Trio Clothing Manufacturers (Pty) Ltd v Lesotho Haps Royal Development (Pty) Ltd and Another (CIV/T 315 of 89) [1990] LSCA 86 (15 May 1990)

CIV/T/315/89 IN THE HIGH COURT OF LESOTHO In t he matter between:- TRIO CLOTHING MANUFACTURERS (PTY) LTD PLAINTIFF and LESOTHO HAPS ROYAL DEVELOPMENT (PTY) LTD HAPPY SHIE 1st Defendant 2nd Defendant RULING ON AN EXCEPTION Delivered by t he Honourable M r. Justice J. L. Kheola on t he 15th day of May, 1990. This is an exception taken by the first and second defendants against the plaintiff's claim in terms of Rules 29 (2) (b) of the High Court Rules 1980 on the ground that it is vague and embarrassing; and in terms of Rule 29 (3) (b) on t he ground that the plaintiff's claim does not comply with the Rules of C o u r t. I shall deal first with the grounds upon which it is alleged that the plaintiff's declaration is vague and embarrassing. It is alleged that the allegation in paragraph 4 of t he declaration that both defendants are liable and t he prayer for judgment against both defendants, conflict with t he allegation in paragraph 2 of t he declaration t h at the agreement w as between t he plaintiff and the f i r s, defendant. - - Paragraph 2 reads as follows:- "On or about the 10th July, 1987 at Maputsoe Plaintiff and the 2nd Defendant acting on behalf of the 1st Defendant entered into a Verbal Contract, which Contract was contained in an agreement signed by the Plaintiff and the 2nd Defendant styled the minutes of the meeting held at New Industrial Divi- sion on Trio Clothing Manufacturers (Pty) Ltd, on the 10th July. 1987." Paragraph 4 reads as follows:- "Since the agreement was made by the 2nd Defendant for the benefit of 1st Defendant, both Defendants are liable one paying the other being absolved for the breach of Contract, Defendants have failed to comply with any of the aforementioned condition and as a result thereof the Plaintiff has suffered damages in the total amount of M319,530-00 made up as follows." Mr. Edeling, Counsel for the defendants, submitted that the words "acting on behalf of the first defendants," which appear in paragraph 2 mean that the second defendant was the agent of the first defendant and as such he (second defendant) was not a party to the contract. 1 agree with the above submission that where an agent has disclosed the name of his principal he cannot be held to be personall liable for damages for breach of contract. In Blower v. Van Noordem, 1909 T. P. D. 890 it was held that an agent who exceeds his authority in contracting for a named principal, and whose contract is /3 - 3 - repudiated by the latter, is liable in damages to the other contracting party on the ground that from his representation of authority a personal undertaking on his part is to be implied that his principal will be bound, and t h a t, if not bound, the other party will be placed in as good a position as if he w e r e ." It has not been alleged by the plaintiff that the second defendant exceeded his authority and that as a result the first defendant has repudiated the contract. Innes, C. J. in Blower v. Van Noorden, supra,at p. 9 05 said: "The position thus taken up amounts in my humble judgment to t h i s: that while adhering to the old rule that t he agent is liable on the contract itself, t he Court will award damages on the basis that he is only liable on a breach of warranty of authority. But t he calculation of damages must be radically different in the t wo c a s e s, and I venture to think that it is desirable to adopt that basis of liability which corresponds to t he m e a s u re of damages to which we feel we m u st adhere. In any event there can be little doubt that in spite of its affirmation of the old r u l e, t he decision of t he Cape Supreme Court in Langford v. Moore and O t h e r s, does in essence materially modify the principles laid down in Wright v. W i l l i a m s ." It seems to me that there has been a m i s j o i n d er in the present case because t he second defendant can only be liable on a breach of warranty of authority.. Having not exceeded his authority he cannot be held liable f or breach of contract. It is interesting to note that during the negotiations the plaintiff was represented - - by one M r. Osman Rajie while t he first defendant w as represented by the second defendant. Why does M r. Rajie not appear as t he second plaintiff? The reason is that he was acting on behalf of t he plaintiff and cannot be a party to a contract between his principal and the first defendant. In the same way the second defendant cannot be a party to a contract between his principal and t he plaintiff. Having come to the conclusion that there is a clear misjoinder in the present c a s e, the next question is whether or not exception is t he proper remedy to set aside a misjoinder. In Anderson v. Gordik Organisation, 1960 (4) S. A. 2 44 (N. P. D.) at p. 247 Caney, J. said: "I consider it to be clear beyond question that the usual procedure by which to raise a question of joinder, whether it be misjoinder or non-joinder, is by way of plea in abatement. In an appropriate c a s e, however, it is competent to raise t he question by an exception to the declaration: Collin v. Toffie, 1944 A . D. 456 at p p. 4 6 6, 4 6 7 ." In paragraph 4 of t he declaration t he plaintiff alleges that both defendants a re liable because the second defendant m a de t he contract for t he benefit of t he first defendant. I think a contract for the benefit of a third person is a valid contract provided t he third party has accepted t he stipulation m a de in his favour. There is no allegation in paragraph 4 that t he first defendant did accept the stipulation in its favour. In Gayather and another v. Rajkali 1947 (4) S. A. 76 it was held that where an agreement is made for the /5 - 5 - benefit of a third party, the agreement operates as an offer to the third party, and the third party's acceptance of the offer creates a vinculum juris between him and the parties to the agreement. (See Ex parte Orchison, 1952 (3) S. A. 66 T. P. D.). I am of the view that the word "for the benefit of the first defendant" read with the words "acting on behalf of the first defendant are embarrassing because the defendants do not know exactly who are the parties to the contract. Mr. Mphalane, attorney for the plaintiff, submitted that whatever clarification the defendants wanted they ought to have done so by asking for further particulars and not by an exception which is a remedy which must go to the root of the opponent's claim or defence. It seems to me that a joinder, whether it be a misjoinder or non-joinder, goes to the root of the claim or defence. In the present case the whole declaration must be set aside because of the misjoinder and the plaintiff must clearly elect the party to it: contract. An agent is not a party to a contract made on behalf of a disclosed principal. If the agent had no authority he shall be personally liable. In the present case there is no allegation that the second defendant either had no authority or exceeded his authority. /6 - 6 - In my view the exception taken against paragraph 3 ( a ), ( b ), ( c ), ( d ), and (e) follows from the fact that in paragraph 2 the plaintiff alleges that the contract is between the plaintiff and the first defendant but all the obligations are on the second defendant who is not a party to the contract. In paragraph 3 (a) the plaintiff refers to its lease with the Corporation and the said premises. The Corporation and the lease as well as the premises have not been identified. I think as far as the identity of these things are concerned the defendants would have asked for further particulars. It is alleged that the amounts claimed in paragraph 4 are not set out in such a manner as will enable the defendants reasonably to assess the quantum thereof. I think this defect could be cured by asking for further particulars. It was alleged that the plaintiff has not alleged whether it elected to cancel the agreements or not. In the circumstances, defendants do not know what case they have to m e e t, furthermore, in the absence of the exercise of an election by the plaintiff, the present status of the contracts is unclear, and it is not possible to determine what relief or measure of damages the plaintiff may be entitled t o. 'The termination of a contract has important consequences upon t he reciprocal rights and duties of the parties thereto, and this would seem to provide further justification for holding that /7 - 7 - if aparty decides to exercise a right to declare a contract cancel he should intimate his election to the defaulting party effectively to terminate the contract, unless that contract itself provided expressly or by necessary implication, that termination may be effected in some manner other than communication to the defaulting party. (Swart v. Vosloo, 1965 (1) S. A. 100 ( A . D . ). In Jowell v. Behr, 1940 W. L. D. 144 it was held that the issue of summons claiming damages for breach of contract is in its a binding announcement of an election to repudiate the contract on the ground of a breach going to the root thereof, and there is no need f or a specific allegation in the declaration that the contract has been repudiated. As w as pointed out in Swart's case - supra - t he m e re issue of the summons without service upon the defendant cannot constitute "intimation" to the defendant of the intention to cancel the contract. There must be service on the defaulter of t he s u m m o n s. In t he present case t he defendants were served with the summons in which it is alleged that they are in breach of contract and damages are claimed. The plaintiff has not claims any specific performance for any part of the contract and it is very clear that after obtaining judgment in its favour the contract shall have come to an end. This ground for the exception must fail The exception was also based on Rule 29 (3) (b) on the ground that the plaintiff's claim does not comply with the Rules of Court. Reference was made to the following rules: /8 -8- (a) Rule 20 (4) in that the declaration does not contain a clear and concise statement of the facts upon which plaintiff relies with sufficient particularity to enable t he defendants to reply thereto. I think t he confusion is caused by misjoinder. (b) Rule 20 ( 6 ), in that t he plaintiff, who relies upon a contract, states in paragraph 2 that it was a verbal contract, contained in signed agreement, which allegations are contradictory and not in compliance with t he requirements of the Rule. I agree that t he paragraph was drafted in a somewhat inelegant language because it seems to me that t he agreement was verbal but its terms appear in t he minutes of a meeting and w e re signed by t he p a r t i e s. To say that the agreement was verbal and at t he same t i me say it was an agreement signed by t he parties, is confusing and t he exception was properly t a k e n. (d) Rule 21 (6) ( a ), in that plaintiff has failed to set out its damages and the particulars thereof in such a manner as will enable t he defendants reasonably to assess the quantum thereof. I entirely agree with this objection because t he amount of M240,000-00 is claimed as damages but t h e re is no explanation how it is arrived a t. However, I am of t he opinion that this lack of particularity could have been cured by asking for further particulars. /9 - 9 - In the result, the exception is upheld and the plaintiff's declaration is set aside with costs and the plaintiff is given thirty (30) days within which to amend its summons and d e c l a r a t i o n. J. L. KHEOLA JUDGE 15th M a y, 1990. For Plaintiff For Defendants - - M r. Mphalane M r. Edeling.