IN THE HIGH COURT OF SOUTH AFRICA
NORTH WEST DIVISION, MAHIKENG

CASE NO: M12/2018

In the matter between:

AFRICAN UNITY LIFE LTD 	 				Applicant					 

And

BOIKANYO’S FUNERAL HOME 			 		Respondent

JUDGMENT.

GURA J:

Introduction

1.	This is an application for payment of outstanding premiums (R 2 084 834-60) due and owing by the respondent to the applicant in terms of various written agreements entered into by the parties.

Factual background.

2.	Previously the applicant traded under the name and style of African Unity Insurance Limited. On or about February 2016, the applicant underwent a name change hence its current name of African Unity Life Limited. However, the registration number remained the same. What follows is the applicant’s version.

The quotation 

3.	On or about 1 November 2008, the respondent received a quotation from SA Life Benefits Specialist (PTY) (“SA Life”). This quotation was accepted and signed by Simon Boikanyo, a duly authorised representative of the respondent on 1 November 2008 (“the quotation”). The express alternatively implied, further alternatively tacit terms of the quotation are, inter alia, as follows: 

	3.1 The premiums will be as per the current underwriter; 
	3.2 Premiums are payable monthly before the 15th of the following month; 
	3.3 The respondent must give SA Life one calendar month written notice of 
         	      its intention to cancel the scheme. Such notice must be given on or before 
	      the 1st of a month and shall become effective on the 1st of the following 
                month. 
                Please note that no membership alterations or amendments are allowed in                
                the month of cancelation; 
	3.4 The commencement date of the scheme was 1 November 2008. 

Intermediary agreement. 

4.	Thereafter, upon accepting the quotation, on or about 22 October 2008 at Letchabile, the Free State, the SA Life, duly represented by an authorised representative, and respondent duly represented by Simon Boikanyo, an authorised representative, entered into a written Intermediary Agreement (“the 2008 Intermediary Agreement”).
5.	The express alternatively implied, further alternatively tacit terms of the 2008 Intermediary Agreement are, inter alia, as follows:  

	5.1 The Assurer: African Unity Insurance Ltd; 
	5.2 Intermediary: The person authorised in terms of this agreement to 
				collect monthly premiums on behalf of the Assurer [Intermediary 
				being the respondent herein]; 
			5.3 Monthly premiums; The total of the risk premium and the 
                         	marketing fee collected by the intermediary;  
			5.4 Risk premiums: The money collected by the intermediary on a 
				monthly basis and payable to the assurer; 

			5.5 When the intermediary (being the respondent) receives risk premiums, the 
			      respondent shall pay over the risk premiums to the assurer in advance or  
			      on or before the first of the month; 
			5.6 Each risk premium received by the respondent shall be paid into a trust 
			      account; 
			5.7 Each risk premium received by the respondent is collected on behalf of 
			      the assurer and in the event of insolvency of the respondent, the risk   
                          premium collected by the respondent but not paid over to the assurer will 
                          not form part of the respondent’s assets; 
			5.8 Each monthly premium paid in cash must be receipted and recorded 
			      immediately on receipt thereof. The receipt must conform to Section 47 of   
                          the Long-Term Insurance Act 52 of 1998; 
			5.9 Should the member fail to pay his/her monthly premium on or before the 
			      first of the month to the respondent, the respondent is obliged to notify the 
			      assurer of this event; 
			5.10 The respondent shall not be entitled to pay the risk premium out of 
                             his/her own pocket in order to maintain the member’s membership of the 
                            Group Funeral Scheme; 
			5.11 In the event that a cheque presented by the respondent to the assurer as 
			        payment for the risk premium is dishonoured or payment is stopped for    
                       any reason whatsoever, the respondent hereby excepts liability: 

				5.11.1 For all legal costs pertaining to the collection of risk premium as 
					between the client and the attorney; 
				5.11.2 For the payment of an administration fee of R200.00;
				5.11.3 For the payment of collection commission at a rate of 10%; 
				5.11.4 For the payment of interest on the risk premium outstanding at 
					any time calculated at the prime of Nedbank plus 5% from the   
					date of the cheque to the date of the final payment; and 
				5.11.5 For the payment of all tracing fees;

			5.12 In the event that the respondent collects the monthly premiums and fails 
			        to pay over the risk premium to the assurer, the respondent hereby                    
                       accepts liability:

				5.12.1 For all legal costs pertaining to the collection of risk premium as 
					between the client and the attorney; 
				5.12.2 For the payment of an administration fee of R200.00; 
				5.12.3 For the payment of collection commission at a rate of 10%; 
				5.12.4 For the payment of interest on the risk premium outstanding at 
				any time calculated at the prime rate of Nedbank pus 5% from 
				the date of the cheque to the date of the final payment; and 
				5.12.5 For the payment of all tracing fees; 

			5.13 The respondent warrants:

				5.13.1 That he collected the premiums from each of the life insured for 
					that month contained on the schedule that he gives the assurer; 
					and 
				5.13.2 The respondents accepts liability for the amount due for that 
					month as calculated by the assurer according to the said schedule 
					received from the respondent; 
			5.14 In the event of the respondent failing to meet any obligation under this 
			        agreement and omitting to rectify such obligations within thirty (30) 
			        days of being request to do so, the assurer shall be entitled to 
			        terminate or alter or amend the agreement summarily:  
			5.15 On termination, all monies due to the assurer shall be payable on 
				demand. All records and documentation issued by the assurer shall be 
				returned to the assurer on demand; 
			5.16 This agreement cancels and replaced any prior agreements (if any) 
				entered into between the assurer and the respondent;
			5.17 Any variation or addition to this agreement shall be reduced to writing 
			        between the parties and shall have effect only in terms of the such 
			        variations or addition.

6.	SA Life duly complied with its obligations under the 2008 Intermediary agreement.  
	
Group scheme form 

7.	Pursuant thereto, on or about 10 November 2008 and at Letchabile, SA Life, duly  represented by an authorised representative, and respondent duly represented by an authorised representative, entered into a written agreement (“the Group Scheme Form”).

8.	The express alternatively implied, further alternatively tacit terms of the Group Scheme Form are, inter alia, as follows:

8.1 The respondent instructed SA Life to underwrite the respondent as from 1 
      October; 
8.2 The respondent understands, accepts, and will comply with the terms and  
      conditions of the Master Policy of SA Life; 
8.3 That this is a binding agreement for the provision of assistance insurance 
       by SA Life to the respondent; 
8.4 The respondent is liable to pay monthly premiums as per the agreement 
      with SA Life, being by the 15th of each month for the first three months.

9.	SA Life obtains underwriting from the applicant on behalf of the respondent, and SA Life is thus an intermediary between the parties. SA Life duly complied with its obligations under the Group Scheme Form.

Applicant and SA Life benefit intermediary agreement

10.	 An intermediary agreement was entered into between the applicant and SA Life in terms of which its services are regulated. Accordingly, on or about 15 June 2016 and at Pretoria, alternatively Bellville, the applicant duly represented by an authorised representative, and SA Life, duly represented by an authorised representative, entered into a written  intermediary agreement (“the SA Life Intermediary Agreement”)

11.	 The express alternatively implied, further alternatively tacit terms of the 2016 intermediary agreement are, inter alia, as follows:
11.1 Applicable definitions:
		11.1.1 The applicant is the insurer; 
		11.1.2 SA Life is the intermediary; 
		11.1.3 Effective date is 1 May 2016; 
		11.1.4 “Scheme/s” means the group schemes which are insured by the 
 insurer, on behalf of which the intermediary is performing 
 intermediary services, subject to the terms and conditions stated    
 herein. 
		11.2 Annexure C contains the name of the respondent; 
		11.3 The intermediary (being SA Life) and the insurer entered into the     
                             intermediary agreement in terms whereof the insurer authorises the                      		           intermediary, in its capacity as agent on behalf of the insurer, to render 			        services in respect of the products of the insurer identified at Annexure A; 
		11.4 The insurer appoints SA Life and the latter (SA Life) accepts such        appointment, subject to the terms and conditions set out in this agreement,        for the duration of the agreement, to perform the services. This agreement         shall commence on the effective date, notwithstanding the date of         signature of this agreement, and shall remain in force for an indefinite         period, subject to the right of either party to cancel the agreement within         ninety (90) days written notice to the other party, or such notice period as         the parties agree to in writing to be adequate. This agreement replaces any         previously enacted agreement dealing with the same subject matter, as         concluded between the parties, with effect from the effective date; 
		11.5 SA Life may only collect premiums on behalf of the insurer, if so duly 			        authorised by the insurer to do so. Confirmation of appointment to collect 		        premiums from the member / policyholder on behalf of the insurer is 			        stipulated in Annexure A; 
		11.6 To the extent that SA Life is authorised to receive and/or deal with 			        premiums it does so in its capacity as a financial service provider, 			        rendering intermediary services on behalf of its principals, namely the 			        clients of SA Life. Premiums payable in terms of the products will only                   	                  be paid upon actual receipt thereof by the insurer; 
		11.7 All client information which includes member and membership 				        information, shall at all times belong to SA Life and shall be held by SA 		        Life for the sole benefit of the insurer. 
	
12.	 Both SA Life and the applicant complied with their obligations under this agreement. 

Cession 

13.	 On or about 4 August 2017 and at Pretoria, alternatively Bellville, SA Life and the applicant, both parties being represented by duly authorised representatives, entered into a written agreement of cession of claims (“the cession agreement”) in respect of the respondent’s outstanding premiums which are due and payable. A copy of the cession agreement is attached to the founding affidavit as annexure FA07. The cedent therein is SA Life and the cessionary therein is the applicant. 

14.	 The material express, alternatively implied, further alternatively tacit terms of the cession agreement, inter alia, are: 
                14.1 That the cedent has a claim against the respondent for premiums due and  
                        payable in terms of the master policy agreement entered into on 28 
                        September 2016, for the period ending at 31 July 2017 for the amount of R 
                        1 318 743.84 (R One Million Three Hundred and Eighteen Thousand and 
                        Seven Hundred and Forty-Three Rand and Eighty-Four Cents) (“the claim”); 
	        
	        14.2 The cedent hereby cedes the claim to the cessionary; 
	        14.3 The cedent authorizes the cessionary to notify the respondent of the cession; 	
                        and 
                14.3 The cessionary accepts the cession upon and subject to the terms and                 
                        conditions of this agreement.

15.	Accordingly, on 14 August 2017, SA Life ceded to the applicant all rights, title and interest in and unto the claim payable in terms of the master policy agreement. By operation of the law and pursuant the cession agreement, read with the master policy agreement, the applicant was substituted as the creditor in SA Life’s existing claim to the outstanding due and payable premiums, including the master policy agreement between SA Life and the respondent. 
  	
16.	Notice of the cession was given to the respondent by way of correspondence from the applicant’s legal representatives on or about 10 August 2017. This notice was sent to the respondent’s chosen domicilium as set out in the 2008 intermediary agreement. The respondent through its legal representatives replied with a mere blanket denial, with a vague allegation that the applicant in fact owes them money. 

Breach 
		
17.	In terms of the 2008 intermediary agreement, the respondent is to pay the risk premiums and monthly premiums to SA Life on or before the first day of each month. In turn, SA Life is to pay the premiums to the applicant, as set out in the SA Life intermediary agreement. The respondent failed to pay over the premiums that are due and owing to SA Life, and thus the latter (SA Life) could not make payment to the applicant.
	
18.	As a result thereof, SA Life and the applicant entered into the cession agreement, as set out above, wherein the premiums that are due and owing by the respondent to SA Life, being the debt, was ceded to the applicant. Accordingly, the applicant has stepped into the shoes of SA Life for the period ending 31 July 2017. More specifically; the respondent breached the 2008 intermediary agreement in that it failed to pay over the premiums to SA Life for the period of August 2015 to July 2017 in the amount of R 1 318 743.84.

19.	 A copy of the premium summary showing the amounts due and owing is attached to the founding affidavit as annexure “FA10”. The summary sets out the total amount owing to SA Life for each month for the period of August 2015 until July 2017, as well as the number of policy holders for each applicable month. The applicant also attached as annexure “FA11”, a spreadsheet setting out how the amounts for each applicable month is calculated. The spreadsheet sets out the type of policy, the premium due for each policy, as well as the applicable branch of the respondent where the policies are held.

20.	 The applicant gave the respondent due notice of its breach as required by the 2008   intermediary agreement, however, despite the notice, the required thirty (30) days have elapsed since the giving of the notice, and the respondent has failed to rectify its breach. Copies of the correspondence between the parties dated 1 July and 26 July 2017 respectively are attached to the founding papers marked annexures “FA12” and “FA13”. Accordingly, despite demand, respondent has, to date, failed, refused, and/or neglected to pay SA Life and/or the applicant the amount due and owing of 
	  R 1 318 743.84 and remedy its breach. 

21.	 In the premises, the applicant elected, as it was entitled in terms of the 2008 intermediary agreement, to terminate any and all agreements between the parties, alternatively, the applicant hereby cancels any and all agreements between the parties, and claim immediate repayment of all premiums which are due and owing to it by the respondent. 

The respondent’s version

22.	 The respondent denies that the deponent to the founding affidavit (Johan Jacob Ferreira) has personal knowledge of all the relevant contents in the founding affidavit or that he is authorised to make the affidavit on behalf of the applicant or that the applicant made a valid decision to bring this application. The mentioned Johan Jacob Ferreira (“Ferreira”) inter alia does not have personal knowledge of any agreements between the respondent and SA Life Benefits Specialists (PTY) (SA Life). 

23.	 The deponent to the answering affidavit (Simon Kgosinkwe Boikanyo) (“Boikanyo”) denies that he accepted or signed or agreed with the terms of the quotation. This is self-evident from annexure FA03 to the founding papers. 

24.	 The version of the applicant is that the quotation was received and accepted on 01 November 2008. The applicant in paragraph 11 avers that the intermediary agreement was entered into after accepting the quotation on 22 October 2008. Clearly this cannot be correct. Boikanyo denies having signed annexure “FA04”. The signature on the document was definitely not made by him. Boikanyo denies that the respondent entered into this intermediary agreement with SA Life represented by Gert Loubser. At all relevant times the respondent, represented by Boikanyo dealt with Gert Loubser, (a director of SA Life). He has known the mentioned Loubser for many years. He was previously employed at KGA (insurers) with whom the respondent did business. When he (Loubser) left KGA he persuaded Boikanyo to do business with SA Life. At that stage already he (Boikanyo) knew Loubser for approximately 10 years and considered him a good friend. He visited Boikanyo at his home and even attended a launch of a new branch of the respondent’s business. Written agreements between them were not a priority at all.  

25.	 It is denied that the person who signed the annexure FA05, namely Esther Mphahlele, was ever authorised to enter into an agreement on behalf of the respondent with SA Life. Boikanyo was not aware of the fact that she apparently signed this document. It is denied that annexure FA05 constitutes an agreement between the respondent and SA Life. The respondent represented by Boikanyo and SA Life represented by Gert Loubser entered into a verbal agreement. This verbal agreement was the only agreement entered into between the respondent and SA Life. The respondent at no stage had any direct agreement with the applicant. 

26.	 It is denied that SA Life and the applicant entered into a valid cession agreement. It is further denied that the person who signed the cession was authorised by SA Life Benefits Specialists (PTY) Ltd and African Unity Life Limited respectively to sign and enter into a cession agreement. The registration number of SA Life is not 2008/255121/23 as indicated on the cession agreement. This registration number belongs to Head Start consult CC. 

27.	 In annexure “FA07” it is recorded that the cedent has a claim against the respondent for premiums due and payable in terms of a master policy agreement entered into and dated 28 September 2016, for the period ending 31 July 2017. SA Life has no claim against the respondent based on such agreement entered into and dated 28 September 2016. Just to illustrate that this averment of the applicant on its own version is not correct, the honourable Court is referred to annexure “FA10” of the founding affidavit wherein the applicant lists month of 2015 as part of the calculation of the amounts due by respondent (which is denied) and then states in the alleged cession agreement that the debt ceded is based on an agreement entered into in September 2016. It is submitted that SA Life has no valid claim of R 1 318 743.84 that could have been ceded to the applicant. 

28.	 Annexure “FA08” was received by the respondent and the applicant was informed through the respondent’s legal representative that the indebtedness is denied. The correspondence by the respondents’ legal representative included sufficient particulars in this regard. 

29.	 The respondent did not enter into the intermediary agreement referred to by the applicant. Although the application brought by the applicant is not based on this cause, the respondent wishes to, in any event, give the honourable Court information regarding the agreement between the respondent and SA Life. The verbal agreement entered into by the respondent, represented by Boikanyo and SA Life represented by Gert Loubser on or about when the respondent and SA Life commenced with business was inter alia as follows:

      29.1 The respondent would collect the premiums from the policy holders on 
              behalf of SA Life; 
      29.2 The respondent would receive a 10% collection fee from SA Life; 
      29.3 Before monthly payment of the premiums collected was done to SA Life, 
              the collection commission and all claims, considered valid by the respondent 
              and SA Life, by policy holders for funeral costs payable to the respondent, 
              would first be deducted from the amount of the premiums collected. 
      29.4 The respondent and African Life would split the profit made 50/50 to be 
              calculated at the end of February of every year. 

30.	 Unfortunately, a dispute arose between the respondent and SA Life on or about May 2017 regarding claims to be deducted from the amount to be paid over to SA Life. The latter informed the respondent that the amount of R506 264.74 is payable, but the respondent disagreed with the calculation as all claims were not taken into consideration see annexure “B” hereto being the calculation made by SA Life. The relationship between the respondent and SA Life deteriorated due to the dispute and the respondent informed SA Life that it terminates the agreement between them. The amount of R1 318 743.84 was not due and payable to SA Life and no breach of any agreement by the respondent took place. 

31.	 The respondent denies that annexures “FA10” and “FA11” reflect an amount due and owing by the respondent to SA Life. It is further denied that all the mentioned amounts were received by the respondent. After ascertainment of the amount of premiums received by the respondent, the claims for funeral costs due to the respondent must also further be subtracted as well as the commission. The profit must also still be shared in terms of the verbal agreement. The respondent has never breached the verbal agreement between the parties. The applicant was not legally entitled therefore, to cancel any agreement between the parties. 

32.	 It is denied that the applicant suffered any damages. The respondent is also uncertain about the extent of damage which the applicant alleges to have suffered. The applicant avers that it suffered damages in the amount of R1 318 743.84 in the founding affidavit but claims R2 084 834.60 in the notice of motion. The applicant should be punished with a special cost order for approaching the Court with an application well knowing that a factual dispute exists. The respondent prays that the applicants’ application be dismissed with costs on an attorney and client scale. 
The applicant’s response.

33.	 In the replying affidavit to the respondent’s opposing papers the applicant made amongst others, the following explanation: By virtue of his position within the applicant’s business, as Chief of Legal and Compliance, Mr Ferreira, (the deponent to the founding and answering affidavits) has full personal knowledge of the current matter. The deponent has attached to his papers as annexure RA1 which is proof of his authority to institute these proceedings, to do everything necessary and to sign all documents in order to enable the applicant to recover the money which the respondent owes.  

34.	In the founding affidavit, the applicant made reference to annexure FA11 which is attached to the founding papers. This is a schedule which expressly sets out payments received by the respondent to the applicant. The payments are marked with a ‘_’ sign as an indication of the decrease in the amount due and owing. For purposes of the Court’s convenience, the applicant sets out the following explanation of the schedule:

                34.1 The “F2010” number means financial year 2010, and “F2011” means 
                        financial year 2011 etc; 
	        34.2 “Opening balance” for the month is just that, the opening balance reflecting 
                        amounts which are due and owing from the previous month; 
	        34.3 “Premium” means the premiums which are due and owing for that month by 
                        the respondent to the applicant;
      34.4 “Premium Adjustment” refers to any adjustment made to reflect 
              actual/accurate data that might have been received at a later stage. This 
              occurs if the respondent failed to provide the applicant with accurate / 
              prompt data timeously. The applicant would then enter in the average for the 
              premium and make an adjustment at a later stage when the applicant 
              receives accurate data from the respondent. In short, ‘Premium Adjustment’ 
              refers to an adjustment after comparing the provision and the actual figures 
              based on the data and occurs as soon as the accurate information is provided;      
      34.5 “Deposits” means any payments received from the respondent; 
      34.6 “Deposit RD” refers to a deposit that would reflect in the applicant’s bank 
              account, only to reverse a few days later. This would usually occur in a 
              situation where there are insufficient funds from the side of the client; 
      34.7 “Claims for Prem” refer to “Claims against Premium”. What this means is 
              that when a funeral parlour (in this case the respondent) submits a claim to 
              the applicant (as underwriter), they usually are in a position to render the 
              funeral service prior to the applicant physically paying the claim out. In 
              cases like this, where the applicant can confirm that the policyholder has 
              received the benefits (i.e. the funeral has been rendered by the funeral  
              parlour), the applicant withholds / sets off the claim to be paid to the 
              respondent against the premiums, as this does not prejudice the end 
              policyholder who has already received the service; 
      34.8 “COMM for Prem” is the same concept as “Claims for Prem”, however the 
              difference is that the process of checking whether or not the policyholder 
              received the benefits does not apply here; 
      34.9 “Closing Balance” means just that, it is calculated as the premiums due, less 
              the deposit received, less the claims paid out and claims placed against the 
              premium, less all fees and fees placed against the premium. 

35.	 Accordingly, it is clear that the respondent did sign and accept the quotation and the monthly commission schedule, and in fact made payment to the applicant in terms of such agreements, as well as in terms of the other written agreements between the parties, as set out in the founding affidavit. 

36.	 On or about 22 October 2008 Ms Mphahlele, the manager of the respondent and Ms Fatima Surtee, the director of SA Life, met at the respondent’s offices. The respondent then signed the 2008 intermediary agreement. Thereafter the quotation was prepared as per the respondent’s specific requests. This process was followed as it is easier for the respondent because all questions relating to the contracts can then immediately be addressed by SA Life. Further, the needs of the respondent are then discussed at this meeting which are then included and reflected in the quotation which is drafted after the meeting to address the respondent’s specific needs. Thereafter once the quote is acceptable, the respondent signed the Group Scheme Form. Ms Mphahlele signed the document on the respondent’s instructions. Hence the different dates. 

37.	 These events are confirmed to have occurred between the respondent and SA Life by Ms Fatima Surtee, a director of SA Life and the signatory on the 2008 intermediary agreement. Ms Surtee further confirmed and verified the 2008 intermediary agreement between the parties. A copy of her confirmatory affidavit was attached to the papers and marked “RA2”. 

38.	 Accordingly, it is an error in the founding affidavit at paragraph 11 it says that the 2008 intermediary agreement was signed after the quotation. It is clear from the fact of the documents themselves that the 2008 intermediary agreement was signed by the respondent on 22 October 2008 and the quotation was signed by the respondent on 01 November 2008. It is therefore incorrect for the respondent to deny entering into the quotation (annexure FA04) and the intermediary agreement with the applicant.

39.	 It is specifically denied that any oral agreement was entered into between the parties, or that such alleged oral agreement was entered into with Mr Gert Loubser or that any agreement was entered into with Mr Loubser. This is specifically denied by Mr Loubser and he in fact confirms that the respondent entered into all agreements with Ms Surtee, and not him. A copy of the confirmatory affidavit deposed to by Mr Loubser is annexure “RA3” to the replying affidavit. Further, Ms Surtee was a signatory and thus a witness to the signing of the 2008 intermediary agreement and confirms that both parties were authorised to enter into this agreement. Should such an oral agreement have existed between the parties, which is expressly denied, the respondent has failed to attach any evidence in this regard, in its affidavit.  

40.	 Further evidence of the relationship between the parties is in the instruction received from the respondent in which it requested that the claims be batched to outstanding premiums. Attached, is this request on the respondent’s letter head, signed by Mr Simon Boikanyo, marked “RA4”. Attached to the applicant’s papers is a fax to email correspondence from the respondent to SA Life in which the respondent sent through new client application forms, cancellation lists, and amendments to be made to the policies, marked “RA5”. Accordingly, it is abundantly clear that the respondent signed the various written agreements and, in fact, performed in terms of them. 

41.	 The representation made to the applicant in this regard; was relied upon by the applicant as Ms Mphahlele as being the duly authorised agent of the respondent. Further, the Group Scheme Form clearly provides that the person signing the form, inter alia, that he/she binds the abovementioned company to this agreement. Under Ms Mphahlele’s signature it states the following “On behalf of the Group Scheme, he who is authorised”. However, on the assumption that Ms Mphahlele was not authorised to sign the document (which is denied), the respondent still made payments to the applicant as per the written agreements, and as set out and explained herein above regarding annexure FA11. At no stage does the respondent deny making payments to the applicant under the written agreements. 

42.	 The respondent seems to have misunderstood the cession agreement and its terms. The cession agreement provides that the applicant has a claim against the respondent for premiums payable by the respondent in terms of the Master Policy Agreement entered into and dated 28 September 2016, for the pending period ending at 31 July 2017 for the amount of R 1 318 743.84. this clearly means that the R1 318 743.84 due and owing by the respondent is claimable by the applicant in terms of the cession agreement, being the amount due and owing for the period ending 31 July 2017. The cession agreement doesn’t assign a starting date for the period, only an ending date. Accordingly, there is nothing correct about FA10 making reference to the amounts due and owing by the respondent as from 2015 until 31 July 2017. The reference made to the 2016 agreement is made to the Master Policy Agreement and not to the cession period. 

43.	 On or about 4 July 2017 the applicant terminated the written agreements with the respondent. A copy of the letter dated 1 July 2017 and covering email send by Ms Leanne Schreiber, being the Legal and Compliance specialist for the applicant, to the respondent was attached and marked “RA9”. The reason for the termination was that the respondent failed to make payments of the premiums to SA Life in 2017, as set out in the founding papers. Despite the applicant’s termination notice, a month later, being on or about 4 August 2017, the respondent sent SA Life a cancellation letter. A copy of the notice is annexure “RA10”. Accordingly the respondent is well aware of the relationship between the parties. As a result of the cancellation, the applicant, as is required by the Financial Services Board (“FSB”), informed the FSB if the underwriting of any scheme is cancelled. This was done; proof thereof is annexure “RA11” to the replying affidavit. 

44.	 Regarding the allegations at paragraph 29.4 of this judgment. Specifically, if the respondent feels that any claims have been approved but not yet paid, or have not been taken into consideration, as set out in annexure B of the answering affidavit, the correct process for the respondent to follow is to firstly, provide the applicant with additional claim information; and secondly to provide the applicant with confirmation that the funeral services has been rendered (approved but not yet paid). The respondent, being a funeral services provider for about two decades, should reasonably be aware of this process. Further, nothing prevents the respondent from approaching the applicant now, before the matter is heard, in an attempt to settle the issue between them. This will allow the parties to identify and correct any discrepancies that may exist and allow the applicant to do a full reconciliation. However, the applicant is unable to do so until the respondent provides the required detailed information.  

45.	 The amounts claimed by the applicant as set out in the annexures were premiums due and owing to it by the respondent for existing policies. Should the respondent not have received these amounts, for whatever reason, then the individual policyholder failed to pay a monthly premium to the respondent resulting in the policy lapsing. If this occurred, then both SA Life and the applicant had to be informed of this by the respondent in order to cancel the underwriting of the particular policyholder. As the respondent has not informed either SA Life or the applicant of such an occurrence, the applicant remained on cover for the policyholder and raised premiums, and thus the applicant carried the risk. 

46.	 It is denied that from the premiums the funeral costs due to the respondent are subtracted therefrom, and that the collection commission is subtracted further therefrom. It is further denied that there was any sharing of the profit or that there was a verbal agreement between the parties. What occurs when the respondent received payment from the policyholder is that the respondent on-pays the agreed premiums to SA Life who in turn pays the applicant. Once a claim is received by the respondent for a funeral pay-out, the respondent pays out the cover and requests reimbursement from SA Life, alternatively, the applicant will set off outstanding premiums against the claims. With regard to the collection commission, it is only due to the respondent upon payment of the premiums to SA Life (and in turn the applicant). The collection commission would only be payable by the applicant to the respondent once the premium is received. 

Points in limine

47.	 The respondent raised the following three points in limine:

(1)	 No prima facie case has been made out in the founding papers; 
(2)	 The plaintiff has no locus standi in matter; and 
(3)	 There are material disputes of facts. 
	
48.	 Just before the points in limine could be argued, Advocate Carvalheira raised an objection against the respondent’s points in limine being argued and submitted that the respondent should be disallowed by the Court to make any submissions relating to the points in limine. The view held by Advocate Carvalheira was therefore that the parties should go straight to the merits and address the Court thereon. The reason why this unusual procedure was suggested by the applicant’s counsel was that the respondent had raised the points in limine for the first time in the heads of argument. In its answering and supplementary affidavits, the said points in limine were not raised. The concern raised on behalf of the applicant was that if submissions were allowed to be made by the parties on the points in limine then there was a great potential that the applicant would suffer prejudice. The respondent, on the other hand, submitted that it was legally entitled to raise these preliminary points regardless of whether the respondent had not alluded to them in its affidavits opposing the application. The Court was referred to a number of authorities in this regard. 

49.	 In Swissbourgh Joffe J, having considered a number of decisions stated: 

“It is trite law that in motion proceedings the affidavits serve not only to place evidence before the court, but also, to define the issues between the parties. In so doing the issues between the parties are identified. This is not only for the benefit of the court, but also, and primarily for the parties. The parties must know the case that must be met and in respect of which they must adduce evidence in the affidavits. In Hart v Pinetown Drive-In Cinema (Pty) Ltd 1972 (1) SA 464D, it was stated at 469C-E that:
         
        ‘where proceedings are brought by way of application, the petition is not the 
        equivalent of the declaration in proceedings by way of action. What might be 
        sufficient in a declaration to foil an exception, would not necessarily, in a  
        petition, be sufficient to resist an objection that a case has not been adequately 
        made out. The petition takes the place not only of the declaration but also of the     
        essential evidence which would be led at a trial and if there are absent from the 
        petition such facts as would be necessary for determination of the issue in the 
        petitioner’s favour, an objection that it does not support the relief claimed is 
        sound’ 

          An applicant must accordingly raise the issues upon which it would seek to rely in the  
     founding affidavit. It must also do so by defining the relevant issues and setting    
out the evidence upon which it relies to discharge the onus of proof resting on it in respect thereof. As was held in Prokureursorde van Tranvaal v Kleynhans 1995 (1) SA 839 (T) at 849B in regard to a constitutional issue

        ‘Dit is myns insiens vir die behoorlike oderning van die praktyd absoluut 
        noodsaaklik dat die konstitusionele punte nie deur advokate as laaste 
        debatspunt uit die mou geskud word maar pertinent in die stukke as gesklilpunt 
        geopper word sodat dit volledig uitgepluis kan word deur die partye ten einde 
        die Hof in staat te stel om die behoorlik te bereg.’ 

The dictum is not only of application to constitutional issues – it applies to all issues. Nor is the dictum only of application in the context of a founding affidavit - it applies equally to answering affidavits and replying affidavits. The more complex the disputes between the parties the greater the precision that is required in the formulation of the issues. See in regard to actions Imprefed (Pty) Ltd v National Transport Commission 1993 (3) SA 94 (A) at 106-7. Although this dictum relates to pleadings in an action it is equally applicable to affidavits in motion proceedings.

The facts set out in the founding affidavit (and equally in the answering affidavit and replying affidavit) must be set out simply, clearly and in chronological sequence, without argumentative matter (see Reynolds NO v Mecklenberg (Pty) Ltd 1996 (1) SA 75 (W) at 751). A distinction is drawn between primary facts and secondary facts:

         ‘Facts are conveniently called primary when they are used in the basis for   
          inference as to the existence or non-existence of further facts, which may be 
          called, in relation to primary facts, inferred or secondary facts. (See Willcox 
          and others v Commissioner for Inland Revenue 1960 (4) SA 599 (A)602A)’ 

In the absence of primary facts, the alleged secondary facts is merely a conclusion of law (Radebe v Eastern Tranvaal Development Board 1988 (2) SA 785 (A) at 793D)

Regard being had to the function of affidavits; it is not open to an applicant or a respondent to merely annex to its affidavit documentation and to request the court to have regard to it. What is required, is the identification of the portions thereof on which reliance is placed and an indication of the case which is sought to be made out of the strength thereof. If this were not so the essence of our establish practice would be destroyed. A party would not know what case must be met (see Lipschitz and Schwartz NO v Markowitz 1976 (3) SA 772 (W) at 775H and Port Nolloth Municipality v Xahalisa and others 1991 (3) SA 98 C at 111B-C. 

In  Heckroodt NO v Gamiet 1959 (4) SA 244 (T) at 246A-C and Van Rensburg v Van Rensburg en andere 1963 (1) SA 505 (A) at 509E-510B, it was held that a party in motion proceedings may advance legal argument in support of the relief or defence claimed by it where such arguments are not specifically mentioned in the papers, provided they arise from the facts alleged.

50.	 In Minister of Land Affairs the Court held that:

“_ _ _. The case that was made out, was conclusively refuted in the replying affidavits as I pointed out in paras [18] to [20] above. It is not proper for a party in motion proceedings to base an argument on passages in the documents which have been annexed to the papers when the conclusion sought to be drawn from such passage have not been canvassed in the affidavits. The reason is manifest – the other party may well be prejudiced because evidence may have been available to it to refute the new case on the facts. The position is worse where the arguments are advanced for the first time on appeal. In motion proceedings, the affidavits constitute both the pleadings and the evidence, and the issues and averments in support of both parties’ cases should appear clearly therefrom. A party cannot be expected to trawl through lengthy annexures to the opponent’s affidavits and to speculate on the possible relevance of facts therein contained. Trial by ambush cannot be permitted”. 

51.	 More recently, in Democratic Alliance v Kouga Municipality and Others, the Supreme Court of Appeal, having referred to the passage above in Minister of Land Affairs stated;

“That is not to suggest that a party in motion proceedings may not advance legal argument in support of the relief claimed where such argument is not specifically mentioned in the papers. That, a court would countenance, provided that the argument arises from the facts alleged_ _ _”. 

52.	 In the case of Valentino, Harms JA accepted that: 

“There are a number of cases which recognise the right of a respondent, in spite of having filed an answering affidavit, to argue at the outset that the founding affidavit does not make out a prima facie case for the relief claimed. They for two reasons suggest that the procedure is akin to an exception based on the ground that a summons or similar initiating process does not disclose a cause of action. The founding affidavit alone falls to be considered, and the averments contained therein must be accepted as true. _ _ _”

53.	 Admittedly there are cases in which to raise a point in limine for the first time in the heads of argument or just at the outset of the hearings in Court may amount to trial by ambush. In most of these instances there is a potential that the applicant may be prejudiced. Throughout her argument, counsel for the applicant seemed to dispel any suggestion that in certain cases it may not be trial by ambush when the points in limine are raised for the first time in the heads of argument. I am unable to share the same view. In this regard, I agree with counsel for the respondent that especially where questions of law are addressed in the heads of argument, in the form of points in limine, to prevent the respondent to argue these aspects just before submissions on the merits are made, would lead to unfair results or an unfair trial. 

54.	 I have carefully considered the submissions by both counsel in relation to the current issue and I have considered the authorities but I do not think that the applicant, in casu may suffer prejudice if the Court directs that the points in limine be dealt with before going into the merits. Only three points in limine have been raised. These are: 
(1)	 No prima facie case has been made out in the founding affidavit; 
(2)	 The applicant has no locus standi; and 
(3)	 There are material disputes of facts. 

55.	 In regard to the issue of locus standi, the respondent avers that the applicant failed to annex to its founding papers, the alleged written contract between the cedent and the respondent. That written contract is the alleged Master Policy Agreement. In dealing with the last point in limine, Harms JA said we concentrate on the founding affidavit only. Finally, the issue of “no prima facie case made out in the founding affidavit”, here the respondent’s case is that the applicant has failed to annex a copy of the Master Policy Agreement in terms of Rule 18(6) which makes it obligatory for that requirement.

Order. 

56.	 It is therefore my considered view that the points in limine should be argued first when the case resumes. Consequently, the following order is made:
	
1.	The three points in limine raised by the respondent are to be argued first before the hearing of the merits of the case.
2.	Costs shall be costs in the cause.
3.	 The applicant is directed to request the Registrar to allocate a date (one day) for hearing of this application.
4.	In the application for a trial date, the applicant shall point out to the Registrar that the Judge who is seized with the matter is myself.

SAMKELO GURA
JUDGE OF THE HIGH COURT

APPEARANCES:
	
DATE OF HEARING:			31 JANUARY 2019					     	
DATE OF JUDGMENT:		     	30 MAY 2019

COUNSEL FOR APPELLANT: 			ADV R CARVALHEIRA	
COUNSEL FOR RESPONDENT:           ADV L VAN WYK

ATTORNEYS FOR APPELLANT: 	ENDERSTEIN VAN DER MERWE ATT c/o MAREE & MAREE ATTORNEYS	    	
ATTORNEYS FOR RESPONDENT:  	DE BRUYN & DE KOCK INC c/o D C KRUGER 							ATTORNEYS