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[2008] ZASCA 136
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Siltek Holdings (Pty) Ltd (in Liquidation) t/a Workgroup v Business Connexion Solutions (Pty) Ltd (081/08) [2008] ZASCA 136; [2009] 1 All SA 571 (SCA) (26 November 2008)
Links to summary
THE
SUPREME COURT OF APPEAL
REPUBLIC OF SOUTH
AFRICA
JUDGMENT
Case number: 081/08
No precedential
significance
In
the matter between:
SILTEK HOLDINGS
(PTY) LTD
(in liquidation)
t/a WORKGROUP APPELLANT
v
BUSINESS
CONNEXION
SOLUTIONS (PTY)
LTD RESPONDENT
Neutral
citation:
Siltek
v Business Connexion
(081/2008)
[2008]
ZASCA 136
(26 November 2008)
Coram:
Streicher
JA, Jafta JA et Boruchowitz AJA
Heard: 6 November
2008
Delivered: 26
November 2008
Summary: Set-off –
requirements therefor restated.
ORDER
On appeal from
:
Pretoria High Court (Mabuse AJ)
1. The appeal is
upheld with costs.
2. The order of the
court a quo is set aside and replaced with the following order:
(a) The defendant is
ordered to pay the sum of R436 430-97 with interest calculated
at the rate of 15.5% from the date of default
to the date of payment.
(b) The defendant is
ordered to pay costs of the action.
JUDGMENT
JAFTA
JA (
Streicher
JA, Boruchowitz AJA)
[1] This is an
appeal against the judgment of the Pretoria High Court (Mabuse AJ) in
terms of which the appellant’s claim
was dismissed with costs.
The appellant had instituted an action against the respondent for the
payment of the sum of R436 430-97.
The respondent’s
defence, which was upheld by the trial court, was that the claimed
debt had been extinguished by set-off.
The appeal is with the leave
of this court.
[2] By agreement
between the parties the trial court was presented with a set of facts
in the form of a stated case and requested
to answer the following
question:
‘
Whether
set-off applies between, on the one hand, a debt that is due but not
payable (ie that which is owed to the Plaintiff) and,
on the other
hand, a debt that is both due and payable (ie that which is owed to
the Defendant).’
In the circumstances
of the present case the question posed was incomplete because it did
not refer to the fact that the appellant’s
liquidation
commenced prior to its debt becoming payable.
[3] The facts on
which the court below was asked to decide the above question were the
following. During August to October 2001
the appellant sold and
delivered goods to the value of R436 430-97 to the respondent.
In terms of the parties’ agreement
the respondent had to pay
the purchase price within 30 days from the date of delivery. On
16 October 2001 and before
the period of 30 days lapsed, an
order liquidating the appellant for failure to pay its debts, was
issued.
[4] Meanwhile the
parties had entered into another agreement in terms whereof the
appellant agreed to pay the respondent commission
for introducing new
customers, if a sale between such customers and the appellant
occurred. The respondent introduced Telkom which
purchased goods to
the total value of R5 589 806. As a result a commission in
the sum of R594 032 34 (inclusive
of VAT) became due and
payable by the appellant to the respondent. This amount became
payable before the appellant was liquidated.
But the respondent did
not demand payment, nor did it claim set-off prior to liquidation.
The respondent raised the issue of set-off
for the first time in its
plea to the claim by the appellant’s liquidator.
[5] The real issue
in this appeal is whether the liquidator’s claim had been
extinguished by set-off in circumstances where
such claim was not yet
payable at the time the liquidation commenced. In order to determine
this issue it becomes necessary to
outline briefly the requirements
of set off in our law, within the specific context of this case.
[6] In our law
set-off takes place if two parties owe each other liquidated debts
which are payable. In essence set-off constitutes
a form of payment
by one party to the other. In
Schierhout
v Union Government
1
Innes CJ explained set-off in the following terms:
‘
The doctrine
of set-off with us is not derived from statute and regulated by rule
of court, as in England. It is a recognised principle
of our common
law. When two parties are mutually indebted to each other, both debts
being liquidated and fully due, then the doctrine
of compensation
comes into operation. The one debt extinguishes the other
pro
tanto
as effectually as if payment had been made. Should one of the
creditors seek thereafter to enforce his claim, the defendant would
have to set up the defence of
compensatio
by bringing the facts to the notice of the Court – as indeed
the defence of payment would also have to be pleaded and proved.
But,
compensation once established, the claim would be regarded as
extinguished from the moment the mutual debts were in existence
together.’
2
[7] As early as 1907
the authorities emphasised that the reciprocal debts must both be
payable for set-off to come into operation.
3
In
Colonial
Treasurer
Innes CJ said:
‘
But for
set-off to operate there must not only have been a debt due by the
Government to Schoeman, but there must have been at the
same time a
debt due by Schoeman to the Government. Was this the case on the
1
st
September, 1900?
To ascertain that we must have regard to the terms on which he
obtained his loan. He bound himself “to
pay the aforesaid loan
within five years from date, along with interest at 3 per cent,
payable at the Treasurer-General’s
office”. So that he
had five years within which to pay the money, and upon the face of
the document the Government could
not have demanded it until the five
years had expired. He might have paid sooner had he wished. But the
Government had no right
to demand payment from him until the five
years had elapsed. And as those five years had not expired by the 1
st
of September, 1900, it is clear that on that date there was no debt
due by the defendant to the Government. And if that be so,
set-off
cannot operate.’
4
[8] In this case,
before the debt due by the respondent to the appellant became
payable, the latter was liquidated and this changed
the circumstances
relating to set-off. Once the
concursus
creditorum
was established, set-off could not come into operation in this
matter. In
Thorne
.
5
Margo J stated:
‘
In regard
particularly to the question of set-off, the rule is that once a
concursus
creditorum
has been established, there can be no compensation unless mutuality
between the respective claims existed at the date of the order….
The mutuality here required is that the reciprocal debts both existed
and that both were liquidated and payable, before the
concursus
creditorum
was established.’
[9] In order to
overcome the difficulty created by the appellant’s liquidation,
counsel for the respondent argued that mutuality
giving rise to
set-off existed before liquidation, and as a result the respondent
could claim set-off after the
concursus
creditorum
.
He submitted that such set-off operated retrospectively to the
period before liquidation, and that it automatically came into
force
in terms of the law. There is no merit in this argument. On the
authority of this court and other courts, mutuality comes
into
existence only when both debts are due and payable.
6
In this case, as stated earlier, the appellant’s debt became
payable after liquidation.
[10] Allied to the
above argument was the submission that a party such as the
respondent, whose debt has become due and payable,
ought not to be
denied the right to set it off against another debt which such party
owes, solely on the ground that the second
debt is not yet payable.
For this proposition counsel relied on the following statement by De
Wet and Van Wyk
7
:
‘
Die
skuldenaar wat ‘n teenvordering in verrekening bring, betaal
eintlik die hoofvordering met die geld wat die hoofskuldeiser
in sy
besit het, en aan die teenskuldeiser verskuldig is. As hy dan die
hoofvordering deur betaling kan voldoen voordat dit opeisbaar
is,
waarom sal hy dit nie deur skuldvergelyking kan uitwis nie? A skuld
aan B honderd rand terugbetaalbaar na vyf jaar. Nou word
B skuldenaar
van A vir ‘n gelyke bedrag, onmiddellik betaalbaar. A kan B vir
betaling aanspreek, die geld ontvang en weer
aan B betaal voor
verstryking van die termyn. Dit kan niemand ontken nie. Waarom kan A
dan nie eenvoudig maar die geld by B laat
en hom meedeel dat hy dit
in verrekening bring teen wat B van hom te vorder het nie? Ons howe
dink daar anders oor, na my mening,
sonder genoegsame redes. Volgens
ons howe kan daar geen verrekening plaasvind voordat die
hoofvordering opeisbaar is nie. Nou is
dit wel waar dat
Van
Leeuwen
en
Voet
vereis dat die skulde van weerskante opeisbaar moet wees, maar hulle
probeer nie eens om hulle houding te verantwoord nie. Na my
mening
moet
Van
Leeuwen
en
Voet
se ondeurdagte opmerkings wyk voor die voorskrifte van gesonde
verstand en algemene beginsels in verband met voldoening. Is die
hoofvordering nog nie vervulbaar nie, kan die teenvordering nie
daarteen in verrekening gebring word nie, net so min as wat die
hoofvordering deur betaling voldoen kan word. Gevolglik tree
skuldvergelyking nie in werking teen ‘n voorwaardelike
hoofvordering
voordat die voorwaarde vervul is nie.’
[11] I shall assume
in the respondent’s favour, without expressing any view as to
the correctness of the assumption that a
party to whom a debt has
become payable, can set it off against a debt which is due but not
payable, provided the other requirements
for set-off are met. But, in
such a case set-off cannot logically be considered to have taken
place at a time earlier than the
time when the election to effect
payment by way of set-off is made. On this basis the respondent would
still be precluded by the
liquidation and the resultant
concursus
creditorum
from claiming set-off after liquidation. It follows that the appeal
must succeed.
[12] In their stated
case the parties had agreed that should the court find that set-off
did not apply, it may grant judgment in
favour of the appellant in
the terms specified therein. Accordingly I will grant an order in
those terms.
[13] The following
order is made:
1. The appeal is
upheld with costs.
2. The order of the
court a quo is set aside and replaced with the following order:
(a) The defendant is
ordered to pay the sum of R436 430-97 with interest calculated
at the rate of 15.5% from the date of default
to the date of payment.
(b) The defendant is
ordered to pay costs of the action.
________________
C N JAFTA
JUDGE OF APPEAL
APPEARANCES:
FOR
APPELLANT: H Louw
ATTORNEYS: Edward
Nathan Sonnenbergs Inc
Johannesburg
Symington
& De Kok
Bloemfontein
FOR
RESPONDENT: C A C Korf
ATTORNEYS: Daly
Mazubela Oliphant Attorneys
Johannesburg
Honey Attorneys
Bloemfontein
1
1926 AD 286.
2
Ibid at 289-290.
3
Colonial Treasurer v Schoeman
1907 TS 273
;
Mohamed v Nadgee
1952 (1) SA 410(A)
;
Thorne and Another
v The Government
1973 (4) SA 42(T)
and
Roman Catholic Church v Southern Life
Association Ltd
1992 (2) 807 (A).
4
Above n 3 at 274-5.
5
Above n 3 at 45F-H and the authorities there
cited. This decision was confirmed on appeal to this court in the
Government v Thorne and Another NNO
1974(2) SA 1(A).
6
Above n 3.
7
Die Suid-Afrikaanse Kontraktereg &
Handelsreg,
5 ed, Volume 1 pp 278-9.