Last week in commercial law: Taylor's Version, unTrustworthy companies, and how to label things we don't understand

Civil procedure pop quiz! Does an appeal suspend a spoliation order? If a spoliation order is final, then yes; if a spoliation order is interim, then no. Well then when is it final or interim? Western Cape Division: it’s final (and suspended by an appeal) if it’s independent of any underlying dispute between the parties about entitlement to possession, but interim (and not suspended) if it’s pending an underlying dispute [your summarist thinks the interim/final distinction is wrong: by definition, spoliation is only about possession, not entitlement to possession, so it’s necessarily always final when it comes to possession, which means an appeal should always suspend a spoliation order].

Ma-Afrika Hotels runs two hotels in Stellenbosch [fans of insurance law will recognise the name]. Its landlord sues in the magistrates’ court for arrear rent during Covid Times. Ma-Afrika refuses to discover documents about how much its insurer paid for its business interruption claim. Landlord applies to compel. They settle the discovery fight, and their settlement is made an order. Ma-Afrika files supplementary discovery but landlord says it does not comply with the consent order. Landlord goes back to court and asks for Ma-Afrika’s defence to be struck out. That never actually happens, right…right? Magistrates’ court: defence struck out plus attorney-and-own-client costs. Western Cape Division: let’s not go nuclear over a discovery fight, an order compelling compliance will do fine, and also a magistrates’ court doesn’t have power to grant attorney-and-own-client costs [your summarist laments courts still granting attorney-and-own-client costs. There. Is. No. Such. Thing. But they refuse to die, “[l]ike some ghoul in a late night horror movie that repeatedly sits up in its grave and shuffles abroad, after being repeatedly killed and buried”].

Harald Seick and Joanne Lefson dated for ten years [you may be wondering what that has to do with commercial law besides your summarist being a romantic]. They buy land in Franschhoek and build some rental accommodation, all done through a company, Proud Heritage. Seick and Lefson are the only two directors and each own 50% of Proud Heritage. Seick and Lefson break up [and are never, ever, ever getting back together]. As the saying goes, exes seldom good co-shareholders and co-directors make, and Proud Heritage is now deadlocked. Seick applies to wind up the deadlocked company on the just and equitable ground. Western Cape Division, after quoting Shakespeare: the constant quarrelling, disputes and animosity [the judge’s diagnosis, not your summarist’s] was no good for your love life and it’s no good for your corporate life either, so winding-up is just and equitable [and all too well, as the more famous poet would conclude].

Utility auditors like International Utility Brokers plumb their customers’ utility bills to spot billing errors or ways to save on rates and taxes [Give to Caesar what is Caesar’s, but no more]. International Utility Brokers alleges a contract with St Johannis Organisation, a non-profit that runs a church-based retirement complex, to audit its utility bills. Mr Germishuys signs the contract for International Utility Brokers and St Johannis’ general manager, Sister Basson, signs for St Johannis. St Johannis argues at trial that Sister Basson was not authorised to sign (she thought she was, but it turns out only its governing body is authorised to conclude contracts). International Utility Brokers argues that she was authorised to sign contracts but if not then St Johannis is estopped from denying her authority. Mr Germishuys testifies for International Utility Brokers. His evidence is that before Sister Basson signed the contract, she asked two other St Johannis employees who were also there—the bookkeeper and the head of the finance committee—for their approval before she signed. Which is very awkward for International Utility Brokers’ authority and estoppel arguments. The star witness not having done enough damage to his case, Mr Germishuys goes on to describe the signed contract as merely a proposal that Sister Basson would take to the governing body. Also awkward. Western Cape Division: what are we doing here your own witness contradicts your case.

Caterpillar sells a truck to Muscor Consultants on instalments. Muscor Consultants misses some payments. Caterpillar cancels the sale and gets a part A ex parte interim order to take back possession of the truck, pending its claim against Muscor Consultants in part B. Muscor Consultants applies for reconsideration. Meanwhile, Caterpillar asks for a variation of the ex parte order allowing it to sell the truck now, instead of waiting until it wins in part B, arguing that the truck’s market value will decrease if it’s made to wait. Gauteng Division, Johannesburg: Caterpillar’s variation application is no good because ordinary fluctuations in market values are no reason to bypass ordinary court procedures, but Caterpillar was justified in applying ex parte for the interim order because the truck’s tracker showed it was being used near an illegal mine.

JSE-listed Trustco needs shareholder approval for a transaction. Trustco goes ahead with the transaction without shareholder approval and without publishing about it in SENS. The JSE issues a censure and fines Trustco R5 million. Trustco applies to the Financial Services Tribunal for reconsideration. Tribunal: the censure and fine are not disproportionate, Trustco’s attempts to rectify its contraventions are too little too late, and Trustco’s argument about the “practical commercial context” of the transaction is not a defence to pesky things like the law.

News from England. As unjust enrichment anarchist Rob Stevens explains, “[i]n the common law, when a legal doctrine is not understood we adopt three different techniques in giving it a label. The first is to use Latin (eg res ipsa loquitur, res inter alios acta). The second is to use antique French (eg ‘torts’, ‘estoppel’). The third is to use the name of the case that is said to have originated it (eg ‘the rule in Rylands v Fletcher’).” An example of the third is something the English lawyers call the Henderson v Henderson principle. It “precludes a party from raising in subsequent proceedings matters which were not, but could and should have been raised in the earlier ones”, which very smart judges say is somehow different from res judicata [or claim preclusion, as the Americans call it, or probably part of a relaxed form of res judicata under South African law]. Mackie Motors sells Renaults in Scotland. Renault gets wind of Mackie Motors landing up in the middle of loans between Panamanian and Ukrainian companies, which Renault thinks is a totally normal thing for a car dealership in Scotland to do money laundering. Renault Finance terminates several financing contracts with Mackie Motors on notice. Mackie Motors sues Renault Finance for declaratory and injunctive relief, but does not sue Renault. While that litigation is pending, Renault terminates its dealership contracts with Mackie Motors on notice. Mackie Motors applies to amend its particulars to join Renault and introduce a similar claim against Renault as the claim against Renault Finance. The new claim alleges some kind of implied umbrella agreement between all the parties that imposed on Renault and Renault Finance duties of good faith. Mackie Motors’s application to amend is dismissed because it discloses no cause of action (the alleged implied terms contradict the express terms of the various contracts), and the existing claim against Renault Finance is struck out for the same reason (the application to join Renault then falls away). After an unsuccessful appeal, Mackie Motors has another go at Renault and Renault Finance, suing Renault for damages for breach, and suing Renault Finance for procuring or inducing Renault’s breach. Renault and Renault Finance: Henderson v Henderson! Commercial Court: Henderson v Henderson doesn’t apply to Renault because Renault was never a party to, and did not participate in, the first proceedings [your summarist notes that wouldn’t bother the Americans because they’re lucky enough to have something called, deep breath, non-mutual defensive collateral estoppel]; and Henderson v Henderson doesn’t apply to Renault Finance because the new claim against Renault Finance was not part of the first proceedings [which seems wrong to your summarist’s understanding of the whole “could and should have been raised” point of Henderson v Henderson].

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