PCL Consulting (Pty) Ltd t/a Phillips Consulting SA v Tresso Trading 119 (Pty) Ltd (98/06) [2007] ZASCA 9; [2007] SCA 9 (RSA); 2009 (4) SA 68 (SCA) (15 March 2007)

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[2007] ZASCA 9
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PCL Consulting (Pty) Ltd t/a Phillips Consulting SA v Tresso Trading 119 (Pty) Ltd (98/06) [2007] ZASCA 9; [2007] SCA 9 (RSA); 2009 (4) SA 68 (SCA) (15 March 2007)

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THE SUPREME
COURT OF APPEAL
OF SOUTH AFRICA
Case number : 98/06
Reportable
In the matter between :
PCL CONSULTING (PTY) LTD t/a PHILLIPS
CONSULTING SA ...................... APPELLANT
and
TRESSO TRADING 119 (PTY) LTD
...................... RESPONDENT
CORAM : HARMS ADP, CLOETE, JAFTA, CACHALIA JJA
et
SNYDERS AJA
HEARD : 2 MARCH 2007
DELIVERED : 15 MARCH 2007
Summary:
Summary
judgment : Rectification : If the allegations made by a plaintiff
justifying rectification of a written agreement are not
in dispute,
summary judgment can be granted for a claim based on the agreement as
rectified.
Neutral citation: This judgment
may be referred to as
PCL
Consulting (Pty) Ltd v Tresso Trading 119 (Pty) Ltd
[2007] SCA 9 (RSA).
___________________________________________________________________
JUDGMENT
CLOETE
JA
/
CLOETE JA:
[1] The respondent, Tresso Trading
119 (Pty) Ltd, as the plaintiff, sued the appellant, PCL Consulting
(Pty) Ltd, as the defendant,
in the Johannesburg High Court for
payment of amounts totalling R396 188,35 allegedly due in terms
of a written lease. It would
be convenient to refer to the parties as
they were in the court of first instance. The defendant entered
appearance to defend and
the plaintiff applied for summary judgment
in terms of uniform rule 32, which was opposed by the defendant in an
affidavit filed
on its behalf. The court of first instance granted
summary judgment for the amount of the claim, interest and costs, and
an appeal
by the defendant, with the leave of this court, to the full
court was unsuccessful. Special leave to appeal to this court was
subsequently
granted.
[2] The primary issue in the appeal
turns on the fact that in its particulars of claim the plaintiff has
alleged that due to a common
error the written lease relied upon by
it misdescribed the premises as ‘office, 6
th
floor, Fedsure Towers’ in Sandton,
whereas (the plaintiff has also alleged) it was the common continuing
intention of the parties
that the lease should have referred to
‘office, 4
th
floor, Fedsure Towers’. In its
affidavit resisting summary judgment the defendant did not deal with
the merits of the rectification
but contented itself with the
allegation that a claim for rectification is not competent in terms
of rule 32. It does appear from
the defendant’s affidavit that the
defendant was in occupation of ‘offices in Fedsure Towers’,
although the defendant studiously
refrained from identifying the
offices in question.
[3] Rule 32(1) reads:
‘
Where the defendant has delivered
notice of intention to defend, the plaintiff may apply to court for
summary judgment on each of
such claims in the summons as is only ─
(a) on a liquid document;
(b) for a liquidated amount in money;
(c) for delivery of specified movable property; or
(d) for ejectment,
together with any claim for interest and costs.’
A prayer for rectification does
indeed fall outside the provisions of rule 32. It does so not because
it is a claim impliedly excluded
by that rule, but because it is not,
in the true sense, a claim at all. The plaintiff’s claim properly
so called is for payment
of arrears due in terms of a lease. In order
to succeed on that claim
at
a trial, the plaintiff would have to allege and prove inter alia that
it let premises to the defendant in terms of an agreement.
The
written agreement signed by the parties and annexed to the
plaintiff’s particulars of claim refers to what the plaintiff
alleges
were the wrong premises. The plaintiff was therefore obliged
to seek rectification of the written agreement in order to enable it
to lead evidence that what it alleges were the correct premises were
let to the defendant ─ for, in the absence of rectification,
such
evidence would be inadmissible both because of the parol evidence or
integration rule and the rule that no evidence may be given
to alter
the clear and unambiguous meaning of a written contract.
1
But the plaintiff’s claim remains a
claim for arrears owing in respect of the lease of the 4
th
floor office and rectification,
although essential to enable the plaintiff to prove its claim, is not
part of that claim.
[4] I therefore, with respect, agree
with the judgment of Coetzee J in
Malcomess
Scania (Pty) Ltd v Vermaak
2
to the extent that it holds that a
plaintiff who alleges that a written contract should be rectified is
confined to what the plaintiff
alleges is the true agreement between
the parties, and cannot (in the absence of an express indication to
the contrary) rely in the
alternative upon the terms of the written
agreement as they stand; but I am constrained to disagree with that
judgment to the extent
that it suggests that summary judgment is
incompetent, even where both parties are
ad
idem
as to the
respects in which their written contract does not correctly reflect
the agreement between them.
[5] In summary judgment proceedings a
plaintiff is required, in terms of rule 32(2), to ‘verify the cause
of action’ ─ not to
verify that it will be able to prove the
cause of action. The cause of action in the present matter is that
the defendant hired the
4
th
floor office in Fedsure Towers from
the plaintiff, in consequence of which it became obliged to pay
amounts totalling R396 188,35
to the plaintiff, which it has
failed to do. There was no dispute as to the terms of the agreement
and in particular, the identity
of the premises let. The plaintiff
was therefore not obliged to cross the evidential hurdle of proving
that despite the provisions
of the written lease which referred to
the 6
th
floor office, it was the 4
th
floor office which was in truth let
to the defendant. Had the defendant placed in issue what the terms of
the agreement were, the
plaintiff would have been obliged to prove
its version of the agreement at a trial, and summary judgment would
have had to have been
refused. But the defendant did not do this. The
question then becomes: Should the court of first instance have been
satisfied that
the defendant had a bona fide defence to the claim for
the arrears pursuant to the agreement alleged by the plaintiff (the
terms
of which are not disputed)? I turn to consider this question.
[6] In its affidavit resisting
summary judgment the defendant said:
‘
8. Clause 32 of the . . . lease
provides that save in respect of those provisions of the . . . lease
which provide for their own remedies
which would be incompatible with
arbitration, a dispute which arises in regard to (
inter
alia
) any of the
rights and obligations of the parties arising from the . . . lease, .
. . shall be submitted and decided by arbitration.
9. Defendant intends to apply, under section 6 of the
Arbitration Act, to the above Honourable Court for a stay of the
instant proceedings.
10. Plaintiff does not allege in its summons any facts
or reasons why the Plaintiff’s claims (and in particular the claim
for rectification)
should not be referred to arbitration.’
[7] The mere fact that parties have
agreed that disputes between them shall be decided by arbitration
does not mean that court proceedings
are incompetent. If a party
institutes proceedings in a court despite such an agreement, the
other party has two options:
(i) It may apply for a stay of the proceedings in terms
of
section 6
of the
Arbitration Act 42 of 1965
;
3
or
(ii) it may in a special plea (which
is in the nature of dilatory plea) pray for a stay of the proceedings
pending the final determination
of the dispute by arbitration.
The definitive statement of the law
in this regard is to be found in
The
Rhodesian Railways Ltd v Mackintosh
4
where Wessels ACJ said:
‘
All that sec.6(1)
5
lays down is that you cannot
adopt the cheaper and speedier procedure therein provided when once
you have delivered pleadings or taken
any other step in the
proceedings. If you have taken any step in the proceedings, then you
can no longer adopt the speedier and less
costly procedure of
applying to the Court to stay proceedings but you must file your
pleadings in the ordinary way. In pleading,
however, you can raise
the defence that the case ought to be decided by arbitration; this
can be done by a special preliminary plea.’
In the present proceedings, the
defendant has simply pointed out that the lease contains an
arbitration clause in wide terms. That
is not sufficient. The
defendant was obliged to go further and set the terms of the dispute.
As Didcott J succinctly pointed out
in
Parekh
v Shah Jehan Cinemas (Pty) Ltd
:
6
‘
Arbitration is a method for
resolving disputes. That alone is its object, and its justification.
A disputed claim is sent to arbitration
so that the dispute which it
involves may be determined. No purpose can be served, on the other
hand, by arbitration on an undisputed
claim. There is then nothing
for the arbitrator to decide. He is not needed, for instance, for a
judgment by consent or default.
All this is so obvious that it does
not surprise one to find authority for the proposition that a dispute
must exist before any question
of arbitration can arise. It includes
Re Carus-Wilson and
Greene
(1887)
18 QBD 7
(CA);
London
and Lancashire Fire Assurance Co v Imperial Cold Storage and Supply
Co Ltd
(1905)
15 CTR 673;
King v
Harris
1909
TS 292.’
The passage just quoted was approved
by this court in
Telecall
(Pty) Ltd v Logan
7
and Plewman JA went on to say:
‘
[12] I conclude that before there
can be a reference to arbitration a dispute, which is capable of
proper formulation at the time
when an arbitrator is to be appointed,
must exist and there can not be an arbitration and therefore no
appointment
of
an arbitrator can be made in the absence of such a dispute. It also
follows that some care must be exercised in one’s use of
the word
‘dispute’. If, for example, the word is used in a context which
shows or indicates that what is intended is merely an
expression of
dissatisfaction not founded upon competing contentions no arbitration
can be entered upon.’
I would merely emphasise that a failure to pay does not
without more imply that there is a dispute as to liability.
[8] The defendant’s counsel
submitted in argument that the mere fact that the defendant had
entered appearance to defend, was sufficient
to raise the existence
of a dispute which could be formulated at a later stage in the
proceedings. The submission ignores the provisions
of
rule 32(3)(b)
which in peremptory terms require the defendant in an affidavit
resisting summary judgment not merely to ‘disclose fully the nature
and grounds of the defence’ but also to disclose ‘the material
facts relied upon therefor’.
[9] No arbitrable dispute has been
raised by the defendant justifying a stay of the proceedings. The
only other defence raised by
the defendant in its affidavit resisting
summary judgment was a counterclaim. That defence was not persisted
in before the full court,
and counsel representing the defendant in
this court expressly disavowed any reliance on it ─ correctly so,
as it is without merit.
[10] It follows that the orders made
by the court of first instance and the full court were correct. The
appeal is dismissed, with
costs.
______________
T D CLOETE
JUDGE OF APPEAL
Concur:
Harms
ADP
Jafta JA
Cachalia JA
Snyders AJA
1
Rand
Rietfontein Ests Ltd v Cohn
1927 AD
317
at 326-7.
2
1984
(1) SA 297 (W).
3
‘
6(1)
If any party to an arbitration agreement commences any legal
proceedings in any court (including any inferior court) against
any
other party to the agreement in respect of any matter agreed to be
referred to arbitration, any party to such legal proceedings
may at
any time after entering appearance but before delivering any
pleadings or taking any other steps in the proceedings, apply
to
that court for a stay of such proceedings.
(2) If on any such application the court is satisfied that there is
no sufficient reason why the dispute should not be referred
to
arbitration in accordance with the agreement, the court may make an
order staying such proceedings subject to such terms and
conditions
as it may consider just.’
4
1932
AD 359
at 370-1.
5
Of
Act 8 of 1928 (Southern Rhodesia), quoted at pp 367-8 of the
judgment, which is (for present purposes) to the same effect as
s 6
of the current South African
Arbitration Act quoted
above, n 3.
6
1980
(1) SA 301
(D) at 304E-G.
7
[2000] ZASCA 97
;
2000
(2) SA 782
(SCA) para 11.