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[2013] ZAECPEHC 43
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Bayview Construction (Pty) Ltd v Eldorado Trading CC and Another (1316/13) [2013] ZAECPEHC 43 (6 September 2013)
IN THE HIGH COURT OF SOUTH AFRICA
(EASTERN CAPE – PORT ELIZABETH)
CASE NO.: 1316/13
In the matter between:
BAYVIEW CONSTRUCTION (PTY) LIMITED
................................
Plaintiff/Applicant
And
ELDORADO TRADING CC
..................................................
First
Defendant/Respondent
JOHN PULLEN
..................................................................
Second
Defendant/ Respondent
JUDGMENT
BESHE J:
[1] The plaintiff seeks summary judgment against the
defendants who are opposing the application.
[2] Plaintiff and first defendant were parties to a
joint venture agreement. Second defendant is a member of first
defendant. The
agreement was entered into for the purposes of
undertaking a Housing Development Agency rectification contract. It
appears to be
common cause that plaintiff advanced funds on loan to
the joint venture from time to time. The business relationship
between the
parties to the joint venture broke down resulting in the
termination thereof.
[3] Subsequent to the termination of the joint venture,
first defendant, by means of a settlement agreement, acknowledged
itself
to be indebted to the plaintiff in the sum of R5 231 786.22.
Plaintiff agreed to accept payment of a reduced amount of
R4 000
000.00, by way of instalments.
[4] In terms of Settlement Agreement, in the event of
the first defendant failing to make payment of any instalment on the
due date,
the full amount of R5 231 786.22, with interest
thereon, less any amounts which may have been paid, would immediately
become due and payable.
[5] The second defendant bound himself as surety and
co-principal debtor jointly and severally with the first defendant in
favour
of the plaintiff for the repayment of any sum of money which
the first defendant may owe to the plaintiff in terms of the
Settlement
Agreement.
[6] Certain instalments were paid by the first defendant
before April 2013. However from the 1 April 2013 no payments were
made.
[7] In May 2013 plaintiff instituted action against the
defendants for payment of the sum of R4 631 781.22,
interest and
costs.
[8] Plaintiff contends that defendants do not have a
bona fide
defence to the claim and that the entering of an
appearance to defend was made solely for the purpose of delay.
[9] In opposing the application for summary judgment,
defendants contended that they have a counter claim against the
plaintiff,
that is in excess of R5 976 000.00, for damages
incurred in relation to the conduct of the tender that was awarded to
the joint venture in respect of the Housing Development Agency
rectification contract.
[10] Subsequent to the filing of the opposing affidavit,
defendants sought leave to introduce a supplementary affidavit. At
this
stage the defendants did not have legal representation and were
represented by the second defendant. The reason, as I understand
it,
for seeking to introduce a further affidavit is that they parted ways
with two different firms of attorneys who represented
them prior to
deposing to the affidavit sought to be introduced. Both withdrew as
result of disagreements with the defendants.
The supplementary
affidavit is intended to clarify defendants’ defence and
challenge the validity of the settlement agreement.
[11] The application to introduce a further affidavit is
opposed by the plaintiff on the basis that it does not disclose a
bona fide
defence. In
Juntgen t/a Paul Juntgen Real
Estate v Nottbusch
1989 (4) SA 490
it was stated that a court
has a discretion to grant that relief which is necessary to make a
party make a full representation of
its true case. In
casu
, it
would seem that the defendants, as they allege, had misgivings about
the manner in which their case was conducted by their
previous
attorney(s). In my view, an injustice would be caused if the
defendants are not allowed to introduce a further affidavit.
I will
therefore exercise my discretion by having regard to the
supplementary affidavit filed by the defendants in determining
the
application for summary judgment.
[12] It is trite that in order to be successful in
opposing an application for summary judgment, the respondent must
depose to facts
that, if accepted as the truth, would constitute a
defence to the applicant’s claim. It is also trite that the
respondent
must fully disclose the nature and grounds of his defence
and the material facts upon which it is based. See
Maharaj v
Barclays National Bank Ltd
1976 (1) SA 418
(A)
.
[13] Defendants’ defence as I understand it, is
essentially that, the amount due and payable to the plaintiff is
disputed.
The settlement agreement was entered into on the advice of
the attorney who represented the defendants at the time despite the
fact that they expressed misgivings about signing the agreement,
given that second defendant did not believe they owed the plaintiff
the amount claimed. The agreement was signed after he had been shown
plaintiff’s audited statement and was under the mistaken
belief
that amounts set therein were due and owing.
[14] Relying of
Gollach and Gomperts (1967) (Pty)
Ltd v Universal Mills and Produce Co (Pty) Ltd
1978 (1) SA 914
A
,
Mr Nepgen
,
who is acting on behalf of the plaintiff,
argued that the settlement agreement, being a compromise between the
parties has the effect
of
res judicata
. That is not open to
the defendants to proceed on the original cause of action. The
settlement agreement being “in full and
final settlement of all
claims between the parties arising from the joint venture and the
Soweto-on-Sea contract” (paragraph
5 of the Settlement
Agreement).
[15] In
Gollach and Gomperts
supra
, the grounds for seeking the
cancellation of a settlement agreement were more or less the same as
those raised by the defendants
in this matter. At page 922
Miller
JA
had this to say
“A
transactio
, whether extra-judicial or embodied in an order of
court, has the effect or
res judicata
. It is obvious that,
like any other contract (and like any other court) a
transactio
may be set aside on the ground that it was fraudulently obtained.
There is authority to the effect that it may also be set aside
on the
ground of mistake, where the error is
justus
”
.
[16]
Mr Nepgen
submitted that defendants’
allegations regarding the manner on which the mistake about the
amount owing to the plaintiff
is said to have arisen is too vague and
sketchy. In the affidavit deposed to by the second defendant, he
gives a detailed account
why he believes that the amount in respect
of which defendants acknowledged their indebtedness is incorrect and
the reasons that
gave rise to the mistake on his part. These in my
view cannot be characterised to be vague and sketchy. The facts
disclosed by
the defendants to support the contention that the
acknowledgement of debt was based on mistake on his part are,
inter
alia
, that:
He had misgivings about signing the settlement agreement
because he did not believe the amount claimed was owed to the
plaintiff;
The effect of the joint venture was that the plaintiff
would have been entitled to half the profit in respect of each house,
being
R7 000.00 and not R14 000.00 as claimed by the
plaintiff. The other half being due to the first defendant;
The audited statement was based on figures that were
furnished by the plaintiff only;
First defendant paid in excess of R7.5 million to the
plaintiff. When the value of the houses had they been completed would
only
have been R4.32 million;
That therefore defendants’ indebtedness was
overstated.
In my view the defendants have succeeded in showing that
they have a defence that is
bona fide
and good in law.
[17] In the circumstances:
The application for summary judgment is dismissed.
The defendants are granted leave to defend the
plaintiff’s action.
Costs of the application for summary judgment are to
be costs in the cause of the action.
_______________
N G BESHE
JUDGE OF THE HIGH COURT
APPEARANCES
For the Plaintiff : ADV: JJ Nepgen
Instructed by : RUSHMERE NOACH INC.
5 Ascot Office Park
Conyngham Road
Greenacres
PORT ELIZABETH
Tel.: 041 – 399 6700
Ref.: Mr CD Arnold/dr/MAT25803
For the Defendant(s) : Mr John Pullen
Instructed by : In person
Tel.: 041 – 364 2489
078 893 0507
084 392 5980
Date Heard : 3 September 2013
Date Reserved : 3 September 2013
Date Delivered : 6 September 2013