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[2020] ZAWCHC 28
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Tumileng Trading CC v National Security and Fire (Pty) Ltd; E and D Security Systems CC v National Security and Fire (Pty) Ltd (3670/2019) [2020] ZAWCHC 28; 2020 (6) SA 624 (WCC) (30 April 2020)
Republic of South Africa
IN THE HIGH COURT OF SOUTH AFRICA
(WESTERN CAPE DIVISION, CAPE TOWN)
Before: The Hon. Mr Justice Binns-Ward
Date of hearing: 4 March 2020
Date of judgment: 30 April 2020
Case No. 3670/2019
In
the matter between:
TUMILENG
TRADING
CC
Applicant
/ Plaintiff
and
NATIONAL
SECURITY AND FIRE (PTY)
LTD
Respondent
/ Defendant
Case
No. 3671/2019
And
in the matter between:
E
& D SECURITY SYSTEMS
CC
Applicant
/ Plaintiff
and
NATIONAL SECURITY AND FIRE (PTY)
LTD
Respondent
/ Defendant
JUDGMENT
(Transmitted by email to the parties’ legal representatives
and posted on SAFLII. The judgment shall be deemed to have
been
handed down at 10h00 on Thursday,
30 April 2020)
BINNS-WARD J
[1]
The plaintiffs, in two actions, instituted
against the same defendant, on what appear to be the same causes of
action, have applied
for summary judgment. Both applications
came up for hearing together in the Fourth Division on the
semi-urgent roll, having
been postponed by agreement between the
parties on that basis by the motion court judge.
[2]
The well-established summary judgment
procedure that had worked successfully for so long has recently been
materially altered by
means of various amendments to rule 32 of the
Uniform Rules of Court. The applications in the cases before me
were brought
in terms of the ‘new’ rule 32, which has
been in effect since 1 July 2019.
[1]
[3]
One
might easily be forgiven, however, when regard was had to the
parties’ heads of argument, for thinking that it was business
as usual. Reliance was had on the established leading
authorities like
Maharaj
[2]
and
Joob
Joob Investments
,
[3]
with no indication that any consideration had been given to whether,
and if so, how, the principles rehearsed in such authorities
might
have been affected by the changes wrought to the procedure in terms
of the recent amendments. On the face of it, as
I made clear
during the oral argument, I would have thought that that approach was
misconceived.
[4]
Apart from a full bench decision in the
Gauteng Division on the question of whether the amendments affected
applications that were
instituted before 1 July 2019,
[4]
there does not appear to be any reported jurisprudence yet on the
operation of the amended procedure.
[5]
Why it was thought desirable to bring in
changes that will inevitably delay the ability of, and increase the
cost to, deserving
plaintiffs to obtain summary judgment is less than
clear. It is also not self-evident how the courts are expected
to deal
with the extra material, in many cases disputatious material,
that will now be put before them in such applications, in determining
whether a defendant has shown that it has a bona fide defence.
Commentators have noted that ‘
Rule
32 in its amended form is not a model of clarity
’.
[5]
They have also gone so far as to opine that ‘
the
fact that under the new procedure the merits of a defendants pleaded
defence in an action would be subjected to judicial scrutiny
in what
in effect is an opposed motion and not in the normal course of a
trial, raises the issue of constitutionality of the procedure
’
.
[6]
It will become apparent later in this judgment that I do not share
the latter opinion.
[6]
As the object of the amendments does not
emerge altogether clearly from the wording, which might easily be
read to have introduced
purely mechanical changes, it is relevant to
refer to the Memorandum published by the Task Team constituted by the
Rules Board
[7]
when it advertised for comment as to whether rule 32 should be
amended.
[8]
[7]
The Task Team had concluded that the
existing procedure was unsatisfactory because (i) ‘deserving
plaintiffs were frequently
unable to obtain expeditious relief
because of an inability to expose bogus defences (either in their
supporting affidavit or in
any further affidavit – further
affidavits not being permitted)’, (ii) ‘opportunistic
plaintiffs were able
to use the procedure to get the defendant to
commit to a version on oath and thus obtain a tactical advantage for
a trial in due
course’ and (iii) the constitutional
challenges to which it reportedly had given rise. The Team
considered that
the identified causes for concern might ‘best
be alleviated and addressed’ by (a) providing that an
application
for summary judgment be brought after the defendant had
filed its plea rather than after it had given notice of intention to
defend
and (b) replacing the essentially pro forma (‘formulaic’)
style of supporting affidavit in summary judgment applications
with a
supporting affidavit that ‘
should
instead identify any point of law relied upon and explain briefly why
the defence as pleaded does not raise any triable issues
’.
[8]
Paragraph
8 of the Memorandum gave the following ‘brief overview’
of the Task Team’s reasoning:
‘
8.1
A plaintiff at present does not have to indicate what exactly its
cause of action
is, or what facts it relies on, or why a defendant
does not have a defence. Instead, the plaintiff is merely required
(and permitted)
to file a brief affidavit, taken from a template,
“
verifying
the cause of action
”
in the vaguest possible way, opining that the defendant has no
bona
fide
defence,
and stating that “
a
notice of intention to defend has been delivered solely for the
purpose of delay
”
(rule 32(2). This formulaic affidavit is unsatisfactory in many
respects.
8.1.1
The plaintiff, when deposing to its affidavit under the current rule,
may well not be
aware what defence the defendant is intending to
advance.
8.1.2
The deponent of the affidavit (who could, for example, be an accounts
manager in a bank)
is also likely to have little idea as to why
exactly the defendant is opposing: the defendant could for example
believe (wrongly)
that it has a viable defence, or that there is some
impediment to the plaintiff succeeding irrespective of the merits
(e.g. prescription,
jurisdiction or lack of standing), or that the
equities are such that a court could well be minded not to grant
judgment for the
plaintiff.
8.1.3
The current founding affidavit in summary judgment proceedings
therefore invariably involves
speculation on the part of the
plaintiff’s deponent. The lack of specificity as to the
plaintiff’s claim, and the complete
lack of detail as to why
the defendant’s envisaged defence is bogus, coupled with the
absence of any replying affidavit,
also means that the plaintiff can
easily be frustrated by a defendant who is prepared to construct or
contrive a defence, or rely
on technical points.
8.2
The best way of addressing these shortcomings would seem to be to
require
the founding affidavit in support of summary judgment to be
filed at a time when the defendant’s defence to the action is
apparent, by virtue of having been set out in a plea. This course is
better than allowing a replying affidavit to be filed (as
was
suggested by a report prepared a few decades ago by the Galgut
Commission). Merely including provision for a replying affidavit
would not address the problems with the formulaic nature of the
founding affidavit, and the speculation inevitably contained therein.
8.3
In the event of a plaintiff applying for summary judgment after the
delivery
of a defendant’s plea, the plaintiff would be able to
explain briefly in its founding affidavit why the defences proffered
by the defendant do not raise a triable issue; and should indeed be
required to do so in order that the question of whether there
is a
bona fide
defence which is capable of being sustained could be
considered by the Court in a meaningful way. Requiring the plaintiff
to set
out why, in its view, it has a valid claim and why the
defendant’s defence is unsustainable, would also remove the
criticism
that the defendant is being required to commit itself to a
version when the plaintiff is not similarly burdened. Obliging the
plaintiff
to engage meaningfully with the case in its founding
affidavit would moreover have the added benefit of reducing the
temptation
for a plaintiff to seek summary judgment as a tactical
move (and as a way of forcing the defendant to commit to a version on
oath,
which can be subsequently used in cross-examination to
discredit a witness of the defendant).
8.4
A stipulation that a plaintiff can only apply for summary judgment
after
delivery of a plea (rather than a notice of intention to
defend) would also mean that the summary judgment application would
be
adjudicated on the basis of the defendant’s pleaded defence
and thus hopefully avoid a situation (such as not infrequently
occurs
under the current rule) where a defendant’s version in its
opposing summary judgment application diverges materially
from its
subsequently-delivered plea. The summary judgment debate will thus
hopefully be a more informed, and less, artificial,
one, and engage
with the real issues in the matter.
8.5
Although foreign practice must be viewed with caution given the
differences
between countries and their procedural systems, it is
notable, too, that the other jurisdictions considered by the Task
Team –
the United Kingdom, Canada, Australia and the U.S.A. –
all permit summary judgment only after a plea has been filed (and
indeed after pleadings have closed). The summary judgment procedure
was seemingly introduced in South Africa on the basis of its
use in
England and Scotland. The fact that summary judgment is only
competent in those jurisdictions after at least a plea has
been filed
(and would thus be premature after merely a notice of intention to
defend has been delivered) is thus reassuring, and
indicative of the
merits of the proposed change.
8.6
If the summary judgment procedure is changed as proposed, the Task
Team
does not believe that a replying affidavit would either be
necessary or appropriate. A plaintiff would have had a chance to
address
the averments in the defendant’s plea in its founding
affidavit in support of summary judgment. If the defendant has a
further
rebuttal in its answering affidavit, then, if that is
credible, the summary judgment application would be defeated; but
that is
not necessarily inappropriate as the matter would then
presumably have complexities which render it ill-suited to the
summary judgment
remedy. For a similar reason, a referral to oral
evidence (also mooted in the Galgut Commission report) seems
inadvisable.
8.7
The Task Team debated whether, as in the comparative jurisdictions
consulted,
summary judgment should potentially be available for any
kind of claim (including illiquid claims for damages). It was
concluded
that this would not be appropriate, and that summary
judgment could justifiably be confined to the kinds of matters
referred to
in section 32(1).
8.8
The Task Team also debated whether, if summary judgment should no
longer
be brought after delivery of a notice of intention to defend,
it should be allowed only after close of pleadings. It was however
decided against requiring a plaintiff to wait until after any
replication, rejoinder or rebuttal had been filed. While such a rule
would ensure that the debate was fully informed, and based on all
pleaded defences and ripostes, it was thought that the speediness
of
the remedy could be compromised, and also that, as the objective
behind summary judgment was to allow judgment to be obtained
expeditiously in clearly deserving cases, a matter in which there
were replications, rebuttals and the like was probably one ill-suited
to summary judgment.
[9]
The reasoning is, with respect, not as
helpful as might have been hoped in giving meaningful insight into
the rationale for, and
intent behind, the rule changes.
[10]
The constitutional challenges reportedly
mounted against the established rule (the rationale of which was only
10 years ago
held by the Supreme Court of Appeal in
Joob
Joob
Investments
to be ‘impeccable’ and
praised by the court at the time as a procedure that had been
usefully and effectively implemented
for nearly a century
[9]
)
are not identified in the Task Team’s memorandum. They,
in any event, do not appear to have been pressed to determination,
for I could find no record of them in the law reports, nor on SAFLII.
Insofar as it might be implied that they may have been
predicated on the contention that the old rule had the capacity of
unfairly depriving defendants of their right to a full-blown
trial,
their prospects of success could only be rated as poor if regard were
had to the fate of a similar challenge to the provisional
sentence
procedure, rejected by a unanimous court in
Twee
Jonge Gezellen v Land and Agricultural Development Bank of South
Africa
.
[10]
The Constitutional Court did find that the common law pertaining to
provisional sentence required development by the infusion
of a degree
of judicial discretion into the procedure in the interests of
justice, but summary judgment has, by contrast with that
procedure,
always been subject to a generous measure of judicial discretion.
[11]
[11]
It is difficult to see how the ability of
plaintiffs to obtain ‘expeditious relief’ through summary
judgment is to be
facilitated or rendered less susceptible to
constitutional challenge by postponing their opportunity to apply for
it until after
the defendant has delivered its plea. The change
undoubtedly comes at a cost, both in time and expense. The
evident
effect of these considerations on plaintiff litigants has
been notable. There has been a significant drop in the number
of
summary judgment applications on the court rolls.
[12]
The reduced numbers would suggest that if ever the procedure were
genuinely regarded by litigators as ineffective before
the
amendments, it might now be regarded as even more so. Time will
tell.
[12]
The
Task Team professed to take comfort from the timing of summary
judgment applications in other jurisdictions such as England
and
Australia. But reference to the summary judgment procedures in
those countries shows that the import of the procedures
that go by
that label there differs starkly from that in place here (whether in
original or amended form). Most significantly
perhaps, by
virtue of the fact that the test for summary judgment in the foreign
jurisdictions involves an assessment of the merits
of the case in
order to determine whether the party against whom summary judgment is
applied for (it could be either claimant or
defendant in England and
Australia) enjoys either a ‘real’ or a ‘reasonable’
prospect of success
[13]
if the matter were to go to trial.
[14]
It would, understandably, usually be difficult for such an assessment
to occur before a plea had been delivered.
[13]
However,
our procedure, by contrast, even in its amended form, remains true to
that in which summary judgment was originally introduced
in the
English civil procedure in the mid-19
th
century.
[15]
Rule 32(3), which regulates what is required from
a defendant in its opposing affidavit, has been left substantively
unamended in
the overhauled procedure. That means that the test
remains what it always was: has the defendant disclosed a bona fide
(i.e.
an apparently genuinely advanced, as distinct from sham)
defence? There is no indication in the amended rule that the
method
of determining that has changed. The classical
formulations in
Maharaj
[16]
and
Breitenbach v
Fiat SA
[17]
as to what is expected of a defendant seeking to
successfully oppose an application for summary judgment therefore
remain of application.
A defendant is not required to show that
its defence is likely to prevail. If a defendant can show that
it has a legally
cognisable defence on the face of it, and that the
defence is genuine or bona fide, summary judgment must be refused.
The
defendant’s prospects of success are irrelevant.
[14]
The Task Team’s concern about the use
by plaintiffs of the procedure for ‘tactical advantage’
is also difficult
to understand as a basis for the amendments to the
rule that have been introduced. Litigation is not a game.
And in
the modern era, the general tendency in litigation worldwide
is for courts to require litigants to make full disclosure of their
cases as early as possible so as to facilitate effective case
management and promote the most efficient and cost effective disposal
of cases by the avoidance of unnecessary trials and the shortening of
those that do proceed to hearing. A plaintiff that
applied for
summary judgment when it knew or reasonably should have appreciated
that the defendant had a bona fide defence, and
was therefore abusing
the procedure, was always, and remains, exposed to an adverse costs
order. The amended rule provides
for even stricter sanctions
against abuse, by providing expressly for the making of orders that
the proceedings be suspended until
the delinquent plaintiff has paid
any costs awarded against it for abusing the procedure.
[18]
[15]
What the amendment requiring an application
for summary judgment to be brought only after a plea has been
delivered is identifiably
directed at achieving, and should succeed
in doing, is the avoidance of speculative summary judgment
applications. Under
the previous regime, a plaintiff might
bring the application in the genuine belief that the defendant had
entered an appearance
to defend only for the purpose of delay, only
to learn that the defendant was able to make out a bona fide defence
when the defendant’s
opposing affidavit was delivered.
Such applications, and there were many, rarely went to a hearing,
however. That was
because the parties to such matters would
almost invariably agree to ‘the usual order’, granting
the defendant leave
to defend. Under the new rule, a plaintiff
would be justified in bringing an application for summary judgment
only if it
were able to show that the
pleaded
defence is not bona fide; in other words, by showing that the plea is
a sham plea.
[16]
Of primary interest in the adjudication
process, and no doubt also for practitioners assisting litigants with
the drafting of their
affidavits, are the changes in the stated
requirements for –
(i)
the content of the plaintiff’s
supporting affidavit, and
(ii)
in
relation to (i), the effect, if any, of the aforementioned changes on
what is expected of a defendant in respect of its opposing
affidavit.
Content of the supporting affidavit
[17]
As to (i), rule 32(2)(b) now provides that
the supporting affidavit must ‘
verify
the cause of action and the amount, if any, claimed,
and
identify any point of law relied upon and the facts upon which the
plaintiff’s claim is based, and explain briefly why
the defence
as pleaded does not raise any issue for trial
’.
The change was effected by the insertion of the underlined wording
into the subrule.
[18]
It is by no means obvious what was sought
to be achieved by inserting the requirement that the deponent to the
supporting affidavit
must identify any point of law relied upon and
the facts upon which the plaintiff’s claim is based.
After all, now
that summary judgment applications fall to be brought
after the plea has been delivered, there will always be either a
combined
summons or a simple summons and declaration already on
record. The particulars of claim or declaration are required to
comply
with the requirements for pleading set out in rule 18.
Accordingly, they must contain a clear and concise statement of
the
material facts upon which the plaintiff relies for its claim with
sufficient particularity to enable the defendant to plead
thereto.
If the allegations in the pleaded claim do not make out a cause of
action that is cognisable in law, it is amenable
to exception, and if
the pleading does not comply with rule 18, it is liable to be struck
out as an irregular step. If the
plaintiff’s cause of
action depends on a ‘legal point’ that is not evident on
the alleged facts, the point should
therefore already be apparent in
the summons or declaration. One must assume therefore that a
claim to which a plea has been
delivered should be neither excipiable
nor non-compliant with the requirements of rule 18 as to
particularity.
[19]
Is the deponent to the supporting affidavit
then required to repeat in narrative form what should already be
apparent from the plaintiff’s
pleadings? Or is he or she
expected to set out the
facta probantia
in elaboration of the
facta probanda
alleged in the pleadings? Having regard to the purpose of
summary judgment proceedings, which is to prevent matters in which
the
defendant
does not appear to have a bona fide
defence
having to go to trial, no obvious point is served by an elaborate
supporting affidavit concerning the merits of the
plaintiff
’s
pleaded
claim
.
[20]
I think that it would be desirable
therefore if plaintiffs were encouraged to confirm what should
already be apparent from their
pleaded case as succinctly as
possible. No purpose will be served by a laborious repetition
of what the judge and the defendant
should be able to discern
independently from the pleaded claim. No harm will be done by
using a ‘formulaic’ mode
of expression if it serves the
purpose; which, it seems to me, it would do in most matters.
[21]
The requirement that the plaintiff’s
supporting affidavit should explain briefly why the pleaded defence
‘does not raise
an issue for trial’ is of more interest.
It cannot be taken literally, for a plea that did that would be
excipiable,
and there is no indication that the amended summary
judgment procedure is intended as an alternative to the exception
procedure.
For the reasons given later with regard to the cases
before me, I consider that the amended rule 32(2)(b) makes sense only
if the
word ‘genuinely’ is read in before the word
‘raise’ so that the pertinent phrase reads ‘explain
briefly
why the defence as pleaded does not
genuinely
raise any issue for trial’. In other words, the plaintiff
is not required to explain that the plea is excipiable.
It is
required to explain why it is contended that the pleaded defence is a
sham. That much is implicit in what the Task
Team said in
para. 8.3 of its Memorandum.
[19]
The position would have been made clearer had the words ‘does
not make out a bona fide defence’ been used.
That would
have made for a more clearly discernible connection between the
respective requirements of subrules (2)(b) and (3)(b).
That
there be such a connection is necessary if the amended rule as a
whole is to be workable.
[22]
What the amended rule does seem to do is to
require of a plaintiff to consider very carefully its ability to
allege a belief that
the defendant does not have a bona fide
defence. This is because the plaintiff’s supporting
affidavit now falls to
be made in the context of the deponent’s
knowledge of the content of a delivered plea. That provides a
plausible reason
for the requirement of something more than a
‘formulaic’ supporting affidavit from the plaintiff.
The plaintiff
is now required to engage with the content of the plea
in order to substantiate its averments that the defence is not bona
fide
and has been raised merely for the purposes of delay.
[23]
It seems to me, however, that the exercise
is likely to be futile in all cases other than those in which the
pleaded defence is
a bald denial. This is because a court
seized of a summary judgment application is not charged with
determining the substantive
merit of a defence, nor with determining
its prospects of success. It is concerned only with an
assessment of whether the
pleaded defence is genuinely advanced, as
opposed to a sham put up for purposes of obtaining delay. A
court engaged in that
exercise is not going to be willing to become
involved in determining disputes of fact on the merits of the
principal case.
As the current applications illustrate, the
exercise is likely therefore to conduce to argumentative affidavits,
setting forth
as averments assertions that could more appropriately
be addressed as submissions by counsel from the bar. In other
words,
it is likely to lead to unnecessarily lengthy supporting
affidavits, dealing more with matters for argument than matters of
fact.
Content of the opposing affidavit
[24]
As to (ii), rule 32(3)(b), which provides
for what is required in a defendant’s opposing affidavit,
remains as it was before,
save that the affidavit must now be
delivered at least five days before the hearing of the application,
instead of by noon on the
day but one before the hearing, as had
previously been the case. As has always been the position, the
opposing affidavit
must ‘
disclose
fully the nature and grounds of the defence and the material facts
relied upon therefor
’. The
purpose of the opposing affidavit also remains, as historically the
case, to demonstrate that the defendant ‘
has
a bona fide defence to the action
’.
There is thus no substantive change in the nature of the
‘burden’,
[20]
if that is what it is, placed on a defendant in terms of the
procedure. However, the broader form of supporting affidavit
that is contemplated in terms of the amended rule 32(2)(b) will in
some cases require more of a defendant in respect of the content
of
its opposing affidavit than was the case in the pre-amendment regime,
for the defendant will be expected to engage with the
plaintiff’s
averments concerning the pleaded defence. In this regard I
anticipate that we shall also see much argumentative
matter in the
opposing affidavits under the new regime, for argument will be met
with counter-argument.
[25]
The assessment of whether a defence is bona
fide is made with regard to the manner in which it has been
substantiated in the opposing
affidavit; viz. upon a consideration of
the extent to which ‘
the nature
and grounds of the defence and the material facts relied upon
therefor
’ have been canvassed by
the deponent. That was the method by which the court
traditionally tested, insofar as it was
possible on paper, whether
the defence described by the defendant was ‘contrived’,
in other words not bona fide.
And the amended subrule 32(3)(b)
implies that it should continue to be the indicated method. (If
a case gives rise to a defendant
being able to cogently rely on
‘technical points’,
[21]
it was, and remains, entitled to do so.)
[26]
The traditional import of the requirement
that the facts relied on by a defendant be ‘
fully
’
disclosed was mentioned earlier in this judgment.
[22]
It may be, now that the opposing affidavit falls to be made after the
defendant’s plea has been delivered, that more
is required of
the defendant in terms of the amended rules than was previously
demanded. After all, the qualification by
Corbett JA in
Maharaj
supra, loc. cit.,
[23]
that ‘
the defendant is not
expected to formulate his opposition to the claim with the precision
that would be required of a plea; nor
does the Court examine it by
the standards of pleading
’ sounds
incongruous when the court adjudicating the summary judgment already
has the plea before it. But if the requirements
are indeed more
stringent, does it mean that the intention behind amendment was to
make the procedure more draconian or drastic
than it used to be?
I doubt it.
[27]
Had such a signal change been intended, it
seems unlikely that subrule 32(3) would have been left substantively
in the same form
that it used to have. I would also have
expected any change in what was required of the defendant’s
opposing affidavit
to be accompanied by the introduction of other
changes to bring our procedure more into line with that in
jurisdictions in which
the courts are able to give directions that
enable the genuineness of the advanced defences to be further
explored before summary
judgment is granted or refused, or further
directions to be given for the management of the claim.
[24]
[28]
Against the background of the aforegoing
analysis, it is time to turn to the determination of the two
applications under the new
rule that are before me.
In case no. 3671/2019
[29]
The action was commenced by means of a
combined summons. It is evident from the particulars of claim
that the claim is for
payment of commission allegedly due and payable
to the plaintiff by the defendant in terms of a written agreement, a
copy of which
is annexed to the pleading.
[30]
It is apparent from the allegations in the
particulars of claim, read with the attached agreement, that the
plaintiff had been engaged
by the defendant, then known as Chubb
Security, as a ‘Chubb Incentive Programme agent’.
The plaintiff’s
functions in terms of the agreement were to
recruit clients for Chubb Security and to instal the pertinent
systems linking up the
client’s burglar alarm to Chubb
Monitoring and Response. It is alleged in the summons that, in
terms of clause 6.1
of the agreement, the defendant was entitled to
terminate the contract at any time by giving the plaintiff at least
60 days’
written notice. The pleading further
alleges that, in terms of clause 6.4 read with clause 8 of the
agreement, should the
termination of the agreement occur in the
manner aforesaid without the plaintiff having been at fault, and
provided the plaintiff
had been an ‘active agent’ for 24
months at date of termination, the defendant would be liable, subject
to certain
further conditions that were set forth in the particulars
of claim, to continue to pay commission to the plaintiff on the
monthly
fees paid to the defendant by the clients that the plaintiff
had introduced.
[31]
The
plaintiff alleged that the agency was terminated by the defendant in
terms of the 60 days’ notice clause. A
copy of the
notice of termination is attached to the particulars of claim.
The notice of termination, dated 20 September
2017, reads as
follows:
Termination of CIP Agent Agreement
It is with regret that we hereby provide notification of
the termination of our agreement and provide the necessary 60 day
notice
commencing with effect from 01 October 2017. The services and
agreement will therefore terminate on 30 November 2017. We are
currently
investigating the circumstances of the termination to
determine whether it is with, or without cause, and therefore whether
the
termination is either in terms of 6.1 or 6.3 of the agreement In
this regard, Chubb reserves its rights to rely on any evidence
found
that qualifies the termination to bring it in line with clause 6.3.
This investigation pertains to various aspects regarding
reputational, performance and/or breach issues.
In addition to the above, we further reserve the rights
of the company to engage with specific CIP Agents regarding amendment
of
agreements, remunerations and stipulations in the immediate
future.
We will be contacting all relevant CIP Agents via e-mail
or in person regarding the above if relevant. However, should no
further
contact be forthcoming, the termination remains in effect and
the necessary contractual stipulations will be applied.
We thank you for your participation in the program and
wish your company every success in future endeavours.
Yours sincerely
[32]
The plaintiff alleges that the termination
did not occur as a result of any fault by the plaintiff and that the
various conditions
to which its contractual entitlement to the
continued payment of commission have been satisfied. It alleges
that the defendant
has, however, failed, since 1 December 2017,
to pay the commission due in the amount of R70 897,36 per month
and that
the resultant amount in which the defendant was indebted to
it as at 28 February 2019 was R1 063 640,40.
[33]
The plaintiff has claimed payment of the
aforesaid amount of R1 063 640,40 plus interest thereon
a
tempore morae
at the prescribed rate of
interest. It has also claimed ‘payment of the commission
to the plaintiff by the defendant
every month in accordance and in
compliance with clause 8 of the Agreement, from 1 March 2019
onwards’, plus interest
thereon
a
tempore morae
.
[34]
In its plea, the defendant notes the
allegations in the particulars of claim and pleads ‘that any
payment due and owing to
the Plaintiff will be subject to inter alia
clause 6.3 of the Agreement’. As the terms of the
termination letter indicated,
clause 6.3 was an alternative to clause
6.1 of the agreement. It allowed for the summary cancellation
of the agreement by
the defendant in certain defined circumstances.
(Clause 6.1, it will be remembered, is the cancellation on 60 days’
notice clause.) The defendant denied that the contract had been
cancelled in terms of clause 6.1 and, in amplification of
the denial,
pleaded that its notice of termination had expressly stated that the
defendant had been ‘investigating the circumstances
of the
termination to determine if the said termination was pursuant to
clause 6.1 or 6.3 of the Agreement’.
[35]
The defendant denied any liability to the
plaintiff and, in paragraphs 8-10 of its plea, pleaded as follows:
8.
… the agreement was terminated by the Defendant pursuant
to
clause 6.3.4. The Defendant’s (sic) workmanship and
product installations were defective and/or of an inferior
quality
which has caused the Defendant to suffer reputational harm.
9.
The Defendant had to remedy the defective workmanship of the
Plaintiff and suffered financial loss.
10.
The Defendant will file a counter claim in due course.
[36]
In its application for summary judgment,
the plaintiff sought judgment for all of the relief prayed for in
terms of its particulars
of claim. The application was
supported by a six-page affidavit by the sole member of the plaintiff
close corporation.
The affidavit’s content was divided
into sections under various subheadings that were clearly inspired by
the requirements
of the amended rule 32(2)(b). It is convenient
to quote paragraph 6-16 thereof because they serve to illustrate the
difficulties
described earlier in fathoming the object of the
amendments.
Point of law relied on
6.
The plaintiff relies on
the legal principles surrounding the termination of an agreement and
specific performance of the obligations
of the parties in terms of
such an agreement
.
Facts upon which claim based
7.
The plaintiff’s
claim is based on the facts set out in its Particulars of Claim, in
particular that the defendant terminated
the agreement between the
parties (“the Agreement”) in terms of clause 6.1 thereof,
that the plaintiff remains entitled
to the payment of commission and
that the defendant has breached the Agreement by failing and/or
refusing to pay such commission
to the plaintiff.
Defence does not raise issue for trial
8.
In its notice of
termination of the Agreement, a copy of which is annexed to the
plaintiffs particulars of claim, marked “AST2”
(“the
Notice”), the defendant stated that it was investigating the
circumstances of such termination in order to establish
whether the
agreement was terminated pursuant to clauses 6.1 or 6.3 thereof. The
defendant further claims that the agreement was
terminated in
accordance with clause 6.3.4 thereof as it suffered reputational
damage due to “
the
defendant’s
”
workmanship and product installations being defective
.
9.
Such
defence
must be rejected.
10.
Firstly, it is clear from the first paragraph of the Notice that the
defendant
relied on such clause 6.1 in terminating the Agreement as
it terminated the Agreement on 60 days’ written notice and not
with immediate effect as allowed and envisaged by clause 6.3.
11.
Secondly , clause 6.3 allows for the cancellation of the Agreement by
notice in writing in the event that the plaintiff either committed an
act of insolvency, went into liquidation, is charged with
or
convicted of a criminal offence, brought the defendant into disrepute
or did business with any company in direct competition
with the
defendant.
12.
It is clear from the Notice that at that time the defendant was not
aware
of any fact that could allow it to rely on the provisions of
clause 6.3 and that the agreement was thus not terminated as a result
of any fault of the plaintiff.
13.
Thirdly, subsequent to the termination of the Agreement, the
defendant
never paid any commission to the plaintiff. It is thus
clear that the defendant never had any intention to pay any
commission to
the plaintiff and that it relies in bad faith on clause
6.3.4 of the agreement in order to avoid doing so.
14.
Fourthly, the defendant's allegations regarding its alleged
reputational
risk is (sic) so vague that it can be rejected out of
hand. It clearly has not suffered a reputational risk or any damages
as confirmed
by the fact that it has failed to deliver a counterclaim
to date hereof, despite threatening to do so.
15.
Fifthly, as the Agreement was not cancelled as a result of any fault
of
the defendant, the plaintiff is entitled to continue to receive
the payment of commission, especially as the defendant did not make
any allegation that the plaintiff was not an active agent, as at the
date of termination of the Agreement, for a period of 24 months,
that
the defendant’s clients did not remain its active clients or
that such clients are indebted to the defendant.
Conclusion and prayer
16.
I confirm that the
defendant's plea does not raise any issue for trial and it and that
it has entered appearance to defend and delivered
its plea purely in
order to delay the relief rightly due to the plaintiff.
17.
I must respectfully say that the plaintiff is entitled that summary
judgment
be granted against the defendant as prayed.
[37]
It will be noted that the averments in the
supporting affidavit added nothing by way of fact to what was already
discernible from
the particulars of claim. The legal character
of the claim was also apparent from the summons, and the need for the
plaintiff
to describe ‘the point of law’ relied upon gave
rise to awkwardly superfluous averments. The rest of the
averments
were purely argumentative; and, in arguing that the plea
did not raise any issue for trial, the argument was misplaced.
In
context, it is evident what the deponent clearly meant was that
the triable defences that were advanced in the plea were not bona
fide and had been advanced merely for delay, which is something
different. In short, in seeking to comply with the amended
subrule, the deponent has actually highlighted the obscurity of the
object(s) sought to be achieved by the amendments.
[38]
It must be assumed that the plaintiff
accepted that the manner in which the notice of cancellation had been
couched had left it
open to the defendant to fall back on clause 6.3
of the agreement during the period of notice were it able to
establish a basis
for doing so. If the position were otherwise,
the plaintiff would no doubt have noted an exception to the plea, and
indeed
should have done so if that were the case. The
defendant’s failure to note an exception to the plea was
essentially
tantamount to a tacit admission that a cognisable defence
was made out in it, at least on the face of it.
[39]
The triable defence most obviously evident
in the defendant’s plea is its allegation that the defendant
had cancelled the
contract in circumstances in which it had been
relieved of the obligation to pay ongoing commissions. The
defendant alleged
that the plaintiff had caused it reputational
damage as a result of poor workmanship. If the allegation were
well founded,
it arguably engaged clause 6.3.4 of the contract, which
entitled the defendant to summarily the cancel contract if the agent
brought
Chubb into disrepute. Bringing the defendant into
disrepute would arguably amount to ‘fault’ for the
purposes
of clause 6.4 of the agreement, with the consequence that it
would be freed from any obligation to pay ongoing commissions.
[40]
However, does the fact that the bones of a
triable defence have been made out in the plea mean that summary
judgment must be refused?
The answer is clearly ‘no’!
The reason for the negative answer is that the enquiry is not whether
the plea discloses
‘an issue for trial’ in the literal
sense of those words, it is whether the ostensible defence that has
been pleaded
is bona fide or not. As discussed earlier, that
that is the relevant enquiry in a summary application follows from
the rule
maker’s decision to leave subrule 32(3) substantively
unamended. If one were to apply the amended rule differently,
it would be impossible to marry the requirement of a plaintiff
apparently posited by subrule 32(2)(b) (viz. showing that ‘the
defence as pleaded does not raise any issue for trial’) with
what is demanded of a defendant in terms of subrule 32(3)(b)
(viz.
showing that its defence to the action is bona fide; i.e. that its
ostensible defence is not a sham). The respective
supporting
and opposing affidavits would pass each other like ships in the night
if one were to understand the notion of ‘issue
for trial’
in subrule 32(2)(b) as denoting something different from a ‘bona
fide defence’ within the meaning
of subrule 32(3)(b).
[41]
In the current case the plaintiff has given
a number of reasons why it considers that the non-excipiable plea
does not disclose
a bona fide defence. It points out (i) that
the defendant had been unable, when it gave notice of cancellation in
September
2017, to identify with any specificity any respect in which
the plaintiff had been at fault; (ii) that it had failed to pay
any commission since the effective date of the termination of the
contract in December 2017 without having informed the plaintiff
that
it had been found to have been at fault in any respect (iii) that
by the time it delivered its plea in August 2019 it
had still had not
identified, other than in the vaguest and broad-brush terms, how the
plaintiff had allegedly been at fault.
It also points out
(iv) that, even by September 2019, the plaintiff had been unable
to formulate its supposed counterclaim
for the damages it had
allegedly sustained in consequence of allegedly having to remedy the
plaintiff’s allegedly defective
workmanship. As observed
earlier, these are all points that could have been argued on the
papers as they were when the application
was launched. They did
not require to be spelled out in a supporting affidavit. The
old style ‘formulaic’
supporting affidavit would have
sufficed. The effect of the amended requirements for a
supporting affidavit is, however,
to require the defendant to deal
with the argumentative material in its opposing affidavit. A
defendant that fails to do
that, does so at its peril.
[42]
How
has the defendant responded to the application? In the opposing
affidavit - deposed to by its attorney of record instead,
as might
have been expected, by a director or manager of the defendant company
– it is averred that the plaintiff has not
pleaded any facts as
to how the commission amount is derived and contended that ‘
in
the absence of … any factual allegations which would enable
the amount to be speedily ascertained … the amount
claimed
does not constitute ‘a liquidated amount in money
’.
It is also averred that the defendant ‘
has
specifically pleaded that the agreement was terminated pursuant to
clause 6.3.4, due to its’
(sic)
having suffered reputational harm, i.e.
that the agreement was terminated due to Plaintiff’s failure to
provide adequate workmanship
’.
The affidavit provides no particulars of the ‘reputational
harm’ or of ‘the inadequate workmanship’.
It
also says nothing about the ‘financial loss’ allegedly
sustained by the defendant in remedying the defective workmanship
that is alleged in the plea and which was identified there as the
subject of an intended claim in reconvention that to date (March
2020) has still not seen the light of day.
[43]
The
opposing affidavit concludes with the following averments:
CONDITIONS NOT FULFILLED
15.
In the alternative to the aforegoing, and even if it is found that
the
termination was without due cause as alleged by the Plaintiff, in
terms of the claim as pleaded the plaintiff is only entitled to
claim
payment in the event that certain conditions are met, namely that
15.1 Plaintiff
had been an active agent for 24 months as at date of termination;
15.2 The
Client remains an active client of the defendant; and
15.3 The
Client has no money owing to the defendant.
Particulars of claim paras 6.2 - 6.4
16.
The Defendant has specifically denied that any or all of these
conditions
have been met.
Defendant’s Plea par 7
17.
If it is found that any or all of these conditions have not been met,
this would serve as a complete defence to the Plaintiff’s
claim, and it is therefore submitted that summary judgment ought
to
be refused.
CONCLUSION
18.
For the above reasons, it is submitted that the Plaintiff’s
case,
to the extent that one exists, cannot under any circumstances
be held to be unanswerable, and that summary judgment herein ought
to
be refused and the Defendant granted leave to defend.
[44]
The
averments in the defendant’s opposing affidavit fall far short
of what is required of it in terms of rule 32(3)(b) if
it is to avoid
summary judgment; see in this regard what has been described as ‘the
classic formulation’ by Colman
J in
Breitenbach
v Fiat SA
.
[25]
Where are the material facts it relies on for its
defence? None are given.
[45]
If the defendant were genuine in its
reliance on clause 6.3.4 of its contract with the plaintiff, it
should have been able to describe
exactly how the plaintiff’s
workmanship had been defective and what it had been required to do to
remedy it. It should
have been able to identify the clients
affected by the allegedly inadequate work. It did not do so.
[46]
If any of the contractual conditions for
continued commission payments had not been met, the defendant should
have been in a position
to identify the client involved and the basis
upon which the trigger for releasing the defendant from its payment
obligation had
been activated; for example, because a client had
terminated its service contract with the defendant. In such a
case, ‘the
full facts’ would include an indication of the
name and address of the client concerned and the date upon which it
ceased
to be a client. The defendant, however, provided no
particularity whatsoever.
[47]
It is difficult to conceive that if the
defendant really had a counterclaim against the plaintiff arising out
of the expense incurred
in undertaking remedial work, it would not be
in a position, nearly two and a half years after the effective
termination of the
agency agreement, to formulate the claim, or at
least furnish reasons for its inability to have done so. It did
neither.
[48]
To borrow from Navsa JA’s
characterisation of the defendant’s position in
Joob
Joob Investments
, ‘such defences
as were proffered [were] cast in the most dubious terms’.
[26]
The most probable inference in the circumstances is that no
particularity has been furnished because the defences and supposed
counterclaim are not genuinely advanced. This is especially so
because the defendant not only failed, quite dismally, to
satisfy the
requirements of rule 32(3)(b), it also failed to respond to the
challenge to it in the plaintiff’s supporting
affidavit to back
up its bald plea with substantiating particularity. If a
defendant fails to put up the facts that it obviously
should have
been able to do were it advancing a genuine defence, it cannot
complain if the court is left in a position in which
it is unable to
find a reasonable basis to doubt that it does not have a bona fide
defence. There is, moreover, nothing in
the papers to justify
the court exercising its overriding discretion in favour of the
defendant.
[49]
There
is no merit in the allegation that the claim is not one in a
liquidated amount. The amount claimed is based on the monthly
commissions that the plaintiff was receiving when the contract was
terminated. The basis for them should be readily confirmable
from both the plaintiff’s and the defendant’s records,
and therefore subject to quick and ready proof.
[50]
In the result I am satisfied that the
plaintiff is entitled to summary judgment in respect of its
liquidated claim and an order
to that effect will issue.
However, I do not consider that the prayers for payment of commission
from 1 March 2019 onwards,
together with interest thereon, are in
respect of liquidated claims. They constitute claims for debts
that had not yet come
into existence when the summons was issued and
therefore could hardly be regarded as liquidated. The plaintiff
was also not
in a position, when the action commenced, to allege that
the conditions to which the defendants continuing obligation to
maintain
the commission payments had continued to be satisfied after
the date of the initiation of proceedings. It is by no means
clear to me that it was competent in the given circumstances for the
plaintiff to seek judgment for payments to be made
in
futuro
.
In case no. 3670/2019
[51]
The claim in case no. 3670/2019 is almost
identical to that in case no. 3671/2019. The only differences
are in the amount
that has been claimed (in this case, a total of
R885 427,35 based on unpaid commissions of R59 028,49 per
month from
1 December 2017 to 28 February 2019) and that a
copy of the agreement was not attached to the particulars of claim
because,
so it is alleged, ‘the plaintiff does not have a copy
of the Agreement in its possession and accordingly cannot attach it
hereto’. The plaintiff did annex a copy of the
defendant’s letter of termination, which, apart from the name
of the addressee, is in identical terms to the letter addressed to
the plaintiff in case no. 3671/2019, quoted in paragraph
[31]
above. The claim also includes a prayer for
payment of commission from 1 March 2019 onwards. For the
reasons given in
the preceding paragraph, I do not regard the claim
for ongoing payments as a liquidated claim.
[52]
Having entered appearance to defend, the
defendant failed to deliver its plea timeously and was placed under
bar. The plea
that was ultimately delivered was in identical
terms to that delivered in case no. 3671/2019.
Notwithstanding that it
referred to various clauses in the agreement
between the parties, the defendant did not attach a copy of the
agreement to the plea.
[53]
The affidavit in support of the application
for summary judgment is substantially identical in its wording to
that in case no. 3671/2019.
That is not surprising having
regard to the correspondence between the respective causes of action
and the fact that both of the
plaintiffs are represented by the same
attorney. It is evident from the allocated case numbers that
the summonses in the
actions must have been issued at the same time.
[54]
The opposing affidavit, in this case, also
deposed to by the defendant’s attorney of record rather than a
director or employee
of the defendant company, is in identical terms
to that made in case no. 3671/2019. It falls short of what
is required
in terms of rule 32(3)(b) for the same reasons as those
stated in paragraphs [42]
to [49]
above. In the circumstances, summary
judgment will be granted in this case in the amount of R885 427,35.
Orders
[55]
The following order is made in case no.
3671/2019:
(a)
Summary
judgment is granted in favour of the plaintiff in the sum of
R1 063 640,40, together with interest a tempore morae
at
10,25% per annum on the constituent monthly amounts of R70 897,36
from the dates upon which each such amount fell due during
the period
31 December 2017 to 28 February 2019 to date of payment.
(b)
The
defendant is ordered to pay the plaintiff’s costs of suit
incurred to date of this judgment.
(c)
The
plaintiff’s claim for ongoing payments from 1 March 2019 is
referred to trial and, insofar as necessary, the defendant
is granted
leave to defend that claim.
[56]
The
following order is made in case no. 3670/2019:
(a)
Summary
judgment is granted in favour of the plaintiff in the sum of
R885 427,35, together with interest a tempore morae at
10,25%
per annum on the constituent monthly amounts of R59 028,49 from
the dates upon which each such amount fell due during
the period 31
December 2017 to 28 February 2019 to date of payment.
(b)
The
defendant is ordered to pay the plaintiff’s costs of suit
incurred to date of this judgment.
(c)
The
plaintiff’s claim for ongoing payments from 1 March 2019 is
referred to trial and, insofar as necessary, the defendant
is granted
leave to defend that claim.
A.G. BINNS-WARD
Judge
of the High Court
APPEARANCES
Plaintiffs’
counsel: Dirk van der Merwe
Plaintiffs’ attorneys: C & A Friedlander
Cape
Town
Defendant’s
counsel: Rudi Abrahams
Defendant’s attorneys: Herold Gie Attorneys
Cape
Town
[1]
GN R842 published in GG 42497 dated 31 May
2019.
[2]
Maharaj v Barclays National Bank Ltd
1976 (1) SA 418 (A).
[3]
Joob Joob Investments (Pty) Ltd v Stocks
Mavundla Zek Joint Venture
[2009]
ZASCA 23
(27 March 2009); [2009] 3 All SA 407 (SCA); 2009 (5) SA 1
(SCA).
[4]
Raumix Aggregates (Pty) Ltd v Richter Sand CC
and Another; Steeledale (Pty) Ltd v Gorrie and similar cases
[2019] ZAGPJHC 386, [2019] ZAGPPHC 500 (4 October 2019); 2020 (1) SA
623 (GJ).
[5]
DE Van Loggerenberg,
Erasmus,
Superior Court Practice
2
nd
ed. (Juta, loose-leaf), Vol. 2 at D1-387 [Service 11, 2019].
[6]
Id.
[7]
The Memorandum was distributed to ‘role-players’
under cover of a letter of the Secretary of the Rules Board for
Courts
of Law, dated 27 June 2016.
[8]
Cf.
C:SARS v United
Manganese of Kalahari (Pty) Ltd
[2020]
ZASCA 16
(25 March 2020) at para. 17, citing
Westinghouse
Brake & Equipment (Pty) Ltd v Bilger Engineering (Pty) Ltd
[1986] ZASCA 10
(6 March 1986) at pp. 17-20;
1986 (2) SA 555
(A), at
562D-563B and
Sidumo and Another v
Rustenberg Platinum Mines Ltd and Others
[2007] ZACC 22
;
2008 (2) SA 24
(CC);
[2007] 12 BLLR 1097
(CC);
(2007) 28 ILJ 2405 (CC), at para. 94, fns 100-102.
[9]
Joob Joob Investments
supra, at paras. 31-33.
[10]
Twee Jonge Gezellen (Pty) Ltd and Another v
Land and Agricultural Development Bank of South Africa t/a The Land
Bank and Another
[2011] ZACC 2
(22 February 2011); 2011 (3) SA 1 (CC); 2011 (5) BCLR 505 (CC).
[11]
Cf. e.g.
SA Bank of
Athens Ltd v Van Zyl
[2005] ZASCA 2
(21 February 2005);
[2006] 1 All SA 118
(SCA), at para. 16.
[12]
In the first week of March 2020, for example
there were only three summary judgment applications set down for
hearing on the Western
Cape Division motion court roll, whereas in a
comparable 5-day period in the preceding year (11-15 March 2019),
before the introduction
of the amended procedure, there were 25 such
matters on the roll. I could not find the court rolls for a
continuous five-day
period in March 2018, but in the four days
between 13-16 March 2018, 27 summary judgment applications were
enrolled.
[13]
The lack of a
real
prospect of success for the defence
(or claim) is the test in terms of CPR 24, which regulates ‘summary
judgment’
in terms of the English Civil Procedure Rules.
It is also the test in summary judgment proceedings in the Supreme
Court
of the Australian state of Victoria; see ss 61 and 62 of
the Civil Procedure Act, 2010 (Act 47 of 2010 (Vic) and Order 22
of
the Supreme Court Rules of Civil Procedure (2015). The absence
of a
reasonable
prospect
of success is the test in the Federal Court of Australia; see s 31A
of the Federal Court of Australia Act 156 of
1976 (Cth). The
High Court of Australia has highlighted the material difference
between the import of the ‘
reasonable
prospect of success’ test in terms of s 31A and the ‘
real
prospect of success’ test in terms of CPR 24 in the English
rules. It held that the effect of the absence of reasonable
prospect of success test distinguished it from the real prospect of
success test in that absolute certainty about the outcome
of the
claim or defence was not required before summary judgment could be
granted; see
Spencer v Commonwealth of
Australia
[2010] HCA 28
(1 September
2010), at paras. 52-56. (Interestingly, in the context of
the ambit of the Task Team’s comparative
survey, which
included both Australia and the USA, the High Court also
highlighted, at para. 57, that it would be ‘dangerous’
to have direct comparative reference to the summary judgment
procedures in the United States
under the
Federal Rules of Civil Procedure
, which it
regarded as materially distinguishable.)
[14]
It is not only the test that is different in the
foreign jurisdictions. English and Australian courts seized of
applications
for summary judgment are also endowed in terms of their
respective summary judgment rules with various powers (which differ
from
one jurisdiction to the other) such as those of hearing oral
evidence and making interlocutory orders and giving case management
directions. In England, for example, where it appears to the
court hearing a summary judgment application
possible
that a claim or defence may succeed but
improbable
that it will do so, it may, in terms of
Practice
Direction 24,
also make a ‘conditional
order’ requiring the defendant to pay a sum of money into
court. Equivalent powers
form no part of the amended local
summary judgment regime.
[15]
See
Edwards v
Menezes
1973
(1) SA 299
(NC);
[1973] 1 All SA 515
(NC), at 304 (SALR),
Joob
Joob
Investments
supra, at paras. 29-31 and
JA
Faris,
The historical context of
summary judgment in South Africa: politics, policy and procedure
,
(2010) LXIII CILSA 352 for a historical overview of the history of
the summary judgment procedure in this country.
[16]
Maharaj
supra,
at p.426A-E.
[17]
Breitenbach v Fiat SA (Edms) Bpk
1976 (2) SA 226
(T), at 228B-H.
[18]
Rule 36(9)(a).
[19]
See paragraph [8]
above.
[20]
Para. 8.3 of the Task Team Memorandum.
[21]
Para. 8.1.3 of the Task Team Memorandum.
[22]
See paragraph [13]
above.
[23]
See notes 2 and 16 above.
[24]
See notes 13
and 14
above.
[25]
Breitenbach v Fiat SA
supra,
loc. cit.
[26]
At para. 34.