IN THE HIGH COURT OF SOUTH AFRICA
[EASTERN CAPE DIVISION, GRAHAMSTOWN]
					                	              CASE NO:  CA143/2020

In the matter between:

PSG WEALTH FINANCIAL PLANNING (PTY) LTD 		  Appellant  

and

GAMBLE INVESTMENTS (PTY) LTD 				Respondent

                                 FULL BENCH JUDGMENT     

NHLANGULELA DJP 

[1]	This appeal comes before us with leave having been granted by the court a
quo (per Goosen J).   The order, granted on 28 April 2020, on which the appeal turns is framed in the following terms: 
“1.	The plaintiff is granted leave to re-open its case.
 2.	The plaintiff is granted leave to recall and qualify its expert witness, Mr D. Elliot, and lead his evidence relating to:
(a)	The true value at risk of the building owned by the plaintiff which was damages by the fire which occurred in June 2016;
(b)	The value of the loss suffered by the plaintiff as a result of the damage by fire in June 2016, such value of loss to include the cost of demolition and debris removal;
(c)	The effect of the application of the average condition on the plaintiff’s claim.
3. The plaintiff is ordered to pay the costs of the application to re-open its case.
4.	The plaintiff is ordered to pay the wasted costs occasioned by second defendant’s application for absolution from the instance.”

[2]	The appellant and respondent in this appeal were cited in the court a quo as
the second defendant and plaintiff respectively.  

[3]	The appellant was aggrieved by the judgment of the court a quo, and it now 
appeals to this court. The appeal is predicated on the main grounds that the court
a quo committed misdirection when exercising discretion granting the respondent
leave to re-open its case to lead further evidence.

[4]	The appeal is opposed by the respondent.

[5]	It is trite law that decision of the High Court to grant re-opening of the plaintiff’s case for the purposes of leading evidence involves an exercise of judicial discretion; and in the manner as stated in Mkhwanazi v Van Der Merwe and Another 1970 (1) SA 6091 at 613E where the Appellant Division (now the Supreme Court of Appeal) stated, with reference to the case of Oosthuizen v Stanley 1938 AD 322, as follows:
“Several considerations have a bearing on the cause of such discretion, for instance the reason for the plaintiff’s failure to call the witness before, the danger of prejudice to the opposite party owing to his being no longer able to bring back his witnesses, and, of course the materiality of the evidence.  In an application for leave to lead fresh evidence in this court the test as to materiality layed down in Colman v Dunbar (1933 AD 141) is that the evidence tendered must be presumably to be believed and such that it would be practically conclusive.  In a trial court, however, in my judgment, the test of materiality should be held to be satisfied where the evidence tendered, if believed, is material and likely to be weighty.’”

[6]	To appreciate the reasoning of the court a quo and the appropriateness or otherwise of the grounds of appeal, I must recount the background facts very briefly.  I choose to do so because that exercise has already been done fully in the judgment of the court a quo.

[7]	On 28 June 2016 an insured building, owned by the respondent, was destroyed in a fire.   A claim to re-instate the building was made against Santam (Pty) Ltd, the duly appointed insurer of the building, which settled the claim in an amount agreed to between it and the respondent.  The amount of settlement was less than its insured value of the building based on the application of the average condition contained in the insurance policy.  As against the appellant, the respondent sued it for payment of damages in the sum of R3 079 224,77 being the amount by which the insurer reduced the claim.  The alleged basis of the claim against the appellant is that it was the Agent for the respondent, and the employee of the appellant, one Ms Wait, who had caused the building to be underinsured.  At the trial the respondent led the evidence of one Mr D. Elliot, the quantity surveyor, to testify on the facts which led to the quantification of the insurance claim at the time when the risk occurred, after the insurance cover.    But the legal representatives for the respondent did not qualify Mr Elliot to testify as an expert witness for the purposes of supporting the issues of liability and quantum of the claim.  After the end of the respondent’s case, the appellant applied for absolution from the instance on the basis that the evidence of the expert’s quantification of the respondent’s claim was lacking.  

[8]	The court a quo decided the application to re-open the respondent’s case on the basis that the pleadings as they stood supported a finding that he respondent’s representatives misconstrued what was required to be proved notwithstanding the three assumptions made that the quantification of the claim was not actually denied.  The assumptions in question are that the appellant’s plea of non-admission of quantification of the loss as set out in paragraph 53 of the particulars of claim had indeed raised a belief that the quantification was not denied;  Ms Wait, who was at the same time the employee of the appellant, had been involved in the negotiations with Santam (Pty) Ltd that produced the quantification report on which the respondent’s claim is based; and in a series of pre-trial conferences held between the parties, the appellant did not alert the respondent to the fact that the quantification of the claim was a material dispute.  In as much as at the court a quo accepted that the error was that of the respondent as a consequence of deliberation on the part of the respondent’s legal representatives, it held the view that such error did not, ipso facto, mean that the respondent’s application to re-open its case cannot be granted.  Neither did the court a quo find it appropriate to visit the remissness of the legal representative for the respondent upon the head of its client. These finding were premised on the existence of significant and insurmountable prejudice to the respondent if granting the application for absolution resulted in the claim becoming prescribed.  The issue raised by the respondent in the papers that it intended to amend its pleadings in order to incorporate / introduce in the pleadings the defence of waiver / acquiescence was regarded by the court a quo as being not relevant for the purposes of determining the application to re-open the respondent’s case.  The court a quo also found that granting the application to re-open the respondent’s case would not in itself defeat finality of litigation between the parties as compared to litigation de novo in all its tedious amplitude.   

[9]	The test for interference with the exercise of discretion of the court a quo is whether it committed a misdirection.  In as much as this court was presented with arguments concerning the appealability of the decision of re-opening the respondent’s case for further evidence to be led, the court a quo had not made a decision that its discretion was not appealable, and the appellant did not cross-appeal such a decision.  In the absence of a cross-appeal, the appealability issue does not arise in these appeal proceedings.  It must follow, therefore, that the stance taken by the respondent that the judgment of the court a quo is not appealable, followed by submissions on that issue do not merit a decision of this court.  Therefore, it is my finding that the appeal has been properly brought to this court.

[10]	 What ultimately falls to be decided is whether the court a quo committed misdirection with regard to the findings it made based on the consideration of the balance of prejudice.  

[11]	On the issue of the materiality of the evidence of Mr Elliot sought to be introduced both parties are in agreement that the quantification evidence was material for the resolution of the dispute between the parties.

[12]	It was submitted on behalf of the appellant that the court a quo did not exercise its discretion properly. 

[13]	According to the appellant, nothing short of the interpretation that the respondent misconstrued the pleadings would qualify as a reason why the expert evidence of Mr Elliot was not led at the trial.    

[14]	 It was contended that the explanation proffered by the legal representatives for the respondent for not leading expert evidence of Mr Elliot was not a bona fide belief that the evidence of quantification of damages sought to be introduced by the respondent had been waived / acquiesced to by the appellant.  It was submitted that   had been known at all times material to the presentation of the respondent’s case that the allegations in paragraphs 51, 52 and 53 of the particulars of claim had remained live issues to be proved in order for the respondent to succeed in its claim against the appellant.  

[15]	It is necessary to quote herein-below paragraphs 51, 52 and 53 together with the plea thereto:
“51.	As a result of any or all of the Second Defendant’s failures and omissions aforesaid, the Plaintiff was underinsured at the time of the loss of entitled the First Defendant to apply the average condition.

52.	As a consequence of the Plaintiff;s underinsurance at the time of the loss, the First Defendant [Santam Insurance], in settling the claim, applied the average condition to the claim resulting in a loss of R3 079 224,77, to the Plaintiff as hereinafter calculated.

53.	The Plaintiff’s loss of R3 079 224,77 is calculated as follows:

				Average in respect of demolition:
				
				Contract:				R      867 808.80
				
				Less average (1)			R      779 968.32
									______________
				TOTAL				R        87 840.48

			Re-instatement quantum		R19 301 647.41

			Less average (2)			R  2 299 256.45
								_____________
			TOTAL				R17 002 390.96

			Total average component

			Average (1)				R     779 968.32

			Average (2)				R  2 299 256.45
								____________
			TOTAL				R  3 079 224.77”
			
The plea is the following:

“28.	Ad paragraph 51 thereof

These averments are denied and the Plaintiff is put to the proof thereof.
	
 29.	Ad paragraph 52 thereof

The Second Defendant makes no admissions regarding these averments and the Plaintiff is put to the proof thereof.

    30.      Ad paragraphs 53.1 thereof

30.1	The Second Defendant makes no admissions in this regard and the Plaintiff is put to the proof thereof                                          parties.

30.2	In the alternative, and in the event that it is held that the Plaintiff has suffered the loss alleged, then the Second Defendant pleads that such was not as a result of any gross negligence, wilful default, dishonestly or fraud by it or any of its employees and advisors, and that it is thus not responsible or liable for any such loss in terms of the contract between the parties.”

[16]	Counsel for the appellant presented a compendium of objections to the discretion exercised by the court a quo in the following terms:

(i)	the court a quo did not take into account that the acquiescence / waiver of   a right to challenge the quantum of the respondent’s claim through the role played by Ms Wait during the settlement negotiations between the respondent and Santam Ltd was a new issue that was neither pleaded nor canvased in evidence during the trial.
(ii)	the proposed amendment of pleadings to cover the issue of acquiescence waiver should the application for absolution not be granted, was the relevant consideration but was not taken into account.
(iii)	it was not taken into account that, since the demolition of the structure damaged in the fire has occurred and construction of the first phase of the replacement building has taken place, the appellant is not a position to make an independent assessment of the value of risk.
(iv)	the court a quo failed to apply the principle enunciated in the case of Blose v Ethekwini Municipality (2005/2014); (2015) ZASCA 87 (20 May 2015) that in considering prejudice a court should not weigh the prejudice to be suffered by the appellant against the likely outcome of the trial (such as prescription) but it must consider what is ultimately procedurally fair to the parties (such as finality in the litigation).
(v)	the court a quo erred in failing to find that the remissness of the legal representatives of the respondent should be visited upon the head of the respondent.
(vi)	the court a quo ought to have taken into account that no costs order was made against the respondent which would be a healing balm to the prejudice, suffered by the appellant.

[17]	It was submitted on behalf of the respondent that the court a quo correctly exercised discretion as envisaged in the case of Mkhwanazi v Van Der Merwe and Another, supra, at 616 B-D where the Appellate Division emphasized that it would be inappropriate for judicial decisions to lay down immutable conditions which have to be satisfied before the relief sought can be granted.  It was submitted that the mistaken assumptions or misconstruing of the pleadings were of little moment, as found by the court a quo, if compared with the prejudice that the respondent is likely to suffer if the re-opening of its case is not granted and the application for absolution is granted.  Counsel for the respondent argued that the intention expressed in the papers by the respondent to amend the pleadings was correctly found to be an irrelevant consideration as no application for amendment of pleadings served before the court a quo.

[18]	Counsel for the respondent submitted further that the finding of the court a quo that the outcome of a refusal of the application to re-open and the granting of the application for absolution are relevant considerations which accord with the principle that is stated in the case of Blose v Ethekwini Municipality, supra, at para [13] that the fact that new evidence may cause the appellant to loose is not a factor to be taken into account.  It is stated further in the case of Blose, supra, that the fact that the refusal of an application for leave may result in a judgment of absolution against the respondent is a consideration which must be taken into account in relation to the prejudice likely to be suffered by the parties.   These principles find application in this case.  It was submitted further that there is no danger of risk whatsoever of the expert evidence of Mr Elliot being fabricated as it had been procured and known to both parties before the action was commenced with.  With regard to the issue of finality, it was submitted that the prejudice that the respondent is likely to suffer if the leave to re-open is not granted, as its claim against the appellant would have become prescribed, would outweigh by far the prejudice that the appellant stands to suffer.

[19]	I am of the opinion that the court a quo did apply a correct approach towards the determination of the respondent’s application for the re-opening of its case in order to qualify Mr Elliot as an expert witness and to testify as such on the quantification of the respondent’s claim against the appellant.  The case of Mkhwanazi, supra, which is the authority on the subject matter at hand, was applied by the court a quo in a correct manner; more particularly in that it dealt with all the considerations that are normally taken into account in the assessment of prejudice likely to be suffered by both parties, and it did so in a balanced manner.  It was on the consideration of cogency of the factors taken into account that it finally came to the conclusion that the respondent’s legal representatives indeed misconstrued the pleadings believing, wrongly so, that the assumptions made prudent by the respondent entitled it not to lead expert evidence that was material and necessary to support the quantification of loss suffered by the respondent due to the damage of property in a fire.  Notwitstanding that consideration, it quite correctly came to the conclusion at paragraph 42 of its judgment that:
“In my assessment the prejudice that the plaintiff will suffer if it is not permitted to re-open its case outweighs the prejudice to be suffered by the second defendant.  The nature of the prejudice to be suffered by the plaintiff is, in my view, also decisive in the balance to be struck between accountability of the legal representatives and the interests of justice.”                                      

[20]	On the aforegoing, I do not agree with counsel for the appellant that the factors it raised during the application to re-open, which are enumerated in para [15] above as the grounds of appeal, were not considered as prejudicial to the appellant.   Therefore, it cannot be said that the court a quo committed misdirection in finding that the refusal of the application to re-open followed by the granting of the application for absolution, with the attendant risk of the respondent’s claim becoming prescribed, is more likely, than not, to leave the respondent without a remedy.  In light of this it is not possible that the granting of absolution and a trial de novo can place the parties in a neutral position as contended for on behalf of the appellant.   On the consideration of all the factors that the court a quo took into account, including the insurmountable prejudice likely to occur should the expert evidence of Mr Elliot not be led at the trial, the appeal must fail. 

[21]	The costs of this appeal, including those incurred in the application for leave to appeal, should follow the result that the appellant has not achieved success in its endeavours.

[22] 	In the result the following order shall issue:

1.	The appeal is dismissed.
2.	The appellant to pay costs including the costs of the application for leave to appeal. 

_____________________
Z. M. NHLANGULELA
ACTING JUDGE PRESIDENT OF THE HIGH COURT, 
GRAHAMSTOWN 
I agree:

_________
N.G. BESHE
JUDGE OF THE HIGH COURT
I agree:

___________
R. KRUGER
ACTING JUDGE OF THE HIGH COURT 

Counsel for the appellant	 	: 	Adv.  J.J. Nepgen
Instructed by				:	Pagdens Attorneys 
						PORT ELIZABETH.
						c/o Carinus Jagga Inc
						GRAHAMSTOWN 

Counsel for the respondent 	:	Adv. R.S. Van Riet SC, appearing with
		Adv. H.N. De Wet
Instructed by	:	Schoeman Oosthuizen Inc
		PORT ELIZABETH	
		c/o Netteltons Att
		GRAHAMSTOWN.
Heard on:  16 August 2021   
         
Delivered on:   31 August 2021