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[2022] ZAFSHC 221
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BBT Electrical and Plumbing Construction and Maintenance t/a BBT Construction v Setshabelo Trading 647 (Pty) Ltd (3367/2019) [2022] ZAFSHC 221 (2 September 2022)
IN
THE HIGH COURT OF SOUTH AFRICA,
FREE
STATE DIVISION, BLOEMFONTEIN
Case
No:
3367/2019
Reportable:
YES/NO
Of
Interest to other Judges: YES/NO
Circulate
to Magistrates: YES/NO
In
the matter between
:
BBT
ELECTRICAL AND PLUMBING CONSTRUCTION
AND
MAINTENANCE T/A BBT CONSTRUCTION
Plaintiff
and
SETSHABELO
TRADING 647 (PTY) LTD
(REGISTRATION
NUMBER: 2013/009655/07
)
Defendant
JUDGMENT
BY:
C
REINDERS, ADJP
HEARD
ON:
11
MARCH 2022
DELIVERED
ON:
02
SEPTEMBER 2022
This
judgment was handed down electronically by circulation to the
parties’ representatives by email, and release to SAFLII.
The date and time for hand-down is deemed to be 17:00 on 2 SEPTEMBER
2022.
[1]
On 30 July 2019 the plaintiff (BBT Electrical and Plumbing
Construction and Maintenance
t/a BBT Construction - “BBT”)
issued summons against the defendant, Setshabelo Trading 647 (Pty)
Ltd (“Setshabelo”)
claiming payment by the defendant of
an amount of R400 000-00, interest
a tempora morae
and
costs. Defendant in its plea denied being indebted in the aforesaid
amount. To proof its case plaintiff called two witnesses.
Defendant
did not adduce any evidence resulting therein that I have to
determine whether plaintiff proved its case.
[2]
The summons originally issued was amended (with leave of the trial
court) after closing
of the plaintiff’s case. Defendant applied
for absolution and before I decided the issue, plaintiff applied to
have its particulars
of claim amended. It is necessary to consider
the pleadings as it ultimately stood.
[3]
When the summons was issued plaintiff averred that it and defendant
on 5 March 2018
at Bloemfontein, duly represented by respectively Mr
Wilson Matete (“Mr Matete”) and Mr Bongani Langwenya (“Mr
Langwenya”) concluded a written settlement agreement (“the
settlement agreement”), alternatively a partially
written and
partially verbal settlement agreement of which a copy was attached to
the particulars of claim as Annexure “M3”.
The terms
thereof reflect, amongst others, the following:
“
PROFIT
SHARE AND MARK-UP
5.1
Profits generated by the joint venture shall vest with SETSHABELO and
SETSHABELO shall be liable for the following
payments to BBT:
5.1.1
payment of the amount of R250 000.00 on site occupation;
5.1.2
payment of the amount of R250 000.00 one month after SETSHABELO
has taken site occupation.
BREACH
7.
Should any of the parties (“the defaulting party”) commit
any breach of any term
or condition of this agreement and fail to
remedy such breach within 7 (SEVEN) days of receipt of a notice from
the other party
(“the non-defaulting party”) calling upon
the defaulting party to rectify such breach, the non-defaulting party
shall,
without prejudice to any other rights which he may have, be
entitled to cancel this agreement.”
[4]
It was averred that defendant only made payment in the amount of
R100 000-00
and failed to perform as agreed resulting therein
that on 19 March 2019 plaintiff through its attorney delivered a
letter demanding
payment of the R400 000-00. As defendant failed
to make payment, plaintiff cancelled the aforementioned settlement
agreement,
wherefore plaintiff claimed an order confirming
plaintiff’s cancellation of the settlement agreement and
payment of the amount
of R400 000-00 together with the relief
mentioned supra.
[5]
In defendant’s plea these allegations were all denied, save
that defendant averred
that it took note of the alleged cancellation
of the settlement agreement.
[6]
To prove its case plaintiff called two witnesses, namely Mr Matete
and Mr Arnold Lepota
(Mr Lepota).
6.1
Mr Lepota, the contract manager of BBT, testified that he was
approached by Mr Langwenya, the managing director
of the defendant,
during October 2017 with the aim of forming a joint venture (a “JV”)
for securing contracts. Due
to the capacity of Setshabelo the parties
agreed that their respective participation rights and obligations in
the JV shall be
split as 60% (BBT) and 40% (Setshabelo), and he so
drafted the agreement. Hereafter a tender for the construction of a
bulk water
pipeline was submitted. On 5 March 2018 the parties
received confirmation of the acceptance of the submitted tender (“the
acceptance letter”- annexed as “M2” to the
particulars of claim). The acceptance letter confirms the contract
value to be “an amount of R12 719 970-60 (including
VAT and contingency sum)”.
6.1.1
On 26 April 2018 Mr Langwenya addressed a letter to him (the
proposal),
requesting that Setshabelo be “released/allowed to
proceed with the project on its own as a company” and that “a
specific amount be payable to BBT in acknowledgement of the agreed
arrangement and the involvement of the plaintiff in securing
the
contract for both parties”. A meeting was requested and indeed
took place. He and Mr Langwenya discussed the proposal
that
Setshabelo wished to proceed with the project on its own and an
agreement was drafted by BBT’s attorney of record, Mr
B Blair.
The settlement agreement was provided to BBT on 22 May 2018 and to
Setshabelo on 23 May 2018 for signature but no response
was
forthcoming. The document was never returned to them.
6.1.2
Mr Blair was requested to send a letter of demand to Setshabelo
for
payment. Only an amount of R100 000-00 was paid, and the amount
was viewed by him as a down payment in respect of the
R500 000-00
agreed upon.
6.1.3
In an electronic mail dated 19 September 2021 addressed to Setshabelo
from Blair Attorneys, the following was recorded:
“
Our
clients confirm that they wish to hereby formally terminate/withdraw
from the contract due to the fact that said Setshabelo
Trading has
breached the terms of the contract by failing to;
1.
Sign the memorandum
of agreement with BBT;
2.
Failing to adhere to
the terms of the said agreement not signed;
3.
Proceeding with
works engaging BBT as the joint venture partners in the project.”
6.2
Mr Matete is the Managing Director (“MD”) of BBT. He was
made aware by the projects manager of
a proposal to enter into a
joint venture. As MD he was the only person authorised to conclude
the agreements relating to this matter
on behalf of BBT, and he duly
signed the JV agreement.
6.2.1
The settlement agreement originated from the proposal of 25 April
2018. Shortly after receiving the proposal from Setshabelo to proceed
on their own, BBT “considered the factors and risks
to
establish what would be a fair compensation to BBT”. In his
view the agreed upon amount was more like “compensation
for
them agreeing in effect to be paid for the effort that they had put
in in in obtaining the tender”. In return Setshabelo
would pay
R500 000-00 in two instalments.
6.2.2
According to Mr Matete he personally did the estimated calculation
with Mr Lepota to determine the amount of R500 000-00 which was
an estimated value based on “calculations done by the
quantity
surveyor” at the time. He further testified that approximately
15% of the total value of the contract (R12 719 970-60)
less 14% in respect of value added tax, constituted the profit for
executing the project. Based on the said amount BBT’s
share of
that profit would have been approximately R984 626-00 being 60%
of the total profit in the amount of R1 640 876-60.
As BBT
was not going to proceed working with Setshabelo, the latter amount
was not applicable. Mr Matete added that the estimation
not only
consisted of the pricing compilation, “which in itself is a
professional service” of the successful tender
done by BBT, but
also the 20 years’ experience of BBT which included the pricing
but also “goodwill, sweat and tears”.
6.2.3
On 26 June 2018 Setshabelo send correspondence to BBT to pardon
them
from making “the first round of payment at the end of May 2018”
due to “financial constraints”.
6.3
No supporting documents in respect of the averred pricing compilation
of the submitted tender were placed
into evidence. The quantity
surveyor did not testify.
[7]
After closing plaintiff’s case and on being confronted with an
application for
absolution the plaintiff amended its particulars of
claim. The more relevant amendments included an allegation that the
defendant
was in breach of the settlement agreement and the plaintiff
has as a result of such breach by the defendant suffered damages in
the amount of R400 000-00, the said damages being the unpaid
balance of R400 000-00 to which the plaintiff was entitled
but
for the defendant’s breach. It was averred that plaintiff duly
cancelled the settlement agreement owing to defendant’s
material breach and the original prayer 1 of the summons for
confirmation of the cancellation of the agreement, was deleted. The
summons in its amended form claims:
“
1.
Payment in the amount of R400 000-00.
2.
In the alternative, should it be found that the agreement was not
validly cancelled, ordering specific
performance by the defendant in
accordance with the agreement asserted by the plaintiff, to wit,
payment to the plaintiff in the
amount of R400 000-00.”
[8]
Having amended its particulars of claim plaintiff did not apply to
reopen its case
and/or to adduce any further evidence and defendant
closed its case.
[9]
It is trite that a party cannot approbate and reprobate.
9.1
Where a party is in breach of an agreement, the innocent party
normally faces a choice to claim specific performance
or to cancel
the agreement and claim damages. Once a party has elected to cancel
or not to cancel, the election is final and could
not be reversed.
The onus rests on the party alleging the election not only to allege
its election, but to prove it.
See:
Thomas v Henry
1985 (3) SA 889
(A)
Sandown
Travel (Pty) Ltd v Cricket South Africa (42317/2011) [2012] ZAGPJHC
249;
2013 (2) SA 502
(GSJ) (7 December 2012) at par [30]
9.2
At the same time it is not possible to claim performance and in the
alternative to rely on a prior cancellation
as these alternatives are
inconsistent.
See:
Salzwedel v Raath
1956 (2) SA 160
(E)
9.3
In
Basson
v Hanna
(37/2016)
[2016] ZASCA 198
(6
December 2016)
at
para [22] and further the Supreme Court of Appeal reiterated the
aforementioned principles and explained in the event of specific
performance a claim for damages could succeed where the party in
breach renders specific performance impossible (at para [42]
thereof).
The
Supreme Court referred to
Woods
v Walters
1921 AD 303
where
Innes CJ stated at
310:
“
It
is a common practice, in South Africa to add to a prayer for specific
performance, an alternative prayer for damages. That course
has been
followed in the present case.
Damages
so claimed must, of course, be proved and ascertained in the ordinary
way.
The
authorities do not warrant a punitive assessment.”
(emphasis
added)
[10]
In the matter before me the evidence and the pleadings are
ad idem
that plaintiff on learning defendant’s breach, cancelled
the agreement. Not only did both Messrs Matete and Lepoto so testify,
but in evidence reference to the email of dated 19 September 2018 so
confirmed. The upshot thereof in my view is that plaintiff
cancelled
the agreement (if it ever existed – and I do not deem it
necessary to make a finding thereon).
[11]
Having cancelled the agreement it was incumbent on plaintiff to prove
its damages, either by
way of positive or negative
interesse
,
but most definitely the plaintiff cannot claim payment of the
R400 000-00 balance in terms of the agreement. The R400 000-00
did not constitute damages
per se
. There is no basis upon
which I can find that plaintiff was not entitled to cancel the
agreement as it did. It follows however
that I regrettably in those
circumstances cannot find in favour of plaintiff as it simply failed
to prove by way of evidence damages
or the amount that was allegedly
suffered and/or which flowed naturally from the cancellation of the
contract.
[12]
Consequently I make the following order:
Absolution of the
instance is ordered with costs.
C.
REINDERS, ADJP
On
behalf of the Plaintiff:
Adv A.I.B. Lechwano
Instructed
by: Phatshoane
Henney Attorneys
BLOEMFONTEIN
On
behalf of the Defendant:
Adv J. Ferreira
Instructed
by: Bezuidenhouts
BLOEMFONTEIN