IN THE HIGH COURT OF SOUTH AFRICA
(WESTERN CAPE HIGH COURT. CAPE TOWN)

DATE:						12 MARCH 2010
In the matter between:

JOSE SIELI t/a DOWE NOOT				APPELLANT

and

JUDGMENT

The appellant initially sued first and second respondents in the magistrate's court, Bellville, for payment of the sum of R47 000, arising out of an agreement in terms of which it was averred that the respondents received 17 pianos on consignment from the appellant, sold eight thereof, but failed to make payment of the purchase price.

Given the central role which the close corporation came to play and an additional cause of action related to the close corporation which the appellant now seeks to introduce on appeal, it is useful to consider how and when it was introduced into the action. Only the first and second respondents were initially sued by the appellant. At some stage prior to trial the close corporation was added as the third defendant. According to the particulars of claim, judgment was sought against all three defendants jointly and severally with no distinction being drawn between them in regard to the question of with whom the plaintiff or appellant had contracted or which party was responsible for the alleged breach of contract.
The appellant applied unsuccessfully for summary judgment against the first respondent who set out in his opposing affidavit that, what I shall refer to as the consignment agreement, might well in fact have been concluded with the close corporation, the third respondent. The first respondent also filed a special plea, averring that at all times he had acted in his capacity as a member of third respondent and thus could not be held liable personally.

Appellant succeeded in taking default judgment against the second respondent, which judgment was rescinded on her application. In her affidavit in support of the rescission application, the second respondent squarely set out her case as being that the consignment agreement was concluded with the close corporation and not her personally. It was in all probability for these reasons that the appellant added third respondent as a party to the proceedings. No pleadings were filed on behalf of third respondent, probably because sometime before trial it was placed into liquidation. Nor for that matter was the liquidator cited or, as far as one can see, notified of the appellant's claim against it.

The magistrate found that second respondent could not be held liable since she had contracted with the appellant in her capacity as a member and 50% shareholder of the close corporation. He found further that first respondent could not be held liable, because on the evidence he had played no role at all in the conclusion of the agreement. The appellant sought to hold second respondent co-liable with the third respondent, the close corporation, for the outstanding monies on the basis of s 63(1)(a) of the Close Corporations Act, No. 69 of 1984, read with s 22(1) thereof. Together these sections provide, in certain circumstances, for the co-liability of a close corporation member where he or she uses the name of the corporation, but fails to add the abbreviation CC (or in Afrikaans "BK"). In this regard the magistrate held that since the particulars of claim had made no mention of this -cause of action or ground of liability, the appellant was precluded from relying thereon.

The appellant, in its heads, has abandoned its appeal against the judgment handed down in favour of the second respondent. What remains is the appeal against the judgment against the first respondent. What remains is the appeal against the judgment in favour of the second respondent. There is no appearance today on behalf of the second respondent and nor were any heads of argument filed on her behalf. There is, however, no indication that the second respondent has abandoned the judgment which she obtained, or her opposition to the appellant's application to amend his particular of claim.

will be sparingly exercised and an amendment will only be allowed in cases where the Court is satisfied that the other side will not be prejudiced thereby. In order to satisfy this test, the party seeking an amendment on appeal must ordinarily satisfy the Court of appeal that the issues sought to be raised have been thoroughly canvassed in the Court below."

"The general rule is that an amendment will be allowed only in cases in which the issues have been thoroughly canvassed in the court below. The Court of Appeal will allow an amendment of the pleadings in the court of first instance, so as to introduce an entirely new cause of action and will give judgment on it only when it is satisfied that the evidence before it fully approves the new cause of action and that no other evidence would have been led in the court of first instance, had the issue been raised there, which might have led to a different conclusion on that issue."

He submitted that there were three additional reasons why the amendment should be granted. He set these out in the heads as follows. Firstly, the legal representative who represented the plaintiff was arrantly inexperienced. Secondly, a grave injustice will be done if the plaintiff is not permitted to correct the inept decision not to amend at the trial. Thirdly, the case which amendment seeks to cure is simply the omission to expressly rely on section 63(1)(a) of the Act. In other words the subject matter sought to be introduced by the amendment was fully canvassed at the trial.

The reason relating to the alleged ineptitude of the appellant's legal representative can, in my view, safely be ignored since to give any weight to such a factor in circumstances such as these will be to open a veritable Pandora's box. The question of an injustice being done must be viewed through the prism of the established test, since any decision to allow a late amendment could potentially do an injustice to the opposing party. Similarly, the third reason, that an amendment simply cures the omission to rely on s 63(1)(a), is no reason at all, but only a restatement of the essential problem which the appellant faces, namely that its particulars of claim in no way apprise the second respondent that this is the case, or an alternative case, which she was required to meet.

It is so that the parties raised from time to time the s 63(1)(a) issue. The record reveals that the appellant's representative sought to rely on the alternative cause of action at an early stage in the trial. While leading the plaintiff he quoted the relevant provisions of the section. This was immediately met with an objection from the respondent's representative in the following terms:

"Thank you Your Worship....I object to the introduction of this as any course(sic) of action of any basis of the claim, in fact if the plaintiff is going to rely on section 63 of the Close Corporations Act that   had   to   be   specifically   pleaded   with   the circumstances in the particulars of claim....so I will allow the plaintiff to carry on without objecting but if this has become the course(sic) of action then the Defendants are going to object, as the Court pleases."

The appellant's representative was then asked in terms by the magistrate whether he relied on s 63(1)(a) as a cause of action in the following passage:

These exchanges, in my view, admit of no other interpretation, but that appellant's legal representative no longer sought to rely on this cause of action, either in the main or in the alternative. I am strengthened in this view not only by the magistrate's finding that the appellant was not entitled to rely on this cause of action but also by the stance taken by the respondent's representative in argument before the trial court.
The arguments of the representatives are contained in the record and contain a passage from the respondent's representative in which he makes it clear that his position remained that such issue, and other issues relating to alleged omissions in terms of the Close Corporations Act, were not pleaded by the appellant and could not be relied upon by him.

The citation of part of the third respondent's name, c/o the second respondent coupled with the appellant's evidence that he contracted with the second respondent personally and her insistence that she contracted on behalf of the close corporation, inevitably led to a close focus on the significance of the name "John Elford" in the consignment note. It does not follow, however, that the entire issue of the omission of the abbreviation CC from the consignment note, and it's implications for third respondent's personal liability in terms of s 63(1)(a) of the Act, was thoroughly canvassed in the trial, particularly seen against the outcome of the objection initially raised by respondent's representative to appellant's reliance on the alternative cause of action.

It is also so that other evidence emerged during the trial which would, in the ordinary course, have a bearing upon a claim based on s 63(1)(a) such as second and third respondents' status as members, their respective duties and how the CC identified itself by signage. But this evidence was also material to the anterior question of whether the agreement was concluded between appellant and the second respondent personally or the CC. The fact, thus, that this evidence exists on the record does not necessarily mean or imply that the parties placed all the evidence which they would have had the alternative cause of action been pleaded, let alone that they conducted or presented their cases on this basis.

These considerations are raised by the second respondent's legal representative in the opposing affidavit he filed in response to the appellant's application:

The second respondent points out that the only way the alternative cause of action can be canvassed is by the hearing of further evidence or the entire rehearing of this case. In this case, it is said on her behalf, that either such step is neither necessary or justified nor fair nor reasonable. I am of the view that this objection is well founded. The second respondent has been put through the trouble and expense of a trial in the magistrate's court plus an appeal and now faces a rehearing of the matter, or at best another mini trial dealing with a new cause of action. The fundamental reason for this is the appellant's failure to amend his pleadings to include the additional cause of action prior to or even during the initial trial, and this in circumstances where his representative made a clear election not to do so.

"Where, however, remittal is asked for by a party who has failed, despite having had the opportunity to do so, to produce any evidence, or any legally admissible evidence, or all the evidence available on a point that was plainly in issue, the application will usually be refused. The principles applied in deciding whether to allow a party to place further evidence before a Court of Appeal are as follows:
1. It is essential that there should be finality to a trial and therefore if a suitor elects to stand by the evidence which he adduces, he should not (later) be allowed to adduce further evidence unless the circumstances are exceptional.
2. The party who makes the application must show that the fact that he has not brought further evidence forward was not attributable to any remissness on his part....
3. The evidence tendered must be weighty, material and presumably worthy of belief and must be such that, if adduced, it will be practically conclusive.
4. If conditions have so changed that the fresh evidence will prejudice the opposite party, the Court will not grant the application, for example if the witnesses for the opposite party have been scattered and cannot be brought back to refute the fresh evidence."

It is not necessary, in my view, to consider the weightiness or credibility of the evidence, or even the question of the prejudice to the second respondent in any detail, since the application does not surmount the first two hurdles it must clear. There is such a thing as the tyranny of litigation and in my view a decision to allow the reopening of a trial in these circumstances, notwithstanding any cost order, would raise that spectre. For these reasons I consider that the application to amend the appellant's pleadings should fail, with the result that the appeal must be determined on the pleadings and the record as they stand.

That in effect leaves appellant's case as being that he contracted personally with the second respondent. There are powerful indications that this was not the case. In the first place the consignment note referred to the customer as "John Elford c/o Magda Pretorius" and was signed and, therefore, approved by her. The sequence of the names suggest that the primary contracting party was John Elford.     It was common cause that this had been the name of the business for many years prior to the third respondent purchasing it from the eponymous Mr John Elford. Apart from the omission of the abbreviation in circumstances which were not fully canvassed in the trial, there was little, if anything, to suggest that second respondent had contracted or would have wanted to contract in her personal capacity.

The music business was conducted by first and second respondents under the name of the CC, using that name on stationery at separate business premises, with signage proclaiming that name and using at least one vehicle with similar signage. In her written dealings with appellant or his legal representative after the dispute arose, second respondent was quite open about the business being conducted through the vehicle of the close corporation. One cannot escape the impression that notwithstanding his long experience in the music business, the appellant was, initially at least, careless as to the exact nature of the entity with which he was doing business. In my view the magistrate was correct in finding that the appellant failed to discharge the onus of proving that he contracted with second respondent in her personal capacity.

For these reasons I consider that there is no merit in the appeal and would dismiss the appeal with costs, excluding the costs incurred on 19 February and the costs of the hearing of the appeal on 12 March 2010.