Royal Sechaba Holdings (Pty) Ltd v Coote and Another

• Jurisdiction: South Africa
• Judgment Date: 30 May 2014
• Citation: 2014 (5) SA 562 (SCA)

Royal Sechaba Holdings (Pty) Ltd v Coote and Another
2014 (5) SA 562 (SCA)

2014 (5) SA p562

Citation	2014 (5) SA 562 (SCA)
Case No	366/2013; [2014] ZASCA 85
Court	Supreme Court of Appeal
Judge	Lewis JA, Bosielo JA, Theron JA, Willis JA and Legodi AJA
Heard	May 15, 2014
Judgment	May 30, 2014
Counsel	JA van der Westhuizen for the appellant.; WJ de Bruyn for the respondents.

Flynote : Sleutelwoorde E

F Estoppel — Res judicata — Issue estoppel — Requirements — Same party — Requirement may be dispensed with in appropriate circumstances.

Headnote : Kopnota

Mr Jones worked for Royal Sechaba Holdings (Pty) Ltd on a commission basis. G Mr Coote and Mr Engelbrecht were directors of Royal Sechaba who authorised the payments of commission to Jones. Ultimately a controversy developed around the payments and Jones, Coote and Engelbrecht were dismissed. Royal Sechaba and Jones then went to arbitration, with Royal Sechaba claiming back from Jones commission it alleged he was not entitled to. In the end Royal Sechaba was unsuccessful.

H Some time thereafter Royal Sechaba instituted an action against Coote and Engelbrecht in the high court alleging they had breached their fiduciary duties to it in making certain of the payments to Jones and claiming damages. Coote and Engelbrecht raised the special plea of res judicata in the form of issue estoppel, which was upheld by the high court, which dismissed Royal Sechaba's claim. Royal Sechaba appealed to the Supreme I Court of Appeal.

The Supreme Court of Appeal reiterated the requirements of a successful plea of res judicata: that there had to be the same cause of action, the same relief and the same parties in the first and second proceedings. It also reiterated that in appropriate circumstances the plea could be upheld where the cause and relief were dissimilar, but where there was a common issue of fact or law J (the form of the plea known as issue estoppel). The court added that in

2014 (5) SA p563

appropriate circumstances the requirement that the parties had to be the A same could also be dispensed with. (Paragraphs [12] – [13], [19] and [21] at 566H – 568A, 570D – G and 571B – E.)

Turning to the facts, it concluded that neither the parties nor the issues were the same in the action and the arbitration, and it dismissed the appeal and remitted the matter to the high court for adjudication. (Paragraphs [22] – [23] and [27] – [28] at 571E/F – 572B and 573A/B – D.) B

Cases Considered

Annotations

Case law

African Wanderers Football Club (Pty) Ltd v Wanderers Football Club 1977 (2) SA 38 (A): referred to C

Amalgamated Engineering Union v Minister of Labour 1949 (3) SA 637 (A): referred to

Bafokeng Tribe v Impala Platinum Ltd and Others 1999 (3) SA 517 (BH) (1998 (11) BCLR 1373): referred to

Bertram v Wood (1893) 10 SC 177: referred to

Boshoff v Union Government 1932 TPD 345: referred to D

Caesarstone Sdot-Yam Ltd v World of Marble and Granite 2000 CC and Others 2013 (6) SA 499 (SCA): referred to

Cassim v The Master and Others 1960 (2) SA 347 (D): referred to

Ferreira v Minister of Social Welfare 1958 (1) SA 93 (E): referred to

Hyprop Investments Ltd and Others v NSC Carriers and Forwarding CC and Others 2014 (5) SA 406 (SCA) ([2014] 2 All SA 26): referred to E

Kommissaris van Binnelandse Inkomste v Absa Bank Bpk 1995 (1) SA 653 (A) ([1995] 1 All SA 517): referred to

Kruger v Shoprite Checkers [2006] ZANCHC 114: referred to

MAN Truck and Bus (SA) (Pty) Ltd v Dusbus Leasing CC and Others 2004 (1) SA 454 (W): referred to

National Sorghum Breweries Ltd (t/a Vivo African Breweries) v International Liquor Distributors (Pty) Ltd 2001 (2) SA 232 (SCA) ([2001] 1 All SA 417): referred to F

Prinsloo NO and Others v Goldex 15 (Pty) Ltd and Another 2014 (5) SA 297 (SCA): dictum in para [23] applied

Rail Commuters Action Group and Others v Transnet Ltd and Others 2006 (6) SA 68 (C): referred to

Royal Sechaba Holdings (Pty) Ltd v Coote (GNP case No 13305/2010): G reversed on appeal

Shokkos v Lampert NO 1963 (3) SA 421 (W): referred to

Smith v Porritt and Others 2008 (6) SA 303 (SCA): dictum in para [10] applied

Yellow Star Properties 1020 (Pty) Ltd v MEC, Department of Development Planning and Local Government, Gauteng H 2009 (3) SA 577 (SCA) ([2009] 3 All SA 475): referred to.

Case Information

JA van der Westhuizen for the appellant.

WJ de Bruyn for the respondents.

An appeal from the North Gauteng High Court, Pretoria (Vorster AJ). I

Order

1.

The appeal is upheld with costs.

2.

The order of the high court is set aside and in its stead is substituted the following order: J

2014 (5) SA p564

A 'The special plea is dismissed with costs'.

3.

The matter is referred back to the high court for adjudication on the particulars of claim and the substantive defence.

Judgment

Theron JA (Lewis JA, Bosielo JA, Willis JA and Legodi AJA B concurring):

[1] The appellant, Royal Sechaba Holdings (Pty) Ltd (Royal Sechaba), instituted action against the respondents, Mr Grant William Coote (Coote) and Mr Daniel Elardus Engelbrecht (Engelbrecht), the first and second respondents, respectively, in the North Gauteng High Court for C payment of damages of R13 122 516 alternatively R4 140 000, for an alleged breach, by them, of their fiduciary duties. The respondents raised a special plea of issue estoppel. The high court (Vorster AJ) upheld the special plea and dismissed Royal Sechaba's claim with costs. This appeal is against that judgment, with the leave of the high court.

D [2] In order to determine whether the special plea was properly upheld, it is necessary to examine the factual background giving rise to this litigation. Coote and Engelbrecht were employees and directors of Royal Sechaba. From February 2007 to September 2009 Coote was the company's chief executive officer and Engelbrecht its chief financial E officer. On 1 August 2006 Royal Sechaba and Mr Louis Martin Jones (Jones) entered into a written contract of employment in terms of which Jones was appointed by Royal Sechaba as director of business development and which was effective from 1 March 2007. The parties concluded a further agreement which was styled 'Addendum to Employment Agreement' (the addendum) and effective from 1 March 2007, in F terms of which Jones would be paid commission by Royal Sechaba on every contract he procured for the benefit of Royal Sechaba. In addition, Jones would be paid an incentive commission for managing and overseeing the performance of the contract concerned. In concluding this agreement, Royal Sechaba was represented by Coote, and Jones acted G personally.

[3] To the extent here relevant, the addendum provides that Jones would receive commission and incentive payments as follows:

'1.

. . . . All new customers that have no existing contract with Royal H Sechaba, a 9% commission based on the projected nett profit as per feasibility document. The nett profit includes the estimated value of any assets that Royal Sechaba would retain at the end of the contract. The estimated value of these assets would be the purchase price less depreciation allowed by the Receiver of Revenue.

I Sales Commission Structure:

•

50% upon starting of the business

•

A further 25% halfway through the contract

•

A further 25% upon completion of the contract

2.

All new business from existing Royal Sechaba contracts brought in by Mr Louis Jones will attract the same commission structure as all J other business.

2014 (5) SA p565

Theron JA (Lewis JA, Bosielo JA, Willis JA and Legodi AJA concurring)

3.

Managing and overseeing the existing Support Services/remote site A business and all new business as stipulated in (1) above Louis Jones will be remunerated at 9% operating incentive of actual nett profit achieved. This is calculated and paid quarterly in arrears.

4.

All expenses, including commission and admin fee payable to Royal Sechaba will be deducted from the profits. This money will only be payable for the duration of involvement by Louis Jones.' B

[4] Jones was extremely successful in procuring new business for Royal Sechaba. It was common cause that Jones was paid an amount of almost R24 million (half of this amount was shared with his management team) over a period of two years, from May 2007 to May 2009. All these C payments were authorised by Coote and Engelbrecht, among others. During July 2009 these payments were the subject of an investigation conducted by an auditor, Mr André Dames, at the instance of Royal Sechaba. Dames came to the conclusion that the payments made to Jones were incorrectly calculated on gross profit, rather than net profit, as provided for in the addendum. He also found that Jones had received D payments before he had become entitled thereto in terms of the payment schedule in clause 1 of the addendum and that Jones had claimed and received commission on 'new business' which had not been procured by him.

[5] On 30 September 2009 Coote and Engelbrecht were dismissed by E Royal Sechaba for, among other things, authorising payments to Jones to which he was not entitled. During the course of the investigation Jones, as well as Coote and Engelbrecht, disputed that Jones had been overpaid. According to them the phrase 'net profit' as used in the addendum meant 'net contract contribution' which differs from net F profit in the ordinary accounting sense. They also alleged that all the payments received by Jones had been due to him. Even though the payment schedule provided for in clause 1 of the addendum was not adhered to, the respondents alleged that they entered into an oral agreement with Jones in terms of which Jones was entitled to receive his full sales commission prematurely (upfront) if cash flow permitted. G

[6] The disputes...