reading the notice of intention to amend into the record, that he did not wish to have Mr Vickers recalled so that he could put to him that the defendant would say that he forged all the documents, not just

the OTPs.

[56] Third, the defendant gave no account of how she thought Mr Vickers had forged all the documents which she alleges were handed to her for the purpose of the audit. No such account was canvassed with Mr Vickers. It would seem to me that it would be no easy task to successfully forge that number of different documents.

[57] Fourth, this forgery defence was not put to the plaintiff’s other witnesses at all, as I believe it should have been. I would have been interested to hear what somebody like Ms Naidoo, as head of Credit and who had been employed by the plaintiff for 20 years or so, would have said about the possibility of successfully creating 159 forged documents that would pass muster as the real thing after a bank audit such as that the defendant should have carried out.

[58] Fifth, the defendant failed to establish any motive for Mr Vickers committing the fraud.

[59] Sixth, unlike Mr Vickers whose evidence I did not have reason to question, I did not find the defendant to be a reliable witness. She was not only prone to emotional and highly contemptuous outbursts, her evidence was not consistent and her answers were often not to the point, but lengthy and evasive and, at times, simply incomprehensible.

[60] As to the defendant’s motive for perpetrating the fraud on the plaintiff, I was referred to certain documentary and untested evidence which it was contended, suggests that defendant, or her family, benefitted financially and improperly from their relationship with Mr Laubscher, who effectively controlled PBC. The evidence in this regard, though it might give grounds for suspicion and although touched on, was not canvassed in depth. The evidence that did illicit answers was confusing and in my view inconclusive. I accordingly make no finding in this regard.

[61] Nevertheless, for the reasons stated above, the second defence must fail and the plaintiff is entitled to a judgment in its favour on the basis that it has established the fraudulent misrepresentations which caused it financial loss.

[62] That then leaves the question of costs. It seems to me to be fair to treat all the costs occasioned by the interlocutory applications for amendments, for the issuing of a warrant of arrest, and for the recalling of witnesses as being costs in the cause. As to the scale of costs, the plaintiff, having established fraud, the appropriate scale is attorney and client scale.

[63] Mr Rubens for the plaintiff said that the matter warranted the employment of two counsel. Although at first I was hesitant to grant the costs of two counsel, it seems to me to be appropriate in view of the following: first, the defendant did not object to the costs of two counsel (Mr Cameron made no submissions at all as to costs); second, the case may have started life as involving only one crisp issue - it ended with life tangled in numerous issues; third, the amounts involved, although not huge in today’s litigation terms, are not insubstantial; fourth, the defendant, despite being provided with a trial bundle prior to the hearing of this matter for the purposes of it being supplemented, insisted on a separate bundle being created containing every discovered document (which was not referred to during the trial); fifth, as there were disputes about what was or was not said or put, the record had to be transcribed and considered, which would also have had to be considered for the purposes of argument.

[64] The plaintiff is in my view also entitled to the costs of the interpreter. Having given evidence in English the previous day the defendant, through Mr Cameron, requested an English - Afrikaans interpreter for the purpose of having the questions put to her in Afrikaans. The services of an interpreter then having been obtained, the questions were asked by Mr Rubens in English, translated into Afrikaans, and then answered by the defendant in an Afrikaans that was so peppered with English that it was more of a hybrid than Afrikaans. Then after cross-examination, Mr Cameron commenced his re-examination in English, despite the presence of the interpreter. When this was pointed out to him the laborious translation process began afresh. I do not believe that the defendant did not understand the questions put to her in English, which she was free to answer in Afrikaans. In all the circumstances the defendant, although entitled to an interpreter, should bear the costs of the interpreter in the amount of R1000.00.

[65] The plaintiff has argued that the defendant should bear the costs associated with the defendant’s Notice in terms of Rule 36(6) which could have been avoided, which contention Mr Cameron has not disputed. In the circumstances the plaintiff is entitled to these costs too.

[66] As mentioned above, it is common cause that the plaintiff advanced the sum of R13, 870,000 under the facility letter. Arising from the liquidation of PBC the plaintiff has been paid three liquidation dividends aggregating R480, 979.66, by which amount the sum of R13, 870, 000.00 falls to be reduced. There also exists the real likelihood that the plaintiff will be paid further liquidation dividends arising from the sale of the development. I will adapt my order accordingly, on the basis that it is open to either party to approach me, on reasonable written notice to the other party, should any complication arise in regard to carrying out this order, including the timing of the sum owed by the defendant and the timing of future payment of dividends.

[67] I make the following order:

67.1 The defendant is to pay the plaintiff the sum of R13, 389, 020.34, less any liquidation dividends paid to the plaintiff arising from the liquidation of Philken Building Construction (Pty) Ltd (in liquidation);

67.2 Interest on the said sum at the rate of 15.5% from the date of this judgment;

67.3 Costs of suit on the attorney and client scale, such costs to include the costs of two counsel, and including:

67.3.1 The costs of photocopying and preparing (including indexing and paginating) the defendant’s trial bundle consisting of three lever arch files;

67.3.2 The costs of an interpreter on 17 September 2013 in the amount of R1000.00;

67.3.3 The costs associated with the defendant’s Notice in terms of Rule 36(6);

67.3.4 The costs of the defendant’s applications for amendment on 12 September 2013 and 16 September 2013;

67.3.5 The costs of the defendant’s application for the warrant of arrest on 23 January 2014;

67.3.6 The cost of transcription of the record of the proceedings in the amount of R10, 944.00.

A THOMPSON

ACTING JUDGE OF THE SOUTH GAUTENG

HIGH COURT, JOHANNESBURG

COUNSEL FOR PLAINTIFF

INSTRUCTED BY

COUNSEL FOR DEFENDANT

DATE OF HEARING

DATE OF JUDGMENT