---

SAFLII Note: Certain personal/private details of parties or witnesses have been redacted from this document in compliance with the law and SAFLII Policy

 

IN THE NORTH WEST HIGH COURT, MAFIKENG

 

CASE NO:  2328/2017

Reportable: YES / NO

Circulate to Judges: YES / NO

Circulate to Magistrates: YES / NO

Circulate to Regional Magistrates: YES / NO

 

In the matter between:

 

CASTCRETE (PTY) LTD                                                  Applicant

Registration Number: 1[...]

 

and

 

ASSASI BHAMS INVESTMENTS (PTY) LTD               Respondent

Registration Number 1[...]

 

DATE OF HEARING                                 :           26 MAY 2023

DATE OF JUDGMENT                              :           06 JUNE 2023

 

FOR THE APPELLANT                            :           ADV. LOUW

FOR THE RESPONDENT                         :           MR. WESSELS

 

JUDGMENT ON LEAVE TO APPEAL

Delivered: This judgment was handed down electronically by circulation to the parties’ representatives via email. The date and time for hand-down is deemed to be 10h00 on 06 June 2023.

 

ORDER 

 

            Consequently, the following order is made:

 

(i)        The application for leave to appeal to either the Full Court of this Division, alternatively to the Supreme Court of Appeal (SCA), is dismissed.

 

(ii)      The applicant is ordered to pay the costs of this application for leave to appeal, on a party-and-party basis, to be taxed.

 

JUDGMENT ON LEAVE TO APPEAL

 

HENDRICKS JP

 

Introduction

 

[1]     This is an application for leave to appeal, presumably either to the Full Court of this Division or to the Supreme Court of Appeal (SCA), (as it is not specified), “against the whole of the judgment and order” handed down on 19^th October 2022 by this Court. The grounds of appeal are exponentially set out as follows:

 

“29.   The Court a quo erred in its finding that Ms Horton no longer worked for the Plaintiff. This was not Ms Horton's evidence. She testified that she is still the managing director.

 

30.    The Court a quo erred in its finding that the Plaintiffs claim was ceded to Credit Guarantee. There was no evidence that the Plaintiffs claim had been so ceded and Ms Horton never gave any testimony to that effect.

 

31.    The Court a quo erred in its finding that the Defendant had no onus in the matter. The Defendant raised various specific defences in respect of which it bore the onus.

 

32.    The Court a quo erred in its finding that Ms Horton had conceded that errors could have been made in respect of the Defendant's indebtedness. Ms Horton detailed the exact amount of the Defendant's indebtedness during her evidence. This evidence was uncontested as a result of the Defendant not leading any evidence.

 

33.    The Court a quo erred in its finding that Ms Horton conceded that the Defendant may have understood that it was entitled to a discount on the basis of the invoices sent to it. Ms Horton consistently and vociferously testified that the Plaintiff had repeatedly told the Defendant that it was not entitled to a discount.

 

34.    The Court a quo erred in its finding that there was doubt whether the claim amount was correctly computed. Ms Horton testified extensively about the amount claimed and the manner in which the amount was calculated. This evidence was uncontested as a result of the Defendant not leading any evidence.

 

35.    The Court a quo erred in its finding that Ms Horton did not satisfactorily explain why the Defendant was not entitled to a refund for the return of pallets. This is not the case. Ms Horton explained the reasons why the Defendant was not entitled to a refund clearly and consistently. Much time was spent on this very aspect during Ms Horton's testimony. Once again, Ms Horton's evidence on this aspect stands uncontested.

 

36.    The Court a quo erred in its finding that the balance of probabilities indicated that it was not agreed between the parties that the Defendant would only be entitled to a discount if the breakages constituted more than 2.5% of the order. There was no evidence from the Defendant. Thus, the version of the Plaintiff had to prevail. There was no basis to find that the agreement was concluded on any terms other than those alleged by the Plaintiff.

 

37.    The Court a quo erred by placing weight on the fact that no evidence was led in respect of Credit Guarantee's locus standi to prosecute the claim in the name of the Plaintiff and that Credit Guarantee is not a party to the proceedings. The Court a quo ignored the principles of subrogation which have the effect that it was not necessary for any evidence to be led in respect of Credit Guarantee's locus standi or for Credit Guarantee to be party to the proceedings. By virtue of the principles of subrogation, the Plaintiffs claim could be validly pursued in the name of the Plaintiff in the absence of such evidence. The following extracts from Reinecke et al, South African Insurance Law are instructive in this regard:

 

37.1.   At paragraph 18.4 on page 386, the authors explain that the principle of subrogation provides an insurer the right to sue in the name of the insured if the insurer has indemnified the insured. The authors state it thusly:

 

"Should the insurer have paid the insured a full indemnity before any payment by the third party, the insurer acquires the right, as against the insured, to enforce the latter's right to claim compensation from the third party. This right is referred to as the insurer's right of subrogation, which entails the insurer coming in the place of the insured as regards such third party."

 

37.2.   The authors discuss the meaning of "subrogation" at paragraph 18.13 on page 388 and state in this regard the following:

 

"In its literal sense the word 'subrogation' means the substitution of one party for another in some or other legal capacity, such as creditor. In the context of insurance, however, the word is used in a metaphorical sense. 'Subrogation refers to the insurer being placed in the position of the insured — stepping into the shoes of the insured — as regards a liable third party. In this sense subrogation is simply a procedural device in the service of the indemnity principle. It allows the insurer, as against the insured, the right to take charge of the proceedings against third parties who are liable for the loss to the insured; the proceedings are conducted in the name of the insured and the insurer merely acts as dominis litis. "

 

37.3         The authors continue at paragraph 18.15 on page 388 as follows:

 

"In this context, subrogation is simply a right the insurer has against the insured; it has no right against the third party. Subrogation involves only the insurer and the insured and therefore has no bearing on the third party or its legal liability at all. In the same way as the insurer's actual payment to a plaintiff is res inter alios as far as a third party defendant is concerned, so too are a range of other matter directly or even just indirectly involving subrogation: the existence of the insured's insurance contract, the potential liability of his insurer, the fact that the insurer may or may not exercise its right of subrogation, the fact that the insurer may or may not exercise its right of recourse."

 

37.4         At paragraph 18.17 on page 389 it is stated as follows:

 

"In short, subrogation is a matter between the insured and the insurer. It is concerned solely with the mutual rights and liabilities of the parties to the insurance contract and convers no rights and imposes no liabilities on third parties. "

 

37.5         At paragraph 18.9 on page 387, the authors discuss a third party's liability toward an insured in circumstances where the insured can claim an indemnity from the insurer. The authors state the following in this regard:

 

"...the third party is generally not released from liability in such a situation but remains liable, to be sued by the insured or the insurer exercising its right of subrogation. In effect, the third party is considered to be primarily liable to the insured when compared to the insurer; the liability of the insurer is in other words seen as being of a subsidiary nature. For this reason, the insurance payment, it is said, is res inter alios as far as the third party is concerned; it is a collateral benefit not to be taken into account in determining the imposition or the extent of the third-party's liability. "

 

37.6         The authors continue at 18.10 as follows:

 

"Insurance payments are therefore to be ignored in assessing the third party defendant's liability, whether based on delict, contract, or enrichment..."

 

37.7         Discussing the purpose of subrogation, the authors state at paragraph 18.12 on page 388 as follows:

 

"By reason of the insurer's right of recourse, the continued liability of the third party is therefore ultimately for the benefit of the insurer and may, even if only indirectly, serve to reduce the cost of insurance by allowing the insurer in such situations to recoup its ‘loss’ from a source other than its premium income. "

 

37.8         In paragraph 18.27, the authors state the following:

 

"Since the main purpose of the doctrine of subrogation is to prevent the insured from being over-compensated, subrogation applies to every type of 'indemnity insurance" and without the need for any express provision in the insurance contract, on the basis of an ex lege implied term and hence automatically. "

 

37.9         At paragraph 18.51 on page 397, the authors discuss the requirements of subrogation and emphasise that it is only the insured, not a third party which may raise non-compliance with the requirements. The authors put it thusly:

 

"Because subrogation is a matter between the insurer and the insured and confers a right on the former only against the latter, only the insured, and not a third party defendant may raise as a defence the fact that one or more of these requirements have not been met,"

 

37.10      At paragraph 18.112 on page 410 the authors state:

 

"The doctrine of subrogation afford the third party no additional defences against the insured's claim, nor does it take away any of the defences he would have had if there had been no subrogation at all. That is because subrogation, and all its concomitant features, are exclusively matters between the insurer and the insured; subrogation does not involve any transfer of the insured's rights against the third party. "

 

37.11      At paragraph 18.115 on page 410 the authors state:

"It is trite that any payment the insured received from his insurer for a loss cannot ordinarily be taken into account in assessing the amount of compensation he may recover from the third party in respect of the same loss. Such insurance payment is res inter alios acta as far as the third party is concerned; it is a collateral benefit that does not reduce or extinguish the third party defendant's liability towards the insured plaintiff. "

 

38.    The Court a quo erred by finding that there were flaws in the Plaintiffs reconciliation statement. No material flaws were established. In any event, even if there were flaws, the Plaintiff would still be entitled to judgment for the amounts unaffected by the alleged flaws.

 

39.    The Court a quo erred in its finding that the invoices relied upon by the Plaintiff were not proved by the Plaintiff and that it amounted to hearsay. The Defendant never disputed the invoices or the Plaintiffs statement. It was therefore not necessary for the Plaintiff to prove the invoices. In any event, Ms Horton specifically testified about the statement, the invoices listed thereon and the outstanding amount. None of this evidence was gainsaid by the Defendant.

 

40.    The Court a quo erred in its finding that the Plaintiff did not prove its case. Even if the pleadings are considered on their own without reference to the evidence, the only issue disputed was the Defendant's contention that he was entitled to certain credits. The Defendant bore the onus to prove the alleged credits. The Defendant did not lead any evidence. Thus, the Plaintiff was entitled to succeed on the pleadings. Moreover, Ms Horton testified about the statement, the invoices and the outstanding amount due. This evidence stands uncontested because the Defendant did not testify.”

 

[2]        Section 17 (1) (a) of the Superior Courts Act 10 of 2013 states that leave to appeal may only be granted where the Judge concerned is of the opinion, that the appeal would have a reasonable prospect of success; or if there is some compelling reason why the appeal should be heard, including conflicting judgments on the matter under consideration.

 

See:   •       The Mont Chevaux Trust (IT2012/38) v Tina Goosen (unreported LCC Case No. LCC14R/2014 dated 3 November 2014).

 

•      Acting National Director of Public Prosecution v Democratic Alliance (unreported GP Case No, 19577/09 dated 24 June 2016) at par [25].

 

•      Notshokovu v S (unreported SCA Case No. 157/15 dated 7 September 2016);

 

•      Democratic Alliance v The President of the Republic of South Africa (unreported GP Case No. 21424/2020) dated 29 July 2020 at par [4];

 

•      Magashule v Ramaphosa 2021(3) All SA 857 (GJ) (a decision of the Full Court) at par [5].

 

•      Ramakatsa and Others v African National Congress (unreported SCA Case No. 724/2019) dated 31 March 2021 at par [10].

 

[3]        This Court in its judgment on the merits, dealt extensively with what are submitted as grounds of appeal listed in paragraphs 29 to 36 and 38 to 40, supra, under the heading “Grounds for Leave to Appeal”, and same need not be reiterated herein. Suffice to state that same have been considered anew, in determining whether there are any reasonable prospects of success on appeal.

 

[4]        The grounds listed in paragraph 37, supra, as grounds of appeal, need some consideration. These grounds of appeal have as basis the principle of subrogation. It is contended by the applicant that this Court “ignored” the principles of subrogation, “which have the effect that it was not necessary for any evidence to be led in respect of Credit Guarantee’s locus standi or for Credit Guarantee to be party to the proceedings. By virtue of the principles of subrogation, the Plaintiff’s (applicant’s) claim could be validly pursued in the name of the Plaintiff (applicant) in the absence of such evidence”.

 

[5]        I can do little better than to quote extensively from the respondent’s Heads of Argument in this regard, from paragraphs 49 to 59. It reads thus:

 

“49.   Credit Guarantee's involvement is not what the judgment in this matter turns on but the Plaintiff's extensive exposé on the application of the principle of subrogation begs a reply of sorts. Where Plaintiff respectfully has it wrong, is that it accepts as a fact that the principle of subrogation is applicable as Credit Guarantee had an insurance agreement with Plaintiff. This proposition is unfortunately not supported by the evidence.

 

50.    Mrs Horton gave evidence to the effect that Credit Guarantee paid Plaintiff 70% of the claim amount. By doing so Credit Guarantee evidently took over her claim and is now proceeding with the claim in Plaintiff's name.

 

51.    It was clear from Mrs Horton's evidence that Credit Guarantee initiated these proceedings and had been prosecuting this action right from its inception.

 

52.        By implication (on some construct of the unknown agreement concluded between Plaintiff and Credit Guarantee) Credit Guarantee would be entitled to the full claim amount if successfully collected from Defendant. This would in effect mean that Credit Guarantee would receive the benefit of 30% of the claim amount. The basis of this agreement is not pleaded. In fact, Credit Guarantee remained incognito until Mrs Horton was cross-examined.

 

53.        It should be mentioned that the 30% benefit that Credit Guarantee receives, finds more favour with a debt purchase agreement than an insurance agreement. After all, an insurance agreement aims to indemnify the insured. Receiving only 70% of Plaintiff's damages does not reasonably seem like an indemnification derived from an insurance agreement. With the limited evidence of Mrs Horton relating to Credit Guarantee, she opened the door to the role of Credit Guarantee in the claim.

 

54.        To this extent, there was no evidence placed before Court by Plaintiff anywhere during the course of the proceedings regarding:

 

54.1  The nature of Credit guarantee's involvement in this matter.

 

54.2  How and why it was involved in the alleged credit application process of Defendant.

 

54.3  What the alleged terms were Defendant consented to when it applied for credit with Plaintiff.

 

54.4  On which basis Credit Guarantee might have acquired the right to collect Plaintiff's debts on its behalf.

 

55.        More importantly, no evidence was led on Credit Guarantee's alleged locus standito litigate and prosecute the claim in the name of Plaintiff. To this day, the Court and Defendant were left guessing as to whether Credit Guarantee concluded an insurance agreement or debt purchase agreement with Plaintiff.

 

56.        If the agreement between Plaintiff and Credit Guarantee is an insurance agreement, the principle of subrogation is applicable. On the other hand, if not, subrogation does not come into play. In that event, the locus standi of Credit Guarantee becomes an ever more important inquiry as correctly found in the judgment of this Honourable Court. If the agreement with Credit Guarantee was a debt purchase agreement, Credit Guarantee had to prove locus standi.

 

57.        To underscore this point, no evidence was led by the Plaintiff regarding the nature of its agreement with Credit Guarantee.

 

58.        The only evidence before Court is to the effect that Plaintiff is not owed anything by Defendant on the alleged outstanding debt.

 

59.        What is clear from the evidence of Mrs Horton is that she knows very little of the institution of the action. She had not instructed the attorneys acting on behalf of Plaintiff to institute or prosecute this action. Mrs Horton was, at most, a witness for Credit Guarantee.”

 

[6]        The aforementioned encapsulate what the essence of the opposition to these grounds of appeal are. I need not add much, save to state that these grounds of appeal, like all the other grounds of appeal, have no reasonable prospect of any success on appeal. There is also no compelling reason why the appeal should be heard. So too, are there no conflicting judgments on the matter under consideration.

 

[7]        Resultantly, the application for leave to appeal stands to be dismissed. There is no plausible reason why costs should not follow the result and be awarded in favour of the successful litigant, the respondent (defendant).

 

Order

 

[8]        Consequently, the following order is made:

 

(i)           The application for leave to appeal to either the Full Court of this Division, alternatively to the Supreme Court of Appeal (SCA), is dismissed.

 

(ii)      The applicant is ordered to pay the costs of this application for leave to appeal, on a party-and-party basis, to be taxed.

 

 

R D HENDRICKS

JUDGE PRESIDENT OF THE HIGH COURT OF SOUTH AFRICA,

NORTH WEST DIVISION, MAHIKENG

---