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IN THE HIGH COURT OF SOUTH AFRICA

(WITWATERSRAND LOCAL DIVISION)

Case No: 05/4557

Date:03/12/2008

In the matter between:

BARON IZIKHWEPHA SECURITY SERVICES (PTY) LTD

(in liquidation)......................................................................................................Plaintiff

and

THE JOHANNESBURG METROPOLITAN BUS SERVICE (PTY) LTD.........Defendant

JUDGMENT

MEYER, J

[1] This is an application for the substitution of a different plaintiff. The notice of motion only claims such substitution, but the application followed a notice of intention to amend and an objection thereto. In substance it seems to be an applicaton for the substitution of a different plaintiff by means of an amendment of the declaration.

[2] The approach to be followed in the determination of this type of application is inter alia found in the judgment of Rose Innes J, in Devonia Shipping Ltd v MV Luis (Yeoman Shipping Co Ltd Intervening) 1994 (2) SA 363 (C) at p 369F – I:

‘The general rule is that an amendment of a notice of motion, as in the case of a summons or pleading in an action, will always be allowed unless the application to amend is mala fide or unless the amendment would cause an injustice or prejudice to the other side which cannot be compensated by an order for costs or, in other words, unless the parties cannot be put back for the purposes of justice in the same position as they were when the notice of motion which it is sought to amend was filed … A material amendment such as the alteration or correction of the name of the applicant, or the substitution of a new applicant, should in my view usually be granted subject to the considerations mentioned of prejudice to the respondent … The risk of prejudice will usually be less in the case where the correct applicant has been incorrectly named and the amendment is sought to correct the misnomer than in the case where it is sought to substitute a different applicant. The criterion in both cases, however, is prejudice which cannot be remedied by an order as to costs and there is no difference in principle between the two cases.’

[See also: Rosner v Lydia Swanepoel Trust 1998 (2) SA 123 (W) at 127G – H; Luxavia (Pty) Ltd v Gray Security Services (Pty) Ltd 2001 (4) SA 211 (W)].

[3] The plaintiff instituted action against the defendant during the year 2005 for payment of damages arising from an alleged breach of an agreement between them. The plaintiff’s name was changed to BI Security Services (Pty) Limited subsequent to the institution of the action. The plaintiff was voluntarily wound up on 11 May 2005.

[4] It is alleged that on 15 January 2007, the liquidators, in terms of a written deed of cession, ceded, assigned and made over unto and in favour of Baron Armed Reaction (Pty) Ltd (“Baron”) all right, title and interest in and to all and any claim of the plaintiff from whatsoever cause and howsoever arising against the defendant ‘as presently subject to litigation proceedings in the High Court of South Africa (Witwatersrand Local Division), under case number 05/4557 or at all.’ It is further stipulated that the deed of cession ‘constitutes an out and out cession of the aforesaid claim.’ An amendment to substitute Baron for the plaintiff is accordingly sought.

[5] The defendant resists the proposed substitution of the plaintiff. The grounds of objection raised in the defendant’s notice of objection to the plaintiff’s proposed amendment dated 30 January 2008 were that the proposed amendment in all likelihood would result in the postponement of the trial that had been enrolled for 11 March 2008; is mala fide and a disingenuous attempt on the part of the plaintiff to avoid its obligation to provide security for the defendant’s costs as demanded in its Rule 47(1) notice; and that the purported cession was executed after litis contestatio and a substitution could accordingly only be perfected when a Court gives its approval.

[6] The grounds of objection relied upon by the defendant in its answering affidavit are essentially that:

(a) the plaintiff’s debtors’ book, including its alleged claim against the defendant, had been ceded to Nedbank Limited at the time of the ‘purported’ cession to Baron and the later cession to Baron is accordingly of no force or effect;

(b) prior to its liquidation, the plaintiff’s business was sold as a going concern to an entity known as PeaceForce and such sale would have included the alleged claim against the defendant;

(c) the ‘purported’ cession is not bona fide and was designed with a mala fide intent to prevent the defendant from being successful with an application for security for its costs which is still pending; and

(d) the granting of the amendment will necessitate a postponement of the trial and the defendant will be prejudiced thereby.

[7] In reply it is explained that the cession to Nedbank Limited was one in securitatem debiti, the plaintiff was in terms thereof entitled to continue to collect its book debt for its own account, and no amount was owing by the plaintiff to Nedbank Limited at the time of the institution of the action. It is further explained that the plaintiff’s claim against the defendant was specifically excluded from the sale to PeaceForce. I agree with the submission made by Adv Silver that, in the particular circumstances of this matter, the issues pertaining to cession to Nedbank Limited and the sale to PeaceForce are issues that ought to be determined at the trial.

[8] The postponement of the trial is also no longer a consideration since the present application was launched on 4 March 2008 and the trial was thereafter postponed. The defendant’s allegation that the cession to Baron is not bona fide and was designed with a mala fide intent to prevent the defendant from being successful with an application for security seems to me to be unsubstantiated.

[9] Adv Basslian, who appeared for the defendant, raised two further grounds of objection during argument. The first was that it was unclear which entity brought the present application. Counsel submitted that if it was the plaintiff the liquidators should have brought it and if it was Baron it has no locus standi. The second was that the right to proceed with the action was not ceded to Baron upon a consideration of the wording of the cession and Baron accordingly has no locus standi to be substituted for the plaintiff. These grounds, however, were not raised in the defendant’s objection to the proposed amendment nor in its answering affidavit.

[10] I am nevertheless of the view that there is no substance in these further grounds. The present application is interlocutory to the pending action between the parties. The substitution of the plaintiff is sought in terms of the notice of motion and its heading cites the plaintiff and the defendant as the parties to the interlocutory proceedings. S 359(1)(a) of the Companies Act suspends all civil proceedings by the company until the appointment of a liquidator. Legal proceedings may then be continued by the liqidator in the name of the company and on its behalf [see: Blackman Jooste Everingham Commentary on the Companies Act Vol 3 at p 14-232]. Also, it has not been shown that the provisions of the deed of cession cannot reasonably bear a meaning to the effect that the original founding right or the right to proceed with the action was included in the cession.

[11] The only potential prejudice of substance raised was in respect of the costs of this action before an introduction of Baron. Adv Silver met the concern with an unqualified tender that Baron would satisfy the costs associated with the entire action in the event of it being unsuccessful in the action.

[12] On the facts of this application I am unable to find that the application to amend is mala fide or that the substitution would cause an injustice or prejudice to the defendant in the nature that requires a refusal of such relief.

[13] Adv Basslian submitted that if the application were to be granted costs should in any event be awarded in favour of the defendant since the notice of motion seeks costs against the defendant and the defendant was accordingly justified in opposing the application. Counsel also submitted that the defendant’s opposition to the substitution was reasonable. I agree. There was an inordinate delay between the execution of the deed of cession and the steps taken to substitute Baron for the plaintiff. It cannot be said that the defendant raised frivolous or vexatious objections.

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

1. The plaintiff is given leave to amend its declaration in accordance with its notice of amendment dated 29 January 2008.

2. Baron Armed Reaction (Pty) Ltd is ordered to pay the defendant’s costs of this application.

P.A. MEYER

JUDGE OF THE HIGH COURT

3 December 2008

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