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[2010] ZAGPJHC 84
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S M Fraser Trading As Salka Enterprises v Counter Point Furnishers CC (10061/2010) [2010] ZAGPJHC 84 (22 September 2010)
REPORTABLE
IN THE HIGH COURT OF
SOUTH AFRICA
(SOUTH GAUTENG HIGH COURT
JOHANNESBURG)
CASE NO: 10061/2010
DATE: 22/09/2010
In
the matter between:
S M FRASER TRADING AS
SALKAENTERPRISES
...................................
Plaintiff
and
COUNTER POINT
FURNISHERS
CC
.............................................................
Defendant
_____________________________________________________________
JUDGEMENT
______________________________________________________________
Mokgoatlheng J
(1) The plaintiff has
instituted an action for provisionalsentence in the sum of R215
087.00 together with interest thereon at the
rate of 11 percent per
annum as from 9 November 2009 to date of payment. The action which is
opposed, is predicated on a written
deed of sale in terms whereof the
plaintiff sold immovable property to the defendant for the purchase
price of R8 500 000.00. The
defendant has in terms of the deed of
sale paid a deposit of R2400 000.00 in respect of the purchase price.
(2) In terms of Clause
4.1 of the deed of sale the defendant was obliged to furnish a bank
or approved guarantee within 30 days
to secure payment of the balance
of R6 100 000.00.The defendant defaulted, was notified of such
default, and only remedied same
on the 3 September 2009.
Consequently, defendant was liable to pay interest for the period of
such default to the plaintiff pursuant
the prescriptions of Clause
17.1.
THE DEFENDANT’S
SUBMISSIONS
(3) The defendant’s
opposition to the action is textual and is predicated on the
contention that the document the plaintiff
relies on for provisional
sentence is not a liquid one in that, Clause 17.1 does not
encapsulate an unconditional acknowledgement
of indebtedness for an
ascertained amount.
(4) The defendant
contends that the claim relies upon extrinsic evidence to supplement
it in respect of:
(
a) the bank whose
interest rate is used and the interest rate at which the amount is
calculated;
(b) the alleged date
from which the defendant was in default and when notification of such
default was given; and
(c) the date when the
amount became due to the plaintiff and the alleged date when the
default was rectified
The defendant contends
further that, its liability in terms of the deed of sale is
conditional upon the finding that it was the
cause for the delay in
the registration of the transfer, is not a simple act, event or
condition which is capable of proof by
affidavit evidence.
The impugned Clause 17.1
provides: “
Should any party to this contract cause any
delay in the registration of the transfer he/she shall from the day
of the notification
of his/ her default, pay to the aggrieved party
interest calculated on the purchase price at the rate charged by any
financial
institution on first home loan mortgages, until the date
on which the defaulting party ceases to be in default.”
(7) The defendant’s
further contention is that, the deed of sale relied upon by the
Plaintiff creates different and separate
obligations for the
Plaintiff and the Defendant in that the latter’s obligation to
pay the purchase price is separate and
distinguishable from its
potential liability created in Clause 17.1.
(8) The defendant argues
that its obligations in respect of the purchase price, may be an
unconditional undertaking to pay an ascertained
amount of money in
consideration of a promise made by the plaintiff to transfer the
property, and may on a proper construction
arise from the deed of
sale which is capable of sustaining an action for provisional
sentence, this however, submits the defendant,
does not render the
potential liability created in Clause 17.1, such an unconditional
undertaking to pay an ascertained amount
of money, because the
Plaintiff is not claiming the purchase price, but is claiming
compensation in the form of interest for the
alleged delay in the
transfer of the property.
(9) The defendant submits
that Clause 17.1 evidences a potential liability dependent upon the
delay in the transfer caused by the
breach of the party who is in
default, consequently, the existence of the indebtedness is
accordingly conditional upon the happening
of a future event, i.e.
breach by the defendant.
(10) Clause 17.1 argues
the defendant does not contain any unconditional undertaking to pay
an ascertained amount of money, all
that is does is, it creates a
potential liability for either the Plaintiff or the Defendant, in the
event of the delay of the transfer
caused by the breach of the terms
of Clause 17.1 by either of them.
(11) The defendant’s
further submission is, the fact that it has not dealt with the merits
or any of the allegations in the
particulars of claim, does not
render the deed of sale to become a liquid document capable of
sustaining acause of action. The
plaintiff still has an obligation to
discharge the onus resting on it to satisfy the requirements
governing the granting of provisional
sentence irrespective of the
document relied upon and regardless of how the defendant reacts to
such document.
(12) Distilled, the
gravamen of the defendant’s opposition is that the plaintiff’s
claim is not founded on a liquid
document, further Clause 17.1 does
not encapsulate an unconditional acknowledgement of indebtedness in
an ascertained amount of
money, because extrinsic evidence has to be
relied upon to determine the defendant’s liability.
The applicable
legal principles
(13) Before dealing with
these submissions, it is opposite to set out the legal principles
relevant to an action of this nature
As enunciated by
NESTADT, A.J
in WESTERN BANK v PRETORIUOS
1976 (2) SA 481
(T):
“
The principles
upon which provisional sentence is granted are well-settled and
clear. The difficulty really lies in their application
to particular
documents which involves a construction of such documents
(
Inter-Union
Finance Ltd. v Franskraalstrand (Edms.)
Bpk and
Others, 1965(4) S.A. 180(W) at p. 181).
2. As a general rule,
provisional sentence is only granted on a liquid document (the
Inter-Union Finance Ltd. case, supra at p.181:
Rich v Lagerwey,
supra).
3. A liquid document
is one which on a proper construction thereof evidences by its terms
and without resort to evidence extrinsic
theret:
(a) an acknowledgment
of indebtedness;
(b) in an ascertained
amount of money;
(c ) the payment of
which is due to the creditor
(the Inter-Union
Finance Ltd case supra at p. 181: Rich v. Lagerwey, supra at p. 754)
In specifying these
three essentials of a liquid document I am not overlooking the
requirement that the acknowledgement of indebtedness
should be
unconditional (Rich v. Lagerwey, supra at p. 754). It seems to me
however that this can conveniently be grouped under
para 3(c). If the
acknowledgement of indebtedness is conditional, then payment would
not be due to the creditor (unless by means
of extrinsic evidence the
condition was shown to have been fulfilled).
Equivalent to an
acknowledgment of indebtedness is an undertaking to pay. Many
decisions use these expressions interchangeably
(Union Share Agency
& Investment Ltd v Spain, 1928 a.d.
74 AT P. 79
; Inglestone v.
Perreira, S.L.D. 55 at o. 65). However, a simple acknowledgment of
indebtedness without a specific undertaking
to pay is sufficient to
sustain a claim for provisional sentence (and this notwithstanding
that the causa debiti is not cited
therein) (Barclays Bank v McCall,
1927 T.P.D. 512).
In regard to the
other two requirements of a liquid document certain modifications
have, over the years, become sanctioned by
the Courts (Rich v.
Lagerwey, supra at pp. 754 and 756).As regards the requirement that
the acknowledgment of debt relates to
an ascertained
amount of money:
where no sum is
mentioned in the document, provisional sentence will not be
granted.(Abrahams v. Campbell Bros., Carter &
Co. Ltd.,
1937
T.P.D. 269
;
Standard Bank of South
Africa Ltd. v. Spedding, 1975(3) S.A. 510 (W))…”
(14) The Learned Judge
after exploring various forms of documents encapsulating the concept
of liquidity and such documents being
the subject of provisional
sentence applications in various cases concluded thus:
“
I conclude,
therefore, more particularly on the basis of Rich v. Lagerwey, supra,
that:
(b) the basic
principles of provisional sentence have so been extended and modified
that provisional sentence may be granted on
a covering mortgage bond
which contains an acknowledgment of indebtedness not in specific sum,
but merely up to a maximum amount
(and which is therefore not a
liquid document), provided that a certificate specifying what the
actual amount of indebtedness is
and that it is due and payable is
provided for in the bond and is alleged in and attached to the
summons.
7. As regards the
requirement that it appears from the document that payment of the
indebtedness is due to the creditor:
(a) Where the document
does not provide for the performance of any obligations by the
plaintiff or the fulfillment of any conditions
or problems concerning
the existence of such requirement usually arise.
(b) (i) Where the
document provides for the performance of obligations by the Plaintiff
(such as in cases of agreements of sale
and lease) but payment by the
defendant and such performance are not reciprocal (the defendant
having to first pay) then provisional
sentence is competent;
Performance by the
plaintiff need presumably neither be alleged nor tendered;
non-performance by the plaintiff would be a matter
of defence to be
raised by the debtor (Inglestone v. Pereira, supra at pp. 64-5; the
Inter-Union Finance Ltd.caseupra at p.183;
Onay and Another
v.Schmulian and Others, 1971(1) S.A. 626 (W); cf., however,
Anastassiades v. Daniel, 1947(1) S.A. 298 (W).
(ii)Whether a
particular document bears the meaning set out in sub-para. (i) or is
to be interpreted as containing reciprocal obligations
is a matter of
construction. In this regard it is not the type of transaction which
determines whether the related document signed
by the debtor is one
upon which provisional sentence may properly be granted. (Rich v.
Lagerwey,supra).
(iii) A further
example of the type of case referred to in sub-para. (i) (thus
attracting the application of the same principles)
is a bond in which
the quid pro quo for the acknowledgment of debt (or undertaking to
pay) only has to take place in the future.
Here the assumption of the
obligation creates an indebtedness which is not put in abeyance by
reason of the fact that payment by
the creditor is to be made at a
later date (National Bank of South Africa v. Seidel & Levy,
1907
T.H. 132
; Abrahams’ case, supra at p. 275-276; Inglestone v.
Pereira, supra at p. 65; the Inter-Union Finance Ltd. case, supra at
p. 182; the Bro-Trust Finance (Pty) Ltd. case supra at p. 525; Rich
v. Lagerwey, supra).
(c) Where on a proper
construction the document provides for the reciprocal performance of
obligations by the plaintiff and the
defendant or the fulfillment of
a condition as a prerequisite to the plaintiff claiming payment by
debtor, then the following is
the position:
(i) Where the
defendant’s indebtedness (as distinct from the mere obligation
to pay) is dependent upon the performance of
an obligation by the
plaintiff or the fulfillment of a condition, the document is not
liquid and provisional sentence will not
be granted thereon (even if
performance or the fulfillment of the conditions alleged or tendered,
as the case may be)
(
Inglestone v.
Pereira, supra
at p. 62 and 65; the
Inter-Union Finance Ltd.
case, supra at p. 181;
Rich v. Lagerwey, supra).
(iv)
Where (merely)
the defendant’s obligation to effect payment is dependent on
the performance by the plaintiff of some “simple”
act
(e.g. the delivery or transfer of scrip) or the fulfillment of some
“simple” conditions (e.g. a giving of a notice
before
payment by the debtor is due) then (this constituting a departure
from strict principle, justified by long-standing practice)
it
suffices for the plaintiff to allege in the summons that the act has
been performed or the condition has been fulfilled. Due
weight must
however be given to the adjective or qualification “simple”.
It connotes a condition or event of a kind
unlikely, in the nature of
things, to give rise to a dispute or, where it is disputed, is
inherently capable of speedy proof by
means of affidavit evidence. If
the condition or event is not a “simple” one then
provisional sentence is not competent.
(Pepler v. Hirschberg, supra;
Spain’s case, supra; Rich v Lagerwey, supra at pp. 755 and
761).
8. In all those cases
where extrinsic evidence is permitted, namely to prove the occurrence
or fulfillment of a simple event or
condition (referred to in para.
(7)©(iv) hereof) or, by means of a certificate, the extent of
the defendant’s indebtedness
and the fact that payment is due
(referred to in para (7)(c)(ii) hereof), the onus of proof rests on
the plaintiff. If the relevant
allegations made by the plaintiff in
the summons are put in issue then, in so far as the Court has to rely
on affidavit evidence
only, it stands to reason that it will
ordinarily hesitate to find that a plaintiff has discharged such onus
unless, in its opinion,
the evidence is of such cogency as to
persuade the Court that oral evidence, tested by cross-examination
and given in circumstances
affording the Court the opportunity of
observing the demeanor of witnesses, is unlikely to affect such
probabilities as might appear
from a consideration of the affidavit
evidence alone. Any other approach could result in gave prejudice to
defendant and might
disable him from proceeding to trial in the
principal case (Right v. Lagerwey, supra at pp. 759-760)…”
(15)
In
WOLLACH
v BARCLAYS NATIONAL BANK LTD 1983(2) SA 543(A)
it was held: “
A
distinction, however, was drawn between the indebtedness itself and
payment of that indebtedness. Provided the indebtedness was
clear and
certain payment was dependent upon the fulfillment of a simple
condition, provisional sentence could be granted...
“
The
indebtedness itself could not be uncertain or unspecified. Without an
acknowledgment of indebtedness in a specific amount, the
document was
not considered a liquid one.”(the authoritics cited are
excluded)
(16) In
RICH AND
OTHERS v. LAGERWEY (supra)
it was held:
“
I think we may
extract the principle that, where the acknowledgment of indebtedness
is sufficiently clear but certain, and payment
depends on some simple
condition or event it is sufficient for the plaintiff to allege that
the condition has been complied with
or the event has happened, and
that then the onus lies on the defendant to show that what was
intended by a document sued on to
be a condition precedent to
entitled the plaintiff to succeed, has not been complied with. If the
defendant is unsuccessful in
establishing that, then provisional
sentence will be granted against him.
There is also
reference to payment becoming due by reason of the failure of the
debtor to carry out a term of the contract, e.g.
a failure to pay
interest on the due date. In such cases it was considered that a
plaintiff could aver in the summons that the
“simple”
condition or event has been fulfilled or taken place, as the case may
be. This undoubtedly constituted a departure
from strict principle,
which required that both the nature and extent of the indebtedness as
well as the fact that payment thereof
was due, must clearly appear ex
facie the document itself. This departure from strict principle was,
no doubt, justified by longstanding
practice. In my opinion, however,
due weight must be given to the adjectival qualification “simple”.
In the context,
it seems to connote a condition or event of a kind
unlikely, in the nature of things, to give rise to a dispute, or,
where it is
disputed, is inherently capable of speedy proof be means
of affidavit evidence.
(17)
Herbstein and
Van Winsen
in The Civil Practice of the Superior Courts in
South Africa
at 551 states as follows:
“
Where the
plaintiff sues on a liquid document then, in so far as the merits of
the action are concerned, the court will ordinarily
grant provisional
sentence unless the defendant produces such counterproof as would
satisfy the court that the probability of success
in the principal
case is against the plaintiff …”
“
Moreover (apart
from defences which arise ex facie the instrument), the question of
probability must be based upon facts raised
in the affidavits …
In other words, you do
not look at the affidavits in deciding whether the document is
liquid. Once you have decided, ex facie the
document, that it is
liquid, it is for the defendant to show from the affidavits that the
probability of success in the principal
case is against the
plaintiff.”
(18) It is trite that
“
there is a distinction between indebtedness subject to a
condition, and an unconditional indebtedness, the payment thereof,
being
so subject.
”See
Pepler v Herschberg
1920 CPD
438
, Union Share Agency and Investment Ltd v Spain
1928 AD
74
of 80,
Ingleston v Pereira
1939 WLD 55.
The Analysis of
Evidence
(19) Applying the above
legal principles, in my views the deed of sale is a liquid document,
which an encapsulates an unconditional
indebtedness and an
ascertained liability namely the purchase price; which notion,
includes the balance thereof.
(20) Mr Steyn by his
submission that Clause 17.1 does not contain any unconditional
undertaking to pay an ascertained amount of
money misconstrues the
import of the deed of sale and consequently, Clause 17.1 because when
the deed of sale is duly interpreted
in its totality, (Clause 17.1
alludes to a purchase price, which is an ascertained amount, further
it alludes to the payment of
interest calculated on the purchase
price at the rate charged by any financial institution on the first
home loan, from the day
of notice until the defaulting partly ceased
to be in default.)
(21) I agree with
Howitz
A J in Joosub v Edelson
1998(3) SA 534(W) that
the
simplicity or complexity of a condition cannot render unconditional
an otherwise conditional debt… that the simplicity
or
complexity of a condition such as the one in issue cannot render
unconditional an otherwise conditional debt. The enquiry, when
provisional sentence is sought, is a two-fold one: one must first
determine whether the debt in question falls within the parameters
set in cases such as
Union Share Agency & Investment
Ltd v Spain (supra
) and
Inglestone v Pereira
(
supra)
. If it does, one then examines the
condition to ascertain whether it qualifies as a simple condition. If
it is, then one can merely
allege in the summons and, if necessary
prove, fulfillment thereof. If the claim fails the first test,
however, one does not proceed
to the second phase of the enquiry.”
(22) Undoubtedly, the
indebtedness in Clause 17.1 falls within the purview the above quoted
cases and also
Rich and Others v Lagerway
(supra)
Wollach v Barclays National Bank
Ltd
1983 (2) SA 543(A).
(23) The conditions set
in Clause 17.1 certainly qualify as simple events, being namely,
(a) the defendant’s
default in timeously furnishing a bank or approved guarantee to
facilitate transfer of the immovable property
to the plaintiff; and
(b) a set ascertainable
arithmatic calculation to determine the amount of interest due and
payable based on the purchase price,
(or an ascertained balance of
the purchase price) until the date on which the defaulting party
ceases to be in default.
(24) In my view, the
indebtedness is set out with sufficient clarity and certainty, and is
in conformity with the strict principle
requiring that: “
both
the nature and extent of the indebtedness as well as the fact that
payment thereof was due, should clearly appear from the
document
itself
.”
(25) “Ex facie
Clause 17.1, it is patent that because the guarantee has not been
furnished, the purchase price has not been
secured, and is
consequently, due and payable. Because the defendant has defaulted in
timeously furnishing the guarantee, interest
based on the purchase
price (or the balance thereof) payable on default, accrues and it’s
a due, payable ascertained indebtedness.
(26) The obligation to
pay the purchase price, and in particular the balance thereof after
the deposit has been deducted, is an
unconditional acknowledgement of
liability to pay an ascertained indebtedness in an amount of money.
The obligation to pay
the indebtedness that is, the capital and the interest due, arises
on the happening of a simple event,
which is the failure to furnish
the guarantee. This is on the cited authorities is a simple event
or condition which may be
proved by extrinsic affidavit evidence.
Mr Morrison on
plaintiff’s behalf is correct in his submission that since
the defendant’s opposition is based on
a technical point and
the defendant has elected not to oppose the action on the merits,
consequently, because the allegations
in the summons are
undisputed; the plaintiff has discharged its onus.
(29) In the premises the
provisional sentence is granted against the defendant in the:-
in the sum of R215
087.00 plus 11percent interest as from 9 November 2009 to date of
payment, and
the defendant is ordered
to pay the plaintiff’s costs of the suite.
Date Signed: 22 September
2010 at Johannesburg
Judge R Mokgoatlheng
Judge of the High Court
of South Africa
Date of Trial: 17 May
2010
Date Judgment Delivered:
22 September 2010
For the Plaintiff: Mr.
L.J Morrison SC
Instructed by:
.
Schalk
Britz Attorneys
Attorneys for plaintiff
C/O MT De Bruin Attorneys
113 Beyers Naude Drive
Northcliff
Ref: Mrs De Bruin
For the defendant: Mr.
J.F Steyn
J.H Van Heerden &
Cohen
Attorneys for defendant
88 Eighth Street
Springs
Tel: 011 815 6324