De Polo and Another v Dreyer and Others

• Jurisdiction: South Africa
• Judge: Morris AJ
• Judgment Date: 09 February 1989
• Citation: 1991 (2) SA 164 (W)
• Court: Witwatersrand Local Division

Morris AJ:

This judgment relates to a special plea filed by the H defendants in an action instituted by the two plaintiffs. The special plea concerns only the right of the first plaintiff to be a party to the proceedings.

For a proper consideration of the matter it is necessary to refer to the particulars of claim before dealing with the special plea. In para 1 of the particulars of claim the first plaintiff describes himself as Armando Luigi de Polo, an adult male, a technical director, of 8 Heidi I Avenue, Florida Glen, Transvaal. The other parties are then identified and in para 6 of the par- ticulars of claim it is alleged that the plaintiffs on the one hand and the defendants on the other entered into an oral agreement. The terms of the agreement are set out and for present purposes it may be assumed that the agreement was one of joint venture or, as it has been described in argument or in the outline of J the case by Mr Grbich, an ad hoc partnership.

Morris AJ

A In paras 7, 8 and 9 it is alleged the partnership did achieve its objective and that certain benefits were obtained and did become payable or had accrued. Amongst the benefits flowing from the partnership, and I quote para 8,

'was the allocation to the first and second defendants directly and indirectly of at least 10000000 ordinary shares at one cent a share B in certain Knights Gold Mining Co Ltd',

that company having acquired the rights contemplated in the partnership and having proceeded with the contemplated project. In fact, the reference to the 10000000 shares suggests in the context that that was the allocation to the first and second plaintiffs and also the first and second defendants, but if I am wrong there nothing turns on it for C present purposes.

Paragraph 9 is in the following terms:

'In breach of the agreement between the plaintiffs and the defendants, the defendants have not shared these particular benefits but have instead wrongfully and unlawfully retained such benefits for D themselves and have wrongfully and unlawfully caused themselves, directly and indirectly, to be allocated and registered as owners of at least 5000000 shares in Knights which they ought to have caused to be registered in the names of the plaintiffs (being 2 500000 in respect of each plaintiff).'

It is then alleged in para 13 of the particulars of claim that the E first and second defendants are obliged to render an account to the plaintiffs of all benefits received, to debate the account with the plaintiffs and to pay the plaintiffs or to deliver to the plaintiffs such benefits as are found to be due.'

Prayer (a) then is in the following terms:

F 'Against payment by the first plaintiff to the first defendant of R12 500, delivery by the first defendant and/or the third defendant to the first plaintiff in negotiable form of 1 250000 ordinary shares in Knights Gold Mining Co Ltd ("Knights").'

It is then claimed in prayer (e) as follows:

'(i)

G an order directing the first and second defendants to render to the plaintiffs a true account of all benefits received by them under the agreement more fully set out in para 6 of the plaintiffs' particulars of claim;

(ii)

debate (sic) of such account;

(iii)

H payment or delivery up to the plaintiffs of such benefits as are found to be due.'

There is also an alternative claim in which the reference is to the ad hoc agreement of partnership and the benefits which were to accrue from that partnership. In para 19 the following is stated:

'In breach of the agreement of partnership between the plaintiffs I and the defendants, the defendants have wrongfully and unlawfully refused to share such benefits and have instead wrongfully and unlawfully sought to retain such benefits for themselves.'

In consequence of this, the prayer in para (a) is for an order declaring the partnership dissolved or dissolving the partnership. There is then a prayer for the appointment of a liquidator with certain powers and also J a prayer

Morris AJ

A that the liquidator should prepare a final account and deliver and/or pay out to the plaintiffs their benefits under such partnership.

It will be seen, therefore, that what is claimed in the particulars of claim amounts to tangible or financial benefits to which each of the plaintiffs is said to be entitled.

B The pleadings underwent various amendments which need not presently be discussed. In November 1988 the defendants, having ascertained that the first plaintiff was an unrehabilitated insolvent, made an application in terms of Rule 30 of the Uniform Rules of Court for the striking out of the first plaintiff's claim.

The first plaintiff countered with a similar notice under that Rule C seeking the striking out of the defendants' earlier notice under Rule 30. The matter happened to come before me in the Motion Court and I upheld the plaintiff's application striking out the defendants' notice. There were certain directions given as to pleadings but by agreement between counsel these were later modified and it was stipulated that D within certain times the defendants were to file a special plea and the first plaintiff was to replicate. The special plea is to be found in a volume containing copies of the pleadings and it is at pp 44 - 6. I think it necessary to read the whole of that special plea. It is the following:

'1.

The defendants contend that the first plaintiff was not legally entitled to institute and/or to proceed with the action, because - E

1.1

the estate of the first plaintiff was sequestrated in terms of orders of Court, annexed and marked "A" and "B", with effect from 7 November 1978;

1.2

the estate of the first plaintiff remained so sequestrated and the sequestration was extended by Court order until 3 F April 1989, as appears from annexure "C";

1.3

the effect of the sequestration of the estate of the first plaintiff was, in terms of ss 20 of the Insolvency Act 24 of 1936 ("the Act") - read in its context - to divest him of his estate and to vest the estate in the Master and thereupon in the trustee;

1.4

G all property which the insolvent may acquire or which may accrue to him during the sequestration belongs to his insolvent estate in terms of ss 20(2) and 23(1) of the Act, except as otherwise provided in s 23;

1.5

the alleged personal right referred to the particulars of claim constitutes property which belongs to the insolvent estate.' H

I think that the word 'in' has been omitted from para 1.5.

The defendants did not stop here, as might well have sufficed, but went on to negate possible contentions which might be raised by the first plaintiff. I do not propose to set those contentions out in detail because it is sufficient to say that they refer to exceptions recognised I in various subsections of s 23 of the Insolvency Act.

The first plaintiff then filed a replication which is to be found at p 51 of the volume to which I am referring. The relevant paragraphs are the following:

'1.

The first plaintiff denies that he was not legally entitled either to institute or to proceed with the action, stating J further that,

Morris AJ

1.1

A he has always been able to sue in his own name in terms of the Insolvency Act in the action without reference to any trustee, and that,

1.2

insofar as he might not have been entitled to sue in his own name, the trustee of his insolvent estate has,

1.2.1

(insofar as may have been necessary) consented in writing to the first plaintiff having entered into the agreement which is the subject matter of the action, and furthermore, B

1.2.2

(and also insofar as may be necessary) such trustee has in writing waived any rights to join in such action, or be C joined as a party therein, abides by the decision of this honourable Court; and agrees to be bound by such decision.'

I omit a narrative paragraph which appears on p 52. The replication then continues in para 2 to state this:

'1.

The first plaintiff admits that he was sequestrated and he D states that

2.1

the first and final liquidation and distribution account in his insolvent estate was completed on 4 June 1979, and that

2.2

no further steps in the administration of his estate were taken subsequent to about 1980 (until the instigation by the defendants of the extension of his sequestration in or about E October 1988), when the file relating thereto was consigned to the archives in the office of the Master of the Supreme Court.'

In para 3 the plaintiff admits that his sequestration was extended, but be says that this was done at the instigation of the defendants for purposes ulterior to the Insolvency Act and accordingly the defendants are not entitled to rely on any disability. Although this is set out in F the replication, it was not dealt with in evidence or argument and it remains to be considered should it arise at any later stage.

In para 5 the first plaintiff replicates as follows:

'5.1

The first plaintiff denies that he lacks locus standi in judicio, states that insofar as he might have lacked any locus standi this has been cured by the intervention of his trustee, G and he denies in any event that his claim would fall to be dismissed (either with or without costs).

5.2

Instead, the first plaintiff pleads that if this honourable Court held that he did not have locus standi, and that the intervention by his trustee had so far not cured such lack of H locus standi, then rather than being dismissed his claim would be stayed pending any joinder of the trustee that the above honourable Court deemed meet.'

Subsequently, and without opposition, the trustees in the estate were joined as fourth defendants and were represented by the attorney and I counsel acting for the plaintiffs. As I understand the position the fact that there was no opposition to the joinder was...