Joob Joob Invetments (Pty) Ltd v Stocks Mavundla Zek Joint Venture (161/08) [2009] ZASCA 23; 2009 (5) SA 1 (SCA) ; [2009] 3 All SA 407 (SCA) (27 March 2009)

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[2009] ZASCA 23
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Joob Joob Invetments (Pty) Ltd v Stocks Mavundla Zek Joint Venture (161/08) [2009] ZASCA 23; 2009 (5) SA 1 (SCA) ; [2009] 3 All SA 407 (SCA) (27 March 2009)

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THE SUPREME COURT OF APPEAL
REPUBLIC OF SOUTH AFRICA
JUDGMENT
Case no: 161/08
JOOB JOOB
INVESTMENTS (PTY) LTD
Appellant
and
STOCKS
MAVUNDLA ZEK JOINT VENTURE
Respondent
________________________________________________________________
Neutral citation:
Joob Joob v Stocks
(161/08)
[2009]
ZASCA 23
(27 March 2009)
CORAM:
Harms
DP, Navsa, Brand, Mhlantla JJA and Bosielo AJA
HEARD:
16 March 2009
DELIVERED:
27 March 2009
CORRECTED:
SUMMARY: Building contract ─ interpretation of ─ nature of
interim certificates ─ validity of certification of damages ─

summary judgment proceedings discussed ─ summary judgment rightly
refused.
________________________________________________________________
________________________________________________________________
ORDER
________________________________________________________________
On appeal from:
High Court, Durban (Gorven AJ sitting as court
of first instance).
The appeal is dismissed with costs including the costs consequent
upon the employment of two counsel.
________________________________________________________________
JUDGMENT
________________________________________________________________
NAVSA JA (Harms DP, Brand, Mhlantla JJA and Bosielo AJA concurring):
[1] This is an appeal against the grant of summary judgment in the
Durban High Court (Gorven AJ). The background is set out hereafter.
[2] During 2004 the parties concluded a written agreement in terms of
which the respondent, a partnership conducting the business
of a
building contractor, undertook to build a resort hotel at Ocean View
site, Zimbali Coastal Forest Resort, Ballito for the
appellant
company. I shall hereafter refer to the appellant as JJ and to the
respondent as Stocks. These parties are referred to
in the agreement
as the contractor and employer respectively.
[3] The terms of the agreement are embodied in a standard contract
recommended by the Joint Building Contracts Committee (JBCC).
1
Clause 5.1 of the agreement provides that JJ shall appoint a
principal agent
2
with full authority to act on its behalf in terms of the agreement.
3
Clause 5.3 goes further and states that only the agent has authority
to bind JJ.
[4] The agreement provides for interim certificates to be issued by
the principal agent as well as a final certificate in respect
of work
completed as per the schedule of works.
4
It is common cause that Stocks cancelled the contract on 26 September
2005. Stocks’ entitlement to cancel the contract is
not in issue.
5
In respect of work completed the principal agent issued four
certificates. They are
as follows:
(a) 1 August 2005 (certificate 9) ─ in terms of which it was
certified that the amount due to Stocks was R129 100.48;
(b) 7 September 2005 (certificate 10) ─ certifying an amount of R2
704 425.78;
(c) 4 August 2006 (certificate 11) ─ for an amount of R14 568
177.68 and
(d) 6 November 2006 (certificate 12) ─ reflecting an amount of R9
690 000.
I will refer to the certificates by the certificate numbers that
appear above.
[5] Clause 31.9 of the agreement states:
‘
The employer shall pay to the contractor the amount
certified within seven (7) calendar days of the date of issue of the
payment
certificate. Payment shall be subject to the contractor
giving the employer a tax invoice for the amount due.’
[6] JJ refused to pay after the certificates referred to in para 4
had been presented. On 8 December 2006 Stocks instituted
action
against JJ in the Durban High Court in which it claimed payment of
the four amounts reflected in those certificates.
[7] JJ entered an appearance to defend. On 29 January 2007, in terms
of Uniform rule 32, Stocks brought an application for summary

judgment which was opposed by JJ. The summary judgment application
was heard on 6 September 2007 and, on 25 September 2007,

judgment was granted in favour of Stocks in the amounts set out in
certificates 10, 11 and 12, with interest thereon
a tempore
morae
. JJ was ordered to pay the costs of the action and the
application for summary judgment in respect of the three claims, on a
scale
as between attorney and own client, including the costs
consequent upon the employment by Stocks of two counsel.
[8] Gorven AJ dealt, inter alia, with two of JJ’s defences which
are relevant to this appeal in some detail. They are set out
below.
[9] First, in respect of certificate 10, that it was not due and
payable as Stocks had failed to deliver a tax invoice as required
by
clause 31.9 of the agreement. It was pointed out on behalf of JJ that
the date of valuation of the work done and the materials
on site set
out in the certificate (22 July 2005), differed from the date of
valuation (15 August 2005) that appears in the
tax invoice.
Furthermore, the tax invoice (6 September 2005) predated the payment
certificate (7 September 2005). Thus, it
was submitted, clause
31.9 had not been complied with.
[10] Second, certificates 11 and 12 related to damages and on a
proper construction of the agreement, the agent’s mandate did
not
extend to certification of damages. It was contended that because the
certificates were for damages, they were illiquid. Allied
to this
defence was the contention that value added tax (VAT) was included in
the certificates and that such tax was not payable
on damages. This
latter contention was not, however, persisted in before us.
[11] Insofar as certificate 9 was concerned, counsel representing
Stocks agreed before Gorven AJ, that summary judgment should
be
refused as the amount in the payment certificate differed from the
amount reflected in the tax invoice. That certificate is
not in issue
in this appeal.
[12] In respect of certificate 10, Gorven AJ found that there was no
requirement in the agreement that a tax invoice must include
a date
of valuation. He held that all that was required in terms of the
agreement was a tax invoice for the amount due. The earlier
date of
the tax invoice was therefore no bar to recovering the amount set out
in the certificate.
[13] In respect of the second defence, the court below held that JJ
had not shown that the certification of damages was not in
accordance
with the agreement.
[14] On 19 October 2007 the court below refused JJ leave to appeal in
respect of its order in relation to certificate 10. Gorven
AJ granted
leave in respect of the orders relating to certificates 11 and 12,
but restricted it to the question of the validity
of the inclusion of
VAT in the amounts certified. On 11 March 2008 this court granted JJ
leave to appeal to it against the whole
of the judgment.
[15] In its affidavit resisting summary judgment, JJ contended that
Stocks was precluded from instituting action because of an

arbitration clause in the agreement. Gorven AJ dealt with this
defence tangentially. It is necessary, at the outset, to note that
it
is very difficult to discern, from the affidavit opposing summary
judgment, the essence of any sustainable defence to Stocks’
claims.
There are diverse references to clauses in the agreement, to the
non-correlation between the dates of the tax certificates
and the
certification by the agent. What is conspicuously absent, is the
substance of a triable defence.
[16] I proceed to deal first with JJ’s defence that an action was
precluded because of an arbitration clause in the agreement.
Clause
40.1 of the agreement under the heading ‘SETTLEMENT OF
DISAGREEMENTS AND DISPUTES’ provides:
‘
Should there be any disagreement between the employer
or his agents on the one hand and the contractor on the other arising
out
of or concerning this agreement,
the
contractor
may request the principal agent to
determine such disagreement by a written decision to both parties. On
submission of such a request
a disagreement in respect of the issues
detailed therein shall be deemed to exist.’ (My emphasis).
The agreement provides that a decision by the principal agent shall
be final and binding unless it is disputed, in which event,
the
dispute shall be submitted to arbitration or where the parties agree,
to mediation.
6
[17] As is apparent from clause 40.1, the primary problem for JJ is
that it is only Stocks as the contractor ─ and not JJ as
the
employer ─ that is entitled to refer a dispute to the principal
agent for resolution. Moreover, a dispute has to exist before
it can
be referred. Before litigation, JJ chose not to pay rather than to
declare a dispute.
[18] In any event, counsel for JJ, understandably, encountered
difficulty in elucidating the arbitral dispute. In muted fashion

counsel contended that the principal agent exceeded his mandate by
completing the certificates in question. This is a dispute between

the employer and his agent and is not a dispute envisaged by the
arbitration clause referred to above, namely, between the employer
or
his agents on the one hand and the contractor on the other, ie
between JJ and its agents on the one hand and Stocks on the other.
[19] Counsel on behalf of Stocks rightly pointed out that there was,
in any event, no prohibition in the agreement against the
institution
of action. There is accordingly no merit to this defence.
[20] In respect of certificate 10, JJ’s main contentions as set out
in para 9 above are without merit. The agreement does not
provide for
the tax invoice to follow any particular format nor does it prescribe
what information it has to contain. Certificate
10 shows that the
amount due is R2 704 425.78. The tax invoice is in the same amount
and refers to certificate 10. The previous
gross amount certified is
the same and so too the nett amount. There can be no doubt that there
is a direct correlation between
certificate 10 and the tax invoice in
question. Clause 31.9 was complied with and the court below cannot be
faulted in this conclusion.
[21] It was submitted on behalf of JJ that, after cancellation, the
principal agent was limited to preparing a final account and
final
payment certificate and there was thus no room for an interim
certificate such as certificate 11.
7
This is fallacious. In the relevant parts of para 38, which appear
under the title ‘CANCELLATION BY CONTRACTOR – EMPLOYERS
DEFAULT’
the following appears:
‘
. . .
38.5 Where the contractor cancels this agreement in
terms of 38.0 the following shall apply:
. . .
38.5.3 The principal agent shall forthwith compile a
report on the status of the portion of the works executed by the
contractor
and shall issue such a report to the employer and the
contractor
38.5.4 The principal agent shall forthwith commence and
complete the final account within ninety (90) working days of
completion
of such a report
. . .
38.5.7 The principal agent shall continue to certify the
value of the work executed by the contractor and the value of
materials
and goods for payment by the employer.’
Certificate 11 is in accordance with clause 38.5.7.
[22] I turn to deal with certificates 11 and 12 and the question of
the certification of damages. It was submitted that the principal

agent had no authority in terms of the agreement to certify damages.
This submission is without foundation. Clause 33 is entitled

‘RECOVERY OF EXPENSE AND LOSS’ and provides for monthly
‘recovery’ statements by the principal agent on which expense and

loss shall be shown and amounts due to the contractor for ‘damages
in terms of 38.5.6’, if any.
8
Sub-clause 38.5.6 provides:
‘
The employer shall be liable to the contractor for
damages resulting from such cancellation.’
The interim certificates envisaged in clause 31.1 (recorded above
9
)
may be adjusted, inter alia, by amounts due to the employer or
contractor in a recovery statement issued in terms of clause 33.1.
10
It was submitted, on behalf of JJ, that since Stocks did not, in its
particulars of claim, refer to or attach recovery statements
in
relation to certificates 11 and 12, summary judgment ought not to
have been granted. This is a submission entirely without merit.
It
was never alleged by JJ that no recovery statements had been issued
or that adjustments had not been properly made. It is necessary
to
repeat that the basis of the valuation or damages was not
substantively challenged.
[23] To sum up: on a proper construction of the agreement it is clear
that the principal agent is not only entitled but is obliged,
in
appropriate circumstances, to certify damages.
[24] In support of his contention that Gorven AJ ought nevertheless
to have exercised his discretion against granting summary judgment,

counsel on behalf of JJ urged us to bear in mind that summary
judgment is a remedy of an ‘extraordinary and drastic nature’,

based on ‘the supposition that the plaintiff’s case is
unimpeachable and the defendant’s defence is bogus or bad in law.’
11
It is necessary to place this characterisation of the summary
judgment procedure in a proper perspective.
[25] Uniform rule 32 enables a plaintiff to apply to court for
summary judgment in respect of four categories of claims:
(a) on a liquid document;
(b) for a liquidated amount in money;
(c) for delivery of specified immovable property; or
(d) for ejectment
[26] Uniform rule 8 provides for provisional sentence where a claim
is founded upon a liquid document. The theory behind provisional

sentence is that:
‘
it is granted on the presumption of the genuineness
and the legal validity of the documents produced to the court. The
court is
provisionally satisfied that the creditor will succeed in
the principal suit. The debt disclosed in the document must therefore

be unconditional and liquid (zuiwer en klaar of liquid)’.
12
If a document ‘upon a proper construction thereof, evidences by its
terms, and without resort to evidence extrinsic thereto…an

unconditional acknowledgment of indebtedness in an ascertained amount
of money the payment of which is due to the creditor’ it
is one
upon which provisional sentence may properly be granted.
13
[27] Gorven AJ pointed out, with reference to
Randcon (Natal)
(Pty) Ltd v Florida Twin Estates Ltd
1973 (4) SA 181
(D &
CLD) at 183H-184H, that a final payment certificate is treated as a
liquid document since it is issued by the employer’s
agent, with
the consequence that the employer is in the same position it would
have been in if it had itself signed an acknowledgment
of debt in
favour of the contractor. Relying further on the
Randcon
case
(at 186G-188G), the learned judge held that similar reasoning applied
to interim certificates. The certificate thus embodies
an obligation
on the part of the employer to pay the amount contained therein and
gives rise to a new cause of action subject to
the terms of the
contract.
14
It is regarded as the equivalent of cash.
15
The certificates in question all fall within this ambit.
[28] Stocks held three liquid documents, the equivalent of
acknowledgements of debt. It could have proceeded to obtain
provisional
sentence on them but chose to apply for summary judgment.
[29] A summary judgment procedure was first introduced into our
practice by the Magistrate’s Court Act of 1917. It was based
upon a
procedure introduced in England by Order XIV under the Judicature
Acts whereby a plaintiff was able, by means of a summary
proceeding,
to obtain a final judgment when there was no
bona fide
defence
to an action.
16
[30] In
John Wallingford v The Directors &c. of The Mutual
Society
(1880) 5 AC 685
(HL) at 699-700, Lord Hatherley referred
to the objects of the new English procedure as follows:
‘
I apprehend that from the first the objects of these
short methods of procedure has been to prevent unreasonable delay, a
delay
which was very prejudicial to the creditors, and never, I am
afraid, or rather, I am pleased to say, can have been very beneficial

to the debtor himself. Simply allowing legal proceedings to take
place, in order that delay may be applied to the administration
of
justice as much as possible, is not an end for which we can conceive
the Legislature to have framed the provisions which now
exist under
the several Judicature Acts. If a man really has no defence, it is
better for him as well as his creditors, and for
all the parties
concerned, that the matter should be brought to an issue as speedily
as possible; and therefore there was a power
given in cases in which
plaintiffs might think they were entitled to use the power by which,
if it was a matter of account, an
account might be immediately
obtained upon the filing of a bill, or, if it was a matter in which
the debt was clear and distinct,
and in which nothing was needed to
be said or done to satisfy a Judge that there was no real defence to
the action, recourse might
be had to an immediate judgment and to an
immediate execution.’
[31] So too in South Africa, the summary judgment procedure was not
intended to ‘shut (a defendant) out from defending’, unless
it
was very clear indeed that he had no case in the action. It was
intended to prevent sham defences from defeating the rights
of
parties by delay, and at the same time causing great loss to
plaintiffs who were endeavouring to enforce their rights.
17
[32] The rationale for summary judgment proceedings is impeccable.
The procedure is not intended to deprive a defendant with a
triable
issue or a sustainable defence of her/his day in court. After almost
a century of successful application in our courts,
summary judgment
proceedings can hardly continue to be described as extraordinary. Our
courts, both of first instance and at appellate
level, have during
that time rightly been trusted to ensure that a defendant with a
triable issue is not shut out. In the
Maharaj
case at
425G-426E, Corbett JA, was keen to ensure first, an examination of
whether there has been sufficient disclosure by a defendant
of the
nature and grounds of his defence and the facts upon which it is
founded. The second consideration is that the defence so
disclosed
must be both
bona fide
and good in law. A court which is
satisfied that this threshold has been crossed is then bound to
refuse summary judgment. Corbett
JA also warned against requiring of
a defendant the precision apposite to pleadings. However, the learned
judge was equally astute
to ensure that recalcitrant debtors pay what
is due to a creditor.
[33] Having regard to its purpose and its proper application, summary
judgment proceedings only hold terrors and are ‘drastic’
for a
defendant who has no defence. Perhaps the time has come to discard
these labels and to concentrate rather on the proper application
of
the rule, as set out with customary clarity and elegance by Corbett
JA in the
Maharaj
case at 425G-426E.
[34] In the present case, as demonstrated above, there is no
discernable sustainable defence put up by JJ. In respect of the
valuation
of work done and materials on site, JJ did not take issue
with the principal agent’s valuation per se. As shown, the
references
to various provisions of the agreement do not assist JJ in
establishing a defence. In respect of the certification of damages
the
merits of the calculation were not challenged. There are vague
references in the opposing affidavit to clause 31.6 and a possible

counterclaim (without quantification) in respect of an alleged
failure by Stocks to protect goods and materials on site. Such
‘defences’ as were proffered are cast in the most dubious terms.
Judgment for Stocks in the court below was fully justified
and Gorven
AJ correctly refused to exercise his discretion in favour of JJ.
[35] For all the reasons set out above the appeal must fail. The
following order is made:
The appeal is dismissed with costs including the costs consequent
upon the employment of two counsel.
_________________
M S NAVSA
JUDGE OF APPEAL
APPEARANCES:
For
Appellant: P M M Lane SC
Instructed
by
Routledge
Modise (In association with Eversheds) Johannesburg
Matsepes
Inc Bloemfontein
For
Respondent: A K Kissoon Singh SC
M
W Collins
Instructed
by
Tiefenthaler
Attorneys Durban
Honey
Attorneys Bloemfontein
1
The constituents of which are :
Association of South African Quantity Surveyors
Building
Industries Federation South Africa
South
African Association of Consulting Engineers
South
African Institute of Architects
South
African Property Owners Association
Specialist Engineering Contractors Committee
It was not
contested that the standard contract under consideration was the
third in a series of JBCC contracts. This is important
because
earlier editions of contracts have been the subject matter of
decided cases the findings of which were made on the basis
of
provisions in those contracts.
2
It is worth noting that ‘agent’ is defined in
the definitions and interpretations section of the agreement as
follows:
‘[T]he
person or entity named in the schedule or appointed by the employer
in terms of 5.0 to deal with specific aspects of
the work.’
‘Principal
Agent’ is defined:
‘[T]he
person or entity appointed in terms of 5.0 and named in the
schedule’.
3
In terms of c
lause 5.1 JJ ‘warrants that the
principal agent has full authority and obligation to act in terms of
the agreement, and where
appropriate, the associated nominated and
selected subcontract agreements’.
4
The material part of clause
31.1 of the agreement
provides as follows:
‘The
principal agent shall issue an interim payment certificate every
month on or before the date stated in the schedule until
the issue
of the final payment certificate.’
Importantly,
clauses 31.4.1-31.4.3 provide:
‘The
value certified in an interim payment certificate shall separately
include:
31.4.1 A
reasonable estimate of the value of the work executed taken into
account the information submitted by the contractor
in terms of 31.2
and making due allowance for adjustments to the contract value in
terms of 32.0.
31.4.2 A
reasonable estimate of the value of materials and goods in terms of
31.6.
31.4.3
Amounts previously certified in terms of 31.4.1 and 31.4.2.’
5
JJ’s affidavit opposing summary judgment,
relying on an arbitration clause in the agreement, initially stated
that there was
a dispute about Stocks’ right to cancel the
agreement which was subject to arbitration, without stipulating what
that dispute
entailed. Towards the end of the affidavit, JJ stated
that on 24 January 2005 Stocks indicated that they had suspended the
works
and only returned to site by 1 March 2005. JJ contended that
this constituted a breach by Stocks, which precluded it from
cancelling
the agreement. There is no challenge in the opposing
affidavit to Stocks’ assertion, in its particulars of claim, that
JJ failed,
in terms of the agreement: (i) to make an advance payment
before noon on 31 March 2005; (ii) to provide a payment
guarantee
in the sum of R40 m before noon on 29 April 2005 and
(iii) to provide by 29 April 2005 written evidence that it had
secured
adequate financing to enable it to comply with its
obligations. Stocks asserted further that payment had not been made
upon presentation
of certificate 9. These, according to Stocks, were
the bases on which the agreement was cancelled. Gorven AJ therefore
correctly
reflected in his judgment, that it was common cause before
him that the contract was properly cancelled by Stocks arising from

JJ’s non-performance. Before us and the court below only the
validity of the certification was in issue ─ not the other grounds

for cancellation. The arbitration clause continued to be a live
issue and is dealt with later.
6
I
n this regard clauses 40.2 to 40.4 apply.
7
Certificate 11, in addition to certifying an amount in respect of
damages, also includes certification by the principal agent
of the
value of work executed and materials on site in an amount of R2 369
383.08. The opposing affidavit does not contest the
valuation of
work done and materials on site in relation to certificates 10 and
11. There are vague references to para 31.6 of
the agreement which
states that the value of materials and goods shall only be included
in a certificate if they are to the satisfaction
of the principal
agent on the bases set out in that clause. Nowhere is the valuation
per se challenged.
8
Clauses
33.1.3 and 33.1.6.
9
Note 4.
10
Clauses 31.5 and 31.5.4.
11
See
Tesven CC v
South African Bank of Athens
2000 (1)
SA 268
(SCA) at 275H referring to
Maharaj
v Barclays National Bank Ltd
1976 (1)
SA 418
(A) at 423F-G. In the last mentioned case Corbett AJ (at
426A-E) said the following:
‘
[O]ne
of the ways in which a defendant may successfully oppose a claim for
summary judgment is by satisfying the Court by affidavit
that he has
a
bona fide
defence to the claim. Where the defence is based upon facts, in the
sense that material facts alleged by the plaintiff in his
summons,
or combined summons, are disputed or new facts are alleged
constituting a defence, the Court does not attempt to decide
these
issues or to determine whether or not there is a balance of
probabilities in favour of the one party or the other. All
that the
Court enquires into is:
(a)
whether the defendant has “fully” disclosed the nature and
grounds of his defence and the material facts upon which it is

founded, and
(b)
whether on the facts so disclosed the defendant appears to have, as
to either the whole or part of the claim, a defence which
is both
bona fide
and good in law. If satisfied on these matters the Court must refuse
summary judgment, either wholly or in part, as the case
may be. The
word “fully”, as used in the context of the Rule (and its
predecessors), has been the cause of some judicial
controversy in
the past.
It connotes, in my view,
that, while the defendant need not deal exhaustively with the facts
and the evidence relied upon to substantiate
them, he must at least
disclose his defence and the material facts upon which it is based
with sufficient particularity and completeness
to enable the Court
to decide whether the affidavit discloses a bona fide defence.
… At the same time the defendant is not expected to formulate his
opposition to the claim with the precision that would be
required of
a plea; nor does the Court examine it by the standards of pleading.’
(My emphasis).
12
Harrowsmith v Ceres Flats (Pty) Ltd
1979 (2) SA 722
(T) at 728C;
Van der
Walt v Eiendomsreg (Edms) Bpk
1986 (2)
SA 461
(T) at 465D-H. See also PBJ Farlam & DE Van Loggerenberg
Erasmus Superior Court Practice
B1─63
(service issue 25, 2006).
13
Rich v Lagerwey
1974 (4) SA 748
(A) at 754H followed in numerous subsequent cases.
See
Erasmus Superior Court Practice
B1─63.
14
Ocean Divers (Pty) Ltd v Golden Hill
Construction CC
[1993] ZASCA 41
;
1993 (3) SA 331
(A) at
340E.
15
Randcon
case at
184C-G.
16
See
Schoeman v
Newmark Ltd
1919 CPD 55.
17
See
Meek v Kruger
1958 (3) SA 154
(T) at 156F-157A. In
Jones v Stone
1894 AC 122
Lord Halsbury, in the Privy Council, in relation to
summary judgment proceedings in Western Australia, similarly stated
that
the procedure was intended
only to apply to cases where
there could be no reasonable doubt that a plaintiff was entitled to
judgment and where it was inexpedient
to allow a defendant to defend
for mere purposes of delay. The procedure is employed in Canada ─
see
Progressive Construction Ltd v Newton
117 DLR (3d) 591
and is known in the United States of America ─ see
Sartor v
Arkansas Natural Gas Corp
[1944] USSC 69
;
321 US 620.