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[2016] ZAGPPHC 198
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Exxaro Coal Mpumalanga (Pty) Ltd v Elandsfontein Colliery (Pty) Ltd (63004 /14) [2016] ZAGPPHC 198 (24 March 2016)
IN
THE HIGH COURT OF SOUTH AFRICA
(GAUTENG
DIVISION, PRETORIA)
Case
number: 63004 /14
DATE:
24 MARCH 2016
In the matter
between:
EXXARO COAL
MPUMALANGA PTY
LTD
................................................................
APPLICANT
And
ELANDSFONTEIN
COLLIERY (PTY)
(LTD)
...........................................................
RESPONDENT
JUDGMENT
NOWOSENTZ L
BACKGROUND
[1] The applicant
brought this application by motion proceedings on 22 April 2014. The
claim is against the respondent for payment
of R15 499 877,44
together with interest and costs for coal sold and delivered pursuant
to three written Coal Purchase Agreements
entered into between the
parties during February , March and April 2013. An application for
amendment of the Notice of Motion was
sought at the hearing in order
to rectify these agreements by the insertion of the words per “per
metric ton” after
the price. It is common cause that the price
of coal sold was per metric ton and the amendment was not opposed.
The amendment is
accordingly granted. The respondent made an
unconditional payment in the sum of R4 241 528,64 to the applicant
and the applicant
has reduced its claim which was formulated in Draft
Order handed in and marked “X”.
[2] The application
was opposed. After the filing of the applicant’s replying
affidavit, the respondent filed an application
to strike out parts of
the applicants replying affidavit and leave to file a supplementary
affidavit. The supplementary affidavit
introduced new material
relating to the set off agreement. The Applicant filed a
supplementary affidavit to deal with this new
material. These
affidavits are accepted. The respondent did not persist with the
striking our application but contended the proceedings
by the
applicant were vexatious.
[3] Prior to this
application, on 14 February 2014 the applicant commenced action
against the Respondent in this Court under case
12833/14 based on the
same claim. A notice of intention to defend the action was delivered
by the respondent on 3 March 2014. The
applicant filed an application
for amendment to its Particulars of Claim which was opposed by the
respondent and has not been resolved.
The disputed part of the
proposed amendment is an allegation in paragraphs 6.4 and 6.5 that
during the period August to early December
2013 the defendant during
negotiations admitted liability for the Plaintiffs claim. No plea has
been filed.
[4] The parties
agreed to a meeting of a Special Committee as envisioned in Clause 21
of the Coal Purchase Agreements which provides
a dispute resolution
procedure. The first step consists of a meeting by a joint committee
with two representatives of each party
who “shall use its bona
fide best efforts to resolve the dispute”. Should the committee
fail, the second step is that
the dispute shall be referred to
arbitration. A meeting of the Special Committee took place on 8 May
2014 and minutes were drawn
up. Paragraph 6 of the minutes reflects
inter alia that the respondent admitted indebtedness to the applicant
and for the amount
claimed. In regard to payment the respondent
proposed that the amount due would not be paid until the applicant
paid an alleged
amount due to an associated company of the respondent
alternatively that the alleged amount be set off against the
applicant’s
claim against the respondent. The applicant did not
agree to this proposal in a letter by its attorney dated 25 June
2014. Neither
party relied on the second step ie arbitration.
RESPONDENT’S
INDEBTEDNESS
[5] The applicant
relies on clause 21 of the Coal Purchase Agreements in contending
that the meeting achieved its purpose of resolving
the dispute by the
respondent’s admission of liability. The respondent admits in
paragraph 49 of its Answering Affidavit
that the dispute in regard to
its indebtedness to the applicant has been resolved and that it
indebted to the plaintiff.
[6] The applicant
contends further that motion proceeds are appropriate and the action
is no longer necessary in view of the respondent’s
admission of
indebtedness. Therefore it is argued that the balance of convenience
and equity are in favour of the motion proceedings.
It has filed a
notice of withdrawal of the action conditional on being granted
relief in this application.
[7] The respondent
in its answering affidavit raised the defence of lis alibi pendens
and prays that the application be dismissed
with costs on an attorney
and client scale. It denies the dispute was settled as the set off
was not dealt with and the minutes
should not be disclosed. It
alleged an agreement was reached in an email from Ms M Steyn on
behalf of the applicant to Mr JHJ Schoeman
the MD of the respondent
and deponent on 12 December 2013. It was contended that properly
interpreted, the email provided that
the applicant and Exarro Coal
(Pty) Ltd, (Exarro) applicant’s holding company would deduct
from applicant’s claim against
the respondent, their use of the
throughput entitlement of Golfview Mining(Pty) Ltd (Golfview) at
Richards Bay Coal Terminal granted
by South Dunes Coal Terminal (Pty)
Ltd (SDCT) . Golfview and the respondent are both wholly owned
subsidiaries of Anker Coal and
Mineral Holdings (ACMH).The amount due
after 30 November 2013 could not be quantified according to the
deponent, until a determination
was made of the reasonable price for
the allocation per tonne utilised though Golfview’s RBCT
entitlement. Notwithstanding
this, an undisclosed tender of payment
was made in terms of Rule 34.
[8] In its replying
affidavit the applicant categorically denied the existence of any set
off agreement having been intended or
reached. The email in question
was in the context of an attempt to restructure the debt of ACMH to
SDCT in which Exarro had a vested
interest as shareholder and wished
to minimise its risk. The contemplated measures included a proposed
five year lease to Exarro
of the use entitlement of ACMH which was
subject to the release of an Investec guarantee by Anker BV the Dutch
parent company of
ACMH. The applicant emphasised that no agreement
eventuated from the proposals in Ms Steyn’s letter dated 12
December 2013.
[9] The next day, 13
December 2013, Ms Steyn received a letter from the attorney of ACMH
and Golfview not only alleging that Exarro
was unlawfully using ACMH
and Golfview’s throughout entitlement from SDCT but that ACMH
and Golfview were not indebted to
Exarro and that no set off is
possible in the circumstances. Furthermore it was pointed out by the
applicant that the set off claimed
by the respondent is not a
liquidated amount and should be between the same parties.
[10] The respondent
justified its supplementary affidavit on the basis that Mr Schoeman
restricted the documents containing the
respondent’s defence
and to fully dispel the submission made by Ms Steyn that the
respondent's defence is contrived and dishonest.
To this end he
submitted a series of correspondence prior to the applicant’s
alleged set off agreement dated 12 December
2013 and an unsigned
entitlement lease agreement between Golfview and Exarro. It was
submitted that cumulatively considered these
documents show that a
lease agreement, containing a set off was created,
recorded in an email
from Exarro dated 26 September 2013. It was not however formalised.
[11] The deponent
disclosed that a with prejudice tender was made by the respondent to
the applicant in the sum of R4 241 528, 64
which it regards as
representing the difference between the sum claimed and R11 258
548.80 which is granted in its favour in the
motion proceedings.
[12] In the
applicant’s supplementary replying affidavit Ms Steyn pointed
out that the attorney’s letter dated 13 December
2013 was not
dealt with by the Respondent at ali. She also noted that the
respondent s case had shifted in that it now introduced
an agreement
creating a set off dated 26 September 2013. The sequence of events
was set out in detail and it was denied that any
such agreement came
into being. She showed how respondent’s excerpts of her
correspondence such as thanking Mr Schoeman for
his “efforts in
concluding this business” was not evidence of the conclusion of
any agreement which still had to be
negotiated and drafted, which
eventuality never transpired.
[13] There is
certainly nothing untoward in a plaintiff applying in motion
proceedings for judgment in action where the defendant
has clearly
conceded liability. The fact that no formal settlement was reached
does not diminish from the respondent's admission
of liability of the
applicant’s claim both at the Special Committee meeting and on
these papers. Despite the defence of set
off by the respondent, the
applicant submits that no real dispute of fact exists and the
respondent has been less than honest.
Wightman i/a JW
Construction v
Headfour (Pty) Ltd
[2008] ZASCA 6
;
2008 (3) SA 371
(SCA) was cited at paragraph [13]
that a party is required to seriously and unambiguously grapple with
the allegations by the other
party.
“There is thus
a serious duty imposed upon a legal advisor who settles an answering
affidavit to answer and engagement with
facts which his client
disputes and reflect such disputes fully and accurately in the
answering affidavit. If that does not happen
it should come as no
surprise that a court takes a robust view of the matter”.
[14] In Standard
Bank of South Africa v Renico Construction (Pty) Ltd
2015 (2) SA 89
(GJ) at paragraph [6] Sutherland J succinctly stated the requirements
for establishing
set- off as follows -
“What
attributes must each debt possess to qualify for set-off? The
elements are:
1. Both debts must
be due to and owed by the same pair of persons.
2. Both debts must
be liquidated.
3. Both debts must
be due and payable. “
[15] At paragraph
[14] the learned judge stated further:
“In Frank v
Premier Hangers CC
2008 (3) SA 594
(C), the predicament of a litigant
who wishes to invoke set-off is addressed. The court, having
reiterated that unliquidated damages
can never be set off against a
debt, went on to demonstrate that the remedy of such a party is to
seek a stay of the claim and
thereupon establish by legal proceedings
the damages and its quantum. (See too: Western Cape Housing
Development Board v Parker
& Ano
2003 (3) SA 168
(C).) “
[16] In Fattis
Engineering Co (Pty) Ltd v Vendick Spares (Pty) Ltd
1962 1 SA 736
(T)
Boshoff J (as he then was) stated at 737:
“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 it is capable of prompt ascertainment.”
[17] The respondent
has never made a demand for payment of its set off claim either
before the issue of summons by the applicant
or even after the
Special Committee meeting. It does not allege when the set off amount
became due and payable. It simply states
that it is now due and
payable. It has never formulated, computed or quantified its claim
before these proceedings. Only in its
supplementary affidavit it
quantified its set off claim in the sum of R11 258 548.80. There is
no counter-application. The set
off is a separate cause of action
which must be pleaded and proven by the respondent. It has failed to
do this.
[18] It is indeed an
extraordinary volte face in the respondent's case that the
contractual basis of its set off shifted from 12
December 2013 in its
answering affidavit to 26 September 2013 in its supplementary
affidavit. All this information was in the peculiar
knowledge of the
Respondent and no good reason has been shown why it failed to deal
with its claim comprehensively in its answering
affidavit. The onus
of proof rests on the respondent to raise the defence of set off and
the applicant cannot be blamed for the
respondent’s failure to
set out the facts on which its defence or counterclaim is based in a
thorough and convincing way.
The turgid and piecemeal manner in which
the respondent has presented its case invites the considerations in
Wightman’s case.
In essence the respondent attempts to create a
contractual relationship with serious financial implications in a
complex and structured
business environment from a patchwork of
emails and letters. It is most improbable when viewed against the
voluminous and intricate
contracts involving the parties or their
holding or filial companies, filed of record as background material
that the parties contracted
on such an informal basis.
[19] The most
disingenuous part of the respondent’s case and ultimately the
tipping point against the argument by the respondent
of a genuine
dispute of fact is the denial by the attorney of ACMH and Golfview of
a set off with Exarro and the egregious failure
of the respondent to
deal with this at all.
[20] In conclusion
the respondent has not sufficiently established a contractual basis
for a set off. The onus of proof rested entirely
on the respondent.
The amount of the set off claim appears for the first time in the
respondent’s supplementary affidavit.
It is not clear when the
debt became due. Again this offends the principles in Wightman’s
case in that the respondent could
have succinctly and clearly stated
the facts it relied upon for the set off in the answering affidavit.
Nothing prevented the respondent
from not just raising a dispute f
fact as a defence but it could have filed a counterclaim thus putting
its full weight behind
its case. In conclusion there is no serious
dispute on these papers and the respondent’s indebtedness as
claimed been established.
There being no counterclaim, no absolution
in regard to the alleged set off can be ordered and this judgment is
no impediment to
the respondent bringing any claim in the future
against the applicant. The applicant is entitled to an order in terms
of the Draft
Order marked “X”.
LIS ALIBI PENDENS
[21] The principle
of lis alibi pendens is an equitable and practical one. The applicant
was justified in bringing motion proceedings
after it had commences
action proceedings in view of the admission of liability by the
respondent at the Special Committee meeting
on 8 May 2014. The
failure of the parties to agree that there was a set off may not have
created a settlement, however nor did
it create a real dispute of
fact which the applicant was aware of when it commenced motion
proceedings. Indeed as has been pointed
out the basis of the set off
was only formulated and brought to applicant’s attention in the
answering and supplementary
affidavits of the respondent for the
first time. The applicant was entitled to invoke the more convenient
and speedy remedy of
motion proceedings and has successfully rebutted
the prima face inference that the motion proceedings are vexatious.
Indeed the
applicant seeks punitive costs for what it submits is
dishonest conduct and contradictory statements by the respondent. In
my view
normal costs should suffice.
ORDER
An order is made in
terms of the draft order (as amended) marked “X”.
NOWOSENTZ LAJ
Appellants
Representative
Counsel NGD
Maritz (SC)
Instructing
Attorney Mahlangu Incorporated
Respondents
Representative
Counsel F
Terblanche (SC)
Instructing
Attorney Werkmans Attorneys
Date heard
20/05/2015
Date delivered
IN THE HIGH COURT
OF SOUTH AFRICA
GAUTENG DIVISION,
PRETORIA
CASE NO:
63004/2014
BEFORE THE HIS
LORDSHIP
In the
application between:-
EXXARO COAL
MPUMALANGA fPTY) LIMITED Applicant
And
ELANDSFONTEIN
COLLIERY (PTY) LIMITED Respondent
DRAFT ORDER
1. The first
agreement, annexure “A” to the application, is rectified
by inserting the words “per metric ton”
after the price
“ZAR 580 (R580.00)” in paragraph 9 thereof;
2. The second
agreement, annexure “B” to the application, is rectified
by inserting of the words “per metric ton”
after the
price “ZAR 600 (R600.00)” in paragraph 9 thereof;
3. The third
agreement, annexure “C" to the application, is rectified
by inserting the words 11 per metric ton”
after the price “ZAR
595 (R595.00)” in paragraph 9 thereof;
4. The respondent is
ordered to pay to the applicant an amount calculated as follows:
4.1 A capital amount
of R11 285 348.80;
Plus
4.2 Interest on the
amount of R4 103 791.20 calculated at the rate of
11. 5% per annum,
compounded and capitalised monthly on the last day of each month,
from 30 March 2013 to 27 March 2015;
Plus
4.3 Interest on the
amount of R6 033 979.87 at the rate of 11.5% per annum, compounded
and capitalised monthly on the last day of
each month, from 13 April
2013 to 27 March 2015;
Plus
4.4 Interest on the
amount of R5 896 242.43 at the rate of 11.5% per annum, compounded
and capitalised monthly on the last day of
each month, from 28 March
2015 to date of payment;
Plus
4.5 Interest on the
amount of R18 917.71 at the rate of 11.5% per annum, compounded and
capitalised monthly on the last day of each
month, from 22 April 2013
to date of payment;
Plus
4.6 Interest on the
amount of R5 343 188.66 at the rate of 11.5% per annum, compounded
and capitalised monthly on the last day of
each month, from 5 May
2013 to date of payment.
5. Cost of the
application, inclusive of the costs of senior counsel.
BY THE COURT
REGISTRAR