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IN THE HIGH COURT OF SOUTH AFRICA

(GAUTENG HIGH COURT , PRETORIA)

Case  Number: 29565/2011

NOT REPORTABLE

NOT OF INTEREST TO OTHER JUDGES

REVISED

In the matter between:.

BIG SAVE HAMMANSKRAAL WHOLESALERS CC                          PLAINTIFF

And

RISHAN CHETTY                                                                       1^ST DEFENDANT

THORIDIUM MEDICAL GROUP (PTY) LTD                              2^ND DEFENDANT

JUDGMENT

Fabricius J,

1.

Plaintiff herein, according to the Particulars of Claim,  is "Big Save Liquor Hammanskraal  (Pty}  Ltd" (formerly Big SaveHammanskraal CC). First Defendant is a  Director of the Second Defendant. In the Particulars of Claim, it is alleged that "Plaintiff  is Big Save Liquor Hammanskraal  (Pty)  Ltd,  a  company  duly incorporated and existing under the Company Laws of South Africa,  which at  the  time  of the causes  of  action,  set out below,  was  duly  registered  asBig Save Hammanskraal Wholesalers  CC".  During argument I was asked to insert the word "Wholesalers ".  It is further alleged that  Big  Save Hammanskraal  Wholesalers  CC, formally  changed its name to  Big  Save Liquor  Hammanskraal CC,  which  was  duly  converted  to a company, being the Plaintiff.

2.

It was  then  alleged  that  on  1  June  2008,  the  Plaintiff  and  the  Second Defendant, duly represented by Mr Chetty, entered into a written agreement of lease in respect of a  particular warehouse. A copy  of  this  lease  was  annexed. It is said  that  at the time, Plaintiff  was  represented  by  Mr  Jardim  and the Second  Defendant,  by the First defendant.  It was further alleged  that  during  February  2008 ,  Plaintiff  and Second Defendant entered into an oral agreement concerning  necessary  renovations to  be effected  at  the  relevant  property.  It was  pleaded  that  Plaintiff  would  obtain  a quote for such renovations, that First Defendant would consider such, and that the value of such renovations be repaid by means of discounting the monthly rental payable as from 1 June 2008.  The quote  was  obtained,   and  First  Defendant  accepted  it   by signing  a document  which  was  annexed  to  the  Particulars  of  Claim.  Accordingly, a binding   agreement   was   concluded   between   the   parties   which   was  materially breached, in that Second Defendant failed to reimburse the Plaintiff for the  particular improvements,   as  a  result  of  which  the  value  of  the  discounts   that  the  Second Defendant  failed  to  grant, amounted  to R597,  884.19.  These  were  the damages that Plaintiff had suffered.

3.

This contractual claim was not proceeded with, but Plaintiff proceeded with claim 2, which   was  a   claim   based   on  "fraudulent/negligent  misrepresentation".  It was pleaded  that,  the  conduct  of  First  and/or  Second   Defendant   was   fraudulent , alternatively negligent, in that they ha.d no intention to grant the Plaintiff the discount referred to, and in fact  intended  to sell the  warehouse  premises.  They  knew   that they would obtain the benefit of the renovations without having to pay for same.  First Defendant falsely represented that the Second Defendant  would in actual fact  grant the rental discount, knowing that it would not do so. Defendants also knew that   they intended to sell the property after renovations were completed.

4.

It was further pleaded that the Defendants intended that Plaintiff would act on these misrepresentations,  that  Plaintiff did   in   fact   act   thereon  by completing the renovations  as  agreed,  in  the  bona  fide,  but  mistaken,  belief  that  it  would   be reimbursed by means of discounted rental, as agreed.

5.

On 18  September  2008,  the Second  Defendant  sold the  property,  whilst knowing that  Plaintiff  would  not be  able to  secure a  discount  on  his  rental  from  the new owner. This conduct was unlawful as a result of which Plaintiff suffered damages   in the said amount, being the value of the renovations, as it was pleaded.

6.

Plaintiff's  Counsel  therefore  based  his  claim  and case  on this delictual  cause of action and suggested in argument that it was indeed a claim for pure economic loss.

7 .

Evidence was led on behalf of Plaintiff in the form of Mr J. Jardim and Mr Ferreira.Mr Jardim gave the relevant evidence and emphasized that he, having dealt with Mr Chetty before, in a contractual setting, had dealt with him again as person to   person. He gave details  about the background  and the previous  contractual  arrangements and in respect of the particular warehouse, had testified that "Themba Big Save"  had outgrown its premises and therefore intended to expand by moving into the premises of Second Defendant. "ThembaBig Save", which was part of the "Big Save" Group, would  establish  the  new  company  to  operate  from  the  said  premises.  "Big Save Themba"  in fact  paid  for  the  renovations  and Big  Save  Hammanskraal,  repaid  it, either  by  way of cash  or  by the delivery  of products  on  the basis  of  set-off.    No details is this respect were provided.

8.

Defendant  filed a  plea  which  included  a special plea relating  to  locus  standi. With reference  to the alleged  oral agreement concluded during February  20 0 8,  and the written agreement  concluded  on 1 June  20 0 8, it was pleaded  that Plaintiff  was   only registered as a Close Corporation on  5 June  20 0 8 , this is common cause. It was denied  that  Plaintiff  existed  and  was  able  to  enter  into  the  alleged  oral agreement during  February   20 0 8,  and  it  was   denied  that  Plaintiff   entered   into   the  written agreement  of  lease,  which  indicates  "Hammanskraal  Big  Save  Wholesalers"   as being  the lessor.  As  a result, Plaintiff  does  not possess  the  necessary  locus   standi to be a party to this action.

9.

Having regard to the pleadings as a whole, I ruled that the special plea would not be decided  in limine as  there  would  be  most  likely  an  overlapping  of  evidence, if such was  presented.   As  I  have  said,  Plaintiff   presented  its   evidence   and  Mr  Chetty testified  on  behalf  of  Defendants.  His  evidence  differed  in  material  and  crucial respects  from  that  presented  on  behalf  of  Plaintiff,  and  these  issues  raised  by him were  never put to Plaintiff's witnesses during cross- examination. Quite apart    from that,  I need to note that Mr Chetty  was a  particularly      bad  witness  who had difficulty in  answering  even  the  most  innocuous  questions.  During  argument, Defendant's Counsel  wisely  abandoned  any reliance on his evidence, and submitted  that     the case could be decided on the evidence presented by Plaintiff, and particularly on  the basis  of the special plea.  According  to the agreement  of lease itself,  the lessee  is

"Hammanskraal  Big Save  Wholesalers  CC".  The argument  simply was that having regard to the fact that Plaintiff  was only incorporated  on 5 June 2008, which is common  cause,  no representations could have been  made to it on  1 June    2008, and obviously  before  that. The alternative  claim  based  on delict  vested on 1 June 2008.  No  evidence  was  led  in  respect  of  any  pre-incorporation  agreement, and none existed. Plaintiff could therefore not have been a party to either the  agreement of lease,  or the  renovations  agreement, as it had not  yet been incorporated  on   1 June 2008. A misrepresentation can therefore not be made to a non-existent   entity.

10.

Apart from that, Plaintiff did also not prove its damages  inasmuch  as the   evidence was that "Themba Big Save CC" made payment  for the renovations,  and was later reimbursed by the Plaintiff. No payment was proven, and where Mr Jardim relied on the annual financial statements, which in fact also did not reflect the total amount  of R59 7,  884.19. His evidence was of a hearsay nature.

11.

During argument,  Plaintiff' s Counsel  argued that the cause of action arose only    in September  of  2008,  when  there  was  a failure  to  have  allowed  the agreed-upon rental discounts. This is of course not the case as pleaded. In the context of an analysis of the Particulars of Claim, I may add that in my view, a proper case  based on a delict, which resulted in pure economic  loss, was not properly  pleaded  in any event.

See:  Law  of  Delict,  5'H Edition,  Neethling,  Potgieter  and  Visser  at  p. 268 and further, and Home Talk Developments (Pty)  Ltd v Ekurhuleni Metropolitan Municipality  2018 (1) SA 391 SCA at 411 par.  31]

Inasmuch  as  Defendant  did  not  rely  on  this  point,  I  will  not  deal  with it further. Plaintiff's  Counsel   submitted   that  there  was  no  authority   in  our  law   for    the proposition  that  a misrepresentation cannot  be made  to  a non-existent  entity, and that the point was new. I certainly do not agree with that contention. It is clear from Steenkamp  N.O.  v Provincial  Tender Board,  Eastern  Cape 2006 (3)  SA  151 SCA at 169 par. 48 and further, that an entity such as a company (or Close Corporation   I may add), prior to incorporation, is not yet in existence, and cannot perform a  juristic act. Further, no one can act at that stage as its agent, because one cannot act as the  agent  of  a  non-existent  principal,  unless  a  pre-incorporation agreement  was concluded which was later ratified. As I have said, there is no evidence on this   topic and  that  point  does  not  arise  herein.  It  is  in  fact  common  cause  that  no such agreement exulted.

12.

In my view, the argument tendered on behalf of Defendants is sound and it is  based on facts that are not in dispute. Plaintiff simply did not exist as a legal entity at the time when the misrepresentations were made. The argument relating to the failure to prove  damages  is on Mr Jardim' s  evidence  also sound.  It is insufficient  simply  to rely  on  the  quote  prese.nted  by  "SWM  Investment  Holdings"  dated   20   February 2008.  Mr  Jardim  could  not,  and  did  not,  present  admissible   evidence   as  to   who exactly  had incurred this  loss, and how it  was computed,  when, and by  whom.  No reason  was  established  was  hearsay  evidence  should be admitted.  Proof  of damage is fundamental to a delictual claim.

See:  Home  Talk supra at 437 par. /93].

13.

The result of all of the above is that Plaintiffs  claim as pleaded  cannot succeed, and accordingly absolution from the instance is granted with costs.

JUDGE H.J FABRICIUS

JUDGE  OF THE  GAUTENG  HIGH COURT,  PRETORIA DIVISION

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