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[2016] ZAECPEHC 13
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Much Asphalt (Pty) Ltd v CSR-Africa Tank Repairs CC (4657/15) [2016] ZAECPEHC 13 (19 April 2016)
IN
THE HIGH COURT OF SOUTH AFRICA
(EASTERN
CAPE LOCAL DIVISION, PORT ELIZABETH)
CASE
NO: 4657/15
In
the matter between:
MUCH
ASPHALT (PTY)
LTD
Plaintiff
and
CSR-AFRICA
TANK REPAIRS CC
Defendant
JUDGMENT
MBENENGE
J:
[1]
On 02 September 2015 the plaintiff and the defendant, through their
duly authorised representatives, concluded a partly written
and
partly oral agreement in terms whereof it was,
inter
alia
,
agreed that the defendant would manufacture a 100 ton vertical
atmospheric storage unit for the plaintiff. Agreement was
further reached that the plaintiff would pay to the defendant a
deposit of 40% of the contract price, being an amount of R318 499.13,
[1]
prior to the manufacture
process of the tank commencing.
[2]
According to the plaintiff-
2.1
the contract would be time sensitive, and the tank was to be
completed, installed and operational
by 14 December 2015;
2.2
the defendant represented that it would be able to perform timeously
in terms of the agreement;
2.3
the parties agreed that the manufacture, supply and installation
process would take approximately
seven weeks to complete; and
2.4
the defendant was obliged to communicate with the plaintiff in good
time if it was unable
timeously to perform in terms of the agreement,
so as to enable the plaintiff to make alternative arrangements and to
avoid the
delay and the resulting financial prejudice.
[3]
Adopting the stance that it had paid the requisite deposit, and being
of the view that, because as at 30 November 2015 the defendant
had
not commenced the manufacture process, it would be impossible for the
defendant to perform properly in terms of the agreement
and complete
its task by 14 December 2015, the plaintiff contended that defendant
had breached the agreement, entitling the plaintiff
immediately to
cancel the agreement and to demand repayment of the deposit paid.
[4]
By letter dated 02 December 2015, the plaintiff,
inter alia,
informed the defendant of its cancellation of the agreement on the
grounds of failure by the defendant to perform, resulting in
impossibility of performance by 14 December 2015, and demanded
repayment of the deposit paid. The letter was not given heed
to
by the defendant.
[5]
The plaintiff thereupon launched action proceedings whereby it seeks
repayment of the amount paid as deposit (R318 499.13),
together
with interest thereon at of the applicable rate (the main action).
[6]
The main action is being defended. The delivery of the relevant
notice to defend attracted the launch of summary judgment
proceedings
for payment of the amount claimed in the main action on the grounds
that the defendant lacks a
bona fide
defence and that the
notice to defend has been delivered solely for the purpose of delay.
[7]
The
bona fide
defence relied on by the defendant is set out as
follows:
7.1
time was not of the essence in the contract between the parties;
7.2
there was no date agreed upon for the delivery of the bitumen tank;
7.3
the plaintiff failed to place the defendant in
mora
, a step
necessary before the plaintiff can lawfully cancel the agreement
between the parties;
7.4
there was thus no breach of the agreement by the defendant;
7.5
the plaintiff’s purported cancellation amounts to a repudiation
of the agreement;
7.6
the defendant accepts the plaintiff’s repudiation;
7.7
as a result of the plaintiff’s repudiation, the defendant has
suffered a loss of profit;
and
7.8
the defendant is entitled to resist the claim by the plaintiff, in as
much as it also has
a counterclaim against the plaintiff.
[8]
In amplification of its contention that it has a
bona fide
defence to the action, the defendant went on in the opposing
affidavit to state as follows: The plaintiff’s
representative,
Jacques Muller (Mr Muller), emailed the
specifications for the bitumen tank to the defendant’s
representative, Ismail Hassen
(Mr Hassen), on or about 20 July 2015.
According to the relevant specifications the tank wall
thickness would vary at different
heights of the tank. Once the
concept drawing had been provided to Mr Muller, he gave a go - ahead
for construction to commence
on 25 September 2015. Subsequent
thereto, Mr Muller amended certain specifications on 6 October 2015
and at the same time
made enquiries about the completion date for the
tank.
[9]
The opposing affidavit also refers to an exchange of correspondence
between the parties’ representatives. On 12
October 2015
Mr Muller required to know from Mr Hassen as to when the expect
completion date would be. Mr Hassen responded:
“
I
had a meeting with my production team and components manufacturers
that was outsourced/ long lead items. They have made
[provisional] commitment that all the milestones [are] on schedule
and therefore will be able to deliver provisionally [during]
the
second week in December 2015. I will try my best and speed up
the process where we can [save] time or work on a dual
manufacturing
process system
.”
[10]
Mr Muller in turn responded:
“
I
will need you to speed up the process considerably, I was expecting a
date more in the region of beginning to mid November as
I need to get
the tank in. Please try your best to get it done as a priority
item.”
[11]
The defendant further avers that on 16 November 2015 Mr Hassen
advised Mr Muller that the milestones of the project had been
achieved to that date and that production would move to a facility in
Durban, closer to the site of installation. Subsequent
thereto,
Mr Hassen was advised by the steel suppliers that the deadline for
availability of 10 mm plate steel, as required for
the bottom of the
tank, was only during the second week of December 2015. Mr
Muller was advised of this, and became extremely
dissatisfied.
[12]
Having been of the view that the due date for delivery would not be
met, Mr Muller cancelled the agreement and demanded repayment
of the
deposit. The relevant portion of the relevant email reads:
“
Taking
all this into account I require you to pay the money that was paid to
you back in full by close of business on Wednesday
2
nd
December 2015 as we have to get someone else to build [the tank] now
and finish it time
.”
[13]
The formal demand letter penned by the plaintiff’s attorney of
record on 2 December 2015, referred to in paragraph 4
above, in so
far as relevant hereto, reads:
“
We
are further instructed that to date, you have not started the
project, and have instead offered our client various contradictory
reasons for your failure to perform.
We
are further instructed by our client that it will no longer be
possible for you to complete the manufacturer of the storage until
by
the 14 December 2015, and you are accordingly in breach of the terms
of the contract.
Our
client has accordingly cancelled, or hereby cancels, the contract on
the grounds of your failure to perform, which has led to
impossibility of performance by the contractual completion date.
We
have therefore been instructed by our client to demand from you, as
we hereby do,. immediate re-payment of the sum of R318 499.13
paid by our client to yourselves.
Unless
the total amount is paid to our offices on or before the close of
business on Friday 04 December2015 legal action will be
taken against
you for the recovery thereof without further notice.”
[14]
Shorn of verbiage, the
bona fide
defence relied on by the
defendant is that the defendant was never afforded the opportunity to
remedy the perceived defect, and
it pre-emptively cancelled the
contract, which amounted to repudiation. The defendant has
further adopted the stance that
it has counterclaim against the
plaintiff.
[15]
On the one hand the plaintiff alleges that the contract was time
sensitive, and the tank was to be completed, installed and
operational by 14 December 2015, whilst on the other hand the
defendant is of the view that the date of delivery was never
discussed,
nor was an indication given that the time of delivery of
the tank was of the essence.
[16]
It is trite law that failure to perform at the time when, or during
the period within which, performance is due is, in the
absence of a
lawful excuse, a breach of contract because it is failure to do what
one has contracted to do.
[2]
[17]
The central issue in this case is whether the parties reached
agreement in relation to when performance was to be due.
This
is so because on the authority of
Alfred
Mc Alpine & Son (Pty) Ltd v Transvaal Provincial
Administration
-
[3]
“
[I]
n
the case of a contract in which no time for performance has been
fixed, the debtor must be placed
in
mora
by
interpellatio
before damages can be claimed on the grounds of such debtor’s
non-timeous performance. A mere failure to perform or
mere
non-performance in the absence of fixed time for a performance,
although it may constitute a ground for defence of
expetio
non adimpleti contractus
,
cannot give rise to a claim for damages because it can never be a
breach.”
[4]
[18]
Contrary to the plaintiff’s contention, this case does not
concern impossibility of performance. It is indeed more
the
lackadaisical attitude of the defendant towards its obligations
[5]
that is the
fons
et origo
of the main action
[19]
In my view, the defendant’s
bona fide
defence has been
set out in the precise and appropriate manner. Were the
defendant’s contention that agreement was
not reached as to the
time for completing the task to prevail, the following would ensue:
19.1
the summons would lack the averment that the defendant was afforded
the opportunity to remedy its breach,
to no avail, which is necessary
to sustain a cause of action for cancellation; and
19.2
the cancellation of the contract would, on the authority of
Alfred
Mc Alpine
,
[6]
have occurred prematurely.
[20]
In light of the factual dispute besetting the main action referred to
in paragraph 15 above, this court is precluded from granting
summary
judgment.
[21]
In the result-
21.1
summary judgment is hereby refused;
21.2
the defendant is granted leave to defend the main action; and
21.3
costs of the summary judgment application shall stand over for
determination by the court hearing the main
action.
__________________________
S
M MBENENGE
JUDGE
OF THE HIGH COURT
Counsel
for the plaintiff
: Mr K B
Pask
Instructed
by
Bentley Attorneys
DURBAN
C/O
Pagdens Attorneys
PORT
ELIZABETH
Counsel
for the defendant
: Ms M
Beneke
Instructed
by
Bashier Moosa Attorneys
UITENHAGE
C/O
D Gouws Attorneys
PORT
ELIZABETH
Date
heard
: 1 March
2016
Judgement
delivered
: 19
April 2016
[1]
The contract
price being R796 247.83.
[2]
Kerr AJ,
Principles
of the Law of Contract
,
Butterworths Durban, 4 ed at 445.
[3]
1977 (4) SA
310
(T); see also
Ponisammy
v Versailles Estates (Pty) Ltd
1973 (1) SA 372
(A) at 387.
[4]
Alfred
McAlpine ibid
at
348 D-F; compare
Broederick
Properties Ltd v Rood
1962 (4) SA 447
(T), where a different approach was adopted.
[5]
The alleged
failure on the part of the defendant to deliver goods timeously
[6]
Supra.