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[2010] ZAGPPHC 18
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Voltex (Pty) Ltd v Ras (7436/2009) [2010] ZAGPPHC 18 (12 March 2010)
IN
THE NORTH GAUTENG HIGH COURT, PRETORIA
[REPUBLIC
OF SOUTH AFRICA]
CASE
NO: 7436/200
Date:12-03-2010
In
the matter between:
VOLTEX
(PTY) LTD
and
WERNER
ANTON RAS
JUDGMENT
MOTHLE
A J
1.
This
matter comes to Court by way of an exception raised by the plaintiff
against the defendant's counterclaim. It is apposite to
state,
succinctly, the background to the exception.
2.
The plaintiff, a company duly incorporated with limited liability,
issued summons against the defendant, a businessman, for payment
of
goods sold and delivered arising out of a written credit facility
agreement
("the
agreement").
The
defendant pleaded to the summons admitting indebtedness to the
plaintiff but denying the amounts claimed. The defendant also
issued
a counterclaim for damages arising out of an alleged breach of the
agreement by the plaintiff, for an amount of R1, 021
163.40. The
plaintiff thereafter raised an exception to the defendant's
counterclaim. The grounds of the exception are that the
counterclaim
does not disclose a cause of action.
3.
In terms of Rule 23 of the Uniform Rules of Court, an exception may
be taken to a pleading if it is vague and embarrassing or
if it lacks
averments necessary to sustain an action or a defence, as the case
may be. It is the latter ground on which the plaintiff
relies,
namely, that the counterclaim filed by the defendant lacks the
necessary averments to sustain a claim.
4.
The action by plaintiff and the counterclaim by the defendant arise
from the agreement. It is common cause that on or about the
3
rd
October
and at Pretoria, the defendant, acting personally, executed the
agreement to the plaintiff in terms whereof he agreed that
if the
plaintiff sold and delivered goods to him on credit, all such
transactions would be subject to the plaintiffs terms and
conditions
of sale as specifically contained in the agreement.
5.
It was part of the agreement that the defendant would cede in
security for the debt,
("in
securitatem indebiti"),
to
the plaintiff, his right, interest and claims to demand payment of
book debts. The cession is part of the agreement, and is stated
in
clause 7 (a) thereof.
6.
The defendant had entered into another agreement
("the
building agreement")
with
Robert Skinner Construction CC
("Skinner
Construction"),
for
the supply and installation of electrical equipment for a newly
constructed shopping complex at Groblersdal. The electrical
equipment
included a transformer of 830 KVA output equipped with a temperature
trip and alarm. It is this transformer that the
defendant sought to
purchase on credit from the plaintiff.
7.
The essence of the terms of the building agreement were that should
the defendant fail to supply the goods and complete the installation
on or before the 24
th
October 2007, the defendant would be liable to pay a penalty to
Skinner Construction equal to R30, 000.00 per day for each day
the
works remain incomplete beyond the last mentioned date. It was
further agreed that the Skinner Construction would be entitled
to
deduct such penalties from any monies due by it to the defendant.
Further, the defendant would be expected to execute and complete
the
works described in the building agreement in a proper and workmanlike
manner and use only materials that are suitable.
8.
The defendant ordered delivery of the transformer from the plaintiff
on credit and thus became indebted to plaintiff as per terms
of the
agreement. The defendant alleges in the counterclaim that the
plaintiff failed to deliver the transformer as agreed and
thus caused
him to suffer damages for non-performance as stated in the building
agreement with Skinner Construction. The salient
averments in the
counterclaim captures, in essence, the cause of action for damages as
follows:
8.1
On the 12
,h
June 2007, the plaintiff issued a quotation to the defendant in
respect of the order for the transformer as submitted by the
defendant,
which the defendant accepted. It was further agreed
verbally between the defendant and the plaintiffs representative that
the plaintiff
would supply and deliver a new transformer before the
25
lh
September 2007 which transformer would be in a proper working
condition and the transaction executed in the terms and conditions
of
sale as specifically contained in the credit facility.
8.2
During or about September 2007, the plaintiff and the defendant
verbally amended the contract between them by agreeing that
the
plaintiff would supply a temporary transformer on the 25
,h
September 2007 since the transformer ordered by the defendant was not
ready for delivery. The supply of this temporary transformer
would be
effected pending delivery and installation of the new transformer as
initially agreed with the plaintiff. The plaintiff
would be
responsible for all costs incurred and attributable to the defendant
as a result of the delay.
8.3
The defendant further alleges in the counterclaim that the plaintiff
breached the agreement by:
8.3.1
Only delivering the temporary transformer referred to on 28
th
September 2007;
8.3.2
Effecting delivery of a transformer on the 12
th
October 2007 which d:d not comply with the agreed specifications, had
a second hand generator and not manufactured according to
the
specific dimensions.
The
defendant further avers that as a consequence of the plaintiffs
breach of the terms of the transaction, the tenants in the
shopping
centre had to hire generators when the temporary transformer did
not arrive on the 25
th
September 2007. Further that the actual transformer delivered by
the plaintiff was not in accordance with the specifications,
resulting in structural damages to the building during
installation. The defendant could thus not complete the electrical
installations in accordance with the building agreement concluded
with the Skinner Construction and consequently the
Contractor
enforced the penalty clause as against the defendant.
9.
The plaintiff's exception to the defendant's counterclaim is based on
the ground that since the defendant has ceded his right
to claim to
the plaintiff in terms of clause 7 (a) of the agreement, he has
divested himself of the right to sue and therefore
"there
is no cause of action".
In
essence, the plaintiff contends that in terms of the cession, the
defendant has also divested himself not only of the right to
claim
debts and book debts, but also to sue for damages.
10.
The attack on the counterclaim is not directed at the merits or
content thereof, but on the basis that the defendant, through
the
cession, has divested himself of the
locus
standi
to
sue. While it is general practice that a party would raise a legal
objection of
locus
standi
in
terms of a special plea, it is also permissible to do so by way of
exception,
See
Viljoen v Federated Trust Ltd
1971 (1) SA 750
(0).
11.
The question raised by this exception is whether the cession in fact
does divest the defendant of the right to sue the plaintiff
for
damages. The cession is an integral part of the agreement and is
provided for in clause 7 (a) thereof.
12.
Clause 7(a) of the agreement which provides for the cession reads as
follows:
"7(a)
The Applicant (reference to the Defendant) does hereby irrevocably
and in Rem Suam cede, pledge, assign, transfer and
make over unto and
in favour of the creditor (reference to the Plaintiff), all of its
right, title, interest, claim and demand
in and to or claims/debts/
book debts of whatsoever nature and description and how so ever
arising which the Applicant may now
or at any time hereafter have
against all or any persons, companies, corporations, firms,
partnerships, associations, syndicates
and other legal persona whom
so ever (the Defendant's debtors) without exception as a continuing
cover in security for the due
payment of any sum of money which may
now or at any time hereafter be or become owing by the debtor to the
credit from whatsoever
cause or obligation how so ever arising which
the Applicant may be or become bound to perform in favour of the
creditor."
13.The
wording of this cession seems to be frequently in use concerning
agreements of this nature. There are indeed instances where
the
courts have been seized with the interpretation of these same words
("ipssissima
verba")
as
used in agreements concerning rights ceded in
securitatem
indebiti.
14.
In
Picardi
Hotels Ltd v Thekwini Properties (Pty) Ltd
[2008] ZASCA 128
;
2009 (1) SA 493
(SCA)
the
Court interpreting a contract containing a cession in securitatem
indebiti couched in the same words as the agreement stated,
amongst
others:
"It
is settled law that unless otherwise agreed, a cession in securitatem
indebiti results in the cedent being deprived of
the right to recover
the ceded debt, retaining only the bare dominium or reversionary
interest therein.
1
'
The
Court further remarked in paragraph 14 of the judgment that:
"/
am of the view therefore that an effective an unconditional transfer
of rights occurred when a cession in securitatem indebiti
was
executed. The consequence is that respondent was divested of the
power to sue the appellant in respect of the unpaid rentals.
In order
to sue for the recovery of the ceded debts, the respondent should
have taken recession of them from their bank."
15.
The principle as stated above does not necessarily hold for all
contracts where there is a cession in
securitatem
indebiti.
Each
contract has to be interpreted as a whole in order to ascertain the
intention of the parties. The clause providing for cession
should not
be interpreted in isolation.
See
Coopers & Lybrand and Others v Bryant
[1995] ZASCA 64
;
1995 (3) SA 761
AD at
768G-H
as
well as
Marigold
Ice Cream Company (pty) Ltd v National Co-operative Dairies Ltd
1997
(2) SA 671
(WLD)
at
677 AC.
The
need to apply the rules of interpretation of contracts was also
endorsed in the
Picardi
Hotels Ltd v Thekwini Properties (pty) Ltd supra at 496F-497A.
Both
parties in this application agree that the issue raised by this
exception is essentially one of interpretation.
16.
In all three cases cited above, the Courts were called upon to
interpret the full terms of the contract of cession in
securitatem
indebiti.
In all three cases the
cessionary was a third party (a bank). The present case is
distinguishable from the three in that the cession
in
securitatem
indebiti
is between the plaintiff
and the defendant and is provided for in the same agreement which
gave rise to the action and counterclaim.
17.
Applying a proper and reasonable construction to the terms of the
agreement, it seems to me that the language of clause 7(a)
does not
expressly state that the cession would cover debts or book debts of
the defendant arising between himself and the plaintiff.
Further, it
does not clearly state whether the cession in
securitatum
indebiti
will
include claims for damages by the defendant against the plaintiff,
arising out of the very same agreement between them. However,
a
reading of subclause 8.2 and clause 10 of the agreement reveals
that
provision
has been made to deal with the claims that may arise between the
parties. The following are the text of the relevant provisions:
8.2
"The applicant acknowledges that the creditor is not the
manufacturer of the goods. The applicant accordingly indemnifies
and
holds the creditor harmless against any claim that may be brought
against the creditor in consequence of such goods being defective
and
causing any damage whatsoever, whether through accident or
negligence, gross negligence or any other cause."
10.
"It is agreed that set-off shall operate automatically as a
matter of law at the moment reciprocal debts between the creditor
and
the applicant come into existence and independently of the will of
the parties and it shall not be necessary for either the
creditor or
the applicant to specifically raise set-off. Upon the operation of an
automatic set-off aforementioned, the debts shall
be mutually
extinguished to the extent of the lesser debt."
18.
There is reference to indemnification and set-off as remedies
provided
for separately in the agreement to deal with claims arising between
the parties
inter
se.
It
would appear to me that the parties could not have intended that the
cession in
securitatem
indebiti
referred
to under clause 7(a), was to
include
any claims for damages arising in the same agreement inter se.
19.
The parties could not have intended to include personal claims under
the phrase
"and other debts and
claims of whatsoever nature."
It
seems that the debts referred to are business debts which were due to
the defendant by other parties, his debtors.
See
Coopers & Lybrand and Others v Bryant supra,
where
the same words used in a cession in
securitatem
indebiti,
were found to exclude
claims for damages.
20.
It is trite that for the purpose of deciding an exception, a court
must assume the correctness of the factual allegations made
in the
relevant pleading, unless such allegations are untrue or so
impossible that they cannot be accepted.
See
Van Zyl NO v Bolton
1994 (4) SA 648
(CPD) at
651
E.
Assuming
that the counter claim has merit and the defendant has divested
himself of the right to sue the plaintiff for damages as
contended by
the plaintiff, then in essence the plaintiff being the holder of the
right to sue, becomes both the creditor and debtor
to the claim for
damages, a situation which in my view is untenable.
21.
I therefore conclude that the cause of action for recovery of damages
as a result of the alleged breach of the agreement by
the plaintiff,
is not part of the book debts or claims that were ceded in terms of
Clause 7(a) of the agreement between both parties.
The counterclaim
as such is not excipiable as the defendant has not in my view
divested himself of the right to raise it against
the plaintiff.
22.
In the premises, the exception raised by the plaintiff against the
defendant's counterclaim cannot succeed. I accordingly make
the
following order:
1.
The exception is dismissed;
2.
The plaintiff may, within 10 days from the date of this order file a
plea to the defendant's counterclaim;
3.
The plaintiff is to pay the defendant the costs of this application.
MOTHLE
A J
For
the Applicant:
Adv.
J Suttner SC
Instructed
by Orolowitz Inc
C/o
Maritz Smith Van Heerden Inc
Plaintiff's
Attorneys
Suite
111, Infotech Building
1
st
Floor, 1090 Arcadia Street
Hatfield
PRETORIA
For
Defendant
Adv.
P J Vermeulen
Instructed
by Smith and Associates Inc.
Defendant's
Attorneys
Waterkloof
Golf Club Building
Johan
Rissik Driver
Waterkloof
PRETORIA