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[2021] ZAGPPHC 385
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Adapt It (Pty) Ltd v Landis + GYR (Pty) Ltd (23576/2020) [2021] ZAGPPHC 385 (4 June 2021)
IN
THE HIGH COURT OF SOUTH AFRICA
(GAUTENG
DIVISION, PRETORIA)
CASE
NO.: 23576/2020
REPORTABLE:
NO
OF
INTEREST TO OTHERS JUDGES:
NO
REVISED
In
the matter between:
ADAPT
IT (PTY)
LTD
Plaintiff
(Applicant
in the summary judgment application)
and
LANDIS
+ GYR (PTY)
LTD
Defendant
(Respondent
in the summary judgment application)
JUDGMENT
BASSON,
J
[1]
On 1 June 2020, the plaintiff (Adapt It (Proprietary) Limited –
the applicant in the application for summary judgment) issued summons
against the defendant (Landis + GUR (Proprietary) Limited
– the
respondent in the application for summary judgment) claiming payment
of various amounts pursuant to a contract concluded
between the
parties. After an exception to the particulars of claim was
dismissed, the defendant filed its plea. The plaintiff
thereafter
filed an application for summary judgement and the defendant filed an
affidavit resisting summary judgment.
[2]
The essence of this application is whether the Respondents, in their
opposing
affidavit, disclose a
bona fide
defence that is good
in law, wherein is stated –
(i)
the nature and grounds of the defence; whilst
(ii)
disclosing the material facts on which the defences are based,
in
accordance with the peremptory provisions of Rule 32(3) of the
Uniform Rules of Court:
“…
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. …………..
The word
“fully”, as used in the context of the Rule 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.”
[1]
[3]
The plaintiff moves for summary judgment in respect of three
principal
claims:
Claim 1
:
Approximately R12 million is claimed in respect of past services
rendered under a contract for services.
Claim 2:
Approximately R155 000.00 is claimed in respect of damages
flowing from the early termination of the contract for services.
The
plaintiff claims damages consisting of a notice period payment which
the plaintiff was required to pay to one of its service
providers
upon the early termination of the Specific Teaming Agreement (“STA”
– referred to in more detail herein
below); and
Claim 3:
Approximately 1.3 million being the profit the plaintiff would have
earned over the remaining period of the STA but for its early
termination because of the defendant’s repudiation. Claim 3 no
longer forms the subject of the summary judgment application
in light
of the plaintiff’s concession that this claim is no liquidated.
[4]
The defendant raised various preliminary points regarding compliance
with the Practice
Manual and with the requirements of the Rules. The
defendant,
inter
alia
,
claims the plaintiff has failed to satisfy the requirements of rule
32(1) of the Rules in that the claims are unliquidated. I
deal with
this issue herein below. The defendant claims that the plaintiff
failed to comply with Rule 32(2)(b) in that the plaintiff
said that
the defence raised “
does
not raise any genuine triable issues for trail
”.
(Rule 32(2)(b) of the Rules the “
defence
as pleaded does not raise any issue for trial”
.)
There is no merit in this contention as explained by the court
in
Tumileng
Trading CC v National Security and Fire (Pty) Ltd; E and D Security
Systems CC v National Security and Fire (Pty) Ltd.
[2]
The court held with reference to rule 32(2)(b) that these words
cannot be taken literally:
“
[21] The
requirement that the plaintiff’s supporting affidavit should
explain briefly why the pleaded defence ‘does
not raise an
issue for trial’ is of more interest. It cannot be taken
literally, for a plea that did that would be
excipiable, and there is
no indication that the amended summary judgment procedure is intended
as an alternative to the exception
procedure. For the reasons
given later with regard to the cases before me, I consider that the
amended rule 32(2)(b) makes
sense only if the word ‘genuinely’
is read in before the word ‘raise’ so that the pertinent
phrase reads
‘explain briefly why the defence as pleaded does
not genuinely raise any issue for trial’. In
other
words, the plaintiff is not required to explain that the plea
is excipiable. It is required to explain why it is contended
that the pleaded defence is a sham. That much is implicit in
what the Task Team said in para. 8.3 of its Memorandum. The
position would have been made clearer had the words ‘does not
make out a bona fide defence’ been used. That would
have
made for a more clearly discernible connection between the respective
requirements of subrules (2)(b) and (3)(b). That
there be such
a connection is necessary if the amended rule as a whole is to be
workable
.”
And
further:
“
[23] It
seems to me, however, that the exercise is likely to be futile in all
cases other than those in which the pleaded defence
is a bald
denial. This is because a court seized of a summary judgment
application is not charged with determining the substantive
merit of
a defence, nor with determining its prospects of success. It is
concerned only with an assessment of whether the
pleaded defence is
genuinely advanced, as opposed to a sham put up for purposes of
obtaining delay. A court engaged in that
exercise is not going
to be willing to become involved in determining disputes of fact on
the merits of the principal case.
As the current applications
illustrate, the exercise is likely therefore to conduce to
argumentative affidavits, setting forth
as averments assertions that
could more appropriately be addressed as submissions by counsel from
the bar. In other words,
it is likely to lead to unnecessarily
lengthy supporting affidavits, dealing more with matters for argument
than matters of fact.”
The
merits
[5]
The crux of the plaintiff’s argument is that the defendant has
not
demonstrated that it has a
bona fide
defence to the action
and that it does not fully disclose the nature and grounds of its
defence and the material facts relied upon
therefore, as required by
rule 32(3)(b) of the Rules. It is further submitted that the
defendant avoids answering the points
of substance raised by the
plaintiff in its founding papers which, so it is submitted,
demonstrate that there are no genuine triable
issues in the matter.
[6]
The plaintiff bases its cause of action on the conclusion of two
written
agreements: the one is the so-called “Teaming
Agreement” (“TA”) and the other the so-called
“Specific
Teaming Agreement” (“STA”) which
were both concluded in Durban on 28 May 2015. The present
claims are founded
on the STA.
[7]
The plaintiff explains in its particulars of claim that the STA that
was
concluded between the parties was based on an “opportunity”
as defined in the TA for services to be rendered to the
EThekwini
Municipality as client in respect of a project relating to the
metering of electricity supplies to customers. On
the strength
of the opportunity and the STA, the defendant concluded a client
agreement with the EThekwini Municipality in terms
of which services
related to the opportunity would be provided to the client.
[8]
The plaintiff claims that it had duly complied with its obligations
under
the STA and rendered the required services to the defendant and
to the EThekwini Municipality. From time to time the plaintiff
then invoiced the defendant for services rendered. The defendant paid
for the services in respect of invoices rendered from August
2015
until October 2018. However, in breach of the STA, the
defendant thereafter failed to pay the amounts invoiced from
October
2018 until 30 March 2020. When the defendant did not comply
with a breach notice issued because of this failure,
the plaintiff
accepted the defendant’s repudiation of the STA
alternatively
cancelled the STA with effect from 28 April 2020.
[9]
Having regard to the affidavit resisting summary judgment, it does
not
appear to be in dispute that the parties have entered into the
TA. The defendant also does not dispute that the TA is the
overarching
framework agreement to the STA and that the TA provides
for opportunities that may arise in the future. It also does not
appear
that the defendant disputes that the STA was to be a separate
agreement in which the parties recorded the material terms and
conditions
regarding the STA that may arise.
[10]
The parties, however, differ on whether the STA has, in fact, been
concluded.
First defence:
Existence of the STA
[11]
The high-water mark of the defendant’s defence is contained in
paragraph 5 of its plea
(responding to paragraphs 6 to 25 of the
plaintiff’s particulars of claim). The defendant pleads that no
STA was concluded
between the parties in respect of the EThekwini
Municipality in compliance with the TA. With reference to Annexure 2
of the TA,
the defendant pleads that the STA on which the plaintiff
relies does not establish the agreement on which claims 1, 2 and 3
rest
in a cognisable manner. More in particular, the defendant pleads
that the agreement attached to the papers,
inter alia
, fails
to identify the opportunity description in clause 4; the effective
date of the STA (at clause 5), the services and/or projects
to be
rendered and/or supplied by the Team Member to the Team Leader for
purposes of the opportunity (at clause 6); the cost schedule
(at
clause 7); the quotation / proposal attached as Appendix 1 (at clause
8); the service levels required from the Team Member
(at clause 9).
The defendant further pleads that the plaintiff failed to plead its
alleged obligations in terms of the STA and
the alleged payment terms
and conditions.
[12]
The defendant submits that it has clearly raised a triable issue in
respect of whether the STA
as pleaded by the plaintiff ever came into
existence and if so, on what terms. It is further submitted that the
plaintiff bears
the burden of proof at trial to establish the terms
and conditions of the STA it purports to reply on and submitted that
to grant
summary judgment in these circumstances would deny the
defendant its opportunity to confront and test the evidence of the
plaintiff
on this core issue.
[13]
The plaintiff disagrees and submitted that this defence about the
existence of the STA does not
raise a genuine,
bona fide
triable issues particularly because the defendant avoids responding
to why it made payment to the plaintiff over a period of three
years
in respect of invoices in relation to services rendered on the
EThekwini Project. If no STA was ever concluded, why was payment
made
for services rendered to the Municipality from August 2015 to October
2018? That the STA was concluded and that such payments
were owed to
the plaintiff for services rendered to the Municipality (the client)
is consistent with what is contained in the TA
(which is not disputed
by the defendant) that under no circumstances would the parties
commence with the execution of any opportunity
unless an STA has been
concluded and that no oral, implied or tacit agreement relating to an
opportunity would be binding between
the parties.
[14]
Although the STA annexed to the TA cannot be said to constitute a
perfect example of what
should be included in an agreement, it is
significant that the STA was concluded on the same day the TA was
concluded and that
both agreements were signed by the same parties
namely the Chief Executive Officers of the plaintiff and the
defendant. The STA
also identifies the “client” as the
EThekwini Municipality. And, as already pointed out, the plaintiff
has rendered
services to the client for a period of three years and
has been paid when invoices were submitted to the defendant. Also
telling
that such an agreement has been concluded is a letter from
the defendant to the applicant dated 19 February 2019 in which the
defendant
(as per the CFO and the Senior Legal Counsel of the
defendant) expressly refer to “
Annexure 2 of the Agreement”
which is the STA and further specifically identifies the client as
the “
eThekwini project”
and confirms the payment
arrangement provided for in clause 7.2 of the TA. This letter further
states that (as of 19 February 2020),
the defendant was awaiting
payment from the “
customer”
and that they
“
understand that this is currently going through a municipal
approval process”
.
[15]
More in particular, as already pointed out, the defendant offers no
explanation why it
was happy to make payments to the plaintiff of
invoice for three years – which is not an insignificant time
period –
if the STA has not been concluded.
[16]
I am consequently not persuaded that the defendant raised a triable
issue in respect of
whether the STA as pleaded by the plaintiff ever
came into existence and if so, on what terms. The agreement clearly
was concluded,
and services rendered over many years to the client
identified in the STA.
Second defence:
Termination of the STA by effluxion of time
[17]
The defendant pleads that, to the extent that the plaintiff opts to
rely on the terms of
the TA, this agreement has terminated by
effluxion of time. The plaintiff can therefore not, considering this,
claim payment for
invoices that fall outside of the period of
subsistence of the TA.
[18]
The plaintiff’s responds to this defence by pointing out that
the STA is a self-standing
agreement and not dependent upon the
existence of the TA. Moreover, the plaintiff is not relying on the TA
for payment but on the
STA. The plaintiff is correct. Also, the
defendant does not explain on what basis it continued to pay invoices
after the effluxion
of the TA if no other agreement – more in
particular the STA – was concluded between the parties. Despite
the fact
that this is being pertinently raised in the founding
affidavit, the defendant has failed to answer to it.
Third defence:
Non-compliance with clause 7.2 of the TA
[19]
The defendant contends that even where the duration of the TA has
been lawfully extended
and even where the STA had come into
existence, this would not suffice since there is a condition
contained in the TA (clause 7.2)
which makes it plain that the
plaintiff’s invoices would only fall due if and when the
defendant receives payment of the
client.
[20]
The defendant merely restates the terms of clause 7.2 in the
affidavit resisting summary
judgment but does not expressly state
that it has not received payment from the client. Even if regard is
had to the letter of
19 January 2020 it merely states that the
defendant was awaiting payment from the client and that it is
currently going through
a municipal approval process. Even though
summons was only served on 1 June 2020 – some five months after
this letter –
nothing was placed before the court to show that
the plaintiff was advised that the client has not paid the defendant.
Also, the
defendant does not dispute the correctness of the invoices
upon which the plaintiff relies.
[21]
Accordingly, no triable issue has been raised with reliance of clause
7.2 of the TA.
[22]
In arriving at my decision that the plaintiff has not raised any
triable issues in respect of
claim 1, I had regard to the
well-established legal principles governing summary judgment
proceedings. In
Maharaj
v
Barclays
National Bank Ltd
[3]
the court explained what a defendant must establish in order to
successfully oppose a claim for summary judgment:
“…
[One]
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 had “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.”
[23]
As stated, I am not persuaded that the plaintiff has disclosed a bona
fide defence in respect
of the non-payment of the amounts claimed in
terms of claim 1. I should also mention out that I am acutely aware
of the caution
expressed by the court in
Joob
Joob Investments (Pty) Ltd
v
Stocks
Mavundla Zek Joint Venture
[4]
namely that it is not the purpose of summary judgment to shut a
defendant from defending it position:
“
[31]…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.
[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 applications in our courts, summary
judgment
proceedings can hardly continue to be described as extraordinary.”
[24]
But, where a defendant does not have a defence and does not raise any
triable issues (in respect
of claim 1), there is no reason why a
court should not grant summary judgment (in respect of claim 1).
Claim
2
[25]
The defendant submitted that claim 2, similarly to claim 3 (which the
plaintiff conceded cannot
be the subject of summary judgment) is not
a liquid claim and hence the plaintiff is not entitled to summary
judgment. In this
regard the defendant relied on the principle that
contractual damages cannot be the subject of summary judgment.
[26]
I am not persuaded that summary judgment should be granted in respect
of claim 2. The amount
claimed, in my view, constitutes contractual
damages which is a claim that is subject to the plaintiff’s
reasonable efforts
to mitigate its damages. This much was recognised
in
Standard
Bank of South Africa Ltd v Renico Construction (Pty) Ltd
[5]
where the court set out the principles, with which I am in full
agreement, as follows:
“
[25]
The correct computation of contractual damages can never, in
principle, be mere arithmetic; a value judgment is an element
of the
computation of the quantum, which computation embraces the effects of
a reasonable effort to mitigate the damages. The figure
of damages
cannot under such circumstances be determined until that debate
is exhausted, as a rule, before a court. In this
regard the
remarks of Binns-Ward AJ in Solomon NO and Others v Spur Cool
Corporation (Pty) Ltd and Others
2002
(5) SA 214
(C)
([2002]
2 All SA 359)
are instructive (at paras 34 and 46):
'The
fundamental principle in the quantification of contractual damages is
that the object is, as far as it is possible without
undue hardship
to the party in breach to do so by an award in money, to place the
innocent party in the position that party would
have been had the
contract not been breached or repudiated. See, for example, Victoria
Falls & Transvaal Power Co Ltd
v Consolidated Langlaagte Mines
Ltd
1915 AD 1
at 22; Culverwell and
Another
v Brown
1990
(1) SA 7
(A)
at
29F; and Rens v Coltman
1996
(1) SA 452 (A)
at
458E. How that object is to be achieved will depend on the
peculiar
facts
of a case.
…
The
judgments in Culverwell and Rens (supra) illustrate
that, while on the facts of a case the dates of due performance,
repudiation cancellation may well be important in the appropriate
computation of contractual damages, the overriding consideration
is
the calculation of a figure which fairly achieves the object of
putting the innocent party in the position it would have occupied
had
the agreement been fulfilled. See also Mostert NO v Old Mutual
Life Association Co (SA) Ltd
2001
(4) SA 159
(SCA)
at
187B – E. Whichever approach to quantification achieves
that object most effectively in the context of the peculiar facts of
a case is the appropriate one. This entails the application
of
pragmatism and common sense rather than formalism. It will in
general be appropriate in quantifying contractual damages
which, from
the perspective of the dates of breach or cancellation, involve a
component of prospective loss, to have regard to
the effect of
relevant events intervening between those dates and the trial insofar
as that will facilitate a more accurate achievement
of the object.'”
[27]
In light of the above, summary judgment in respect of claim 2 is
refused and leave to defend
is granted.
Order
[28]
In the event the following order is made:
(i)
Summary judgment is granted against the defendant / respondent
for
payment of the sum of R 12 411 717.80 (claim 1) (less the
amounts of R 7 107 119.79 and R 889 421.95
already
paid).
(ii)
The defendant / respondent is ordered to pay interest compounded
monthly
on each invoice rendered, from the date that invoice fell
due, until the date of payment thereof at the minimum prime overdraft
lending rate from time to time of Standard Bank.
(iii)
The defendant / respondent is granted leave to defend claims 2 and 3.
(iv)
Costs to be costs in the action.
JUDGE
A C BASSON
JUDGE
OF THE HIGH COURT
Delivered:
This judgment was prepared and authored by the Judge whose name is
reflected and is handed down electronically
by circulation to the
Parties/their legal representatives by email and by uploading it to
the electronic file of this matter on
CaseLines. The date for
hand-down is deemed to be 4 June 2021.
Case
number
: 23576/2020
Matter
heard on
: 25 May 2021 (Virtual hearing)
For
the Applicant
: Adv Alistair Franklin SC
Instructed
by
: Garlicke & Bousfield Inc
For
the Respondent
: Adv Salim Nakhjavani
Instructed
by
: Kapditwala Inc t/a Dentons
[1]
Maharaj
v Barclays National Bank Ltd
1976 (1) SA 418
(A) at 426 B-E.
[2]
(3670/2019)
[2020] ZAWCHC 28
;
2020 (6) SA 624
(WCC) (30 April 2020).
[3]
1976 (1) SA 418
(A) at 426 A-D.
[4]
Joo
b
Joob Investments (Pty) Ltd
v
Stocks
Mavundla Zek Joint Venture
2009
(5) SA 1 (SCA).
[5]
2015
(2) SA 89
(GJ).