Standard Bank of South Africa Limited v Starpack Manufacturers and Distributors CC and Others (49834/2011) [2017] ZAGPPHC 857 (21 November 2017)

REPUBLIC OF SOUTH AFRICA

IN THE HIGH COURT OF SOUTH AFRICA

GAUTENG DIVISION, PRETORIA

CASE NO: 49834/2011

DATE: 21 NOVEMBER 2017

NOT REPORTABLE

NOT OF INTEREST TO OTHER JUDGES

REVISED

In the matter between:

THE STANDARD BANK OF SOUTH AFRICA LIMITED Applicant

And

STARPACK MANUFACTURERS AND

DISTRIBUTORS CC First Respondent/Defendant

RUI FERREIRA GOAVEIA Second Respondent/Defendant

JACO CARLOS AGRELA BAUTISTA

GOAVEIA Third Respondent/Defendant

CUSTOM CAPITAL (PTY) LIMITED Fourth Respondent/Defendant

JUDGMENT

MOGAGABE. AJ:

INTRODUCTION

[1]

1.1 This is an application for joinder in terms of which the applicant seeks to join Custom Capital (Pty) Limited cited as the fourth respondent in these proceedings, as a fourth defendant in the pending trial action instituted by applicant as plaintiff against first to third respondents in this Division {hereinafter referred to as "the action" ). Custom Capital (Pty) Limited is opposing the Joinder application.

1.2 The application for joinder is sought pursuant to the provisions of Rule 10(3) of the Uniform Rules on the ground that the pending action depends upon the determination of substantially the same questions of law or fact, which if the fourth respondent (Custom Capital) was sued separately, would certainly arise in such separate legal action. Furthermore such joinder is sought on the bases of the common law grounds of convenience, the savings of costs and the avoidance of a multiplicity of actions.

1.3 For present purposes the applicant will be referred to as "Standard Bank'' and first respondent (first defendant in the action) as "Starpack'' whereas fourth respondent would be referred to as "Custom Capitaf'.

STANDARD BANK'S CAUSE OF ACTION AGAINST FIRST TO THIRD RESPONDENTS

[2] Standard Bank's cause of action against first to third respondents (cited as first to third defendants in the action) is founded on a rental agreement which Custom Capital ceded to Standard Bank. In terms of such rental agreement Custom Capital rented to Starpack

certain goods as more fully outlined herein below. In terms of such cession agreement Custom Capital ceded all its rights, title and interest and transferred ownership of such goods to Standard Bank. The second to third respondents/defendants were sued on the basis of having bound themselves as sureties and co-principal debtors to indemnify Custom Capital and pursuant to such cession agreement Standard Bank for the liabilities and obligations of Starpack arising from the rental agreement. Starpack had failed to make punctual payment of the requisite monthly instalments in terms of the rental agreement and as a result of such default was in breach of its obligations pursuant thereto, entitling Standard Bank as cessionary to cancel the rental agreement and instituted the action against first to third respondents for inter alia payment of such debts due by Starpack.

BACKGROUND

[3] On or about 15 January 2009 Custom Capital concluded a written rental agreement with Starpack in terms of which Custom Capital inter alia rented one new colour semi-automatic industrial printer and one new laminator ('the goods") to Starpack.[1] Custom Capital then ceded this rental agreement to Standard Bank in terms of a cession agreement.[2]

[4] In consequence of the cession of the rental agreement Standard Bank paid Custom Capital for such ceded rental agreement.[3]

[5] Custom Capital delivered to Standard Bank the rental agreement and a document entitled ''Contact and Installation Confirmation" , in terms of which Starpack confirmed that the goods had been delivered and installed by Custom Capital in accordance with the terms and conditions of the rental agreement, as well as a document entitled " Installation and Verification Affidavit' evidencing the fact that the owner of the goods confirmed the existence of all the equipment listed on the invoice and confirmed that the goods are at the premises of Starpack; and finally proof of payment to the owner of the goods for the goods[4] a copy of which is Annexure "JA4".

[6] In terms of this cession agreement concluded between Custom Capital and Standard Bank. Custom Capital ceded to Standard Bank all its rights of ownership in the goods so that it will become owner thereof. It is imperative to quote inter alia quote the following clauses of the cession agreement in terms of which Custom Capital warranted, represented and undertook to Standard Bank that:

(a) The fourth respondent [Custom Capital] will have and will by cession of the contract [rental agreement] pass to the applicant [Standard Bank] valid and absolute title to the goods so that applicant [Standard Bank] will become the owner of the goods on that date and no person will have any basis for asserting the contrary (clause 5.1.2);

(b) The fourth respondent [Standard Bank] will pass good, valid, free and unencumbered transferable right, title and interest in and to the contract and the goods to the applicant [Standard Bank]. Neither the contract nor the goods will be the subject of any lien, right of retention or pre-emption, cession, pledge, hypothec or other encumbrance or security interest whatsoever of or any claim or attachment by or in favour of any other person (clause 5.1.4);

(c) Neither the fourth respondent [Custom Capital] nor the Customer [Starpack] will be in breach of any of their respective obligations in terms of the contract or in law and in particular the Customer will have paid the initial rental/payment (if any) in terms of the contract (clause 5.1.6);

(d) Complete delivery has been made and unqualified acceptance taken of the goods by the Customer subject to the terms and conditions of the contract (clause 5.1.13).

(e) The fourth respondent [Custom Capital] indemnified the applicant [Standard Bank] and held it harmless against any loss or expense arising out of, or in connection with, or which may be sustained, or incurred by the applicant [Standard Bank] as a direct or indirect consequence of any breach by the undertakings of the fourth respondent [Custom Capital} in terms of the cession agreement or any cession pursuant thereto including but not limited to any negligent misrepresentation by the fourth respondent [Custom Capital] to the applicant [Standard Bank] (clause 6.1).

[7]

7.1 During August 2011 Standard Bank issued summons against the first, second and third respondents to the effect that in terms of the rental agreement Custom Capital rented the goods to Starpack for a period of 60 months commencing on 15 January 2009 and that Starpark would repay the monthly instalments payable in terms of the rental agreement to Standard Bank (pursuant to the cession) in the following terms: 60 payments inclusive of VAT at R11 959,07 each at monthly intervals commencing on 15 January 2009.

7.2 That Starpack had breached the rental agreement in that it failed to make punctual payments in terms thereof and that as at 3 August 2011, Starpark was in arrears with its monthly rentals in the sum of R344 703,35, and pursuant to such breach, Standard Bank cancelled the rental agreement and instituted the action against Starpack and the second and third respondents who bound themselves as sureties and co-principal debtor for the payment when due of all present and future debts of Starpack to Standard Bank pursuant to the cession.

DEFENCES RAISED BY FIRST. SECOND AND THIRD RESPONDENTS

[8] Starpack and second respondent delivered their plea whereas third respondent delivered a separate plea. In their respective pleas resisting the action Starpack, second and third respondents raised the following defences to Standard Bank's claim:

8.1 The alleged owner of the goods, one "D Visagie" was not in fact the owner of the goods and as such Custom Capital never acquired ownership thereof and consequently could not have transferred ownership of the goods to Standard Bank.

8.2 In consequence thereof Standard Bank never acquired ownership of the goods and as such it could not rent the goods to Starpack and thus the first to third respondents never obtained undisturbed possession and use of the goods.

8.3 Standard Bank filed two replications to these pleas to the effect that Starpack, second and third respondents are estopped from denying receipt of the goods, which replications are conditional i.e. filed or applicable in the event of the trial court finding that there was no delivery of the goods.

8.4 I interpose to point out that nowhere in the papers has Custom Capital confirmed or conceded that:

8.4.1 it did not acquire ownership of the goods;

8.4.2 it did not deliver the goods to Starpack;

8.4.3 that Starpack did not acquire use and possession of the goods.

BASIS OF STANDARD BANK'S CLAIM AGAINST CUSTOM CAPITAL

[9] In anticipation of the joinder application, Standard Bank has prepared a Notice of amendment in terms of which it intends amending

its particulars of claim to include a claim against Custom Capital predicated on its breach of the cession agreement and particularly

the warranties contained therein on the basis that it failed to pass to Standard Bank a valid and absolute title to the goods so that Standard Bank would become the owner of the goods on that date and no person will have any basis for asserting the contrary (as per clause 5.1.2 afore-quoted), as well as having failed to pass good, valid, free and unencumbered transferrable right, title and interest in and to the rental agreement and the goods to Standard Bank and its obligations in terms of the cession agreement by indemnifying Standard Bank in terms of clause 6.1 thereof for any loss suffered by Standard Bank as a direct or indirect consequence of any breach of its undertakings by Custom Capital pursuant to the cession agreement.

GROUNDS FOR JOINDER

[10] Standard Bank. contends that it is in its interest to join Custom Capital to the action on the basis that in the event of first to third respondents succeeding in their defence in the action that the goods were never in actual fact delivered to Starpack and/or

ownership thereof never passed to Custom Capital and consequently to Standard Bank, Standard Bank's claim against them will fail as a result of the failure of Custom Capital to comply with the rental cession agreement. As such Standard Bank is entitled to join Custom Capital as the fourth defendant in the main action.

BASIS OF RESISTANCE OF THE JOINDER APPLICATION

[11] Custom Capital is resisting the joinder application on the basis that:

11.1 Any claim that Standard Bank may have against it has prescribed; and

11.2 It is not convenient to join Custom Capital to the action.

[12] In essence Custom Capital is raising the defences of prescription and the lack of convenience to the joinder application. I turn now to deal seriatim with the propriety or validity in law and in fact of such defences to the joinder application.

[13] The application for joinder of Custom Capital in casu is regulated by the provisions of Rule 10(3) of the Uniform Rules of Court. I deem it apposite for present purposes to quote the

provisions of Rule 10(3) of the Uniform Rules of Court to the following effect:

"10(3) Several defendants may be sued in one action either jointly, jointly or severally, separately or in the alternative, whenever the question arising between them or any of them and the plaintiff or any of the plaintiffs depends upon the determination of substantially the same guest;ons of law of fact which, if such defendants were sued separately, would arise in each separate action." (my underlining/own emphasis)

PRESCRIPTION

[14] Mr. Pillemer on behalf of Custom Capital contended that Standard Bank was aware of any claim against it "around the end of 2009 or early 2010"[5] • In addition thereto it contends that the Bank had actual knowledge of any possible claim against Custom Capital on 26 April

2013, when the first and second respondents delivered their plea to the claim by Standard Bank which translates into a period of more than three years before service of the joinder application on Custom Capital on 2 August 2016. Accordingly Standard Bank's claim against it has in the circumstances prescribed.

[15] Mr Steyn on behalf of Standard Bank submitted that in determining the issue of the propriety in law as to whether or not Custom Capital ought to be joined to the main action the court is not in a position to determine the issue of prescription in that prescription could only be raised in trial actions by way of a plea or special plea primarily on the basis that Standard Bank as the plaintiff in the main action may have a valid answer thereto;[6] . As a general proposition I agree. However, prescription may also be raised in interlocutory proceedings as is in casu, either if it were common cause or in situations where the claim or the right to claim were "known to have prescribed"[7]. This is not the situation in casu.

[16] As so alluded to above Standard Bank has in anticipation of the joinder application prepared a Notice of amendment in terms of which it intends amending its particulars of claim to include a claim against Custom Capital as outlined in paragraph 9 above.

[17] It is important to point out that this is a conditional claim in the sense of it becoming applicable or operative in the event of the court upholding the defences so raised by Starpack, second and third Respondents as outlined above.

[18] In this regard Mr. Scoltz submitted that the objection to the joinder application on the basis of prescription cannot avail Custom Capital in that the claim against it will only arise or be triggered in the event that the trial court upholds the defences so raised by Starpack, second and third Respondents, i.e., in the event of the trial court non-suiting Standard Bank in its claim against them. I cannot agree more. It will be inappropriate for purposes of determining the joinder application for this court to make a finding on the propriety of the prescription defence. Such a finding can only occur once the trial court has upheld the said defences of the first to third Respondents as well as after evidence has been tendered relating thereto.

[19] In any event this being a conditional cla.im , the prescription will commence running once Standard Bank suffers loss against Custom Capital based on the breach of the warranties and representations it made in terms of the cession agreement and in particular to the indemnity clause.

[20] Furthermore, there exists in casu a material factual dispute pertaining to the issue whether or not Standard Bank was aware of the transfer of ownership of the goods to Custom Capital or to it, and the question as to whether in actual fact Custom Capital did acquire ownership of the goods.

This being motion proceedings, such material dispute of facts are not easily capable of resolution on the papers, necessitating evidence being tendered by both parties (i.e. Standard Bank and Custom Capital as well Starpack) for the determination of this vital and material aspect concerning the prescription defence. This being so, the appropriate forum or stage in determining this issue will be the trial adjudicating the trial action.

[21] It is clear that the issue or question arising between Standard Bank and Custom Capital depends upon the determination of essentially or substantially the same questions of law of fact in the main action by Standard Bank against the first to third respondents, which would also arise if a separate action were to be instituted by Standard Bank against Custom Capital, particularly the main or key or central questions as to whether the goods were actually indeed delivered to first respondent (Starpack) and/or whether Starpack obtained undisturbed use and possession of the goods and the allied question whether Custom Capital was entitled legally to rent the goods to Starpak and/or whether ownership thereof passed to Custom Capital and consequently to Standard Bank. As such joinder of Custom Capital to the pending action would not only result in a savings of costs but also the avoidance of a multiplicity of actions.

[22] Accordingly this defence of prescription so raised by Custom Capital in resisting the joinder application cannot in the circumstances

avail Custom Capital i.e. cannot in the circumstances be sustained.

[23] I turn now to deal with the defence of lack of convenience so raised by Custom Capital in resisting the application for joinder.

CONVENIENCE

[24] In support of the "convenience" defence Custom Capital advances the following reasons or submissions:

24.1 Firstly, Custom Capital resides in Durban in that its registered address and principal place of business is in Durban; as well as having its resources i.e., relationship with attorneys and counsel in Durban; and

24.2 Secondly, that the entire cause of action arose in Durban;

24.3 As such if Standard Bank wanted to pursue any action against Custom Capital it was supposed to litigate in the High Court in Durban, thus rendering the present joinder application unnecessary in the circumstances;

24.4 Thirdly that a similar application for joinder against Custom Capital was withdrawn by Standard Bank in August 2015 as it had relied on a wrong cession agreement in this application, which conduct is tantamount to "waiver' or "acquiescence" on its part in not pursuing the present joinder application This being so, so the argument runs, it will not be convenient for this Court to order the joinder of Custom Capital to the present main action pending in this Division.

[25] These reasons so advanced by Custom Capital in support of the defence of lack of convenience in resisting the application for joinder have no merit whatsoever and cannot in the circumstance hold sway for purposes of resisting the joinder application.

[26] In any event, Mr Pillemer on behalf of Custom Capital at the hearing of this matter, and correctly so, did not vigorously pursue these grounds of objection referring to them as "very quick short submissions".

CONCLUSION

[27] Accordingly Custom Capital's opposition to the joinder application cannot in the circumstances be sustained.

ORDER

[28] In the result the following order is made:

28.1 Custom Capital (Pty) Limited is hereby joined as the fourth defendant in the action pending between the plaintiff (Standard Bank of South Africa Limited} and the first, second and third defendants under the above case number i.e. Case No 49834/2011.

28.2 The plaintiff {Standard Bank of South Africa Limited) is authorised to send a copy of this order and all the papers filed in the application thus far on the party so joined (i.e. Custom Capital (Pty) Limited) by delivery thereof to the following address:

Romer Attorneys

Fourth Respondent's (Custom Capital's) Attorneys

Suite 1, Moor House

2 Elston Place

Westville

c/o Friedland Hart Soloman and Nicolson

Monument Office Park

Block 4, Third Floor 79 Steenbok Avenue

Monument

Pretoria

Ref: T van Straten

28.3 Custom Capital (Pty) Limited is ordered to pay the costs of this application on a party and party scale.

SJR MOGAGABE

ACTING JUDGE OF THE HIGH COURT GAUTENG LOCAL DIVISION,

JOHANNESBURG

COUNSEL FOR APPLICANT/

PLAINTIFF

MR R SCHOLTZ

INSTRUCTED BY

LOWNDES DLAMINI ATTORNEYS,

SANDTON

COUNSEL FOR FOURTH

RESPONDENT (CUSTOM CAPITAL

(PTY) LIMITED)

MR R PILLEMER

INSTRUCTED BY

ROMER ATTORNEYS WESTVILLE

DURBAN

DATE OF HEARING

21 AUGUST 2017

DATE OF JUDGMENT

21 NOVEMBER2017

[1] A copy of this rental agreement is annexed to the founding papers as Annexure “JA2”.

[2] A copy of such cession agreement is annexed to the founding papers marked “JA1”

[3] A tax invoice so issued by Custom Capital to Standard Bank is Annexure “JA3” and Standard Bank’s proof of payment is Annexure is “JA4” to the founding papers respectively.

[4] A copy of which is Annexure “JA4” to the founding papers.

[5] Bundle B, pp 145-146 para 12.

[6] With reference or having regard to the provisions of section 17 of the Prosecution Act and the case of Murray and Roberts Construction (Cape) (pty) Ltd v Upington Municipality 1984 (1) SA 571 (A).

[7] Uniform Finance Holdings (Pty) Ltd v Bonuli and Another NNO 2013 (2) SA 449 (GSJ) at para [6].