Lancino Financial Investment (Pty) Ltd v F J Bennet

In December 2003, the plaintiffs (Lancino Financial Investment and J H Hattingh) and the first defendant (F J Bennet) concluded a cooperation agreement ('samewerkingskontrak') concerning the development of a township on property (plot 62) owned by the first defendant. The agreement provided that the plaintiffs would apply for township establishment and bear all related costs. Upon approval, plot 62 would be transferred to a new company with 50% shareholding each by the first plaintiff and first defendant. The plaintiffs would market the erven, with a company called Sencon having exclusive rights to build houses. The purchase price for plot 62 would be half the net selling price of all erven, payable progressively. The plaintiffs discharged their obligations until 6 July 2005, when the first defendant transferred plot 62 to the second defendant (Majestic Silver Trading 94 (Pty) Ltd), which the plaintiffs alleged constituted repudiation. The plaintiffs sued for specific performance or, alternatively, cancellation and damages of approximately R17 million, including losses allegedly suffered by Sencon which had ceded its claim to the second plaintiff. The first defendant excepted to the pleadings on three grounds.

• Whether the particulars of claim were excipiable for failing to comply with section 2(1) of the Alienation of Land Act 68 of 1981 regarding oral agreements for alienation of land
• Whether the pleadings were defective regarding the stipulatio alteri in favour of Sencon in the absence of an averment of acceptance
• Whether the court should dismiss a claim when an exception is upheld or grant leave to amend
• The proper practice regarding costs orders where separate aspects of a hearing are involved

The appeal was allowed in part with no order as to costs. The order of the court a quo was altered by inserting a new paragraph 4 granting the plaintiffs leave to amend their particulars of claim, with the notice of intention to amend in terms of Rule 28 to be delivered within 20 days of the date of judgment.

When an exception to pleadings is upheld, the invariable practice is for the court to give the pleader an opportunity to amend rather than dismissing the claim. This established practice does not permit departure except in rare cases, and where departure may be permissible, the court must provide specific reasons in its judgment. Where a court makes separate costs orders for separate aspects of a hearing, the judge must provide guidance to the taxing master (at least as to the proportion of total time each aspect occupied) to enable proper allocation of costs.

The Court observed that the contract in question was 'plainly a complicated one' involving the creation of a form of partnership with the first defendant's contribution centering around plot 62. The Court noted that more attention to detail and careful consideration of how the parties intended to put their agreement into effect may enable the plaintiffs to formulate their claims in clearer terms. The Court also commented that where one party is plainly the successful party and a particular aspect of the hearing occupied minimal time, it is doubtful whether the court should exercise its discretion to make a separate costs order for that aspect.

This case reinforces the well-established principle in South African civil procedure that when exceptions to pleadings are upheld, courts should almost invariably grant leave to amend rather than dismissing the claim. It emphasizes that departure from this practice requires specific reasons to be articulated in the judgment. The case also provides important guidance on the proper formulation of costs orders where a hearing involves separate aspects, requiring judges to provide guidance to the taxing master on the apportionment of time and costs between different issues.