Capital Outsourcing Group (Pty) Ltd v Screening & Earthworks (Pty) Ltd

• Jurisdiction: South Africa
• Judge: Lever AJ
• Judgment Date: 06 September 2007
• Docket Number: 1199/2005
• Hearing Date: 15 March 2007
• Court: Bophuthatswana High Court

Lever AJ:

[1]

The subject of the present application is to determine whether the Plaintiff's amended declaration is excipiable or not. For the sake of convenience the Excipient's will be referred to as Defendants or, where appropriate, First or Second Defendant and the Respondent will be referred to as the Plaintiff. The pleadings and the various bundles of documents that make up the record are bulky and I shall only deal with portions of the pleadings and documents as are germane to the various exceptions.

[2]

The main action is a part heard matter before another Judge of this Division. In order to deal with the matter it is necessary to give a brief summary of the background and the circumstances in which the exception was brought.

[3]

The Plaintiff had opened it's case and several witnesses gave evidence and have been cross - examined. The plaintiff has not as yet closed its case and there are at present some 206 pages of transcribed evidence. The plaintiff runs what is described as a "labour broking business". Essentially the Plaintiff offers labour outsourcing solutions to its clients. The plaintiff bought this business from an entity known as "CAPITAL CONTRACTING SERVICES NATAL CC" (hereinafter referred to as "CAPITAL CC") through a company known as BUSH HILL RISK MANAGEMENT 35 (PTY) LTD. BUSH HILL RISK MANAGEMENT 35 (PTY) LTD thereafter, by special resolution, changed its name to CAPITAL OUTSOURCING GROUP (PTY) LTD

2007 JDR 0957 p3

Lever AJ

(hereinafter referred to as "CAPITAL (PTY) LTD"). CAPITAL CC entered into the original agreement with the first defendant. The Plaintiff's 'original' or main claim as against the First Defendant is for services rendered in terms of the agreement annexed to the declaration as annexure "C" (the service agreement). The claim against the Second Defendant is based on a suretyship agreement annexed to the declaration as annexure "G". The Defendants rely on the provisions of clause 15.4 of the service agreement, which provides: "No party may cede any of its rights or delegate or assign any of its obligations in terms of the AGREEMENT without the prior written consent of the other party." It is apparent from the evidence adduced thus far that no such written consent to a cession of rights was obtained from the first defendant. It appears that at some stage the plaintiff's representatives became aware that they might need to broaden the basis of plaintiff's claim. A postponement was sought and granted and in due course a notice of amendment, which includes a number of alternate claims, was subsequently filed. The Defendants opposed the amendments and the matter was argued before the Judge hearing the main action. The Plaintiff was granted leave to amend its declaration in accordance with its notice of amendment and the relevant amended pages were subsequently filed of record. In due course the Defendants' filed their exceptions, which are the subject of the present judgment.

[4]

The amendments, which are germane to the exceptions presently under consideration relate to the alternate claims and are contained in paragraphs 31, 32, 33 and 34 of the amended declaration. The relevant paragraphs read as follows:

"31

Alternatively to 14 - 27 above, and in the event that it should be held that no valid agreement was concluded between the plaintiff and the first defendant (and the plaintiff persists in its contention that such agreement was concluded) then the plaintiff avers as follows:

31.1

Until March or April 2004 and at all material times prior thereto, Capital traded inter alia under the style Capital Outsourcing Group (COG).

2007 JDR 0957 p4

Lever AJ

31.2

During such period, Capital supplied labour braking services to the first defendant in terms of the agreement annexure C hereto on the terms set out therein at rates agreed between Capital and the first defendant.

31.3

Capital provided such services under the trading style COG.

31.4

With effect from about April 2004 the plaintiff acquired the business of Capital including the trading style COG in terms of the agreement referred to in 11 above.

31.5

Subsequently to April 2004 the plaintiff carried on the said business and carried on such business under the style COG.

31.6

Subsequently to April 2004 the first defendant continued utilising labour broking services, which were now provided by the plaintiff as the owner of the business formerly carried on by Capital.

31.7

Such services were provided by the plaintiff on the same basis as such services has (sic) been provided by Capital in terms of the agreement between Capital and the first defendant annexure C hereto at agreed rates.

31.8

The plaintiff submitted invoices and statements to the first defendant in respect of such services.

31.9

Such invoices reflected the company registration number and Vat registration number of the plaintiff from about July 2004 onwards.

31.10

Such statements reflected that the person submitting such statements was the plaintiff.

31.11

The said services were rendered before and after April 2004 under the style COG.

31.12

It was not material to the first defendant whether the proprietor of such style was Capital or the plaintiff.

31.13

The first defendant made payment to the plaintiff pursuant to such invoices and statements during the period subsequently (sic) to April 2004; such payments were made into a new bank account nominated by the plaintiff.

31.14

In acting as set out above, the first defendant represented to the plaintiff that it agreed to accept the said services on the basis set out above.

31.15

In the premises the first defendant has assented, alternatively must be deemed to have assented to enter into an agreement with the plaintiff on the basis set out above.

31.16

The first defendant is accordingly liable to make payment to the plaintiff of the balance outstanding in respect of such agreement in the sum of R280 441,70.

31.17

The plaintiff is successor of Capital.

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Lever AJ

31.18

The second defendant is accordingly liable as surety and co - principal debtor with the first defendant for the said indebtedness pursuant to the deed of suretyship referred to in paragraph 28 above.

32

Further alternatively to 14 to 27 and 31 above, the plaintiff avers as follows:

32.1

During or about December 2003 the plaintiff (which was then referred to as Bush Hill Risk Management 35 (Pty) Limited) and Medu Capital Fund (Medu) entered into a written sale of business agreement with Capital (the sale of business agreement); the defendants have been furnished with a copy of the sale of business agreement and a copy thereof is accordingly not annexed hereto in order to prevent this notice (sic) from being too prolix.

32.2

The sale of business agreement lapsed for failure of certain suspensive conditions contained therein.

32.3

However during or about March 2004 the parties to the sale of business agreement entered into a reinstatement agreement (the reinstatement agreement) in terms of which it was agreed that the sale of business agreement was reinstated with effect from the date of signature of the reinstatement agreement.

32.4

The reinstatement agreement was signed by Capital and the plaintiff on 19th of March 2004 and by Medu on 23rd March 2004.

32.5

A copy of the reinstatement agreement has been delivered to the defendants; a copy is accordingly not annexed hereto in order to prevent this notice (sic) from being too prolix.

32.6

In terms of the sale of business agreement read with the reinstatement agreement the plaintiff acquired the labour broking business conducted by Capital inter alia under the name Capital Outsourcing Group as a going concern.

32.7

The business so acquired by the plaintiff included the agreement between Capital and the first defendant annexure C hereto.

32.8

In terms of clause 21.2 of the sale of business agreement Capital undertook to procure the written consent of the first defendant to the cession and delegation of the rights and obligations in terms of the agreement to the plaintiff.

32.9

Clause 21.3 of the agreement provides in part as follows:

"To the extent that, and for so long as, the other party/ies to the contracts referred to in 21.1.2 does/do not consent to such cession and delegation, as between the purchaser and the seller the purchaser shall be:

21.3.1

Entitled to the benefit of and shall bear the risk of the contract from and including the effective date ...

21.3.2

Obliged at its own cost but in the seller's name to discharge the seller's obligations under the contract after the effective date ...

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Lever AJ

21.3.3

The seller irrevocably and in rem suam appoints the purchaser and any agent acting on its behalf, jointly, and each of them severally, to be its lawful attorney and agent and to do in its name all things reasonably required in order to perform the seller's obligations, and exercise its rights under the contract. ..."

32.10

In breach of the undertaking contained in paragraph 21.2 of the sale of business agreement referred to above, Capital as seller failed to procure the written consent of the first defendant to the cession and the assignment of the agreement.

32.11

Subsequently (sic) to 23rd March 2004 the plaintiff in terms of clause 21.3.3 of the sale of business agreement did in the name of Capital all things reasonably required in order to perform Capital's obligations in terms of the agreement.

32.12

The first defendant is liable to make payment of the said balance of R280 441,70 pursuant to such services.

32.13

The plaintiff is accordingly entitled, in terms of the said clause 21.3.3 of the agreement of sale to claim payment of such sum on behalf of Capital from the first defendant.

32.14

The plaintiff is...