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[2016] ZAGPPHC 1224
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Drive Control Corporation (Pty) Ltd v Deltrosys (Pty) Ltd and Another (14356/2016) [2016] ZAGPPHC 1224 (4 November 2016)
REPUBLIC
OF SOUTH AFRICA
IN
THE HIGH COURT OF SOUTH AFRICA,
GAUTENG
DIVISION, PRETORIA
CASE
NO: 14356/2016
4/11/2016
REPORTABLE
NOT
OF INTEREST TO OTHER JUDGES
REVISED.
In
the matter between:
DRIVE
CONTROL CORPORATION (PTY)
LTD
Applicant
and
DELTROSYS
(PTY)
LTD
First
Respondent
ROBERT
PAUL
WEIMAR
Second
Respondent
JUDGMENT
SUMMARY
Application
for summary judgment.
Defences:-
no agreement because applicant had not signed acceptance -
quasi-mutual assent. First respondent's and applicant's conduct
constituting
consent.
Surety:-
applicant supplying goods in excess of value provided for on
credit application. Principal debtor not disputing liability in
respect
of excess.
-Surety
cannot rely on same for release.
Interest:-
mora interest where no contractual interest provided for.
WEINER.
J:
1.
The applicant (Drive Control) applies for summary judgment
against the first and second respondents (Deltrosys and Weimar). The
claim against Deltrosys is for payment for goods sold and delivered.
The claim against Weimar is in respect of a written suretyship
signed
by Weimar.
2.
Drive Control alleges that, on or about the 18
th
August 2015, Deltrosys represented by Weimar (who is a director of
the first respondent) concluded a written agreement styled
"Application for Dealership (including Application for
Credit Facilities and Sureties)" with Drive Control, represented
by one De Jager (the dealership agreement).
3.
The dealership agreement consisted of the application form
completed by Weimar on behalf of Deltrosys to which was attached a
document
setting out the terms and conditions of sale. It is not
disputed by the respondents that the application was signed by Weimar
as
director of Deltrosys.
4.
It is also not disputed by Weimar that, subsequent to the
signing of the dealership agreement, Deltrosys placed orders on Drive
Control during August and September 2015 to the value of R2 123
204,40 which orders, despite delivery, and the lapse
of
the requisite 60 day period, have not been paid for by
De!trosys. The monthly purchase limit was R1 250,000,00.
5.
It is further not disputed by Weimar that the dealership
agreement contains a separately demarcated area headed "Suretyship".
He does not dispute that he signed the terms and conditions of sale
and the suretyship on the 18
th
August 2015.
RESPONDENTS'DEFENCES
NO
AGREEMENT
6.
Weimar does not deny that he signed and initialled the
documents comprising the original dealership agreement nor does he
deny that
his signature and handwriting appear on the copies sought
to be relied upon by Drive Control. The copies attached to the
particulars
of claim are of the original agreement accompanied by a
lost document affidavit.
7.
The
respondents rely on the alleged failure of Drive Control in not
signing the application for credit. Thus, they contend that
no
contract was concluded between the parties. They do not allege that
there was an obligation on Drive Control to countersign
the
application for credit facilities in order to conclude a contract
between the parties. The place for signature for Drive Control
appears in a separately demarcated area "for office use only".
The internal issues referred to under this heading do
not form part
of the contractual terms of the application. Drive Control contends
that this defence must fail as no method of acceptance
was prescribed
and therefore the communication of acceptance can take any form. It
can be done by conduct indicating acceptance
of the offer as well as
by words expressing it. See Driftwood Properties (Pty) Ltd v
McLean.
[1]
8.
Drive
Control submits that it accepted the offer conduct in receiving the
Deltrosys' order for goods and supplying the goods on
the terms set
out in the annexure to the dealership application. Drive Control
states that, even if the dealership application
constituted an offer,
which required countersignature by two directors of Drive Control in
order for acceptance to take place,
if this does not occur, this does
not mean that a contract does not come into existence. Drive Control
refers to the doctrine of
quasi-mutual assent and refers to Pillay
and Another v Shaik and Others.
[2]
In that case, the sellers had drawn up standard form agreements for
completion by buyers of the member's interest in close corporations,
which were developing properties. Buyers who wished to buy into the
development, signed the standard form agreements making offers
to
purchase. The buyers paid the deposits and the receipt was
acknowledged. The buyers also furnished guarantees. All of the above
acts took place without the buyers being aware that the sellers had
not yet signed the agreements. The sellers thereafter denied
the
existence of the alleged agreement on that basis. The SCA held that
when an agreement does not have to be in writing, such
an agreement
will have binding force, unless the parties agree beforehand that
writing constitutes a formality.
9.
The
SCA held further that the critical question was whether the party's
actual intention, which did not conform to the declared
intention,
led the other party, as a reasonable man, to believe that its
declared intention represented its actual intention.
[3]
"[55] The
approach to be adopted in a case such as this was set out in Sonap
Petroleum (SA) (Pty) Ltd v Pappadogianis, supra,
at 239F to 240 B, as
follows:
'If regard is had to
the authorities referred to by the teamed Judges ....I venture to
suggest that what they did was to adapt,
for the purposes of the
facts in their respective cases, the well known dictum of
Blackbum J in Smith v Hughes
(1871) LR 6 QB 597
at 607, namely:
"If, whatever a
man's real intention may be, he so conducts himself that a reasonable
man would believe that he was assenting
to the terms proposed by the
other party, and that other party upon the belief enters into the
contract with him, the man thus
conducting himself would be equally
bound as if he had intended to agree to the other party's terms."
10.
Drive Control contends that the same reasoning applies to the
facts of the present case. Deltrosys (whose intention now does not
appear to conform to their declared intention in the dealership
application) has, by its conduct in placing orders with Drive
Control, arranging for a courier to collect same, accepting delivery
and taking possession of the goods, misrepresented its actual
intention and led Drive Control, as a reasonable person, to believe
that Deltrosys' declared intention in the dealership agreement
represented its actual intention.
AGENCY
11.
The respondents also seek to raise a defence that Deltrosys'
intention was to act as an agent for a third party (referred to as
"Richard Cape") and is therefore not liable for payment of
certain of the goods referred to in certain of the annexures.
However, Weimar stated in the affidavit resisting summary judgment
"having been under the mistaken impression that an agreement
had
come to being, Deltrosys believed that it was liable for orders
placed by Richard Cape". Accordingly, the respondents
are, in
effect, conceding that, if an agreement is found to have come into
being, it follows that Deltrosys believed itself to
be liable for the
orders placed by this third party, which it alleges was the principal
on whose behalf it was acting.
12.
Drive
Control contends that this defence of agency is set out in a manner
which is bald, vague and sketchy and does not therefore
constitute a
bona fide defence. See Breytenbach v Fiat SA (Edms) Bpk
[4]
where Colman held the following:
"What I would
add, however, is that if the defence is averred in a manner which
appears in all the circumstances to be needlessly,
bald, vague or
sketchy, that will constitute material for the court to consider in
relation to the requirement of bona fides."
13.
Drive Control contends that the respondents do not set out who
the principal was for whom Deltrosys acted as agent. The respondents
refer to a cross border guarantee by Rich Rewards Distribution (Pty)
Ltd ("Richard Rewards Distribution") for the debts
of
Deltrosys. Nothing is contained in such guarantee that refers to an
agency agreement. No mention is made of Deltrosys acting
as Rich
Rewards Distribution's agent in placing orders with Drive Control.
Secondly, the terms of the agency agreement are not
disclosed. The
cross-border guarantee records that the orders were placed at
Deltrosys' special instance and request and that an
agreement was
concluded between Deltrosys and Drive Control and that monies are
payable by Deltrosys to Drive Control in terms
of that agreement.
No-one on behalf of Rich Rewards Distribution, or any other person
who apparently acted as principal, confirms
the allegations of the
respondents.
14.
Although the respondents alleged that Drive Control knew that
Deltrosys was acting as an agent when placing orders for goods it is
not explained how and what Drive Control knew.
15.
Accordingly, the defences of Deltrosys that no agreement came
into existence or that it was acting as an agent, cannot succeed.
THE
SURETYSHIP
16.
The question then arises as to whether or not Weimar has been
released from the suretyship because of the conduct of Drive Control.
17.
The
monthly purchase limit of R1 250 000,00 was exceeded for the month of
September 2015 by an amount of R381 721,90 (the excess
amount).
Weimar contends that, as the purchase limit was exceeded, he is
released as surety as a result of the prejudicial conduct
of Drive
Control in allowing the purchase limit to be exceeded. The
respondents do not argue that Deltrosys (the principal debtor)
is not
liable for payment of the excess amount. It is only in relation to
Weimar, in his capacity as surety, that this argument
is raised. In
Nedbank Ltd v Puricare CC and Others
[5]
the court held as follows:
"[39] Recent
judgments of the Supreme Court of Appeal indicate that there is no
general principle that a surety is discharged
from liability because
the creditor has behaved in a manner prejudicial to the
surety's interests. In Absa Bank Ltd v Davidson
2000 (1) SA 1117
(SCA) Olivier JA said that '[a]s a general proposition prejudice
caused to the surety can only release the surety (whether totally
or
partially) if the prejudice is the result of a breach of some or
other legal duty or obligation' (para 19)...
[40] ....
[41] The onus of
proving prejudicial conduct rests on the surety; and it seems that
the surety is also required to prove the
financial extent of
the prejudice so as to establish whether his release is partial or
complete (see also Khula Enterprise
Finance Limited v
Geldenhuys & another [2012) ZASCA 165 para 6), ... ".
[18]
Based upon the aforesaid authority, if the prejudice defence is good
in law, Weimar might only be entitled to a partial release
from the
suretyship in respect of the excess amount.
[19]
In dealing with whether Weimar is, in fact, prejudiced, reference can
be made to Nedbank Ltd v Puricare CC and Others
[6]
(Supra)
in which the court held the following, in relation to a bank debiting
the defendant's account with amounts for which no
overdraft facility
existed:
[47] I return now to
why it does not matter that no approved facilities were in place at
the time of the transfers. A facility agreement
simply means that the
bank is bound to honour debits to the amount of the agreed facility
until the agreement is validly terminated
or lapses with the
effluxion of time. The fact that a facility agreement is not in place
does not mean that a bank is not entitled,
in its discretion, to
honour a customer's debit requests. The debits of which the Dominick
defendants complain, namely those of
17 March 2010 and 30 April 2010,
were made pursuant to the request of its customer, Puricare. Nedbank
was not obliged to honour
those requests; but if the requests were
authorised by Puricare (and there is no suggestion that they were
not, and all indications
are that they were), Puricare could not
complain if the bank chose to meet the requests. The position was
stated thus by Zulman
JA in Absa Bank Ltd v IW Blumberg and Wilkinson
[1997] ZASCA 15
;
1997 (3) SA 669
(SCA) at 675H-6760:
'The
fact that the appellant [a bank] might have permitted the respondent
to draw cheques against uncleared effects, despite there
being no
agreement in this regard, would not excuse the respondent in law from
liability to make payment to the appellant. .....It
would be strange
indeed if it were permissible for a customer of a bank to draw a
cheque, on the bank, requesting the bank to honour
the cheque, and
thereafter, when the bank honoured the cheque despite the absence of
an overdraft facility, to then plead that
this would have resulted in
an overdraft facility which had not been agreed upon. In essence this
is precisely what the respondent
is contending for. It hardly lies in
the mouth of the respondent, who drew the two cheques in question
against uncleared effects,
albeit contrary to the agreement between
the parties, to be heard to complain that the bank should not have
honoured the cheques
and debited its account. Put differently, it is
the appellant, so it is suggested, who must bear the loss if the
uncleared effects
were not met. This cannot be so...
[48] I thus conclude
that, insofar as the principal debt is concerned, Puricare was liable
for the full amount owing on the overdraft
account, including the
indebtedness arising from the transfers of 17 March 2010 and 30 April
2010... An argument by a surety which
focuses on noncompliance
by the creditor with the contract between itself and the principal
debtor is really an argument that
the surety is not liable because
the principal debtor itself is not liable. Once it is accepted that
the principal debtor is liable
to the creditor for the amount claimed
from the surety, the focus switches to the suretyship, i.e. to the
question whether the
suretyship itself covers that particular
indebtedness or whether there was a violation of any other term of
the suretyship."
18.
Drive Control contends that the monthly purchase limit was for
the benefit of Drive Control and Deltrosys. The person now objecting
to the monthly purchase limit is a stranger to the dealership
agreement. Neither of the parties to the dealership agreement have
taken the point that the monthly limit for September 2013 was
exceeded and that Deltrosys is not liable for the excess.
19.
It is submitted by Drive Control that Deltrosys, in placing
the orders itself and in regarding itself as liable for such orders
despite the fact that the monthly limit was exceeded, cannot claim
that it is not liable for such orders. In fact, Deltrosys does
not
dispute liability on this basis.
20.
Weimar's argument can only succeed if liability of the
principal debtor is successfully disputed. Once it is held that the
principal
debtor is liable for the full amount the surety is also
liable for such amount.
21.
The suretyship covers
"the due and punctual payment by
the principal debtor (Deltrosys) to the credit grantor (Drive
Control) of
any amount
which is now
or may hereafter become owing by the principal debtor to the credit
grantor
from any cause of indebtedness however
arising
''
. (emphasis added). This covers the
indebtedness in question. Drive Control accordingly contends that
there is no prejudice to Weimar
entitling him to a partial or
complete release from the suretyship. Weimar contends that he
completed the application and suretyship
which was contained in one
document and that the requested purchase limit per month was
completed by Weimar on behalf of Deltrosys.
He thus contends that the
limit requested was not for the benefit of Drive Control but for the
benefit of the surety. This, they
submit, can only be dealt with at a
trial. This argument is unsustainable.
22.
The
final issue is that of the mora interest claimed by Drive Control. It
is submitted that there is no principle that stands in
the way of a
finding that, in the absence of an agreement in respect of interest,
a creditor should be compensated by an award
of mora interest for the
loss suffered as a result of not receiving the agreed payment on
time. See
Land
and Agricultural Development Bank of South Africa v Ryton Estates
(Pty) Ltd and Others
.
[7]
23.
Drive
Control does not claim contractual interest on any monies that are
past due date, which is provided for in terms of clause
8 of the
dealership agreement. Such clause states that interest shall be
payable at the maximum interest rate prescribed in terms
of the Usury
Act. Drive Control accepts that, since the Usury Act has been
repealed, it cannot demonstrate an entitlement to contractual
interest. Drive Control refers to
Crookes
Brothers Ltd v Regional Land Claims Commission for the Province of
Mpumalanga and Others
[8]
where the court held:
"[14] Even in the
absence of a contractual obligation to pay interest, where a debtor
is in mora in regard to the payment of
a monetary obligation under a
contract, his creditor is entitled to be compensated by an award of
interest for the loss or damage
that he has suffered as a result of
not having received his money on due date. Centlivres CJ made that
plain in Linton v Corser
supra (at 695G-696A), when he stated:
'The old authorities
regarded interest a tempore morae as "poenaal ende adieus",
vide Utrechtsche Consultatien, 3, 63,
p.288. Such interest is not in
these modem times regarded in that light. To-day interest is the
life-blood of finance, and there
is no reason to distinguish between
interest ex contractu and interest ex mora. Milner's case is, as far
as I have been able to
ascertain, the only case which applied the old
authorities, and in Johnston v Harrison,
1946 N.P.D. 239
at p. 251,
the Court was not slow in distinguishing that case. The question that
now arises is whether we should apply the old
Roman-Dutch Law to
modem conditions where finance plays an entirely different role. I do
not think we should. I think that we should
take a more realistic
view than in a matter such as this to have recourse to the old
authorities."
24.
Drive
Control refers to
Land
and Agricultural Development Bank of South Africa v Ryton Estates
[9]
(Supra) which provide as follows:
"[20]
Section
1(1)
of the
Prescribed Rate of Interest Act 55 of 1975
provides as
follows:
'If a debt bears
interest and the rate at which the interest is to be calculated is
not governed by any other law or by an agreement
or a trade custom or
in any other manner, such interest shall be calculated at the rate
prescribed under subsection 2 as at the
time when such interest
begins to run, unless a court of Jaw, on the ground of special
circumstances relating to that debt, orders
otherwise. '
In terms of
s 1(2)
the
Minister of Justice prescribed the rate of interest at 15,5 per cent
per annum for the purpose of
s 1(1).
[21]
As mora interest represents damages, the rate thereof is not
governed by agreement or in any other manner. It follows
that mora
interest is payable at the prescribed rate."
25.
Drive Control accordingly submits that it is entitled to mora
interest in terms of the
Prescribed Rate of Interest Act at
the
applicable rate of 9 per cent per annum.
26.
It is not disputed that in terms of the dealership agreement
payment was due within 60 days. Accordingly, Drive Control contends
that the amount of R491 482,50 became due and payable on the 30th
October 2015 while the amount of R809 963,16 and R821 758,74
became
payable on the 30
th
November 2015. Drive Control contends
that it is entitled to mora interest from the day after the due date.
27.
The respondents contend that the plaintiff cannot claim mora
interest because clause 8 of the agreement provides for the payment
of interest based upon the Usury Act. Therefore, section 1(1) of the
Prescribed Rate of Interest Act is not applicable.
28.
Drive Control, as stated above, has argued that it cannot show
its entitlement to contractual interest by virtue of the repeal of
the Usury Act. It is accordingly entitled to the lesser award of mora
interest.
29.
This
interest is based simply on the delay or default of the respondent.
"The
purpose of mora interest is therefore to place the creditor in the
position that he or she would have been in had the
debtor performed
in terms of the undertaking". See Crookes Brothers v Regional
Land Claims Commission (Supra)
[10]
.
"[17]
The term mora simply means delay or default. When the contract fixes
the time for performance, mora (mora ex re) arises
from the contract
itself... The purpose of mora interest is therefore to place the
creditor in the position that he or she would
have been in had the
debtor performed in terms of the undertaking".
30.
The respondents' submissions in this regard are without merit.
Accordingly both the defences of the respondents and their
submissions
in regard to interest must be rejected.
31.
Accordingly, the following order is granted:
31.1.
Summary judgment is granted against the defendants jointly and
severally for:-
31.1.1. Payment of the
sum of R2 123 204,40;
31.1.2 Interest on the
sum of R491 482,50 at the rate of 9 percent per annum a tempora
morae from 31 October 2015 to date
of payment in full;
31.1.3
Interest on the sum of R1 631 721,90 at the rate of 9 per cent
per annum a tempora morae from 1 December 2015 to date of payment
in
full;
31.1.4
costs of suit on the attorney and client scale.
______________________
S
WEINER
JUDGE
OF THE HIGH COURT
OF
SOUTH AFRICA
GAUTENG
LOCAL DIVISION,
JOHANNESBURG
Appearances
For
the Plaintiff: Advocate A L Roeloffze
Instructed
by: Hooker attorneys
For
the First and Second Defendant: Advocate G Naude SC
Instructed
by: S C Vercueil Attorneys
Date
of hearing: 2 August 2016
Date
of Argument: 2 August 2016
Date
of Judgment: 25 October 2016
[1]
1971 (3) SA 591 (A)
[2]
2009 (4) SA 74 (SCA)
[3]
Supra fn2 at paragraph 55
[4]
1976 (2) SA 226
at 228
[5]
(18922/2010)
[2014] ZAWCHC 17
(18 February 2014) at paragraph 39-41.
[6]
Supra fn 5 at [44] to [48]
[7]
2013 (6) SA 319
(SCA) at paragraph {9]
[8]
2013 (2) SA 259
(SCA) at paragraph 14
[9]
Supra fn 7 at paragraph 20-21
[10]
Supra fn8 at paragraph 17