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[2021] ZASCA 150
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Rand West City Local Municipality v Quill Associates (Pty) Ltd and Another (497/20) [2021] ZASCA 150 (26 October 2021)
THE
SUPREME COURT OF APPEAL OF SOUTH AFRICA
JUDGMENT
Reportable
Case No: 497/20
In
the matter between:
THE
RAND WEST CITY LOCAL
MUNICIPALITY
APPELLANT
and
QUILL
ASSOCIATES (PTY) LTD
FIRST RESPONDENT
THE
REGISTRAR OF THE
HIGH
SECOND RESPONDENT
COURT
(GAUTENG DIVISION,
PRETORIA)
Neutral citation:
Rand West City Local Municipality v Quill Associates (Pty) Ltd
and Another
(Case no 497/20)
[2021] ZASCA 150
(26 October 2021)
Coram:
NAVSA ADP, MATHOPO, MOLEMELA, MOKGOHLOA AND GORVEN JJA
Heard
:
09 September 2021
Delivered
:
This judgment was handed down electronically by circulation to the
parties’ representatives by email,
publication on the Supreme
Court of Appeal website and release to SAFLII. The date and time for
hand-down is deemed to be 09h45
on 26 October 2021.
Summary:
Practice and Procedure – validity of writ of execution –
Registrar issuing writ not engaging in administrative action
–
not reviewable under the
Promotion of Administrative Justice Act 3 of
2000
- question is whether writ is in accordance with court order –
respondent caused writ to be issued outside of terms of court
order –
impermissibly providing for compound interest and value added tax
(VAT) – writ liable to be set aside.
ORDER
On
appeal from:
Gauteng Division of the High Court, Pretoria (Botes
AJ) sitting as court of first instance:
1.
The appeal is upheld with costs of two counsel, where so employed.
2.
The order of the court
a quo
is set aside and replaced with
the following order:
‘
1.
The “writ of execution – incorporeal property”
under case numbers
36264/2013 and 362645/2013 in favour of the first
respondent as execution creditor, in terms of which the Sheriff was
directed
to attach and take into execution the sum of R7 965 470.56
plus interest at the rate of 15.5% calculated per annum and
compounded monthly as from 11 July 2018 to date of payment, and other
taxed costs and charges besides the costs of the Sheriff
against the
“incorporeal property” of the applicant held at First
Rand Bank (Randfontein) cheque account number 672-387-440-45
is set
aside.
2.
The first respondent is ordered to pay the costs of the application.’
JUDGMENT
Mokgohloa
JA (Navsa ADP, Mathopo, Molemela and Gorven JJA concurring)
[1]
This appeal concerns the validity of a writ of execution
issued at the instance of the first respondent, Quill Associates
(Pty)
Ltd (Quill), purportedly in accordance with an order of the
Gauteng Division of the High Court, Pretoria (the trial court), dated
31 July 2015. The writ was issued against the appellant, the Rand
West Local Municipality (the Municipality).
[2]
The background
facts are largely common cause. During 1998 a predecessor of the
appellant
[1]
concluded an agreement with Quill, in terms of which it purchased a
software program (the BIQ program) from the latter. In terms
of the
agreement, it was entitled to the necessary support and maintenance
for a period of one year, renewable annually. During
2004 the
predecessor underwent a name change. This resulted in a new agreement
being entered into in terms of which it was not
expected to pay for
the BIQ program again, but was to continue to pay licence fees, as it
did in the previous years. In July 2011,
one of the appellant’s
predecessors gave notice to terminate the 2004 agreement and informed
the first respondent that it
would continue using the BIQ program on
a month-to-month basis. An extended exchange of correspondence and
interactions ensued
between the formerly disparate municipalities,
now the appellant, and Quill concerning the continued use of the BIQ
program. Litigation
was threatened as no new agreement could be
reached concerning the future use of the BIQ program. During this
period the appellant’s
predecessors continued using the program
without paying licence fees. This caused the first respondent to
institute action against
the appellant’s two predecessors in
the trial court, claiming interdictory and monetary relief. The claim
was based on an
infringement
of
Quill’s copyright in the BIQ program in terms of s 24(1) of the
Copyright Act
[2]
.
[3]
After hearing evidence and argument, the trial court
(Potterill J) held that they had infringed Quill’s copyright
and granted
the interdictory relief claimed in the summons. It also
concluded that a reasonable royalty was a substantive remedy. Thus,
it
granted a monetary judgment in favour of the first respondent
together with ‘interest on the said amounts at a rate of 15.5%
per annum
ad tempore mor
e; VAT if VAT is payable on the
amounts so ordered.’ The appellant made certain payments
pursuant to this order.
[4]
The first respondent caused the second respondent, the
Registrar of the High Court, to issue a writ of execution on the
balance
outstanding. In the affidavit in support of the writ, the
first respondent averred that interest had to be calculated from the
date of service of the summons to the date of payment ‘capitalized
monthly’ and that interest on the balance after payment
had to
be ‘compounded monthly’. The first respondent further
claimed that VAT was payable and caused the Registrar
to include all
these claims in the writ. The Deputy Sheriff executed the writ on 10
July 2018 by attaching an amount of R7 965
470-56 in the
Municipality’s bank account. This caused the Municipality to
launch an application in the Gauteng Division
of the High Court,
Pretoria (the court
a quo
), for an order reviewing and setting
aside the writ in execution on the basis that the writ was not in
accordance with the order
of the trial court. More particularly that
the order did not provide for interest to run from date of summons,
or for compound
interest or VAT. The court
a quo
dismissed the
application with costs. This appeal is against that order.
[5]
The high court (Botes AJ) considered that the case before it raised
novel issues.
First, whether a ‘decision’ to issue a writ
of execution was susceptible to review in terms of the Promotion of
Administrative
Justice Act 3 of 2000 (PAJA). Second, whether interest
a tempore morae
is ‘calculated from the date when the
liability arose,
or on a date when the
summons was served as provided for in the
Prescribed Rate of Interest
Act 55 of 1975
.’ Third whether value added tax is payable on an
amount in respect of an order or an award made by a Court pursuant to
the
provisions of the
Copyright Act 98 of 1978
.
[6]
Reliance on PAJA as a basis for review and for the setting aside of
the writ was correctly
abandoned before us. It is difficult to
discern what precisely the high court determined in this regard. It
appeared to keep the
option of a PAJA-based review open, concluding
that the Registrar could not be accused of not applying his mind,
whilst at the
same time accepting that the basic test is to determine
whether a writ is in accordance with the court order on which it is
premised.
It is clear that a writ will be set aside where it does not
accord with the order on which it was purportedly issued, or the
facts
show that the debt has been satisfied, or the order on which it
was premised is itself set aside.
[3]
The Registrar does not engage in administrative action when he/she
issues a writ. It can and ought to be challenged on the principle
of
legality.
[7]
The high court went into a lengthy discussion on whether interest ran
from the date
of service of summons or from the time of the award.
Botes AJ considered that he should consider what
a
tempore morae
meant in
the ‘present context’. Significantly, the court
recognized that the court order did not ‘expressly
state from
which specific date interest should be calculated’. Relying on
the decision of this court in
Drake
Flemmer & Orsmond Inc and Another v Gajjar NO
[4]
,
Botes J concluded that interest must be taken to run from the date of
service of the summons.
[8]
In relation to compound interest the high court, relying on the
decision of this court
in
Davehill
(Pty) v Community Development Bank
[5]
,
concluded that Quill suffered ‘further damage by virtue of the
fact that [the Municipality] failed and omitted to effect
payment of
royalties and the monthly licence fees since the date upon which the
combined summonses were served on the [Municipality’s]
predecessors.’ The high court went on to hold as follows:
‘
Mora
interest remains a specie of damages on which [Quill] remains
entitled to recover from the [Municipality]. I therefore find
that
[Quill] is entitled to claim compound interest from the
[Municipality], in accordance with and provided for in the
calculation
by [Quill]’.
[9]
The approach of the high court was flawed. First, it failed to have
regard to the
relief sought by Quill before the trial court. Compound
interest was not prayed for.
[6]
The trial court was specifically asked to determine the amount of a
reasonable royalty and licence fees. At paragraphs 49 and 50
the
trial court set out a range of factors taken into account to
compensate Quill for the breach of its copyright. Potterill J
did not
at any point in the judgment allude to the impact of delay on the
value of the monetary award and the need to compensate
by way of a
specific more onerous form of interest, namely, compound interest. In
any event, compound interest is claimable in
certain defined
instances, which were not asserted, considered or applicable in the
present case.
[7]
It was not for Botes AJ to visit an issue that the high court was not
called upon to determine and which, by all indications in
the
judgment, it did not consider. Until the reasonable royalty, based on
all the factors alluded to by the trial court, and licence
fees were
determined, there were no amounts on which interest could run.
Interest would, in the ordinary course, run from that
date at the
prescribed rate of interest.
[10]
It is so that compensation in the form of a monthly licence fee from
the time
of
the service of the summons and until the Municipality ceased
infringement of Quill’s copyright was sought, but that was
catered for when the trial court made its award. Interest was not
sought
[8]
nor granted on the basis reflected in the writ.
[11]
Botes AJ’s reliance on
Drake
Flemmer
is unhelpful
and was misplaced. The principal issue in that case was how to
account for the effects of inflation and trial delay
on the value of
the claim.
[9]
It involved a claim against attorneys for professional negligence in
the conduct of a client’s claim against the Road Accident
Fund
where the claim was settled well below its true value.
[10]
The evidence adduced at the trial was directed at proving the amount
he would have been awarded had his claim against the Fund
been
properly conducted and to that end his claim was actuarially valued
at a particular point in time.
[11]
The court in that case noted that the claim was based on breach of
contract. That essentially was the basis on which the monetary
claim
was assessed. An award of contractual damages is designed to put the
aggrieved party in the position he would have enjoyed
had the mandate
been properly performed.
[12]
As can be seen it is thus a very different case on the pleadings, the
law, and the facts from the one in the instant case.
[12]
So too, was the high court’s reliance on
Davehill
.
That case concerned an expropriation under the provisions of the
Expropriation Act 63 of 1975. In terms of s 12(3) of that Act,
the
Community Development Board was obliged to pay interest to the
appellants from the date of taking occupation of the properties
on
any outstanding portion payable in respect thereof.
[13]
That was described by the court as statutory interest. The pleadings
in that case sought
mora
interest on the amount
of statutory interest outstanding. That was what the court in that
case was asked to adjudicate. It then
proceeded to deal with the
question of the rate of
mora
interest in terms of the
Prescribed Rate of Interest Act 55 of 1975
.
It was concerned with the meaning of ‘special circumstances’
in
s 1(1)
of that Act, entitling a court to depart from those
provisions concerning the rate of interest. Special circumstances
relate to
the facts of a particular case, which must be raised and
adjudicated.
[14]
In that case special circumstances were found wanting. Once again,
the pleadings, the law and the facts of that case are far removed
from that of the present.
[13]
Lastly, in relation to the question of VAT, the high court was not
called upon to decide whether
it was payable. That was a question for
the trial court, which had avoided that question and made an order,
which, impermissibly,
was vague and unenforceable. The high court was
not sitting as a court of appeal on the correctness of the
conclusions reached
by the trial court. Its duty was to look to see
if the writ was in accordance with the order and not to embark on
answering the
novel questions it identified.
[14]
The Municipality was thus undoubtedly correct in its stance on the
time from when
mora
interest started to run, namely, the time
of the determination by the trial court, of what was due to Quill in
the form of reasonable
royalty and licence fees. So too, the
Municipality was correct in relation to compound interest and VAT.
Quill sought more than
its pound of flesh. The writ was not in
accordance with the order of the trial court and is liable to be set
aside.
[15]
The following order is made:
1
The appeal is upheld with costs, including the costs of two counsel,
where
so employed.
2
The order of the court
a quo
is set aside and replaced with
the following order:
1
The ‘writ of execution – incorporeal property’
under case numbers 36264/2013 and 36265/2013 in favour of the
first
respondent as execution creditor, in terms of which the Sheriff was
directed to attach and take into execution the sum of
R7 965 470.56
plus interest thereon at the rate of 15.5% calculated per annum and
compounded monthly as from 11 July
2018 to date of payment, and other
taxed costs and charges besides the costs of the Sheriff against the
“incorporeal property”
of the applicant held at First
Rand Bank (Randfontein) cheque account number 672-387-440-45 is set
aside.
2
The first respondent is ordered to pay the costs of the application.’
FE
MOKGOHLOA
JUDGE OF APPEAL
APPEARANCES:
For
appellant:
A F Arnoldi SC and J J Botha
Instructed
by:
Smith Van der Watt Inc., Krugersdorp
Symington and De Kok Inc.,
Bloemfontein.
For
respondent:
S D
Wagener SC
Instructed
by:
A L Maree Inc., Pretoria
Martins
Attorneys, Bloemfontein.
[1]
The
appellant became a successor in title of the Randfontein and
Westonaria municipalities after the amalgamation of the
aforementioned
two municipalities on 3 August 2016.
[2]
S24(1)
of the
Copyright Act 98 of 1978
provides:
‘
Action
by owner of copyright for infringement
(1)
Subject to the provisions of this Act, infringements of copyright
shall be actionable at the suit of the owner of the copyright,
and
in any action for such an infringement all such relief by way of
damages, interdict, delivery of infringing copies or plates
used or
intended to be used for infringing copies or otherwise shall be
available to the plaintiff as is available in any corresponding
proceedings in respect of infringements of other proprietary
rights.’
[3]
Le
Roux v Yskor Landgoed (EDMS) BPK en Andere
1984
(4) SA 252
(T) at 257 B-I.
[4]
Drake Flemmer &
Orsmond Inc and Another v Gajjar NO
[2017]
ZASCA 169; 2018 (3) SA 353 (SCA).
[5]
Davehill (Pty) v
Community Development Bank
[1987]
ZASCA 120;
1988
(1) SA 290 (A).
[6]
This
appears from the recital of the relief sought set out at para 1 of
that judgment.
[7]
Euro
Blitz 21 (Pty) Ltd Another v Secena Aircraft Investments CC
[2015]
ZASCA 21
; JOL 32990 (SCA).
[8]
Para 1
of the trial court’s judgment and paras 12.1 to 12.3 of the
relief sought by Quill.
[9]
Fn 4
para
1.
[10]
Fn 4
para
1.
[11]
Fn 4
para
3.
[12]
Fn 4
paras
40 and 41.
[13]
Davehill
295
E- I.
[14]
Davehill
301
D-F.