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[2019] ZAGPPHC 194
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Industrial Plumbers (Pty) Ltd v Probuild Construction Group (Pty) Ltd (62041/18) [2019] ZAGPPHC 194 (30 May 2019)
HIGH COURT OF SOUTH
AFRICA
GAUTENG
DIVISION, PRETORIA
Case
No: 62041/18
In
the matter between:
INDUSTRIAL
PLUMBERS (PTY) LTD
Applicant
And
PROBUILD
CONSTRUCTION GROUP (PTY) LTD
Respondent
JUDGMENT
SARDIWALLA J
Introduction
[1]
[1]
This
is an application for leave to appeal against the whole order by the
respondent.
[2]
On
4 September 2018, an application was before in the urgent court
brought by the applicant against the first respondent interdicting
and restraining the respondent from seeking to set-off any alleged
indebtedness due to it and directing that the respondent make
payment
to the applicant of the sum of R1 179239.21 as reflected in Tyrwhitt
payment advice 13 annexed to the application marked
“EZ11”.
On 4 September 2018 I handed down an order granting the relief that
the applicant had sought as follows:-
1.
The
Respondent is interdicted and restrained from seeking a set-off of
any alleged indebtedness that is due to it on the basis of
penalties
and other contract charges arising out of the Centre Forum
sub-contract that is presently in dispute or presently payable;
2.
The
Respondent must forthwith make payment to the applicant in the sum of
R 1 179 239.21 as reflected in the payment advice
13
annexed to this application marked “EZ11”;
3.
The
Respondent is to pay the costs of the application.
[3]
As
a consequence the respondent brought an application for leave to
appeal against the entire order. The appeal was before me on
12
February 2019.
Background
[4] These
proceedings stem from an urgent application launched by the applicant
against the respondent wherein
the applicant sought, in essence, to
interdict the respondent from claiming to set- off of an amount of R
9 985 589,32.
The applicant issued a payment invoice in the
amount of R 1 179 239, 21 for services rendered on the
Tyrwhitt Project
in terms of invoice 13. The respondent responded to
the applicant’s invoice by alleging that there were levy
penalties that
were due to it on the Centre Forum Project and issued
a payment certificate for the amount of R9 985 589,32 and
therefore
a set-off should operate between the two parties. It is the
applicant’s avers that there was no agreement between the
parties
to apply the principle of set-off as these were two distinct
projects which were regulated by separate contracts. The applicant’s
further indicate that the respondent’s failure to make payment
on the Tyrwhitt invoice 13 has resulted in the applicant being
forced
to suspend work on the Tyrwhitt project and as a result of the
respondent’s beach in its contractual obligations it
launched
the urgent application.
Respondent’s
grounds of appeal
[5]
The respondent disputes my findings, in that it disputes that the
applicant is entitled to the relief granted
against it. The
respondent’s grounds of appeal in essence are:-
1.
That
the matter was not urgent;
2.
That
the applicant could secure adequate and substantial redress in the
ordinary course;
3.
That
the applicant did not establish a clear right;
4.
That
the respondent’s reliance on the operation of set-off precluded
the relief sought; and
5.
That
the application should have been dismissed with costs.
Leave
to appeal
[6]
With that background it is appropriate now to consider
Section
17(1)
of the
Superior
Courts Act 10 of
2013
,
which provides the test for an appeal as follows:
“
(1)
Leave to appeal may only be given where the judge or judges concerned
are of the opinion that-
(a)
(i)
the appeal
would
have
a
reasonable
prospect of
success
;
or
(ii)
there is some
other
compelling reason why the appeal should be heard...”
[7]
In considering the provisions of
s 17(1)
(a)
(ii) of the
Superior Courts Act which
provide that leave to appeal may be
granted, notwithstanding the Court’s view of the prospects of
success, where there are
nonetheless compelling reasons why an appeal
should be heard. There is established jurisprudence in this Court
that where an appeal
has become moot the Court has a discretion to
hear and dispose of it on its merits.
[8]
The merits of the appeal remain vitally important and will often be
decisive. Furthermore,
where the purpose of the appeal is to raise
fresh arguments that have not been canvassed previously before the
Court, consideration
must be given to whether the interests of
justice favour the grant of leave to appeal. It has frequently been
said by the Constitutional
Court that it is undesirable for it as the
highest court of appeal in South Africa to be asked to decide legal
issues as a court
of both first and last instance. That is equally
true of this Court. But there is another consideration. It is that if
a point
of law emerges from the undisputed facts before the court it
is undesirable that the case be determined without considering that
point of law. The reason is that it may lead to the case being
decided on the basis of a legal error on the part of one of the
parties in failing to identify and raise the point at an appropriate
earlier stage.
[2]
But the court
must be satisfied that the point truly emerges on the papers, that
the facts relevant to the legal point have been
fully canvassed and
that no prejudice will be occasioned to the other parties by
permitting the point to be raised and argued.
[3]
The
Requirements for set-off
[9]
François du Bois et al
Wille’s Principles of South
African Law
(9
th
Ed) at 832, states:
‘
Set-off, or compensatio, is
the extinction pro tanto of debts owed reciprocally to each other by
two persons. If the debts
are equal both are discharged; if
unequal the smaller is discharged, the larger remaining in force for
the balance or excess only.
Set-off is equivalent to payment,
and it consequently operates ipso facto and ipso jure, or
automatically, as a discharge total
or partial, of the debts in
question, the moment four conditions or sets of facts occur.
Set-off must be pleaded by the party
that wishes to take advantage of
it, so that the court may give effect to it; but it is not necessary
that this party, before her
debt is due, inform the other party that
she will claim set-off.
The four conditions for set-off to
operate are that both debts must be: (i) of the same nature,
(ii) liquidated; (iii) fully
due, and (iv) payable by and to the same
persons in the same capacities.’
[10]
The requirement that for set-off to occur there must be reciprocity
of debts (both debts must
be ‘payable by and to the same
persons in the same capacities’). In
Trustees of
Douglas & Co.’s Insolvent Estate v Natal Bank
(1883)
4 NLR 74
at 77
, Connor CJ said:
‘
The general rule as to
compensatio is that the debt sought to be compensated must be due to
the person to whom the other debt is
due (Dig. 16.2.1, 16 pr.,
18(1),22,14; Cod. 4.31.9; Grot. 3.40.6; Voet,
16.2.7; Noodt. Op. 2.282, v Revertamus;
Mackeld, § 49.7;
Poth. Oblig. § 631,632, and Pand. 16.2 (15,18)).’
(Also see
Trustees
of Long, Eben & Co. v Holmes
(1853-1856) 2 Searle
307
;
Machen’s Trustee v Henrey
(1884-1885)
4 EDC 22
;
Brider v Wills
(1885-1886) 4 SC
282.)
And in
Estate Brown v Brown
1923 EDL
291
at 296
, Graham JP said this:
‘”
The debt must be due
to the very person who opposes it in compensation”
(Pothier,Oblig., vol. 1., part. 3,
sec. 494)
, or, as stated by Green,
p154, vol. III [Green’s Encyclopaedia of the Scotch Law], “each
of the parties mutually indebted
must be a creditor of the same jural
character as that in which B is the debtor. There can be no
concursus as regards either
party, where, for example, he is creditor
in a fiduciary or other special character, and debtor in his private
capacity, for here
he is in truth two different persons and concourse
means the union in one person of the opposite interests involved in
an obligation.”’
[11]
It is has been prima facie established in the case of the services
rendered and the claim for
interim penalties that the debts are owing
between the same parties in the same capacity. However, I am on
the scant facts
before me unable to find that the debt is liquidated
in the sense that it is capable of speedy and easy proof. It is
trite
that a debt is liquidated for the purpose of set-off when, as
stated in
Wille’s Principles of South African Law
at
833-
‘
. . . its exact money value
is certain or when the amount is admitted by the debtor, or even if
the claim be disputed by the debtor,
it is of such a nature that the
accuracy of the amount can be clearly and promptly established by
proof in court; eg an amount
due under a judgment, or a taxed
bill of costs, or a liquid document signed by the debtor, or a claim
for goods sold and delivered,
or for salary, or for commission for an
agreed amount, or upon an agreed basis.
No set-off takes place where one,
if not both, of the debts is unliquidated, eg a claim for damages, or
for legal costs where the
bill has not been taxed (unless a specific
sum had been agreed upon by the parties), or a claim on an account
which necessitates
a long discussion and debate, or a prolonged
investigation into disputed questions of fact.’
(Footnotes omitted.)
[12]
In
Fatti’s Engineering Co (Pty) Ltd v Vendick Spares
(Pty) Ltd
1962 (1) SA 736
at 738
, Boshoff J said the
following:
‘
Our Courts have frequently
been called upon to consider whether a claim was liquidated or not
for the operation of set-off.
Mutual liquidity of debts is an
essential pre-requisite for set-off. A debt must be liquid in
the sense that it is based
on a liquid document or is admitted or its
money value has been ascertained, or in the sense that is capable of
prompt ascertainment.
The decision as to whether a debt is
capable of speedy ascertainment is a matter left to the discretion of
the individual Judge
in each particular case:
Whelan
v Oosthuizen
1937 TPD 304
at p 311; Lester Investments (Pty)
Ltd v Narshi
1951 (2) SA 464
(C) at p 470
,
and the authorities referred to therein.‘
And in
Bardopoulos
and Macrides v Miltiadous
1947 (4) SA 860
(W) at 866
,
Clayden J said the following about the requirement that the debt must
be capable of prompt ascertainment:
‘
Now although set-off can
operate even though some proof is necessary of the debt pleaded in
compensation the debt must be capable
of “speedy and easy
proof” – see
Whelan
v. Oosthuizen
(1937, T.P.D. 304)
.’
(Also see
Standard
Bank of South Africa Ltd v Renico Construction (Pty) Ltd
paras
8-18.
)
[13]
Here, the respondent relies on a recovery programme clause in its
standard terms and conditions
to establish the applicant’s
alleged indebtedness. The clause reads as follows:-
“
Recovery Programme
-
Should a subcontractor fall
behind programme he/she will be issued with one warning to rectify
the situation.
-
If the subcontractor fails
to rectify the situation within 7 working days interim late penalties
will be deducted from the next
payment certificate. These penalties
will be reversed once the subcontractor has caught up with the delay
(the interim penalty
clause).”
It is averred by the
applicant , that pursuant to the clause that if the applicant was
behind programme on a specific date, the
respondent should have
issued a written warning advising the applicant that it was behind
programme and allow for a period of 7
working days to rectify the
situation before making a demand for payment. The respondent,
according to them, was obliged
in terms of this clause to allow the
applicant to perform a reconciliation of the work, which it has
failed to do. It therefore
denes any indebtedness owing to the
respondent.
[14]
The respondent needs to establish, not only the liability of the
applicant under the clause on
which it relies, but also the disputed
terms of the clause and which of the services were indeed not
rendered and supplied for
which the applicant incurred such
liability. This is also not a case where the amount is
determined if liability, though
disputed, can be established. Those
issues, in my view, cannot be considered as susceptible of being
easily determined.
It requires an investigation that is more
than a mechanical exercise (see
Lester
Investments (Pty) Ltd v Narshi
1951
(2) SA 464
(C) at 470F-472A;
Renico
Construction
(supra)
at 95J-96A
.)
It is not clear on the papers presently before me, not even
prima
facie
,
that some amount is indeed due by the applicant, let alone that such
amount is likely to be equal or exceeds the amount of the
Centre
forum debt. (See
Toucher
v Stinnes (S.A.) Ltd
1934
CPD 184
.)
I am of the view, on the papers presently before me, that the alleged
interim penalty liability of the applicant could
not have operated
ipso
jure
as
a set-off, also because the facts presented in this application do
not establish
prima
facie
that their alleged liability to the respondent is capable of prompt
and easy proof, and it is therefore not liquidated in the sense
necessary for set-off to operate.
[15]
In my view, therefore, the respondent has not succeeded in showing
that the interim penalty debt
for the Center Forum Project operated
ipso jure
as a set-off against the Tyrwhitt Project debts.
My findings thus far is dispositive of the relief claimed in this
application
and render it unnecessary to consider whether or not the
other requirements of set-off have been established as the Centre
Forum
Project dispute has been referred to adjudication and is still
pending.
[16]
In the result the following order is made:
The application for
leave to appeal is dismissed with costs, including those of two
counsel.
C
M SARDIWALLA
JUDGE OF THE HIGH
COURT
Date of hearing:
20 March
2019
Date of
Judgment:
30 May 2019
Counsel
for Applicant: Adv.:
PW
Pelger
Instructed
by:
Hewlett Bunn Attorneys
Counsel
for Respondents:
Instructed by:
Allen & Overy Attorneys
[1]
The parties
shall in this judgment be referred to as they were in the court a
quo.
[2]
Van Rensburg v Van Rensburg &
andere
1963 (1) SA 505
(A) at 510 A-C. The approach has been
endorsed by the Constitutional Court. CUSA v Tao Ying Metal
Industries & others (CCT
40/07)
[2008] ZACC 15
;
2009 (2) SA 204
(CC) para 68.
[3]
Fischer & another v
Ramahlele & others (203/2014)
[2014] ZASCA 88
;
2014 (4) SA 614
(SCA) paras 13 and 14.