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[2017] ZAFSHC 62
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Solid Build Contractors CC v Jacobs and Others (229/2017) [2017] ZAFSHC 62 (18 May 2017)
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Certain
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IN
THE HIGH COURT OF SOUTH AFRICA,
FREE
STATE
DIVISION.
BLOEMFONTEIN
Case
number: 229/2017
In
the matter between:
SOLID
BUILD CONTRACTORS
CC
Plaintiff
[Registration
Number: 1998/080073/23]
and
JOHANNES
PETRUS JACOBS
[ID
NR:
[6…]]
First Defendant
WE
BUILD CC
[Registration
Number:
2008/145538/23]
Second Defendant
JOHANNES
PETRUS JACOBS
N.O.
Third Defendant
CAREL
JACOBUS SWANEPOEL JACOBS N.O.
Fourth Defendant
THE
MALUTI
TRUST
Fifth Defendant
[Registration
Number: 1047/1998]
CORAM:
SNELLENBURG, AJ
HEARD
ON:
11 MAY 2017
JUDGMENT
BY:
SNELLENBURG, AJ
DELIVERED
ON:
18 MAY
2017
[1]
The plaintiff issued summons against the defendants for payment of
the amount of R1 646 360.57; interest and cost of the suit.
Pursuant
to the defendants delivering a notice of intention to defend the
plaintiff issued an application for summary judgment.
It is no
longer in dispute that leave to defend should be granted, but the
parties remain at loggerheads regarding the appropriate
cost order.
[2]
The defendants were informed in the summary judgment application that
the matter will serve before court on 16 March 2017. The
defendants
duly opposed the application by delivering an answering affidavit on
9 March 2017. As result the court postponed the
application to 11 May
20171 by agreement between the parties, for argument as opposed
motion. The costs of the postponement
were ordered to be costs in the
application. It is apposite to record that the defendants1
attorney already on 13
March
2017,1 prior to the postponement of the matter to the opposed roll
for argument, enquired from the plaintiff's attorney whether
the plaintiff intended to persist with the
application for
summary
judgment in light of the answering affidavit. In reply the defendants
were advised by the plaintiffs attorney at the seat
of the
court that his instructions were that
the matter should be postponed
for hearing, ergo the
postponement by agreement referred to earlier.
[3]
In terms of this Division's Rules of Practice the plaintiff's heads
of argument for the opposed motion were due to be filed
on Wednesday,
3 May 2017. On this day (3 May 2017) at 14h02 the plaintiff's
attorneys of record, Messrs Smit Sewgoolam, addressed
an email
to the defendants' attorneys wherein they propose that leave be
granted to the defendants; that the plaintiff does not
proceed with
the summary judgment application; that the costs involved in
the summary judgment proceedings be reserved and
that they remove the
matter from the opposed roll by notice.
[4]
The defendants' attorneys replied to the plaintiff's last-mentioned
email on 4 May 2017 at 09h37. The gist of the reply was
that the
proposal was found in order save for the issue of costs. The
defendants' attorneys advised that their instructions were
that the
plaintiff either tender the costs that the defendants had already
incurred as result of the summary judgment proceedings
or that the
costs be argued. The defendants also recorded that their heads of
argument would be finalised by the next day; that
they had already
incurred preparation costs and were already liable for counsel's
reservation to argue the opposed motion.
[5]
On 4 May 2017 the plaintiff caused a 'notice of removal' to be filed.
The notice informs that the summary judgment application
is removed
from the roll of the 11
th
of May 2017
and costs to be costs in the cause. It is apparent that the costs
referred to in the notice of removal
is substantially different from
the costs proposed by the plaintiff in its email of 3 May 2017. The
plaintiff thereby rejected
the defendants' counter proposal. In
addition, for reasons dealt with later in the judgment, the notice of
removal was irregular
and of no legal consequence.
[6]
The defendants duly filed file heads of argument in terms of the
Rules of Practice on Friday, 5 May 2017. The heads of argument
were
signed by counsel on 4 May 2017. In the heads of argument the
defendants persist with their opposition to the summary
judgment
application and argue for costs on the scale as between attorney and
client.
[7]
The defendants' rely in their answering affidavit on (i) deficiencies
in the summons which according to them render the particulars
of
claim both vague and embarrassing and susceptible to an outright
exception for want of allegations to sustain a cause of action;
(ii)
a bona fide defence set out in detailed manner to the merits of the
claim and, (iii) counter claims for damages allegedly
suffered as
result of the plaintiff's failure to perform its obligations in terms
of the acknowledgment of debt.
[8]
In addition to the aforementioned facts the defendants deal
pertinently with the issue of costs of the summary judgment
application
in their answering affidavit. To this end the
defendants rely on the fact that the plaintiff had previously issued
summons
against the first, second and fifth defendant under case
number: 1969/2016 in which action the plaintiff relied on the same
acknowledgement
of debt for payment; had applied for summary judgment
and had granted leave to defend to the defendants in that matter
after receipt
of their answering affidavit.
[9]
The summons in the previous action (1969/2016) was withdrawn by means
of a notice on 23 February 2017. The current action (229/2017)
was
however already issued on 17 January 2017, thus whilst the
previous action was still extant. The defendants contend that
the
plaintiff was aware of the exact nature of their defence to the
merits of the plaintiff's claim as the same was disclosed in
the
answering affidavit filed in the previous action to resist the
summary judgment application. The defendants therefore contend
that
the plaintiff should not have made the current application for
summary judgment and should bear the costs of the application
on an
attorney and client scale.
[10]
It is essential to consider both the nature of the dispute between
the parties and how it was ventilated in the current
and erstwhile
proceedings in case 1969/2016.
[11]
The plaintiff's current action (case 229/2017) is premised on the
recovery of the balance amount owing in terms of an acknowledgement
of debt and agreement to repay the amount due, executed in its favour
by the first and second defendants. The original amount admitted
to
be due in the acknowledgement of debt is R3 122 917.00 (also
described in the acknowledgement of debt as the principle debt).
The
acknowledgement of debt was signed on 14 May 2015 by the first
defendant, acting both in person and also on behalf of the second
defendant. The acknowledgement of debt was also signed on the
plaintiffs behalf on 14 May 2015 by its representative.
[12]
The first and second defendants declare in paragraph 1 of the
acknowledgement of debt that they are bound by the conditions
set out
in the agreement.
[13]
As far as the third, fourth and fifth defendants are concerned, it
will suffice to say that the third and fourth defendants
are the duly
authorised trustees of the fifth defendant ["the Trust"].
The plaintiff relies on a written deed of surety
granted by the Trust
in its favour as surety, in solidum and joint and several
co-principle debtor with the first and second defendant,
for due
compliance by the first and second defendants with their obligations
in terms of the acknowledgement of debt.
[14]
Paragraph 2 of the acknowledgement of debt provides as follows
regarding the agreed terms of repayment:
"We
offer as payment for the Principle Debt the profit on the Building
Contracts entered into by ourselves and the Purchasers
of the
Properties listed in Annexure B (hereinafter referred to as the
Properties), for the building works of the top structures
(hereinafter referred to as the "Works”) to be carried out
by the Creditor. The profit will be paid to the Creditor
on receipt
of payment of the final draw on the Works by the relevant Financial
lnstitution.”
[15]
To facilitate the payment as agreed upon the second defendant is
obligated, as the appointed builder on all the mortgage bonds
that
were approved in relation to the properties by the relevant financial
institutions, to attend to the handing over and signing
of all
necessary documents required by the financial institutions to effect
the registration of the properties into the name of
the purchasers
and after registration for the payment of the progress draws on the
Works to the plaintiff or his agent. The first
and second defendants
are not allowed, under any circumstances, to hand in any documents at
the financial institutions or request
any form of payment pertaining
to the properties by the financial institutions. It is also agreed
that the plaintiff will request
all progress draws from the financial
institutions pertaining to the Works on the properties. Lastly
it was agreed that on
completion of the top structure of the
last of the properties, the plaintiff will do a reconsideration of
all the profits
earned on Works on the properties and the balance
between the principle debt and the profit will be paid to the
'debtor' (both
the first and second defendants are referred to in the
acknowledgement of debt as "the debtors") within 7
days
after completion of the reconciliation statement.
[16]
No specific instalments or dates for payment, other than what is
summarised above, were agreed upon.
[17]
The acknowledgement of debt agreement also imposes obligations on the
plaintiff regarding the completion of building Works
to properties
so that the profit can be generated which is necessary
for the repayment of the principle debt.
It is equally clear that the
profit will be paid to the plaintiff on receipt of payment of the
final draw on the Works by the relevant
Financial Institution.
[18]
In the acknowledgement of debt reference is made to two annexures. In
the particulars of claim the plaintiff alleges that it
is not able to
append annexure B, being one of the two annexures referenced
in the acknowledgement
of debt1
as it was not appended to the acknowledgement of
debt initially I alternatively could not
('currently') be found. The
plaintiff fails to deal with the fact that the other annexure that is
referenced in the acknowledgement
of debt is also not appended.
Annexure B's importance appears from the content of paragraph 2 of
the acknowledgement of debt referred
to in paragraph [14] above.
[19]
In case 1969/2016 the plaintiff issued summons against the first and
second defendant and the Maluti Trust {currently the fifth
defendant
in case 229/2017). The plaintiff relied on the same cause of action
it currently relies on in the current action. The
only material
differences between the actions are that the plaintiff in action
1969/2016 claimed the full amount acknowledged to
be owed to it,
namely R3 122 917.00 (the principle debt in the acknowledgement of
debt) and the trustees of the Maluti Trust were
not joined in those
proceedings, only the Trust in name. If not apparent from what is set
out above, the plaintiff also relied
on the same suretyship it relies
on in the current proceedings.
[20]
The plaintiff also applied for summary judgment in case 1969/2016. In
response the defendants deposed to an answering affidavit
in terms of
Uniform rule 32(3)(b). In that affidavit the defendants raised the
same defence to the merits of the action than is
raised in the
current answering affidavit filed in this action, namely case
229/2017. Some of the defences regarding objections
to technical
deficiencies in the pleading are the same as is disclosed in the
answering affidavit in the current proceedings
and other
objections are similar to the objections raised currently. It is
correct that the defendants in case 1969/2016 referred
to a counter
claim in the tersest of terms, but the defendants had established a
bona fide defence without the counter claim which
is presumably the
reason why leave to defend was granted.
[21]
It should be quite apparent that the only difference between the
parties in the action is that the trustees have been cited
in the
current proceedings, as they should have been in case 1969/2016. The
trustees however deposed to the answering and supporting
affidavit in
person and as trustee in those proceedings, as they again did in
these proceedings.
[22]
As stated above, leave to defend in case 1969/2016 was duly granted
by the plaintiff and costs were ordered to be costs in
the cause. The
notice of withdrawal of the summons, filed in February 2017 as
referred to, tendered costs to be reserved in the
new action
the plaintiff intended to issue,
although as pointed out above that
action had fact
already been issued on 17 January 2017.
[23]
There can be no doubt that the plaintiff knew, when it issued the
application for summary judgment under consideration (the
current
case), that the defendants will rely on a contention which would
entitle them leave to defend. In fact, the plaintiff
already
had comprehensive knowledge of the defendants' defence as the same
was set out in detail in the answering affidavit in
case 1969/2016.
[24]
Uniform rule 32(9) provides as follows:
"(9)
The court may at the hearing of such application make such order as
to costs as to it may seem just:
Provided that if-
(a)
the plaintiff makes an application under this rule, where the case is
not within the terms
of subrule (1) or where the plaintiff, in the
opinion of the court, knew that the defendant relied on a contention
which would
entitle him to leave to defend, the court may order that
the action be stayed until the plaintiff has paid the defendant's
costs;
and may further order that such costs be taxed as between
attorney and client; and
(b)
in any case in which summary judgment was refused and in which the
court after trial gives
judgment for the plaintiff substantially as
prayed, and the court finds that summary judgment should have been
granted had the
defendant not raised a defence which in its opinion
was unreasonable, the court may order the plaintiffs costs of the
action to
be taxed as between attorney and client."
The
defendants rely on the provisions of sub-rule 32(9)(a) for costs on
attorney and client scale.
[25]
The relevant principle where a plaintiff knows that the defendant has
a defence it will raise which would entitle it to leave
to defend was
explained by Kuper, J, in the case of
RELIABLE REFRIGERATOR
SERVICE CO. (PTY) LTD v A. COUVERAS, trading as SPRINGBOK MEAT
MARKET,
delivered on 1 October 1957 and quoted with approval
insofar as it relates to costs in such event in
PRIMROSE BRICK
WORKS (1936) LTD v METROPOLITAN TIMBER CO LTD
1959 (1) SA
35
(W) at 39A D:
"It
is quite apparent therefore that in terms of this Rule the position
was contemplated that a defendant would file an affidavit
disclosing
a defence but that that defence was not a genuine one and that the
remedy given to the Court in such circumstances was
to direct the
defendant to pay the costs of the action as between attorney and
client. At the same time it was apparent that the
drafters of the
Rule considered that where a plaintiff knew that the defendant was
going to defend the action and that he had raised
a defence which he
would repeat in any affidavit that he was called upon to file and
that under those circumstances the plaintiff
should not apply for
summary judgment. It is quite clear that applications for summary
judgment under this Rule were not intended
to be the normal course of
events whenever a defendant entered an appearance to defend. It was
never contemplated that a
plaintiff should be given an
additional advantage because of this Rule of obtaining the defence of
the defendant on affidavit and
because it is the obligation of the
defendant in terms of the Rule to set out his defence fully, that is
provided for in sub-Rule
3(c). .... .. ..... . In any other case
where he makes the application where he knows that the defendant is
going to defend the
action and knows what that defence is, he does so
at his peril and may in proper circumstances be ordered to pay the
costs of the
application for summary judgment immediately."
Also
see
BODEMER v HECHTER
1962 (4) SA
244 (T).
In the matter under consideration the defence was raised
under oath in case 1969/2016 as stated.
[26]
In
MAHOMED ADAM (PTY) LTD v BARRETT
1958 (4) SA
507 (T) at 508E F
it was held that:
"It
was never contemplated that an application for summary judgment
should be the normal course of events whenever a defendant
enters an
appearance to defend an action. It is a special proceeding which is
made available to a plaintiff in respect of certain
claims under
certain circumstances. It is not intended to prevent a defendant from
defending the action, but to prevent sham defences
from defeating the
rights of the plaintiff by delay."
[27]
The passage in
FLORIDAR CONSTRUCTION CO (SWA) (PTY) LTD v
KRIESS
1975 (1) SA 875
(SWA) at 878A,
in awarding
attorney and client costs in terms of Uniform rule 32(9)(a) is also
apposite to the facts of this matter:
"The
purpose of the subrule is, on the one hand, to discourage unnecessary
or unjustified applications for summary judgment,
and, on the other
hand, to discourage defendants from setting up unreasonable defences.
In regard to the first of these it is to
be borne in mind that in
many instances the object of bringing an application for summary
judgment is to force the defendant to
put his defence on affidavit. A
plaintiff is not entitled to do this unless it is clear that there
are good grounds for making
the application."
[28]
The cases referred to above illustrate that courts have through the
years consistently warned plaintiffs who employ the procedure
notwithstanding knowledge of a defendant's bona fide defence, that
they do so at their own
peril,
and that the abuse of the summary judgment
procedure will not be tolerated. Summary judgment
is reserved for a
specific salutary purpose, namely it is an important method of
preventing defendants who can demonstrate no bona
fide defence or
furnish security from taking advantage of the unavoidable delays
resulting from a matter going to trial by
utilising the
stratagem of entering an appearance to defend. See
STANDARD
BANK OF SOUTH AFRICA LTD v
ROESTOF
2004 (2) SA 492
(W) at 497F-G.
[29]
The plaintiff was well aware of the defendants' defence which was
dealt with comprehensively in the answering affidavit in
case
1969/2016. The plaintiff found itself in a much more advantageous
position than the average plaintiff which institutes action.
[30]
It was argued on behalf of the plaintiff that the technical
objections that the particulars of claim was vague and embarrassing
or lacked allegations necessary to sustain a cause of action did not
constitute a bona fide defence in this matter due to the nature
of
the objections and the plaintiff was therefore entitled to issue the
summary judgment application in the current case (case
229/2017),
notwithstanding the fact that similar objections were raised in the
answering affidavit in case 1969/2016. It was also
argued that the
reason for the leave to defend was in fact the counter claims which
were more thoroughly pleaded although
the counter claims were
still not pleaded with the required detail. Leave is said to have
been granted in Case 1969/2016 out of
benevolence in light of the
alleged counter claims, not because a true
bona fide
defence
was disclosed. The plaintiff is said to have acted reasonable in
granting leave to defend in this matter and as such
the
defendants conduct to persist in arguing costs is unreasonable. The
plaintiff submits that the defendants should have dealt
with the
matter on a different basis instead of escalating the costs of the
matter. Lastly it is contended that if it is found
that the plaintiff
adopted an overly sanguine view, the merits of the case do not
justify the inference that the plaintiff abused
the process of
summary judgment. It is contended that there is no justification to
award costs against the plaintiff, much less
costs on the scale as
between attorney and client.
[31]
Save for the criticism regarding the manner in which the counter
claims were pleaded in the answering affidavit in case 1969/2016,
the
remaining contentions on behalf of the plaintiff, ably argued as they
were, do not pass muster.
[32]
The defendants set out sufficient detailed facts in the answering
affidavit in case 1969/2016 to satisfy the requirements in
sub-rule
32(3)(b) regarding a bona fide defence to the plaintiff's claim. The
same facts were repeated in the answering affidavit
in this matter,
case 229/2017. The defendants dealt lucidly with the reasons why the
balance in terms of the acknowledgement of
debt would not be due and
payable. The defendants also dealt with the plaintiff's failure or
refusal to comply with its obligations
in terms of the
acknowledgement of debt regarding the finalisation of Works which it
was responsible for and which forced the defendants
to employ
subcontractors to finalise the Works. As result of the fact
that the final draw on the Works has not been received
the remaining
balance in terms of the acknowledgement of debt could not yet be due
and payable.
[33]
To further compound matters for the plaintiff, in addition to the
defence to the merits, the defendants also relied on excipiability
of the plaintiff's claim as formulated in case 1969/2016 ["the
complaints"]. Not all the complaints which were raised
in case
1969/2016 were repeated in the current answering affidavit as some of
the complaints were in fact addressed in the current
particulars of
claim. The complaints were properly pleaded in both affidavits and
would constitute a bona fide defence in both
erstwhile and current
actions for purposes of summary judgment
(see SOUTH AFRICAN BUREAU
O
F STANDARDS v GGS/AU (PTY) LTD
2003 (6) SA 588
(T) par
9).
[34]
The defence to the merits was pertinently and properly disclosed in
the erstwhile action in case 1969/2016 and the plaintiff
had
knowledge of the defence when it issued the current application for
summary judgment. The nature of the dispute did not alter
in any
material aspect.
[35]
In
ABSA BANK LTD (VOLKSKAS BANK
DIVISION) v S J DU TOIT
&
SONS EARTHMOVERS (PTYl LTD
1995
(3) SA 265 (C) at 2688-D Van Riet, AJ
referred with approval to
the following explanation by Gardiner, AJ (as he then was)
IN
RE ALLUVIAL
CREEK
LTD
1929
CPD
532
at
535:
"An
order is asked for that he pay the costs between attorney and client.
Now sometimes such an order is given because of something
in the
conduct of a party which the Court considers should be punished,
malice, misleading the Court and things like that, but
I think the
order may also be granted without any reflection upon the party where
the proceedings are vexatious, and by vexatious
I mean where they
have the effect of being vexatious, although the intent may not have
been that they should be vexatious. There
are people who enter into
litigation with the most upright purpose and a most firm belief in
the justice of their cause, and yet
whose proceedings may be regarded
as vexatious when they put the other side to unnecessary trouble and
expense which the other
side ought not to bear."
[36]
In
SOUTH AFRICAN BUREAU OF STANDARDS v GGS/AU (PTY) LTD
supra
Patel, J was also called upon to consider the issue of costs
in a summary judgment application where the plaintiff was
sufficiently
informed, by means of a letter in the case under
consideration, of the defendant's defence, prior to the issuing of
summons against
the defendant. The learned Judge made the following
observations in paragraph 10 of the judgment which are equally
applicable in
this matter:
"Under
the circumstances, it should have discouraged the plaintiff from
launching the summary judgment application. But it
totally
disregarded the defendant's right to defend the action
by putting the latter to
unnecessary
trouble and expense to oppose the application and
thereafter conceding to give leave to defend. Therefore,
if Rule
32(9)(a) is to have any force and effect then it should certainly be
applied in this matter which
was indeed misconceived under
the circumstances and foredoomed to failure."
[37]
The
application for summary judgment in this instance amounts
to
an abuse of the procedure. It
was,
to
borrow from the judgments cited with approval
above, foredoomed to failure.
It
totally
disregarded the defendants' right to defend and was totally
unreasonable. As a result the defendants were indeed put through
unnecessary trouble and expense.
[1]
The
application
should simply never have been made.
[38]
It is not in dispute that the defendants did not consent to the
removal of the application for summary judgment from the roll.
The
plaintiff at no time sought to obtain leave from either the
defendants or the court to withdraw the application and clearly
has
no such intention.
[39]
The defendants were entitled to persist with their opposition and to
argue the matter relating to costs. To this end the plaintiffs
attempted removal of the application from the opposed roll was a
purported removal without legal consequence. The matter was postponed
for hearing by agreement between the parties. The plaintiff did not
withdraw its application for summary judgment, as stated. The
plaintiff could not in the circumstances unilaterally remove the
matter from the opposed roll as it purported to do without the
defendants' consent or leave of court. The notice of removal of the
application from the roll was therefore irregular and of no
legal
consequence. On the same score the defendants' 'notice of
re-enrolment' was completely unnecessary and also has no legal
consequences. The matter remained on the opposed roll and served for
adjudication.
[40]
On
the day preceding the day on which the application was enrolled to be
argued
[2]
the plaintiff filed
heads of argument relating to the issue of costs. The
heads of argument were signed by counsel
on 9 May 2017. I condoned
the irregular filing of the plaintiff's heads of argument so that the
matter could be
ventilated
and finalised.
[41]
Although the defendants did not take issue with the irregular filing
of the plaintiff's heads of argument, it remains the court's
rule of
practice which was not complied with. In order to prevent the costs
from further escalating should the matter not proceed,
I accepted the
heads of argument and heard arguments as stated. This must not be
seen as a precedent.
Cursus curiae est lex curiae,
the
practice of the court is the law of the court.
[42]
In light of my conclusions effect must be given to provisions of
Uniform rule 32(9)(a).
[43]
Accordingly,
IT IS ORDERED
THAT:
1.
Summary judgment is refused and leave is granted to the defendants to
defend the action.
2.
The plaintiff is ordered to pay the defendants' costs of the summary
judgment proceedings on the attorney and
client scale.
3.
The costs incurred by the defendants pertaining to the notice of
enrolment of the summary judgment application
subsequent to the
plaintiffs notice, dated 4 May 2017, of removal of the application
for summary judgment from the opposed roll,
is excluded from the cost
order in paragraph 2 above and is not recoverable from the plaintiff.
__________________
N.
SNELLENBURG, AJ
Appearance
on behalf of the plaintiff:
Adv PC Ploos van Amstel
Instructed
by:
Mr OJ van Schalkwyk
Lovius Block Attorneys
Appearance
on behalf of the defendant:
Adv J Els
Instructed
by:
Mr R Oosthuizen
EG Cooper Majiedt Inc
[1]
See also
Ebrahim
v Excelsior Shopfitters and Furnishers
(Pty) Ltd
(II)
1946
TPD 226 at 236
Lemore
v
African
Mutual
Credit
A
ssociation
and
Another
1961
(1)
SA
195
(C)
at
199.
[2]
10
May
2017.