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[2010] ZASCA 152
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Winlite Aluminium Windows & Doors (Pty) Ltd v Pyramid Freight (Pty) Ltd t/a UTI (216/10) [2010] ZASCA 152; 2011 (1) SA 571 (SCA) (29 November 2010)
THE
SUPREME COURT OF APPEAL OF SOUTH AFRICA
JUDGMENT
Case No: 216/10
In the matter between:
WINLITE ALUMINIUM
WINDOWS & DOORS (PTY) LTD
................................
Appellant
and
PYRAMID FREIGHT (PTY)
LTD t/a UTI
........................................................
Respondent
Neutral citation
:
Winlite Aluminium Windows & Doors v Pyramid Freight
(216/10)
[2010] ZASCA 152
(29 November 2010)
Coram:
HARMS DP,
NAVSA, HEHER, SNYDERS JJA AND BERTELSMANN AJA
Heard:
23 November
2010
Delivered:
29
November 2010
Updated:
Summary:
Trial –
costs – tender under Uniform rules 34(1) and (5) – effect
– reconsideration under rule 34(12) –
whether trial court
exercised proper discretion in concluding that plaintiff not
justified in proceeding with trial when tender
more than capital
awarded but less than sum of capital and accrued interest at date of
tender.
____________________________________________________________________________________
ORDER
On appeal from:
Western Cape High Court (Cape Town)
(Fourie, Waglay and Ndita JJ as court of appeal):
The appeal is dismissed
with costs.
_______________________________________________________________________
JUDGMENT
_____________________________________________________________________
HEHER JA (HARMS DP,
NAVSA, SNYDERS JJA AND BERTELSMANN AJA concurring):
[1] This judgment
concerns the effectiveness of a secret tender made in terms of
Uniform rules 34(1) and (5) to influence the award
of costs in a
trial action.
[2] In September 2005 the
respondent (Pyramid) sued the appellant (Winlite) in the Cape of Good
Hope Provincial Division (exercising
its Admiralty Jurisdiction) for
payment of R755 675.32, being the balance of fees and disbursements
for services rendered as a
cleaning and forwarding agent, and R10 000
in respect of storage and preservation expenses incurred as a cargo
agent, together
with interest on the said amounts.
[3] Winlite defended the
action. It also claimed, in reconvention, payment of R131 243.01
as damages for the cost of posting
guarantees to release goods
allegedly wrongfully withheld by Pyramid and the monthly fees for the
renewal of such guarantees, as
well as loss of profits resulting from
such withholding and the consequent delay in its ability to install
and commission a manufacturing
plant.
[4] The trial commenced
on Wednesday 14 March 2007 before Cleaver J. It continued on 15
March, 19 March, 31 July and 2 August. On
11 October 2007 the learned
Judge delivered judgment and made the following order:
‘
1.
Judgment is granted against the defendant for payment of:
1.1
R212 745.30
1.2
Interest on the said sum as follows:
1.2.1
At the rate of 17% per annum with effect from 9 September 2005 to 4
March 2007.
1.2.2
At the prevailing repo rate as defined in Government Notice No 166
dated 26 February 2007 plus one third thereof, plus eight
percentage
points with effect from 5 March 2007 to date of payment.
1.3
The sum of R9 120.
1.3.1
Interest on the said sum of R9 120 at the prescribed legal rate
reckoned from 9 September 2005 to date of payment.
2.
Defendant is to pay the plaintiff’s costs of the proceedings
including the costs of the postponement of the matter on 19
March
2007.
3.
The defendant’s counter-claim is dismissed with costs.
4.
The plaintiff’s application to compel defendant to furnish
trial particulars which on 21 February 2007 stood over for later
determination is dismissed with costs.’
[5] The learned judge was
thereafter timeously notified in terms of rule 34(13) that Winlite
had, on 14 March 2007, made a secret
tender in terms of rules 34(1)
and (5) in which it offered to pay ‘in full and final
settlement of all the Plaintiff’s
claims, including its claim
for costs . . . the sum of R250 000,00’ and ‘the
Plaintiff’s taxed party and party
costs to date (including
costs of Senior Counsel), including the reasonable costs of
considering and accepting this offer.’
He was requested to
reconsider the question of the costs of the action as required by
rule 34(12).
[6] Cleaver
J duly heard argument on the effect of the tender and delivered a
considered judgment on the matter. He found that once
the tender had
been made, it was unnecessary to continue running the trial for a
further four days ‘when only the claim for
interest had not
been covered by the tender’ and no evidence was necessary to
prove the claim for the interest. He considered
that Pyramid had been
entitled to a
spatium deliberandi
until
the recommencement of the trial on 19 March. Accordingly he ordered
that Winlite would be liable for the costs of 14 and 15
March and
that Pyramid should be responsible for Winlite’s costs
thereafter.
[7] Cleaver J refused
Pyramid leave to appeal against the main judgment but granted it
leave to appeal to the Full Court against
the costs order only.
[8] In the Full Court
three separate judgments were delivered. Ndita J and Waglay J (for
similar reasons) agreed that the appeal
should be upheld with costs
and the order of Cleaver J be substituted with an order that the
defendant’s application in terms
of rule 34(12) be dismissed
with costs. The effect was thus that the original order made by the
trial judge stood. As Ndita J saw
the matter ‘the award made by
the court a quo in favour of the plaintiff exceeded the tender by a
significant margin. The
plaintiff, therefore, “faced the risk
successfully . . . the court a quo was not justified in departing
from the general
rule.” Fourie J dissented. Although he agreed
that the appeal should succeed he thought the order of Cleaver J
should have
directed each party to pay its own costs from 19 March
2007 because Pyramid ‘had prolonged the trial in an
unsuccessful attempt
to obtain a higher freight award’, while
Winlite had tendered less than the eventual award to Pyramid.
[9] In the exercise of a
discretion on how costs should be apportioned when a tender has been
made the starting point will ordinarily
be whether the tender beat
the amount awarded. This means that apart from determining the
spatium deliberandi
the discretion at this stage of the
proceedings is fairly limited. In this regard it is common cause that
Winlite’s offer
was about R28 000 less than the amount payable
in terms of the judgment. But the capital sum awarded was,
co-incidentally, R28
000 less than the sum tendered, the balance of
the award consisting of interest. It was this last factor which
persuaded Cleaver
J to order Pyramid to pay Winlite’s costs
from the expiry of the
spatium deliberandi
. In his view, as I
have mentioned, Pyramid unnecessarily prolonged the trial on a
subsidiary issue. To my mind the learned misdirected
himself in so
concluding.
[10] The amounts claimed
consisted of three elements, freight charges, contractually agreed
interest and mora interest. The trial
judge ordered in relation to
both interest claims that such interest should be reckoned from 9
September 2005. By the time that
the tender was made on 14 March 2007
accrued interest exceeded R50 000, thus amounting to more 20% of the
capital. More importantly,
by that date, the total of capital and
accrued interest exceeded the amount tendered by at least R20 000
(more than 8%). I think
therefore he was wrong to describe the
freight charges as the ‘central issue’ at the time that
the tender was made.
While that may have been so from an evidential
view point, the real issue was the amount of money that was then due
by Winlite
to Pyramid, however composed, and there was no reason for
the learned judge to accord more weight to one element than the
other.
When Winlite tendered it did so with full knowledge of the
nature and extent of Pyramid’s claim (including the basis of
the
interest calculations). In formulating its offer ‘in full
and final settlement of all the plaintiff’s claims’
it
must be taken to have included whatever liability might be determined
for interest accrued to the date of tender. The position
might have
been different if the tender had been so worded that it covered the
successful claims only.
[11]
This misdirection constituted a failure to exercise his discretion as
to costs judicially. The Full Bench therefore was entitled
to
interfere. In my view Ndita J and Waglay J were correct in finding
that Pyramid, was entitled to reject the tender and that,
having done
so, it ‘faced the risk successfully’ and, in accordance
with the general principle, such success carried
with it the costs of
the action. For the reasons I have already enunciated the conclusion
of Fourie J that ‘the real reason
why the appellant continued
with the litigation was not to obtain payment of its interest, but to
(unsuccessfully) pursue its claim
for the increased freight amount’
manifests the same misconception of the issue as tainted the
reasoning of the trial judge.
Their approach might have been
justified in the initial determination of how the costs should fall
but was not appropriate to the
narrower question of the effect of the
tender. As a matter of practice when deciding costs courts ought to
consider whether unnecessary
evidence was led by the successful party
and should disallow the costs in relation to severable issues in
respect of which that
party did not succeed:
Gentiruco
AG v Firestone SA (Pty) Ltd
1972
(1) SA 589
at 668H-669C. But, as said, that discretion should have
been exercised when the original costs order was considered.
[12] The appeal is
dismissed with costs.
____________________
J A Heher
Judge of Appeal
APPEARANCES
APPELLANT: M J Fitzgerald
SC with him L Buikman
Instructed by DLA Cliffe
Dekker Hofmeyr Inc, Cape Town;
Symington & De Kok,
Bloemfontein
RESPONDENT: M Wragge SC
Instructed by Bowman
Gilfillan Attorneys, Cape Town;
Matsepes, Bloemfontein