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[2018] ZAGPPHC 760
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Kaleida Project Management Company (Pty) Ltd v Kalagadi Managese (Pty) Ltd and Another (A352/2016) [2018] ZAGPPHC 760 (20 February 2018)
IN
THE HIGH COURT OF SOUTH AFRICA
GAUTENG
DIVISION, PRETORIA
CASE NO:A352/2016
20/2/2018
In the matter between:
KALEIDA
PROJECT MANAGEMENT COMPANY (PTY) LTD APPLICANT
and
KALAGADI
MANGANESE (PTY) LTD
FIRST RESPONDENT
MDM
ENGINEERING
SECOND RESPONDENT
JUDGMENT
RANCHOD J:
[1]
This is an appeal against the judgment of Mngqibisa-Thusi J
dismissing a claim by
the appellant as against the first respondent
for payment of R9,216,900.00 based on an alleged acknowledgement of
debt. The appeal
is with the leave of the court
a quo.
The
second respondent was cited merely as an interested party and no
relief was sought against it save for costs in the event it
opposed
the application.
[2]
During February 2011 the appellant tendered for a project for the
'supply and installation
of a wagon tippler and side arm charger' to
be used at the first respondent's Kalagadi
Mines
Sinter Plant.
In terms of a Letter of Award (the LOA) the appellant was appointed
on 28 June 2011 to carry out the project.
[3]
However, the LOA provided for a condition precedent that the
appointment of the appellant
was conditional upon the parties
entering into a final binding agreement by 30 July 2011 failing which
the appointment would lapse.
The value of the contract was to be R26
,950,000.00.
[4]
The first respondent submitted a draft of its contract (i.e. the
'final binding agreement'
contemplated in the LOA) through its
procurement manager to the appellant on 10 August 2011 for
consideration. (It must be accepted
that the first respondent had
waived the deadline of 30 July 2011). It is common cause that the
final binding agreement never came
into being.
[5] Whilst
the appellant and the first respondent were still negotiating the
terms of the proposed
agreement, the appellant commenced with the
preparation of some preliminary technical drawings relating to the
project. It then
issued two Invoices to the first respondent for a
total amount of R9,261,900.00 for work done. The one invoice is dated
28 June
2011 {the same date as the date of the LOA) for R6,144,600.00
and another dated 23 September 2011 for R3,072,300.00. The invoices
were for 'Completion of Design - GA and Foundation Loads' and '10%
Invoice for delivery of CERTIFIED & CLIENT APPROVED Single
Line
Drawings of Hydraulics & Electronics complete' respectively.
[6] The
first respondent refused to pay the invoiced amounts
as
a
final binding agreement had not
been concluded between the parties. The appellant sued the first
respondent on the basis of an alleged
partly oral and partly written
agreement. It says the first respondent had acknowledged its
indebtedness to it in several emails,
particularly in two emails
dated 30 and 31 August 2011.
[7] It is
necessary to set out the contents of the several emails as they form
the basis for
the appellant's claim for the invoiced amounts.
[8] On 30
August 2011 Samantha Reddy a Finance Controller at the appellant sent
an email to
Xolile Kubheka the Financial Administrator of the first
respondent in which she says -
'As per our conversation earlier,
could you please send me the invoice numbers and amounts that are due
to be paid for
Kaleida
Project Management Company (Pty) Ltd.'
8.2
Kubheka replies in an email a few minutes later -
'The amount scheduled for payment
will be R9 216 900.'
8.3 In
a further email from Kubheka to Reddy the next day at 1:49pm she
says-
'According to my manager the
payment will be made on the (5
th
September 2011.'
8.4
On 7 September 2011 at 9:04am Reddy sends an email to Kubheka
'As per your emails below, please
be advised that no payment has been received as yet. Could you please
advise as (sic) when we
will be
receiving our payment .'
8.5 On
the same day, at 11 :54am Kubheka says in an email to Elaine Daniel
of the appellant
-
'I was In meeting the whole day
trying to sort out the payment issue, I have given the reason to the
guy who was here. We are really
sorry for any inconvenience we have
caused your company. The issue has been resolved and the payments are
going to be processed
today.'
[9] The
first respondent denied that the emails constituted an
acknowledgement of debt for several
reasons. It said Kubheka
was
a
junior employee to whom invoices
were submitted for work done. She would then take the invoices to the
technical team i.e. either
the Chief Operations Officer or the
Project Manager to confirm that the work has indeed been done and if
so, either of them would
sign on the Invoices to confirm that fact.
The second respondent had signed a completion certificate regarding
the work done by
the appellant. The first respondent accepts that the
preliminary work was done. However, in this case when reviewing the
invoices,
the Chief Financial Officer alerted the Chairperson of the
first respondent that the appellant was not entitled to any payment
at that stage as the main agreement had not been concluded.
[10]
The first respondent also contended that the appellant did the
preliminary work knowing It was
on risk as long as the final
agreement had not yet been concluded. Indeed, it did not enter into a
final agreement due to its concerns
about the appellant's financial
abillty to carry out the contract. In this regard, Mike Daniel of the
appellant had Informed Daphne
Nkosi, a director of the first
respondent in an email dated 26 July 2011 that the appellant was
'experiencing a short term cash
flow constraint.' The first
respondent was also aware of a letter dated 26 April 2011 by the
appellant's auditors stating that
the appellant's records 'reflect
that the company is technically insolvent'. The first respondent was
therefore concerned about
the appellant's ability to execute the work
if the contract was entered into and therefore wanted assurances in
this regard before
the final agreement could be signed.
[11]
The first respondent submits that one is ineluctably drawn to the
conclusion that the appellant
was attempting to bolster its finances
by seeking payment of the invoiced amounts In an apparent attempt to
address concerns of
the first respondent regarding the appellant's
financial stability.
[12]
In my view, there are two issues that are determinative of the
appeal,
i.e. the condition precedent and
whether . the emails constitute an acknowledgement of debt.
[13] The
appellant was fully aware of the relevant part of clause 2 of the LOA
which provides
-
'2.
CONDITION
PRECEDENT
2.1 This LOA is
conditional upon satisfaction, or waiver by Kalagadi Manganese, of
the following condition
precedents:
(a) The
entering into a final binding agreement between Kalagadi and Kalaida
Project Management Company for the execution of the contract works
and/or services by no later than 30 July 2011 (the “
Deadline
Date”)
on the terms and
conditions acceptable by Kalagadi Manganese.
2.2 Waiver
(a) The
Condition Precedent exists solely for the protection of Kalagadi
Manganese and only Kalagadi Manganese can waive such condition, which
waiver shall only be in writing.
2.3 Effect of Failure
of Conditions
(a) If
a Condition Precedent is not satisfied prior to the Deadline Date
then
this LOA shall
ipso facto
terminate unless extended In writing
by Kalagadi Manganese.
(b) If
this LOA terminates as aforesaid, no party has any further rights
against or obligations to the others, except for any party's rights
and obligations accrued at the date of termination, if any.'
[14]
As the parties did not enter into a final binding agreement the
LOA
had terminated as per clause 2.3(a).
[15]
No doubt the appellant was aware of this hence the reliance on an
alleged acknowledgement of debt. An acknowledgment of debt, commonly
referred to as an 'AOD', is a document which contains an unequivocal
admission of liability by the debtor. The debtor acknowledges that he
or she owes a particular sum of money to the creditor and
undertakes
to repay the amount owing on terms agreed to between the parties. It
may contain incidental terms such as an acceleration
clause. An
acknowledgment of debt is a liquid document, i.e. one which proves a
debt without any extraneous evidence.
[16]
In the context of provisional sentence the document relied upon
must
be a liquid document. A liquid document is one which contains a clear
and unequivocal acknowledgment of debt regarding the
amount alleged
to be due and payable
[1]
.
In the Constitutional Court
case
of
Twee Jonge Gezellen
[2]
it was stated that -
'In principle, . . .a document is
liquid if it demonstrates, by its terms, an unconditional
acknowledgement of indebtedness in a
fixed or ascertainable amount of
money due to the plaintiff. Many different sorts of documents
have
been found to qualify as "liquid in terms of this
definition, . . . .They Include acknowledgments of debt, . . . .'
[17]
Courts have consistently insisted on a clear and unequivocal
acknowledgment
of indebtedness before regarding a document as
sufficiently liquid in the context of obtaining provisional sentence
thereon
[3]
.
[18]
It is evident from a reading of the emails in question that whilst
Kubheka speaks of a 'scheduled date for payment' and thereafter that
'payment will be made on 6 September 2011' and still later
that
'payments are going to be processed today.' there is nothing in the
emails to show an unequivocal acknowledgment of debt by
the first
respondent. In Leyland SA v Booysen and Clark Motors
[4]
it was held -
'It was essential for the
plaintiff's cause of action (in addition to averring liquid
indebtedness under the acknowledgment of debt)
to place reliance on
the provision of the acknowledgment of debt governing
payabillty
and to allege facts establishing that the condition precedent to
payability has occurred.'
[19]
It follows that where payability is referred to but not an
unequivocal
undertaking to pay, the emails cannot be regarded as
being an acknowledgement of debt as the emails cannot be construed as
a clear
acknowledgment of money due to the appellant by the first
respondent. All that Ms Kubheka, a junior employee of the first
respondent
was doing is responding to a query about when accounts
would be paid.
[20]
The fact that the first respondent's project manager had certified
that certain work had been completed does not
avail
the appellant either. As the court a
quo
correctly
found, the certificate of completion 'does not impute on the first
respondent an acknowledgment of indebtedness if one
takes into
account the terms and conditions
as contained in the letter of award.'
[21]
The attempt by the appellant to separate the contents of the emails
from the clear provisions of the LOA must fail. Clause 2.1 of the LOA
makes it clear that it was subject to the conclusion of the
main
agreement between the parties. It follows, and the learned Judge in
my view correctly found, that the applicant took the risk
of
rendering the services knowing that it would not be paid unless the
main agreement was concluded.
[22]
It was also, with respect, correctly found by the court a
quo
that the appellant did not prove
that an acknowledgment of debt arose in pursuance of a partly oral
and partly written agreement
- the latter allegedly being evidenced
by the emails. The appellant did foresee or should have foreseen a
dispute of facts regarding
an alleged partly oral agreement yet chose
to utilise motion proceedings.
[23]
The first respondent says the appellant knew when it rendered partial
services (for which the invoices were issued) that it was doing so on
risk. In an email dated 10 August 2011 the appellant's Gerald
De Wet
wrote to Aaron Maroeshe of the first respondent in which he says,
inter alia,
-
'Thanks for the contract I have
worked through it. . . . We are currently working at risk on this
project and are consequently very
uncomfortable with the position we
find ourselves in and are about to suspend all further work on this
project until the commercial
issues have been satisfactory dealt
with.'
[24]
The appellant was clearly aware that it was working on risk while
the
final agreement had not
been concluded.
[25]
In all these circumstances, the attempt by the appellant to rely
on
the aforesaid emails as an acknowledgment of debt is without merit.
[26]
I would dismiss the appeal with costs.
N.
RANCHOD
JUDGE
OF THE HIGH COURT
I
agree and it is so ordered
M
MAVUNDLA
JUDGE
OF THE HIGH COURT
I
agree
LM
MOLOPA-SETHOSA
JUDGE
OF THE HIGH COURT
Appearances:
Counsel
on behalf of Applicant : Adv. J.O
Williams (SC)
Adv, H Groenewald
Instructed
by
: Van Der Elst Attorneys Inc.
Counsel
on behalf. of First Respondent: Adv. M Sikhakhane (SC)
Instructed
by
: Edward Nathan Sonnenbergs
Date
heard
: 11 October 2017
Date
delivered
: 20 February 2018
[1]
Harrowsmith v Ceres Flats (Pty) Ltd 1979(2) SA 722 (T)
[2]
Twee Jonge Gezellen v Land and Agricultural Development Bank 2011
(3) SA I CC at 8 para [15]
[3]
Harrowsmith v Ceres Flats (Pty) Ltd 1979(2) SA 722 (T) at 743F•G
[4]
1984(3) 480 at 483A·C.