About SAFLII
Databases
Search
Terms of Use
RSS Feeds
South Africa: South Gauteng High Court, Johannesburg
SAFLII
>>
Databases
>>
South Africa: South Gauteng High Court, Johannesburg
>>
2015
>>
[2015] ZAGPJHC 260
|
|
Tendering Marketing Services CC t/a TMS Steel v Wessel & Watson Steel (Pty) Limited (2015/17593) [2015] ZAGPJHC 260 (25 November 2015)
IN THE HIGH COURT OF
SOUTH AFRICA
GAUTENG LOCAL DIVISION,
JOHANNESBURG
CASE NO: 2015/17593
DATE: 25 NOVEMBER 2015
In the matter between:
TENDERING MARKETING SERVICES CC t/a
T M S STEEL
........................................
Applicant
And
WESSEL & WATSON STEEL (PTY)
LIMITED
…...........................................................
Respondent
JUDGMENT
ADAMS AJ:
[1]. During May 2015, the applicant
launched an application against the respondent for an order for
payment by the respondent to
the applicant of the sum of R328,000.00,
together with interest thereon and cost of the application. The
application is founded
on a written agreement between the parties
dated the 1st October 2012, signed by one Dewald Johannes Coetzer
(‘Wally’)
on behalf of the applicant, and signed on
behalf of the respondent by one Trevor Roy Watson (‘Trevor’).
[2]. In terms of the agreement, the
applicant sold to the respondent some of its assets at an agreed
purchase price of R358,000.00.
[3]. The respondent opposed the
application and set out its defence in its answering affidavit. In
addition to certain points in
limine raised by the respondent, its
defence on the merits is set out in the Answering Affidavit as
follows:
‘Nowhere in the agreement does it
state when the amounts claimed become due and payable and the
applicant bases its cause
of action on a document which is deficient
and vague.’
[4]. The respondent disputes the
applicant’s claim that it (the respondent) is clearly indebted
to the applicant in the amount
of R328,000.00. Applicant alleges that
there are genuine disputes of fact and that no final agreement was
reached between the parties.
There was not a meeting of the minds, so
it is alleged by the respondent.
THE FACTS
[5]. On the 1st October 2012, a written
agreement (‘the agreement’) was concluded between the
applicant, cited in the
agreement as ‘TMS Steel CC’ and
the respondent. The agreement was signed on behalf of the applicant
by Dewaldt Johannes
Coetzer (‘Wally’) and on behalf of
the respondent by Trevor Roy Watson (‘Trevor’).
[6]. In terms of the agreement, the
applicant sold to the respondent certain of its assets at an agreed
purchase price of R358,000.00.
[7]. The purchase price of R358,000.00
was payable, in terms of the agreement, as follows:-
‘Trevor agreed to pay for all of
the assets on the basis of R100,000.00 deposit, and the balance of
R258,000.00 to be paid
in ten equal instalments of R25,800.00 per
month for ten months’.
[8]. The agreement was closely linked
to, albeit completely independent of a contract of employment between
Wally and the respondent.
In fact, reference is made in the written
agreement of sale to the negotiations relating to the remuneration to
be paid to Wally
by the respondent. It was, for example, recorded in
the agreement that an offer of a gross salary of R38,000.00 was
tabled by the
respondent, presumably payable to Wally.
[9]. Subsequent to the conclusion of
the agreement, the purchase price was never paid by the respondent to
the applicant. The respondent
failed to effect payment to the
applicant of either the deposit of R100,000.00 or any of the monthly
instalments of R25,800.00
per month. What did, however, happen was
that Wally took up employment with the respondent at the beginning of
October 2012. At
some point, Wally fell ill and during February 2015,
he resigned from the employ of the respondent. An agreement was
reached between
Wally and the respondent in terms whereof an amount
of R30,000.00, in lieu of 2 months’ salary paid to Wally by the
respondent
whilst he was absent from work, would be set off against
the amount owing to the applicant. This then reduced the respondent’s
indebtedness to the applicant to R328,000.00 as and at the 5th
February 2015.
[10]. On the 10th March 2015, Wally
addressed a communication to the respondent’s Trevor in which
he states, inter alia, the
following:
‘I questioned Mr Watson on the
date on which I can expect payment for equipment bought from me (TMS)
in October 2012 as per
the signed agreement by myself and Mr Watson.
… …
(The agreed and signed for price
R358,000.00 back then, less 2 X R15,000.00 in lieu of salary when I
was off ill). This equipment
was in use at WWS and other branches of
the EET Group of Companies for the last two and a half years without
me (TMS) receiving
any payment as per our signed agreement.
During this period I did not insist on
any payment because I understood that there was a good working
relationship between Mr Watson
and myself and that he will honour our
agreement at a time convenient for WW Steel’.
[11]. The aforegoing advices from
Wally, on behalf of the applicant, to the respondent, are viewed by
the respondent as confirmation
that the original agreement provided
that the purchase price became due and payable by the respondent to
the applicant ‘when
it was convenient for the respondent to
make payment’. Alternatively, that the agreement was
subsequently amended to provide
thus.
[12]. In extensive correspondence
between the respondent and the applicant’s legal
representatives during April 2015, the
respondent accepted its
liability to the applicant for an amount of R328,000.00. Respondent
did, however, indicate that in its
view, the amount was not payable
because, as Trevor puts it in an e – mail communication of the
22nd April 2015:
‘The facts changed and there was
tacit agreement that the payments would be made as and when the
company could afford this,
and in fact Wally has confirmed this in
the e – mail I sent you’:
[13]. This communication was followed
by further negotiations and more attempts to reach some sort of a
payment arrangement. In
the end, the endeavours to agree on a payment
plan were to no avail as the parties could not reach consensus
despite the fact that
offers and counter – offers were made.
[14]. During this time and more
particularly on the 1st May 2015, the respondent in an e – mail
to the applicant’s attorneys
again confirmed that the amount is
due to the applicant. However, again it is alleged by the respondent
that there was in place
a subsequent agreement in terms whereof the
respondent would pay the applicant ‘when convenient’.
[15]. After the founding affidavit was
deposed to on behalf of the applicant, the respondent made payment to
the applicant of two
amounts of R27,500.00 each, totalling
R55,000.00, which the applicant concedes should be deducted from the
amount claimed, thus
further reducing the respondent’s
liability to applicant, on the applicant’s own version, to
R273,000.00.
POINTS IN LIMINE
[16]. The respondent raised two points
in limine.
[17]. The first one, which was raised
for the first time during arguments before me, relates to the fact
that, according to the
respondent, the application is irregular in
that the affidavits of the applicant (both the founding affidavit and
the replying
affidavit), do not comply with the provisions of the
Justices of the Peace and Commissioners of Oath Act number 16 of 1963
(‘the
Act’) and its regulations. The basis on which this
point is raised is not altogether clear. However, during argument,
Counsel
for the respondent contended that the non – compliance
lies therein that the Commissioner of Oaths, whom he presumes to be
a
Commissioner of Oaths ex Officio, has not indicated his designation.
This, so it was submitted on behalf of the respondent, does
not
comply with the regulations promulgated under and in terms of the
Act. I was not specifically referred to the precise regulation.
[18]. There is no merit to this point
in limine.
[19]. In terms of section 5(1) of the
Act, the Minister may appoint any person as a commissioner of oaths
for any area fixed by
the Minister, in terms of subsection (2), any
commissioner of oaths so appointed shall hold office during the
Minister's pleasure.
[20]. In terms of section 6, the
Minister may designate the holder of any office as a commissioner of
oaths for any area specified
in such notice and may, in like manner,
withdraw or amend any such notice.
[21]. On the face of it, the
Commissioner of Oaths has complied with all his obligations and
duties in terms of the Act and the
Regulations. His official stamp
indicates his full names as ‘Raymond Clement Dunn’ and
that he is a ‘Commissioner
of Oaths, Registration Officer,
Reference no: 9/1/8/2 Kempton Park, INKOLEKO TRADING 367 CC’.
The way I read the official
stamp of the Commissioner of Oaths is
that he in fact was appointed in terms of section 5(1) of the Act and
not ex officio in terms
of sec 6. For this reason alone the objection
to his commissioning of the affidavit ought to fail, because there
would then not
be any need for him to indicate his designation.
[22]. Respondent submits that Mr Dunn
has not set out any basis upon which to establish that he is indeed a
Commissioner of Oaths.
For the respondent to succeed with this point,
it has to be inferred that Mr Dunn holds himself out as a
Commissioner of Oaths
when he is not one. There is, however, no
evidence before me from which I can draw that inference. The
respondent had open to it
the option to investigate whether or not Mr
Dunn was indeed a Commissioner of Oaths. It did not do so and instead
opted to make
the bold and very bald statement, by implication, that
the Commissioner of Oaths fraudulently holds himself out as a
Commissioner
of Oaths when in fact he is not one. This approach is
not tenable. In any event, the maxim omnia praesumuntur rite esse
acta donec
probetur in contrarium, also known as the 'presumption of
regularity', finds application. In terms of this maxim, acts are
presumed
to have been lawfully done until proof to the contrary is
produced.
[23]. Accordingly, the first point in
limine stands to be dismissed.
[24]. The second point in limine
relates to the issue of authority to act on behalf of the applicant,
a Close Corporation. This
point was not pursued with any conviction
during arguments before me by the respondent’s Counsel and, in
my view, for good
reason. The respondent’s objection to the
deponent’s authority is along the lines that no proof that
Wally is authorised
to bring this application, for example in the
form of a resolution, has been provided. This point, in my view, is
defeated by the
fact that a resolution was attached to the
applicant’s replying affidavit. Even without the resolution, I
am not convinced
that the point ought to succeed. The point is that
the deponent is the sole member of the applicant and there can
accordingly be
little, if any, doubt that he would have authorised
the proceedings.
[25]. Therefore, the second point in
limine also has no merit and should fail.
THE ISSUES & RESPONDENT’S
DEFENCES
[26]. The defences of the respondent
are twofold.
[27]. The first being that the written
agreement between the parties is ‘deficient and vague’ in
that whilst the agreement
expressly indicates that it is entered into
between the applicant and the respondent, it is provided in the body
of the agreement
that Trevor agreed to pay for all the assets on the
basis of a R100,000.00 deposit and the balance of R258,000.00 to be
paid in
ten equal instalments of R25,800.00 per month for ten months.
This, according to the respondent, means that it is unclear who the
parties to the agreement are.
[28]. It is submitted on behalf of the
applicant that on a proper reading of the written agreement, there
can be very little, if
any, doubt that the agreement was concluded
between the applicant and the respondent and that the reference to
Trevor agreeing
to pay was obviously a reference to him agreeing to
pay on behalf of the respondent. I agree with this submission for the
simple
reason that this would be the logical interpretation of the
contract. I shall revert to this reasoning in more detail later on in
my judgment.
[29]. Secondly, it is contended by the
respondent that nowhere in the agreement is provision made for the
date on which the contract
price is payable. Closely aligned to this
contention is the claim by the respondent that the events subsequent
to the conclusion
of the agreement confirm that the intention of the
parties had always been that the purchase price would be paid by the
respondent
to the applicant whenever it is convenient for the
respondent. I get the impression that at times, especially if regard
is had
to the correspondence during April 2015, it is the
respondent’s case that after the agreement was entered into,
there was
a tacit agreement in terms of which the payment terms had
been amended to the effect that payment falls due when the respondent
could afford to make the payment. Either way, by the time the
application was launched, so it is submitted by the respondent, even
if the amount is owed, it was not due and payable.
[30]. The respondent therefore argues,
seemingly in the alternative, that the agreement that the contract
price would be paid when
convenient for the respondent, was a
novation of the agreement entered into between the parties on the 1st
October 2012.
[31]. As regards the ‘alternative
defence’, the respondent has to show that the agreement that
the respondent would
pay when in a position to do so was intended by
the parties to novate the original agreement. The last time the
respondent communicated
with the applicant’s attorney was on
2nd May 2015 and he had this to say towards the end of the e –
mail:
‘You see I have never contested
the fact that I owe Wally the money for the assets. He will be paid
irrespective of what you
do. My issue is the terms of the settlement
because these were definitely altered by mutual agreement’ (my
emphasis).
[32]. Although there is no mention
specifically made of novation in the subsequent correspondence
between the parties, the implication
from a proper reading of the
correspondence between the parties is that, according to the
respondent, the original agreement was
novated.
[33]. I am of the view that the dispute
raised by the respondent is not a genuine dispute of fact but a
dispute of law and that
it is a matter of legal argument to be
determined by the court. The dispute raised by the respondent is a
matter of contractual
interpretation. In my opinion, this court is
called on to interpret, first and foremost, the written agreement and
in particular,
the clauses relating the payment terms relative to the
date of payment, if any.
THE LAW
[34]. I now turn to the applicable law,
including the principles relating to the interpretation of contracts.
[35]. In Plascon – Evans v Van
Riebeeck Paints, 1984 (3) 623 (AD), the principles relative to the
assessment of factual issues
in motion proceedings are set out as
follows at pg 634:
‘It seems to me, however, that
this formulation of the general rule, and particularly the second
sentence thereof, requires
some clarification and, perhaps,
qualification. It is correct that, where in proceedings on notice of
motion disputes of fact have
arisen on the affidavits, a final order,
whether it be an interdict or some other form of relief, may be
granted if those facts
averred in the applicant's affidavits which
have been admitted by the respondent, together with the facts alleged
by the respondent,
justify such an order. The power of the Court to
give such final relief on the papers before it is, however, not
confined to such
a situation. In certain instances the denial by
respondent of a fact alleged by the applicant may not be such as to
raise a real,
genuine or bona fide dispute of fact (see in this
regard Room Hire Co (Pty) Ltd v Jeppe Street Mansions (Pty) Ltd,
1949
(3) SA 1155
(T) at 1163 - 5; Da Mata v Otto NO,
1972 (3) SA 858
(A)
at 882D - H). If in such a case the respondent has not availed
himself of his right to apply for the deponents concerned to
be
called for cross-examination under Rule 6 (5) (g) of the Uniform
Rules of Court (cf Petersen v Cuthbert & Co Ltd,
1945 AD 420
at
428; Room Hire case supra at 1164) and the Court is satisfied as to
the inherent credibility of the applicant's factual averment,
it may
proceed on the basis of the correctness thereof and include this fact
among those upon which it determines whether the applicant
is
entitled to the final relief which he seeks (see eg Rikhoto v East
Rand Administration Board and Another,
1983 (4) SA 278
(W) at 283E -
H). Moreover, there may be exceptions to this general rule, as, for
example, where the allegations or denials of
the respondent are so
far-fetched or clearly untenable that the Court is justified in
rejecting them merely on the papers (see
the remarks of BOTHA AJA in
the Associated South African Bakeries case, supra at 924A).
[36]. It is trite that the principles
applicable to the interpretation of written documents apply to the
interpretation of written
contracts, namely that the primary meaning
of the document must be determined from the language in accordance
with the well-known
rules of interpretation.
[37]. The written agreement between the
parties must be read as a whole to determine the true intention of
the parties thereto and
if unambiguous, no intrinsic facts or
evidence are permissible to contradict, amend or qualify the terms
thereof. In that regard,
I have had regard to the matter of Total SA
(Pty) Ltd v Bekker,
[1991] ZASCA 183
;
1992 (1) SA 617
(A) at 624J-625B where Smalberger
JA held that:
‘What is clear, however, is that
where sufficient certainty as to the meaning of a contract can be
gathered from the language
alone it is impermissible to reach a
different result in drawing inferences from the surrounding
circumstances... The underlying
reason for this approach is that
where words in a contract, agreed upon by the parties thereto, and
therefore common to them, speak
with sufficient clarity, they must be
taken as expressing their common intention...”
[38]. Also, in Natal Joint Municipal
Pension Fund v Endumeni Municipality,
2012 (4) SA 593
(SCA), at
paragraph 18 where Wallis JA held that:
‘The present state of the law can
be expressed as follows: interpretation is the process of attributing
meaning to the words
used in a document, be it legislation, some
other statutory instrument or contract, having regard to the context
provided by reading
the particular provision or provisions in the
light of the document as a whole and the circumstances attendant upon
its coming
into existence. Whatever the nature of the document
consideration must be given to the language used in the light of the
ordinary
rules of grammar and syntax; the context in which the
provision appears; the apparent purpose to which it is directed and
the material
known to those responsible for its production. Where
more than one meaning is possible, each possibility must be weighed
in the
light of these factors. The process is objective, not
subjective. A sensible meaning is to be preferred to one that leads
to insensible
or unbusinesslike results or undermines the apparent
purpose of the document. Judges must be alert to, and guard against,
the temptation
to substitute what they regard as reasonable, sensible
or businesslike for the words actually used. To do so in regard to a
statute
or statutory instrument is to cross the divide between
interpretation and legislation; in a contractual context it is to
make a
contract for the parties other than the one they in fact made.
The inevitable point of departure is the language of the provision
itself, read in context and having regard to the purpose of the
provision and the background to the preparation and production
of the
document’.
[39]. It is settled law that
interpretation is a matter of law and not fact. The interpretation is
a matter for the court to decide
and not for a witness.
This was set out in KPMG Chartered
Accountants SA v Securifin Ltd & Another,
2009 (4) SA 399
(SCA)
at par 39.
[40]. The law of novation is defined as
the replacing of an existing obligation by a new one, where the
existing obligation is discharged
in full. This is set out in
Christie on Contracts, 6th Edition, page 466 and 467. It is
essentially a matter of intention and consensus.
There must be a
‘clear’, ‘cogent’ and ‘unequivocal’
intention by the parties that a novation
was intended as set out in
Rodell Financial Services (Pty) Ltd v Naidoo & Another,
2013 (3)
SA 151
(KZP) at para 12.
[41]. There is in our law a presumption
against novation. The party alleging novation has the onus to show
that a novation was indeed
intended by the parties. It is presumed
that a creditor intends strengthening and/or confirming an existing
right with a new contract
that is creating a second obligation rather
than destroying it through novation. This is also set out in the
Rodell case supra.
[42]. There can be no objection in
principle to a second obligation arising in respect of an existing
debt. This is set out in Adams
v SA Motor Industry Employers’
Association,
1981 (3) SA 1189
(A) at 1198D.
[43]. Thus, two independent obligations
can co-exist in respect of the same performance or common debt.
Unless novation is intended,
which is not presumed, two obligations
can and do co-exist. Also set out in the Adams case supra.
[44]. If a second contract does not
novate the first contract, the debtor faces the possibility of being
sued on either of them.
This is no hardship as the debtor has agreed
to both contracts and the risk of being sued under and in terms of
both contracts.
The right of a creditor to enforce the original
contractual obligation may be suspended until the maturity of the
second contract
or obligation. However, where the debtor is in breach
of its obligations under the second contractual obligation, the
creditor
will be entitled to enforce his rights under the first
contractual obligation.
APPLYING THE PRINCIPLES TO THE FACTS IN
CASU
[45]. Having regard to the principles
set out above, I now turn to consider their application to the facts
of this case.
[46]. All things considered and
applying basic logic, it has to be accepted that the written
agreement was concluded between the
applicant and the respondent. The
reference to Trevor paying the purchase price clearly means that he
would pay in his representative
capacity for and on behalf of the
respondent. This is the most sensible interpretation. In that regard,
I have had regard to the
following principle enunciated in the Natal
Joint Municipal Pension Fund matter (supra): ‘A sensible
meaning is to be preferred
to one that leads to insensible or
unbusinesslike results or undermines the apparent purpose of the
document’.
[47]. I am, therefore, of the view that
the written agreement was concluded between the applicant and the
respondent and I reject
the respondent’s contention that it is
not clear from the contract who the parties to the agreement were.
[48]. The second issue requiring an
interpretation of the terms of the agreement relates to the clause
providing that the respondent
would pay the purchase price ‘…
on the basis of R100,000.00 deposit, and the balance of R258,000.00
to be paid in
ten equal instalments of R25,800.00 per month for ten
months’.
[49]. Again, if one applies the
‘sensible meaning’ approach, as against one which leads
to an unbusinesslike result,
the inescapable conclusion is that the
parties intended the deposit of R100,000.00 be payable on the date of
signature of the agreement,
being the 1st of October 2012 and the
balance to be paid in ten monthly instalments of R25,800.00 each,
with the first instalment
being payable on or before the 1st November
2012 and the subsequent instalments being payable on or before the
1st of each and
every succeeding month until the last instalment,
which was payable on or before the 1st of August 2013.
[50]. I therefore find that there is no
merit in the contention on behalf of the respondent that the
agreement does not provide
for a date or dates on which the purchase
price would have become due and payable.
[51]. For the same reasons, notably an
approach based on a sensible meaning of a contract, I reject the
respondent’s submission
that the original agreement provided
that the purchase price would be due and payable at the convenience
of the respondent. The
said submission is unsustainable. In any
event, if this contention is accepted, then it begs the question why
it was necessary
for the parties to provide for payment in
instalments, as they did in the contract if the respondent could pay
only when he could
afford to do so.
[52]. This then leaves me with the
issue relating to whether or not the agreement was subsequently
amended / novated to allow the
respondent to pay the purchase price
and when he could afford to do so.
[53]. As I indicated above, in our law,
there is a presumption against novation and the respondent bears the
onus to demonstrate
that the parties, in their subsequent dealings,
intended to novate the above the original contract.
[54]. What I have before me is evidence
that there were discussions with a view to agreeing on a ‘payment
plan’ so as
to accommodate the respondent and the financial
hardships it was experiencing. The applicant makes it clear that it
did not insist
on payment because of the relationship between the
parties at the relevant time. In my view, this does not, however,
even begin
to translate into a novation. It is clear that at all
relevant times the applicant had no intention of novating the
agreement and
it therefore cannot be said that there was a ‘clear’,
‘cogent’ and ‘unequivocal’ intention by
the
parties to novate, as was required in Rodell Financial Services (Pty)
Ltd v Naidoo & Another,
2013 (3) SA 151
(KZP).
[55]. At best for the applicant, the
events subsequent to the date on which the written agreement was
concluded gave rise to a second
obligation in respect of an existing
debt. This is as per Adams v SA Motor Industry Employers’
Association,
1981 (3) SA 1189
(A) at 1198. This would mean that two
independent obligations co-exist in respect of the same performance
or common debt. The applicant
would then be entitled to sue the
respondent on either one of the two causes of action.
[56]. This is no hardship as the debtor
has agreed to both contracts and the risk of being sued under and in
terms of both contracts.
The right of a creditor to enforce the
original contractual obligation may be suspended until the maturity
of the second contract
or obligation. However, where the debtor is in
breach of its obligations under the second contractual obligation,
the creditor
will be entitled to enforce his rights under the first
contractual obligation.
[57]. For all of these reasons, I am of
the view that there was no novation of the original written agreement
and, therefore, the
respondent is liable to the applicant in terms of
the written agreement dated the 1st October 2012.
[58]. I therefore intend granting
judgment against the respondent in favour of the applicant for the
amount of R273,000.00. Applicant
also claims mora interest from the
1st of October 2013. I am of the view that, in light of my findings
above relating to the dates
on which the purchase price ought to have
been paid, the applicant is entitled to interest at the legal rate
from this date, being
the 1st October 2013, to date of final payment.
COSTS
[59]. Counsel for the applicant argued
that the opposition to the its’ application was vexatious.
Accordingly, so it was submitted,
the respondent should pay the
applicant’s cost on the scale as between attorney and client.
[60]. I have had regard to the matter
of In re: Alluvial Creek Ltd,
1929 CPD 532
, in which case the
principle is laid down that, in its discretion to award a punitive
costs order, the court should have regard
to the proceedings by a
party which are vexatious in that they put the other side through
unnecessary trouble and expense which
the other side ought not to
bear. The applicant’s bone of contention relates to the fact
that, by all accounts, the respondent
had accepted liability for the
amount claimed but raised a defence that payment was not due on
rather spurious grounds.
[61]. Whilst it may well be that the
respondent ought to have adopted a more compromising approach to the
applicant’s claim,
I am of the view that this does not warrant
the court showing its displeasure by granting a punitive costs order.
ORDER
In the circumstances I make the
following order:
1. The respondent shall pay to the
applicant the amount of R273,000.00.
2. The respondent shall pay to the
applicant interest on R273,000.00 at the rate of 15.5% per annum from
the 1st October 2013 to
the 17th July 2014 and at the rate of 9% per
annum from the 18th July 2014 to date of final payment.
3. The respondent shall pay the
plaintiff’s taxed or agreed party and party costs on the High
Court Scale.
L ADAMS
Acting Judge of the High Court
Gauteng Local Division, Johannesburg
HEARD ON:
5th November 2015
JUDGMENT DATE:
FOR THE APPLICANT: 25th November
2015
Mr S B Friedland
INSTRUCTED BY: Beder –
Friedland Incorporated
FOR THE DEFENDANT: Adv B A Morris
INSTRUCTED BY: Salant Attorneys