SWAZILAND
HIGH COURT
S
V
M
S
Investments (Pty)Ltd
Plaintiff
V
Swaziland
Royal Insurance Corporation
Defendant
Case
No 2592/99
Judgment
23/06/00
Coram
Sapire, CJ
For
Plaintiff Mr. N. Kades, S.C.
For
Defendant Mr. D. Smith, S.C.
Judgment
23/06/00
The
Plaintiff, a company engaged in the taxi business, insured its
vehicles used in the conduct of its business with the Defendant. The
Defendant is an insurance company conducting its business in
Swaziland, where it enjoys a privileged position, with exclusive
rights to conduct such business in the Kingdom.
One
of plaintiff's vehicles, an ubiquitous Comb, was stolen while in the
Republic of South Africa. The Plaintiff had covered itself against
such loss by taking out a policy with the defendant, through a firm
of insurance brokers. The Defendant had unbeknown to the plaintiff
cancelled the authority of that broker to do business on its behalf
but had omitted to publicise the fact of such cancellation.
1
The
Plaintiff, which had received no more than a cover note from the
broker claimed the indemnity to which it was entitled in terms of the
policy, but was met by a denial from the Defendant that any insurance
had been effected in respect of loss to the vehicle. Defendant based
its repudiation of the claim, on the termination of the broker's
authority, and the failure of the broker both to inform the Defendant
that the risk had been underwritten, and to account for the premium
paid to it.
The
dispute became the subject matter of an action in this court. The
plaintiff claimed payment of the amount of the indemnity together
with interest a tempore morae and costs. The trial commenced and
concluding some two years after the cause of action arose.
Matsebula
J after hearing the cases presented by the contending parties found
that the Plaintiff was estopped from denying the authority of its
erstwhile agent, and liable to pay to the plaintiff the sum claimed
together with interest a tempore morae and costs.
Relying
on the outcome of the case, and attaching a copy of the judgement to
its particulars of claim the plaintiff pursues a further claim
against the Defendant. The claim is for an amount said to be the
income or profit by which the plaintiff would have benefited, had the
defendant not delayed in making payment of the indemnity. Plaintiffs
claim is therefor in damages allegedly suffered by reason of and
consequent upon the breach by the defendant of the terms of the
policy in making payment only after the order in the first action.
The parties have agreed that I determine the question of liability
first.
Although
the Defendant has not specifically pleaded res judicata, the
undisputed facts on the pleadings reveal the present to be a further
claim for damages arising from the same cause of action.
The
Plaintiff relies on the judgement and has attached to its particulars
of claim, the whole of the judgement of Matsebula J determining the
first action. The judgement, which stands, and has been satisfied, is
a complete bar to the present claim. It is a final judgement between
the same persons arising from the same cause of action.
2
The
effect of a final judgement on a claim is to render the claimant's
cause of action res iudicata.1
If
therefore a party with a single cause of action giving rise to a
single claim obtains a final judgement on part of his claim, the
judgement puts an end to his whole cause of action. The result is
that a subsequent claim for the balance of what his cause of action
entitled him to claim in the first instance can be met with a plea of
res iudicata.
When
a cause of action gives rise to more than one remedy, a plaintiff who
pursues one of those remedies and obtains a judgment thereon can be
met with a plea of res iudicata if he should subsequently seek to
pursue one of the other remedies. The reason being that a final
judgement on part of one's cause of action puts an end to the whole
of such cause of action.
Although
res judicata has not, per se been pleaded by the defendant, the
plaintiff's own allegations in its particulars of claim, establish
that it has already exhausted its remedies for redress by reason of
the Defendant having failed to make timeous payment in terms of the
policy.
It
is significant that the first claim on which the plaintiff obtained
judgement included a prayer for interest a tempore morae. The
plaintiff succeeded in this claim and received the interest in terms
of the judgement. It follows that not only could the Plaintiff have
made claim for its loss occasioned by the late payment, but it did
so, and received compensation in accordance with its claim.
The
plaintiff's allegations in the particulars of claim are destructive
of plaintiff's cause of action. Notwithstanding Defendant's
surprising omission to plead res judicata, this court cannot in
accordance with the authorities which I have quoted earlier, again
for a second time award damages arising out of the same breach of the
same contract.
1
Van Zyl v Niemann. 1964 (4) SA 661 (A) 669
-
670A;
Custom Credit Corp (Pty) Ltd
v
Shembe
1972 (3) SA 462 (A) 472A-B.
3
The
Plaintiff cannot succeed in its action for a second reason. The
Defendant's obligation in terms of the standard contract of
indemnification for loss arising from the theft of the insured
vehicle is to make payment of its value. The payment will normally be
made in an amount sounding in money. This indeed was the nature of
Plaintiffs claim in the first action. The loss suffered by the
creditor for non payment of an amount sounding in money is
compensated for by the interest a tempore morae which is claimed and
usually awarded in addition to the capital amount. The following
extract from the judgement in Bellairs v Hodnett summarises the
exposition as
"It
may be accepted that the award of interest to a creditor, where his
debtor is in mora in regard to the payment of a monetary obligation
under a contract, is, in the absence of a contractual obligation to
pay interest, based upon the principle that the creditor is entitled
to be compensated for the loss or damage that he has suffered as a
result of not receiving his money on due date (Becker v Stusser, 1910
CPD 289 at p. 294). This loss is assessed on the basis of allowing
interest on the capital sum owing over the period of mora (see Koch v
Panovka, 1943 NPD 776). Admittedly, it is pointed out by Steyn, Mora
Debitoris, p. 86, that there were differences of opinion among the
writers on Roman-Dutch law on the question as to whether mora
interest was lucrative, punitive or compensatory; and that, since
interest is payable without the creditor having to prove that he has
suffered loss and even where the debtor can show that the creditor
would not have used the capital sum owing, this question has not lost
its significance. Nevertheless, as emphasized by CENTLIVRES, C.J., in
Linton v Corser, 1952 (3) SA 685 (AD) at p. 695, interest is today
the "lifeblood of finance" and under modem conditions a
debtor who is tardy in the due payment of a monetary obligation will
almost invariably deprive his creditor
of
the productive use of the money and thereby cause him loss. It is for
this loss that the award of mora interest seeks to compensate the
creditor.".2
The
damages now claimed by the plaintiff are not such as normally follow
from a failure to make timeous payment of a debt sounding in money.
The losses in respect of which plaintiff now claims rise not only
because the indemnity was not paid on time but because of the
particular financial position of the plaintiff. Such damages fall
within the category labelled "special"
The
terms "general" and "special" damages are derived
from English law and our law does not draw the same hard and fast
distinction between "general" and "special"
damages.3 Since the terms are closely connected with certain features
of English law which are foreign to Roman-Dutch law, they should be
used with circumspection in South African practice. The terms are
used in a variety of different meanings, but in South African
practice the word "special" as applied to damages is
generally used to indicate that they are connected with some special
circumstance in the particular case.
2
Bellairs v Hodnett And Another 1978 (1) SA 1109 (A)
3
Botha
v
Pretoria
Printing
Works
Ltd
1906 TS 710 713; Buchanan 1965
SALJ
457
458.
4
In
contract the two terms are convenient labels to differentiate,
broadly and without any pretence at precision, between (1) damage
that flows naturally and generally from the kind of breach of
contract in question and which the law presumes that the parties
contemplated would result from such a breach, and (2) damage that,
although caused by the breach of contract, is ordinarily regarded in
law as being too remote for damages to be recoverable unless, in the
special circumstances attending the conclusion of the contract, the
parties actually or constructively contemplated that they would
probably result from its breach.
In
formulating the test for special damages, the courts have failed to
distinguish clearly between reasonable foresight and convention as
bases of special damages. According to Curlewis J
A
in Lavery & Co Ltd v Jungheinrich the test for special damages is
the actual or presumptive contemplation of the parties. The requisite
contemplation (foresight) may be inferred from (a) the subject matter
and terms of the contract itself, or (b) the special circumstances
known to both parties when they contracted. However, in considering
the allegations necessary in a pleading to found a claim for special
damages, the judge states that the plaintiff should not only allege
"common knowledge", but also that the contract was entered
into "on the basis" of such knowledge. This seems to
suggest that the test is not merely the contemplation of the parties,
but the convention of the parties. In his concurring judgment Wessels
J
A
expressly states that the basis of the defendant's liability is
conventional.
The
position
was reconsidered by the appellate division in Shatz Investments (Pty)
Ltd v Kalovymas and the conclusion was reached that, in an
appropriate case, the correctness of the principles as stated in the
earlier cases should be reconsidered. It seems clear that upon
eventual reconsideration of the principles the appellate division may
make foresight alone the basis of liability for special damages. In
the meantime, the
convention
principle as expounded in Lavery & Co Ltd
v
Jungheinrich must
still
be
regarded
as
governing.
Special
damages must be specially alleged and claimed, and full particulars
there
of
must
be
given.
Where
special damages are claimed for breach of contract, the necessary
allegations are
(a)
that
such
damages were within the contemplation of the parties, and (b) that
the contract was entered into on the basis of the special
5
circumstances
on which the plaintiff relies for his claim. A claim for damages
other than the normal or legal measure constitutes a claim for
special damages. The plaintiff must allege and prove that such
damages were within the contemplation of the parties at the time the
contract was made. Failure to make the necessary allegations in a
summons in support of a claim for special damages may render the
summons excipiable, or the claim may be struck out.4
The
plaintiff has not made the necessary allegations upon which to base
the claim for special damages. Plaintiffs counsel has argued that
from the mere fact that the Defendant insured the vehicle used by a
person engaged in public transport it followed that it was in the
contemplation of the parties that the plaintiff would suffer loss
should the indemnity not be paid on time, and that they contracted on
that basis The policy however did not provide cover for loss of
profits, and the consideration advanced by the Plaintiff was neither
pleaded or proved.
The
defendant's obligation at all times was to pay an amount of money
required to replace the stolen vehicle. The contract of insurance
limited the defendant's liability, to the figure stated. This
obligation was eventually discharged albeit long after due date. In
so far as, lateness of payment constituted a breach of contract
no
claim for special damages flowed therefrom. The plaintiff neither
pleaded nor proved that when contracting the parties envisaged that
because of the particular circumstances of the plaintiff's financial
position, non-payment or late payment of the indemnity would occasion
losses other than interest.
I
therefor rule that there is no liability on Defendant in respect of
the present claim. The claim is dismissed with costs.
Sapire
CJ
4
see
Lavery
& Co Ltd
v
Jungheinrich
l931
AD 156
162;
Bower
v
Sparks, Young and Farmers' Meat lndustries
Ltd
1936
NPD
1
13;
Whitfield
v
Phillips 1957 3
SA
318
(A),329;. Garavelli
and
Figli
v Gollach
and
Gomperts
(Pty) Ltd
1959
1
SA
816
(W)819; North
&
Son (Pty) Ltd
v
Albertyn
1962 2 SA
212
(A) 215,
6
