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[2018] ZAKZDHC 33
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Bidvest Bank Limited v Jacobs Capital (Pty) Limited (12043/2016) [2018] ZAKZDHC 33 (29 June 2018)
IN
THE HIGH COURT OF SOUTH AFRICA
KWAZULU-NATAL
LOCAL DIVISION, DURBAN
Not
Reportable
Case
No: 12043/2016
In
the matter between:
BIDVEST
BANK
LIMITED
PLAINTIFF
and
JACOBS
CAPITAL (PTY)
LIMITED
DEFENDANT
JUDGMENT
Delivered on: 29
June 2018
Gorven
J
[1]
There are two matters before me. The first is an exception to the
plaintiff’s particulars of claim (the particulars).
The second,
which arises only if the exception does not succeed, is an
application for summary judgment. This is one of two matters
with
identical issues. I have been informed by counsel that the parties
agree that only one judgment is necessary. There are three
agreements
involved. I shall use the same description of the agreements as is
used in the particulars. I shall refer to the parties
as the
plaintiff and the defendant respectively.
[2]
The particulars refer to three written agreements. The first of
these was concluded between Tradeflow (Pty) Limited (Tradeflow)
and
the defendant (the trading agreement). The second was between the
plaintiff and Tradeflow (the receivables purchase agreement).
The
third was between the plaintiff and the defendant (the customer
agreement). There is no dispute that these three agreements
were
concluded and govern the contractual relationship between these three
entities.
[3]
The essence of the trading agreement is that Tradeflow would make
payment on behalf of the defendant to suppliers nominated
by it. The
defendant would reimburse Tradeflow for those amounts along with an
agreed commission and charges. I shall refer to
this composite amount
as the claim for reimbursement. The essence of the receivables
purchase agreement was that the plaintiff
would ‘purchase’
and take cession of certain of the claims for reimbursement from
Tradeflow. That of the customer agreement
was that the defendant
would open a designated account with the plaintiff and could post on
a secure platform information concerning
amounts to be paid in
respect of claims for reimbursement.
[4]
The plaintiff claims payment from the defendant of claims for
reimbursement. The exception is to the following effect. The
plaintiff’s claim is founded on the trading agreement, to which
it was not a party. In order for a claim for reimbursement
to be
payable under the trading agreement, Tradeflow was obliged to draw a
bill of exchange on the defendant for the amount claimed.
Without
such a bill of exchange, a claim for reimbursement was not payable.
The plaintiff sues as cessionary of Tradeflow’s
claims for
reimbursement under the trading agreement. The plaintiff has not
pleaded that Tradeflow drew bills of exchange on the
defendant for
the amounts claimed. On the particulars, accordingly, Tradeflow
cannot demand payment of any claims for reimbursement
from the
defendant. As cessionary, the plaintiff can have no better rights
than Tradeflow. As a consequence, the particulars of
claim do not
contain averments necessary to sustain the cause of action relied
upon.
[5]
It is correct that the particulars of claim do not contain any
averments that Tradeflow drew bills of exchange. The plaintiff
submitted that it does not rely for its claim only on the trading
agreement. Whilst it pleads the terms of each of the three
agreements,
its claim is founded on the customer agreement. It
submits that, properly interpreted, the customer agreement creates a
right to
payment. The defendant submits that the customer agreement
should be construed to create a right to payment only once bills of
exchange have been drawn by Tradeflow.
[6]
Since
the exception rests of the interpretation of the terms of the
customer agreement, the approach set out in
Telematrix
(Pty) Ltd t/a Matrix Vehicle Tracking v Advertising Standards
Authority SA
,
[1]
applies:
‘
Exceptions
should be dealt with sensibly. They provide a useful mechanism to
weed out cases without legal merit. An over-technical
approach
destroys their utility. To borrow the imagery employed by Miller J,
the response to an exception should be like a sword
that “cuts
through the tissue of which the exception is compounded and exposes
its vulnerability”. Dealing with
an interpretation issue,
he added:
“
Nor do I
think that the mere notional possibility that evidence of surrounding
circumstances may influence the issue should necessarily
operate to
debar the Court from deciding such issue on exception. There must, I
think, be something more than a notional or remote
possibility.
Usually that something more can be gathered from the pleadings and
the facts alleged or admitted therein. There
may be a specific
allegation in the pleadings showing the relevance of extraneous
facts, or there may be allegations from which
it may be inferred that
further facts affecting interpretation may reasonably possibly exist.
A measure of conjecture is undoubtedly
both permissible and proper,
but the shield should not be allowed to protect the respondent where
it is composed entirely of conjectural
and speculative hypotheses,
lacking any real foundation in the pleadings or in the
obvious facts.”’
[2]
Since
Telematrix
,
the general approach to interpretation of documents has been
clarified in
Natal
Joint Municipal Pension Fund v Endumeni Municipality
:
[3]
‘
The present
state of the law can be expressed as follows: Interpretation is the
process of attributing meaning to the words used
in a document, be it
legislation, some other statutory instrument, or contract,
having regard to the context provided by reading
the particular
provision or provisions in the light of the document as a whole and
the circumstances attendant upon its coming
into existence. Whatever
the nature of the document, consideration must be given to the
language used in the light of the ordinary
rules of grammar and
syntax; the context in which the provision appears; the apparent
purpose to which it is directed and
the material known to those
responsible for its production. Where more than one meaning is
possible each possibility must be weighed
in the light of all these
factors. The process is objective, not subjective. A sensible meaning
is to be preferred to one that
leads to insensible or unbusinesslike
results or undermines the apparent purpose of the document. Judges
must be alert to, and
guard against, the temptation to
substitute what they regard as reasonable, sensible or businesslike
for the words actually
used. To do so in regard to a statute or
statutory instrument is to cross the divide between interpretation
and legislation;
in a contractual context it is to make a
contract for the parties other than the one they in fact made. The
“inevitable point
of departure is the language of the provision
itself”, read in context and having regard to the purpose of
the provision
and the background to the preparation and production of
the document.’
[4]
[7]
I have set out this approach fully. This is because the outcome of
both the exception and the application for summary judgment
depend,
at least to an extent, on the interpretation of the agreements. The
particular aspect requiring interpretation is clause
3.2 of the
customer agreement and some of the terms used in that clause. When I
quote the clauses and terms of the agreements,
I shall substitute the
actual names of the parties for their description in the agreements
for convenience sake.
[8]
Clause 3.2 of the customer agreement reads as follows:
‘
When and each
time Jacobs posts a Payment Assurance, Jacobs creates and assumes, in
respect of the Account Receivable to which such
Payment Assurance
relates, an independent, irrevocable, unconditional, legal, valid,
transferable and binding obligation in favour
of Tradeflow (or, in
the event of a Transfer, in favour of Bidvest) to pay to the relevant
Designated Account on the relevant Maturity
Date an amount equal to
and in the same currency as the relevant Certified Amount without
deduction or counterclaim and without
exercising any right of set off
under the Underlying Relationship to which such Payment Assurance
relates or otherwise, and such
amount shall be due and payable by
Jacobs on the Maturity Date.’
[9]
The crisp issue on the question of interpretation of this clause is
whether it must be interpreted to require bills of exchange
to be
drawn under the trading agreement by Tradeflow. The plaintiff argues
that this is not necessary whereas the defendant argues
the contrary.
The basis of the contrary argument arises from the reference in the
clause to the words ‘in respect of the
Account Receivable to
which such Payment Assurance relates’. The words ‘Account
Receivable’ are defined in the
customer agreement as follows:
‘
[T]he right
to receive any and all present and future payments of money due and
payable, whether due now or payable in the future
. . . as a result
of an Underlying Relationship, whether or not earned by performance.’
The receivables
purchase agreement contains a definition which, for present purposes,
is identical. The trading agreement contains
neither such definition
nor any reference to the words ‘account receivable’.
[10]
The defendant submits that, in terms of clause 2 of the trading
agreement, bills of exchange must be drawn by Tradeflow on
the
defendant before any ‘account receivable’ arises. That
being so, clause 3.2 of the customer agreement requires
the existence
of an ‘account receivable’ before the defendant can post
a payment assurance which creates the independent
obligation of the
defendant to pay Tradeflow or the plaintiff. Clause 2 of the trading
agreement reads:
‘
In
respect of each transaction Tradeflow will draw a bill of exchange on
Jacobs for the amount of each invoice paid to Jacobs’s
suppliers by Tradeflow, which shall include commission due to
Tradeflow, and all additional charges as provided for in clause 7
below. Jacobs shall forthwith sign and deliver each bill of exchange
to Tradeflow for acceptance purposes and agrees to pay the
bill in
the manner prescribed by Tradeflow. Tradeflow may, in its discretion,
require the drawing and delivery to it of the bill
of exchange before
making any payment, or entering into any commitment to pay, Jacobs’s
supplier. Tradeflow will raise its
invoice on Jacobs for its
commission and other costs within two business days of payment or
commitment to pay Jacobs’s supplier.’
[11]
It seems to me that there are a number of fallacies in the
defendant’s submission. First, clause 2 of the trading
agreement
does not say that the drawing of a bill of exchange creates
an ‘account receivable’. As I have pointed out, there is
no reference to those words in the trading agreement. It is pleaded
that the trading agreement and the customer agreement were
concluded
one day apart. It is pleaded that the receivables purchase agreement
was concluded about ten months earlier. Since the
three agreements
form a suite governing the contractual conduct of the three entities,
it is inconceivable that, if it had been
intended that clause 2 of
the trading agreement was to be the basis on which an ‘account
receivable’ referred to in
the customer agreement was to come
into existence, this would not have been specified.
[12]
Secondly, the interpretation of clause 2 of the trading agreement
does not specify that, before a claim for reimbursement can
be made,
Tradeflow has to draw a bill of exchange. What is envisaged is the
generation of an invoice setting out the particulars
of the claim for
reimbursement. In this context, the bill of exchange would provide a
liquid document to enforce payment of the
invoiced amount. If,
however, the invoice sets out accurately the payment made on behalf
of the defendant and the charges and commission
allowed for in the
trading agreement, it would give rise to a claim for reimbursement.
[13]
Thirdly, clause 3.2 of the customer agreement does not support such
an interpretation. It is significant that clause 3.1 provides
that
the defendant ‘may, but is not obliged to, Post Payment
Assurances.’ Given that situation, if the defendant had
any
concern as to whether an ‘account receivable’ had come
into existence, it would simply not post a payment assurance.
Put
another way, the defendant need only post a payment assurance if it
was satisfied that an account receivable existed. The posting
of a
payment assurance removes any basis for challenging whether an
‘account receivable’, or, in the language or this
judgment, a claim for reimbursement under the trading agreement, is
payable. If no such account receivable existed, the defendant
would
clearly not post a payment assurance. If it does so, in the light of
clause 3.2, this ‘creates . . . an independent,
irrevocable,
unconditional, legal, valid and binding obligation’ to pay
Tradeflow or the plaintiff on the date posted by
the defendant as the
maturity date in the amount posted by the defendant as the certified
amount. It obviates the need to prove
that the amount posted is in
fact due under the trading agreement.
[14]
The customer agreement forms a contract in terms of which the
defendant, if it posts a payment assurance on the platform to
which
it is given access under that agreement, renders itself obliged to
make payment to Tradeflow or the plaintiff as the case
may be. It is
clear that the posting of a payment assurance itself creates the
obligation if it sets out a certified amount and
a maturity date upon
which that amount is due and payable to Tradeflow or the plaintiff as
the case may be.
[15]
It was
faintly argued that evidence could clarify the interpretation of
clause 3.2 of the customer agreement. But no submissions
were made as
to the ‘further facts affecting interpretation’ that
could reasonably exist.
[5]
Endumeni
envisages the interpretative enterprise drawing on the context of the
term of the agreement relied upon.
[6]
Reference must be had to the circumstance in which it came into
existence. The two other agreements provide some context beyond
that
of the customer agreement. Their conclusion also indicates some of
the circumstances under which the customer agreement came
into
effect. Under the trading agreement, payment to the defendant’s
designated suppliers is to be made on behalf of the
defendant by
Tradeflow. Those amounts, plus agreed commission and charges, are to
be reimbursed by the defendant. This amounts
to an extension of
credit by Tradeflow to the defendant. Under the receivables purchase
agreement, certain of the claims for reimbursement
of Tradeflow may
be assigned to the plaintiff. As to immediate context, clause 3 of
the customer agreement is headed ‘The
Payment Obligation’.
The purpose to which clause 3.2 of the customer agreement is directed
is the creation of an obligation
to pay amounts specified by the
defendant on dates specified by the defendant which is not open to
challenge by the defendant.
This interpretation takes account of
language, context and the purpose of the provision as well as the
background to the preparation
and production of the customer
agreement and, in particular, clause 3.2 thereof.
[16]
The particulars of claim contain all the necessary averments for
payment of the amounts posted as payment assurances to be
due to the
plaintiff under the customer agreement. They therefore disclose a
cause of action on the usual basis that, if proved,
the plaintiff
would be entitled to judgment. The exception must accordingly be
dismissed.
[17]
That then leaves the summary judgment application. The formalities of
the application are not challenged. The defendant does
not challenge
the averments of the plaintiff which base its claim on clause 3.2 of
the customer agreement. In other words, it is
not challenged that the
defendant posted a payment assurance in respect of each respective
account receivable in a certified amount
with a maturity date as
reflected in the annexure in question and that the plaintiff had
taken cession and transfer of those amounts.
[18]
The basis of the defence set out in the affidavit opposing summary
judgment is twofold. First, that bills of exchange purportedly
drawn
pursuant to the provisions of the trading agreement are stripped of
legal validity. Since, the defendant averred, this was
required in
order for Tradeflow to have a claim for payment against the
defendant, the plaintiff has no better claim. This defence
does not
require any further attention. It raises the same argument as does
the exception. I have held that an obligation is created
by clause
3.2 of the customer agreement which does not require the drawing and
signing of bills of exchange. This does not afford
a basis for
resisting summary judgment.
[19]
The second line of defence is the contention of the defendant that it
has a counterclaim arising from the conduct of Tradeflow
or the
plaintiff. Unless the counterclaim relied upon by the defendant
constitutes a basis for opposition, the plaintiff has made
out a case
for summary judgment. It is thus necessary to examine whether the
counterclaim raises a basis for resisting summary
judgment. If no
such basis exists, a court is nevertheless given a discretion as to
whether or not to grant summary judgment.
[20]
The averment is made that Tradeflow repudiated its obligations to the
defendant. It will be helpful to quote the averments
in the opposing
affidavit in this regard:
‘
The
repudiation . . . instantaneously stripped [the defendant] of trade
finance and directly and immediately caused it to suffer
damages by
reason of its loss of profits. Further damages were caused by the
withdrawal causing the Defendant to breach its contractual
obligations to its customers who now have claims against the
Defendant. These damages are yet to be conclusively quantified . .
.’.
The
defendant was said to have accepted the repudiation and cancelled all
three agreements. The deponent estimated that the quantum
of the
damages sustained by the defendant exceeded the claim of the
plaintiff. This is the basis of the counterclaim.
[21]
The defendant delivered two sets of heads of argument in the summary
judgment application. In neither set did it deal at all
with the
counterclaim. It confined itself to submissions concerning the first
defence concerning the bills of exchange. Before
me, at most very
faint submissions were advanced concerning the counterclaim. This is
probably because the plaintiff’s heads
referred to clauses 3.2
and 3.3 of the customer agreement. Clause 3.2 creates the obligation
to pay ‘without deduction
or counterclaim’. Clause 3.3
provides that the defendant shall not ‘present any Adverse
Claim against a Payment Assurance.’
The words ‘adverse
claim’ are defined in the customer agreement to include a
counterclaim. On these bases, the counterclaim
is excluded as a
defence to a claim for payment under clause 3.2 of the customer
agreement.
[22]
In
addition and in any event, Rule 32(3)
(b)
requires a defendant to ‘disclose fully the nature of the
grounds of its defence and the material facts relied upon therefor.’
Where the only opposition to summary judgment is that a counterclaim
exists which will extinguish either partly or in full the
claim of
the plaintiff, those grounds and the material facts on which the
counterclaim is based must be fully disclosed.
[7]
[23]
Absolutely no factual particularity has been furnished by the
defendant concerning the two heads of damages relied upon for
its
counterclaim. Identical averments were made in a letter sent by the
defendant’s attorney to the plaintiff in September
2015. The
affidavit opposing summary judgment was deposed to on 14 March 2017.
At the very least, by then, trading trends would
have been apparent
as would at least some indication of any loss of profits. Likewise,
the defendant would undoubtedly have been
able to list the
contractual obligations to its customers which the repudiation and
cancellation had caused it to breach and the
amounts due to those
customers as a consequence. It was surely possible to provide some
particularity at that stage or, at least,
to explain why this could
not be done. Despite the effluxion of more than 18 months, none of
this was addressed. Of course all
of this assumes, without deciding,
that the defendant could prove that the plaintiff or Tradeflow
repudiated the agreements.
[24]
All in
all, the affidavit opposing summary judgment is silent as to what
factual situation arose from the alleged repudiation. In
my view,
this is not sufficient when attempting to raise a counterclaim as a
basis for avoiding summary judgment. The position
echoes that
referred to in
Soil
Fumigation Services Lowveld CC v Chemfit Technical Products (Pty)
Ltd
.
[8]
In the result, the affidavit cannot be said to fulfil the
requirements of disclosing fully the nature and grounds of the
alleged
counterclaim and the material facts relied upon so as to
resist summary judgment.
[25]
The question then arises whether I should exercise my overriding
discretion in favour of refusing summary judgment. No specific
submissions were made on this aspect. Granting summary judgment in no
way disqualifies the defendant from launching any claim against
the
plaintiff. When the counterclaim alleged by the defendant is so
speculative and lacking particularity as is the present one,
and
appears to be excluded by the terms of the customer agreement, I can
see no proper basis for exercising my discretion against
granting
summary judgment.
[26]
Although this was not raised in argument, only amounts certified in
the annexure in question where a maturity date is given
in the
payment assurance are payable. One of the amounts has no maturity
date reflected in the annexure and cannot accordingly
be said to be
payable. In addition, the total claimed differs from the total of the
amounts (including that one sum) in the annexure.
The total of the
amounts payable is R6 080 549.83 and not the claimed
R6 622 596.68. Summary judgment will
be given for the
lesser amount and must be refused for the balance. It was agreed by
both parties that, where two counsel had been
employed, any costs
order should include those costs.
In
the result:
A.
The defendant’s exception is dismissed with costs, such costs
to include the costs consequent on the employment of two
counsel
where this was done.
B.
Summary judgment is granted in favour of the plaintiff against the
defendant for:
1
.
Payment in the sum of R6 080 549.83.
2. Interest on the
following sums at the rate allowed under the
Prescribed Rate of
Interest Act 55 of 1975
calculated from the respective dates to date
of payment:
(a)
R126 781.59 from 10 April 2015;
(b)
R61 234.56 from 10 April 2015;
(c)
R109 871.79 from 10 April 2015;
(d)
R161 462.34 from 10 April 2015;
(e)
R89 074.39 from 14 April 2015;
(f)
R759 411.96 from 16 April 2015;
(g)
R169 372.89 from 21 April 2015;
(h)
R118 557.99 from 21 April 2015;
(i)
R131 775.39 from 22 April 2015;
(j)
R649 655.45 from 22 April 2015;
(k)
R175 583.77 from 22 April 2015;
(l) R44 913.85
from 21 May 2015;
(m) R47 896.27
from 26 May 2015;
(n) R78 861.55
from 28 May 2015;
(o) R44 239.93
from 29 May 2015;
(p) R202 192.47
from 29 May 2015;
(q) R50 073.13
from 29 May 2015;
(r) R30 696.46
from 29 May 2015;
(s) R118 718.82
from 29 May 2015;
(t) R72 213.05
from 29 May 2015;
(u) R34 561.47
from 29 May 2015;
(v) R219 262.25
from 29 May 2015;
(w) R30 059.73
from 29 May 2015;
(x) R41 816.59
from 29 May 2015;
(y) R503 237.70
from 29 May 2015;
(z) R40 858.69
from 29 May 2015;
(aa) R48 970.46
from 29 May 2015;
(bb) R139 277.98
from 29 May 2015;
(cc) R163 904.02
from 29 May 2015;
(dd) R67 979.04
from 29 May 2015;
(ee) R150 961.34
from 29 May 2015;
(ff) R69 011.68
from 2 June 2015;
(gg) R35 291.30
from 2 June 2015;
(hh) R798 006.65
from 3 June 2015;
(ii) R112 536.27
from 9 June 2015;
(jj) R140 988.74
from 19 June 2015;
(kk) R50 535.18
from 3 July 2015;
(ll) R59 761.52
from 9 July 2015;
(mm) R77 851.97
from 14 July 2015;
(nn) R53 089.60
from 17 July 2015.
3.
Costs of suit, including reserved costs and the costs of the summary
judgment application
, such costs to include the costs
consequent on the employment of two counsel where this was done
.
C. In respect of the
balance of R542 046.85 claimed, summary judgment is refused and
the defendant is given leave to defend.
_________________
Gorven
J
Date of Hearing: 21
June 2018
Date of Judgment: 29
June 2018
Appearances
For the Plaintiff:
LN Harris SC (with him D Ramdhani), instructed by Norton Rose
Fulbright South Africa Incorporated
For the Respondents:
AWM Harcourt SC (with him SK Dayal),
Instructed
by Maharaj Attorneys
[1]
Telematrix
(Pty) Ltd t/a Matrix Vehicle Tracking v Advertising Standards
Authority SA
2006 (1) SA 461
(SCA) para 3.
[2]
The reference is to
Davenport
Corner Tea Room (Pty) Ltd v Joubert
1962
(2) SA 709
(D)
at
715H.
[3]
Natal
Joint Municipal Pension Fund v Endumeni Municipality
2012
(4) SA 593
(SCA)
para
18.
[4]
References omitted.
[5]
See
Telematrix
para 3, footnote 1 supra.
[6]
Paragraph 18, footnote 3 supra.
[7]
Breitenbach
v Fiat SA (Edms) Bpk
1976 (2) SA 226
(T) at 228B-H.
[8]
Soil
Fumigation Services Lowveld CC v Chemfit Technical Products (Pty)
Ltd
2004 (6) SA 29
(SCA) paras 22-24.