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[2010] ZAWCHC 338
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Veneer Concepts (Pty) Ltd v Geerlings (Pty) Ltd (20173/2009) [2010] ZAWCHC 338 (18 November 2010)
IN THE
HIGH COURT OF SOUTH AFRICA
(WESTERN
CAPE HIGH COURT, CAPE TOWN)
CASE NO:
20173/2009
In the
matter between:
VENEER
CONCEPTS (PROPRIETARY) LTD
….................................................
Applicant/Defendant
And
GEERLINGS
(PROPRIETARY LTD
…................................................................
Respondent/Plaintiff
JUDGMENT
DELIVERED ON 18 NOVEMBER 2010
CLOETE,
AJ
[1] This
is an application for rescission of a default judgment granted by the
registrar in terms of r 31(5)(b)(i) against the applicant/defendant
on 1 December 2009. In this judgment I will refer to the applicant as
defendant and the respondent as plaintiff.
[2] The
application is brought both in terms of r 31(2)(b) and in terms of
the common law. The defendant further contends that r
42(1 )(a)
provides a clear basis for the rescission.
[3] For
sake of convenience I will deal firstly with the defendant's claim
for rescission in terms of r 42(1)(a) since, if I conclude
that
rescission on this basis should be granted, it will not be necessary
for me to deal with defendant's claims for rescission
on the other
grounds referred to above, nor will it be necessary for me to
determine whether the defendant is in wilful default
or whether
'partial rescission' of the judgment will be competent in the present
circumstances.
[4]
During the course of the proceedings, the following emerged from the
papers, heads of argument and certain concessions made
by plaintiff's
counsel on its behalf:
[4.1.]
The plaintiffs claim is for damages pursuant to the defendant's
alleged unlawful repudiation of an agreement of sale, in
terms of
which the plaintiff sold to the defendant a certain machine with an
extraction system ("the machine"). These
damages fall into
two distinct categories, and are dealt with as such in the plaintiffs
particulars of claim; [4.1.1.] A cancellation
fee of R109 272; and
[4.1.2.] A claim for loss of profit of R337 575.02.
[4.2.]
It is conceded by plaintiff that judgment in respect of the claim for
loss of profit was erroneously granted, and thus falls
within the
ambit of r 42{1)(a). Simply put, it was not competent for the
registrar to grant default judgment for a claim other
than for a debt
or liquidated demand in terms of r 31(5)(a).
[4.3.]
The plaintiffs opposition is thus confined to the claim in respect of
the cancellation fee of R109 272.
[4.4.]
In respect of this claim, the plaintiff concedes that it is indeed
one for special damages, but contends that the claim nonetheless
falls within the category of a 'debt or liquidated demand' as
envisaged in terms of r 31(2)(a).
[4.5.]
The plaintiff further concedes that the relevant portions of its
particulars of claim pertaining to the special damages claim
are
irregular in that they do not comply with the provisions of r 18(6).
Plaintiff however argues that this irregularity does not
constitute a
ground for rescission of the judgment
[4.6.]
Defendant on the other hand submits that the cancellation fee claimed
is
pure
and simple damages in respect of which evidence needs to be led'.
[4.7.]
Defendant argues that the requirement gleaned from r 31, namely, that
in the case of damages evidence needs to be led before
an order may
be granted, extends not only to the quantum but also to the merits of
the claim.
[5]
The primary issue is thus whether the special damages claim in
respect of the cancellation fee of R109 272 is a
'debt
or liquidated
demand'
The issues relating to non-compliance with the provisions of r 18(6)
and the necessity (or otherwise) for the leading of
evidence are
pertinent to the determination of this primary issue.
[6] The
relevant portions of plaintiff's particulars of claim read as
follows:
"6.
At the time of the conclusion of the sale agreement the defendant was
aware and the sale agreement was concluded on the
basis that:-
6.1
...In the event of the plaintiff cancelling the purchase of the
machine from the overseas supplier consequent upon the defendant
not
proceeding with the sale agreement, the plaintiff would, in terms of
the agreement between the plaintiff and the overseas supplier,
be
obliged to pay a cancellation fee to the overseas supplier...
11.
As a consequence of the defendant's conduct
(i.e.
the alleged repudiation) ...
the
plaintiff cancelled the purchase of the machine from SCM and in terms
of the agreement between the plaintiff and SCM the plaintiff
became
obliged to make payment to and did make payment to SCM in rands of
the amount of €9 420.00 being R 109 272.00...
13.
The damages suffered by the plaintiff
13.2.
were within the contemplation of the plaintiff and the defendant at
the time of the conclusion of the sale agreement."
[7]
In The
Law
of South Africa
(Joubert)
2
nd
Edition
Vol 7 p16, the author summarises what is required when a party claims
'special damages' as follows:
"In
contract the two terms
(i.e.
general and special damages)
are
convenient labels to differentiate broadly ... between damage that
flows naturally and generally from the kind of breach of
contract in
question and which the law presumes that the parties contemplated
would result from such a breach, and damage that,
although caused by
the breach of contract, is ordinarily regarded in law as being too
remote for damages to be recoverable unless,
in the special
circumstances attending the conclusion of the contract the parties
actually or constructively contemplated that
they would probably
result from its breach ...A plaintiff who has suffered damage of a
kind which the law does not presume to be
the necessary consequence
of the act complained of but which depends upon the circumstances of
the case, must warn the defendant
that the claim extends to such
damage. Special damages must therefore be specially alleged and
claimed and fully established by
the evidence."
[8]
In terms of r 18(6) a party who in its pleading relies upon a
contract shall state
'whether
the contract is written or oral and when, where and by whom it was
concluded, and if the contract is written a true copy
thereof or of
the part relied on in the pleading shall be annexed to the
pleading'.
[9]
The plaintiff in its particulars of claim contented itself with the
bare allegations to which I have referred above and it
cannot be
said that the claim for special damages was
'specially
alleged and claimed'
[10]
Counsel for plaintiff relied on what is stated at
Wright
v Westelike Provinsie Keiders BPK
(supra)
at 1180B-F in support of his submission that the irregular pleading
contained in the particulars of claim is not a ground
for rescission
of the judgment. The following is stated at 1180B-D:
"...
The particulars of claim in the action by the respondent against the
appellant did not make out a cause of action, or
at best for the
plaintiff, were liable to be met by a dilatory plea ... That being
so, judgment should not have been granted
thereon, by default or
otherwise ... The fact that the judgment was wrong and probably
practically of no use. does not, however,
necessarily mean that it
should be set aside at the instance of the appellant. It is apparent
from the passage in the Afncan
Farms & Townships Ltd case quoted
above, that a final judgment based on an incorrect apprehension
by
the court
of
the facts or of the law is nonetheless an effective judgment between
the parties to the action.
"
(my emphasis)
[11]
In
African
Farms & Townships Ltd v Cape Town Municipality
1963
(2) SA 555
(A) at 564C-F, it was stated as follows:
"According
to DIG 50.17.207, res judicata is accepted as the truth. Because of
the authority with which, in the public interest
judicial
decisions
are
invested, effect must be given to a final judgment, even if it is
enoneous . . referring to the rule in DIG 50.17.207. De
Villiers CJ
in Bertram v Wood
HO
SC 180),
held
the following:
'The
meaning of the rule is that the authority of res judicata induces a
presumption that the judgment upon any claim submitted
to
a
competent court
is
correct ..."
(my
emphasis)
[12]
All three authorities referred to specifically make reference to a
judgment being granted by 'a court' and, to my mind, it
is implicit
from these authorities that what is intended is that a judicial
officer has exercised a judicial discretion in granting
the
judgment.
[13]
These authorities are thus distinguishable from the present case, in
which it is common cause that the default judgment was
granted
by
the registrar
and
not by a competent court. In my view, the registrar can never be
vested with a judicial discretion for the simple reason that
he or
she is not a judicial officer. Accordingly, the submission of
plaintiffs counsel on this ground must fail.
[14]
The plaintiff further submits that the
cancellation
fee claim'
is
in a fixed sum. which falls within the definition of a
'debt
or liquidated demand
in
r 31(2). It argues that no evidence is required to determine its
quantum - it is a fixed sum payable in terms of a contract
between
the plaintiff and its overseas supplier. The fact that the plaintiff
in turn claims the same amount from the defendant
does not make it
any less fixed and determinable.
[15]
In support of this submission, plaintiff relies on two authorities,
i.e.
Kleynhans
v Van der Westhuizen NO.
1970
(2) SA 742
(A) at 750-751 and
Probert
v Baker
1983
(3) SA 229
(D) at 236H-237B. Plaintiff's counsel conceded that the
facts in both of these cases were completely different from the
present
matter but argued that the principles contained in these
authorities should nonetheless persuade me that the claim for
special
damages falls squarely within the category of a
'liquidated
amount in money.
[16]
With regard to the defence to the claim, the circumstances in which
the sale agreement was allegedly concluded are fully
set out in the
founding affidavit of Mr Theron The defendant maintains that the
agreement was subject to its ability to obtain
approval for the
required finance, that the machine would arrive in South Africa by
not later than the end of June 2009 so as
to enable the machine to
be delivered and commissioned immediately upon its arrival, and that
the machine would be shipped to
South Africa by the plaintiff
regardless of the defendant's order. The defendant's finance was not
initially forthcoming, but
it was eventually approved by the third
week of June 2009. However, on contacting the plaintiff at this
stage, it appeared that
the machine had not in fact been shipped and
that it would take another six to eight weeks to arrive and then be
fully commissioned.
The defendant considered this to be a material
breach of the agreement and notified the plaintiff of cancellation
of the order.
[17] The plaintiff takes issue with this, referring to
the signed written order and the
minutiae
of
the small printed conditions of sale on the back of the order form.
As pointed out by defendant's counsel, the plaintiffs own
purchase
order sent to the defendant expressly contains the wording
'Subject
to suitable finance to be arranged'.
[18]
Importantly, Theron in his founding affidavit stated that he was
advised by the plaintiff that it intended to ship the machine
to
South Africa
'because
the
(plaintiff)
believed
that it would be beneficial to have this particular model in stock,
instead of having to wait at least six weeks for
it to be shipped to
South Africa and cleared through customs'.
Theron
further alleges that according to the plaintiff, this would have
enabled the latter to be placed ahead of some of its local
competitors. This is simply not challenged in the plaintiffs
answering affidavit.
[19]
Specifically with regard to the
cancellation
fee'
allegedly
payable (and, according to the plaintiff, paid) by it to its
supplier of the machine, the plaintiff alleges that the
defendant
would have been aware of this in the event that its own sale
agreement with the defendant was cancelled. The defendant
expressly
denies this and, in my view, provides a reasonable explanation, in
view of the allegation that, on its version, the
plaintiff was
intent on shipping the machine to South Africa in any event so as to
give it the market edge over its competitors.
[20]
To my mind, the defendant has succeeded in establishing a
prima
facie
defence
insofar as the
cancellation
fee'
claim
is concerned. In
Sanderson
Technitool (Pty) Ltd v Intermenua (Pty) Ltd
1980
(4) SA (WLD) 573 at 575H-576A the court, dealing with the meaning of
a
prima
facie
defence,
stated the following:
'It
is sufficient if he makes out a prima facie defence in the sense of
setting out averments,
which
if established at the trial,
would
entitle him to the relief asked for. He need not deal fully with the
merits of the case or produce evidence that the probabilities
are
actually in his favour.'
(my
emphasis)
[21]
In determining whether a claim is one for a liquidated amount in
money, the court is entitled to have regard to the defence
raised by
a defendant in opposition to a claim for summary judgment. In
Tredoux
v Kellerman
2010
(1) SA (CPD) 160 at 166G-167A, the court referred with approval to
Neves
Builders & Decorators v De la Cour
1985
(1) SA 540
(C) at544G. where the following was stated:
'If
from the defence as disclosed, it appears to the judge that proof of
the claim may be protracted and difficult rather than
prompt, then
it seems to me that that is a matter which he may take into account
in deciding whether or not the claim is liquidated
1
[22] In
my view, the same principle applies to the determination of whether
the judgment for the cancellation fee claim was erroneously
granted
by the registrar. In addition, the plaintiff did not even annex a
copy of its agreement with the third party overseas
supplier in
support of its claim that a cancellation fee was payable. It also
did not annex proof of any such payment, nor did
it allege when such
payment was made. This court is entitled to take judicial notice of
the varying rate of exchange of South
African rands to Euro. At the
very least, the plaintiff would have to lead evidence as to the date
upon which payment of the
amount of €9 420 was made in order to
sustain its claim that such payment equates to the amount of R109
272.
[23] I
am thus satisfied that the cancellation fee claim is not a
liquidated amount in money as is envisaged by the provisions
of r
31(5)(a). Accordingly, this leg of the judgment was clearly
erroneously granted by the registrar and falls to be set aside
in
terms of the provisions of r 42(1 )(a).
[24]
Once a court finds that an order or judgment was erroneously sought
or granted, it should without further enquiry rescind
or vary the
order and it is not necessary for a party to show good cause. In
Bakoven
Ltd v G J Howes (Pty) Ltd
1992
(2) SA 466
(E) at 471F-H the court summarised the position as
follows:
"Rule
42(1 )(a), it seems to me, is a procedural step designed to correct
expeditiously an obviously wrong judgment or order...
In
contradistinction to relief in terms of Rule 31(2)(b) or under the
common law, the applicant need not show good cause' in
the defence
of an explanation for his default and a bona fide defence ... Once
the applicant can point to an error in the proceedings,
he is
without further ado entitled to rescission. It is only when he
cannot rely on an 'error" that he has to fall back
on Rule
31(2)(b) ...or on the common law ...in both latter instances he must
show 'good cause'.'
[25] It
should also be mentioned that, unlike the provisions of r 31(5)(b),
in which a specific time period is stipulated for
a party to
approach a court for the setting aside of a default judgment granted
against it, there is no corresponding provision
in terms of r 42 and
accordingly it is not necessary for me to consider the defendant's
application to condone non-compliance
with the rules of court with
regard to time periods.
[26] In
the result, I make the following order;
[26.1.]
The default judgment granted on 1 December 2009 is rescinded;
[26.2.] The defendant is granted leave to defend the action;
[26.3]
The costs of the application for rescission of judgment shall stand
over for determination at trial.
J
I CLOETE, AJ