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[2015] ZAFSHC 176
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Pinnacle Micro (Pty) Ltd v Premi-Com Communications CC and Another (3476/2014) [2015] ZAFSHC 176 (16 April 2015)
IN THE HIGH COURT OF
SOUTH AFRICA
FREE STATE DIVISION,
BLOEMFONTEIN
Case Number: 3476/2014
DATE: 16 APRIL 2015
In the matter between:-
PINNACLE MICRO (PTY)
LTD
.............................................................................
Plaintiff/Applicant
[Registration Number:
1993/000917/07]
And
PREMI-COM COMMUNICATIONS
CC
.................................................
1st
Defendant/ Respondent
[Registration Number:
2004/038415/23]
DONOVAN ALLAN
McDONALD
...........................................................
2nd
Defendant /Respondent
[Identity Number: 6..………….]
CORAM: VAN ZYL, J
DELIVERED ON: 16 APRIL 2015
[1] A summons was issued in terms of
which the plaintiff instituted two claims against the defendants,
jointly and severally, payment
by the one the other to be absolved,
for payment of the amounts of R369 624-25 and R407 929-37
respectively, together with ancillary
relief, which includes costs on
a scale as between attorney and own client.
[2] I will refer to the parties as
cited in the main action.
[3] The plaintiff is no longer seeking
summary judgment against the second defendant. Mr Reinders, on behalf
of the plaintiff, indicated
in his heads of argument already that
after the filing of the answering affidavit, the plaintiff granted
the second defendant leave
to defend the action. However, reference
will still be made in the judgment to the second defendant in so far
as he acted on behalf
of the first defendant and/or in instances
where the defence of the first defendant is the same to or
intertwined with that of
the second defendant.
CLAIM 1:
[4] In claim 1 the plaintiff avers that
the plaintiff and the first (and second) defendants concluded an oral
agreement in terms
of which the first (and second) defendants
acknowledged their indebtedness to the plaintiff, jointly and
severally, the one to
pay the other to be absolved, in the amount of
R411 624-25, together with interest and costs on a scale as between
attorney and
own client. The plaintiff further avers that in terms
of the said agreement, the defendants had to pay the said amount by
way
of monthly instalments in the amount of R7 000-00 per month, the
first payment to be made on or before 7 September 2013 and thereafter
on or before the 7th day of every succeeding month until the full
amount has been paid. Pursuant to the acknowledgement of debt
agreement, the first and second defendants made six monthly payments
of R7 000-00. Since February 2015, the defendants have however
neglected to pay the aforesaid instalments, whereupon, in terms of
the acknowledgement of debt, the full outstanding balance together
with costs and interest became immediately due and payable. The
current outstanding balance amounts to R369 624-25.
[5] Although the defendants admit the
conclusion of an acknowledgment of debt agreement, it is averred that
it is only the first
defendant who entered into the said agreement
and that it was therefore only the first defendant who was
responsible for the payment
of the monthly instalments of R7 000-00
per month.
[6] The opposition by the first
defendant to claim 1 is based upon an averment that although the
initial claim amount was R411 624-25,
the plaintiff, and specifically
Rainier Esterhuizen and Tim on behalf of the Plaintiff, informed the
second defendant, on behalf
of the first defendant, that the
plaintiff’s insurance had paid out an amount of R354 000-00 for
the plaintiff’s loss
and that they would therefore settle the
matter on the basis that the first defendant was to pay only the
difference between the
said amounts to the plaintiff. Only then was
it agreed that the first defendant will pay the aforementioned
difference in instalments
of R7 000-00 per month. The first
defendant therefore denies that the acknowledged of debt agreement
was concluded for the full
amount of R411 624-25.
[7] In addition to the aforesaid the
defendants base their opposition of claim 1 on a counterclaim for
damages against the Plaintiff.
It is averred on behalf of the first
defendant that Mrs Sonia Kruger, a representative of the plaintiff,
provided the first defendant’s
statement with the plaintiff,
which statement reflected the first defendant’s key client
list, to one of the first defendant’s
other distributors, IRT
Distributions. Due to this, IRT Distributions closed the first
defendant’s account with them and
then the plaintiff also
closed the first defendant’s account with itself. As
confirmation of these averments, the defendants
attached a copy of
the e-mail wherein the information was sent to Mr van der Merwe of
IRT Distributions by Mrs Sonia Kruger of
the plaintiff as Annexure
“A”, as well as a confirmatory affidavit by Mr van der
Merwe as Annexure “B”.
[8] As a result the first defendant did
not receive any income, neither did the second defendant, because the
first defendant is
the second defendant’s only source of
income. This caused the first defendant’s inability to
continue with the monthly
payments of R7 000-00 as agreed upon
between the first defendant and the plaintiff.
[9] Regarding the alleged damages the
defendants suffered and their intended institution of a counterclaim,
the following averments
appear in the answering affidavit:
“3.13 As will be explained herein
below, the actions of the plaintiff caused the first defendant and me
damages and the damages
have a direct nexus with any amount the
applicant claims or might be entitled to. The first defendant and I
intend instituting
a counterclaim in the main action for our damages
and the Honourable Court will be asked to stay the determination of
the plaintiff’s
claims until after our damages are proven.
…
4.9 The damages that I refer to in the
paragraphs herein above was caused by the plaintiff because of the
standstill the first defendant’s
business experienced due to
the fact that the plaintiff closed the first defendant’s
account with them and caused the first
defendant’s account to
be closed with IRT Distributions. The first defendant’s
account with the plaintiff has been
closed since that incident but
IRT Distributions re-opened the account with them after a week.
However, in that week certain of
the first defendant’s clients
had to approach other service providers as the first defendant could
not provide them with
its usual services at that stage. The first
defendant has now lost those clients to other service providers and
therefore not
only suffered damages in the period that the business
was brought to a standstill but is continuously suffering damages due
to
the loss of those clients. By implication I am also suffering
damages as explained herein above.
4.10 Although the damages cannot be
precisely quantified at this stage, I feel confident that it will
amount to more than the amount
that the plaintiff claims in claim 2
and the balance of the difference between the amount in claim 1 and
the amount paid by the
insurance. As mentioned herein above the
first defendant and I intend to lodge a counterclaim in the main
action in order to claim
the damages that we have suffered. The
amount of damages will be calculated and quantified by an expert
should we be granted leave
to defend the action.
4.11 As explained herein above, the
reason why the first defendant could not pay the amount indebted to
the plaintiff, is because
the plaintiff has, in breach of its
agreements with the first defendant, stopped all business with the
first defendant and I am
of the opinion that any damages that we have
suffered because of the actions should either be subtracted from the
amount claimed
by the plaintiff or the plaintiff’s proved claim
amount subtracted from my damages, depending on which amount is
higher.
4.12 Because of the fact that this is a
summary judgment application and because the extent of such damages
can only be determined
by thorough investigation, it has not yet been
possible in the available time to calculate and liquidate the damages
and to tender
the difference, if there is any, to the plaintiff.
4.13 ….. I have been advised
and accept that the damages must be determined through thorough
investigation and proved in
an action procedure wherein oral evidence
can be led and all the income statements can be provided to the
Court. Furthermore,
oral evidence by an expert witness such as an
accountant will probably be necessary.”
CLAIM 2:
[10] Insofar as claim 2 is concerned,
the plaintiff avers that the first defendant applied in writing to
the plaintiff to be a registered
dealership and, acting in terms of
the dealership agreement, the plaintiff sold and delivered to the
first defendant certain equipment
at the special instance and request
of the first defendant. The goods so sold and delivered amounted to
R407 929-39, which amount
is due and payable.
[11] Although the defendants aver that
the application for dealership document which the plaintiff annexed
to its particulars of
claim was not filled out when it was signed, it
is admitted by the second defendant on behalf of the first defendant
that the first
defendant is indebted to the plaintiff in the claimed
amount of R407 929-39. The first defendant however avers that it was
unable
to pay the said amount to the plaintiff, because the plaintiff
has in breach of its agreement with the first defendant, stopped
all
business with the first defendant. The same defence regarding the
alleged damages suffered by the defendants and the intended
counterclaim as raised in opposition of claim 1, is also raised as a
defence to claim 2.
CONSIDERATION OF THE MERITS:
[12] At the onset of his oral argument
Mr Reinders indicated that he cannot convincingly submit that summary
judgment should be
granted against the first defendant on claim 1. In
this regard he conceded that the defence raised on behalf of the
first defendant
pertaining to the alleged payment of insurance money
and the alleged agreement concluded as a result of that payment,
should be
considered to constitute a bona fide defence to the greater
part of the amount claimed. Should the averments on behalf of the
first defendant be accepted in this regard for purposes of summary
judgment, it would leave a balance of approximately R9 000-00
on
claim 1, with regards to which amount summary judgment ought not to
be granted in the circumstances.
[13] In my view Mr Reinders’
concession was correctly and responsibly made. The first defendant
should be granted leave to
defend claim 1.
[14] Regarding the plaintiff’s
second claim against the first defendant, Mr Reinders submitted that
summary judgment should
be granted. He emphasised the fact that the
first defendant admits that he is indebted to the plaintiff for the
amount claimed
and that the first defendant’s only defence is
an alleged counterclaim, but which counterclaim is unquantified. Mr
Reinders
submitted that in order for a defendant to succeed with a
counterclaim as a defence to a claim in summary judgment proceedings,
a defendant is compelled to comply with the provisions of Rule
32(3)(b), requiring full disclosure of the nature and grounds of
the
counterclaim as well as the material facts upon which it relies. He
submitted that the first defendant does not disclose a
bona fide
defence, as the first defendant should at least have given an
indication of the amount of damages and the calculation
thereof. Mr
Reinders pointed out that the first defendant did not even give an
estimation of the alleged damages and the grounds
for such
calculation. Mr Reinders furthermore pointed the following aspects
out in this regard:
14.1 Although it is the first
defendant’s case that the plaintiff closed the first
defendant’s account, the first defendant
did not aver that he
was unable to still do business with the plaintiff on a cash basis,
which would have restricted or even negated
the first defendant’s
alleged damages.
14.2 For the first defendant`s
counterclaim, it intends to rely on the very same written agreement,
the existence and validity of
which the first defendant is currently
denying.
14.3 According to the first respondent
itself, its account with IRT Distributions was re-opened after a
week. Despite the lapse
of time since then, the first defendant did
not even attempt to make any calculation of his damages.
[15] In the well-known judgment of
Maharaj v Barclays National Bank Limited
1976 (1) SA 418
(A) at 426
the following is stated with regards to the requirement of a bona
fide defence:
“All that the Court enquires into
is: (a) whether the defendant has ‘fully’ disclosed the
nature and grounds
of his defence and the material facts upon which
it is founded, and (b) whether on the facts so disclosed the
defendant appears
to have, as to either the whole or part of the
claim, a defence which is both bona fide and good in law. If
satisfied on these
matters, the Court must refuse summary judgment,
either wholly or in part, as the case may be. …
It must be conceded at once that the
defendant’s affidavit, insofar as it purports to set forth a
defence on the merits (as
outlined above), is not a wholly
satisfactory document. …The affidavit does, nevertheless,
appear to disclose a defence
which seems, on the face of it, to be
bona fide.”
[16] Mr Reinders is correct in pointing
out that no allegation was made on behalf of the first defendant that
after the closing
of its account with the plaintiff, it was not
allowed to buy goods on a cash basis from the plaintiff. However,
from paragraph
3.2 of the answering affidavit it is evident that the
business transactions between the plaintiff and the first defendant
were
done on a consignment basis. The following averments were made:
“The business entails that the
first defendant sell the plaintiff’s products, to wit computers
and computer related
products, to clients that I recruit on behalf of
the first defendant. After selling the products and receiving
payment from the
clients, the first defendant then pays the plaintiff
the amount for the products that the first defendant sold on their
behalf
on consignment basis.” (Own emphasis)
Without the necessity to speculate, the
aforesaid arrangement is in my view clearly indicative of the first
defendant’s financial
inability to pay the plaintiff for any
specific product before having received payment for the said product
from the relevant client.
It therefore appears that the first
defendant would not have been financially able to do business with
the plaintiff on a cash
basis.
[17] Regarding the agreement which the
first defendant seemingly intends to rely on for purposes of its
counterclaim, it is in my
view evident from the answering affidavit
that the first defendant is in fact not relying upon the written
agreement alleged by
the plaintiff, but on an oral agreement. In
this regard it is averred on behalf of the first defendant that it
has been doing
business with the plaintiff for approximately 11
years. Considering that the alleged written agreement is only dated
August 2011,
it appears that the parties have indeed been doing
business for many years prior to the alleged conclusion of the
written agreement.
In addition thereto, in paragraph 3.8 of the
answering affidavit the first defendant is specifically relying on an
oral agreement
which existed between the plaintiff and the first
defendant. I cannot agree with Mr Reinders’ contention that the
oral agreement
referred to in paragraph 3.8 should be understood as
being a reference to the settlement agreement between the parties.
When read
in context, it is in my view a clear reference to the
alleged oral agreement in terms of which the parties have been doing
business
with one another.
[18] It is indeed so that although a
defendant in summary judgment proceedings may rely on an intended
counterclaim for an unliquidated
amount, the extent of such
counterclaim should be stated. See Jacobsen van den Berg SA (Pty)
Ltd v Triton Yachting Supplies
1974 (2) SA 584
(O) at 588. However,
in that very same judgment it is stated at 588G:
“If a defendant is not able to
give any further information, he as buyer or one of the parties to
the account should say so
and give reasons why he cannot do so.”
[19] In Nedperm Bank Ltd v Verbri
Projects CC
1993 (3) SA 214
(WLD) at 224 E the following was stated:
“I have looked at all the cases.
They indeed support the proposition of a discretion, but a discretion
exercised in appropriate
cases where there is some factual basis, or
belief, set out in the affidavit resisting summary judgment which
would enable a Court
to say that something may emerge at a trial, and
there was a reasonable probability of it so emerging, that the
defendant would
indeed be able to establish the defence which it puts
up in its affidavit and which at the particular time it might have
difficulty
in precisely formulating or in precisely quantifying
because of lack of detailed information.”
[20] That the closing down of the first
defendant’s account by the plaintiff and IRT Distributions
apparently did have a negative
financial impact on the first
defendant’s business, seems to be corroborated by the fact that
the first defendant’s
failure to pay the agreed instalments of
R7 000-00 per month occurred during March 2014 for the first time,
which corresponds with
the time at which the plaintiff’s
accounts were closed, considering that the relevant e-mail which led
to the closing of
the accounts was sent on 3 March 2014. I am
therefore satisfied that except for the amount of the intended
counterclaim, the first
defendant made a full disclosure of the
nature and the grounds of its intended counterclaim, and the material
facts upon which
it relies.
[21] Considering the averments made in
paragraphs 4.10 to 4.13 of the answering affidavit, already alluded
to in paragraph 9 above,
I have to agree with Mr Olivier’s
contention that the first defendant has tendered a reasonable
explanation as to why it
is unable to quantify its counterclaim at
this stage.
[22] I consequently do not know whether
the intended counterclaim, if successful, would extinguish the second
claim of the plaintiff,
or not. However, in the exercising of my
discretion, I am of the view that against the background of the
totality of the circumstances
of this matter, summary judgment should
be refused. See Soil Fumigation Services Lowveld CC v Chemfit
Technical Products (Pty)
Ltd
2004 (6) SA 219
(SCA) at paragraph 10:
“In order to be successful in a
defence, the defendant must, of course, comply with the provisions of
Rule 32(3)(b), which
requires a full disclosure of the nature and the
grounds of the counterclaim as well as the material facts upon which
it relies.
Failure to comply with these provisions will not
necessarily mean, however, that summary judgment will follow. In
accordance
with the provisions of Rule 32(5), the Court retains an
overriding discretion to refuse summary judgment. This overriding
discretion
pertains not only to that part of the claim which would be
extinguished by the counterclaim, but also to the balance of the
claim.
In short, the Court retains a discretion to refuse the
application for summary judgment in its entirety, even where a
defence
to only a part of the claim has been raised.”
[23] The only question which remains is
whether, considering that the first defendant admits its indebtedness
to the plaintiff in
the amount claimed in the second claim of the
plaintiff, judgment on the second claim should be postponed pending
the adjudication
of the counterclaim or whether the first defendant
should be granted leave to defend the second claim. In this regard Mr
Reinders
contended that the appropriate order will be to postpone
judgment on the second claim pending the adjudication on the
counterclaim,
so as to enable the plaintiff to apply for earlier
adjudication of the claim should it eventually appear that the first
defendant
is unnecessarily dragging out the process. He relied on
the Soil Fumigation Services v Chemfit Technical Products-judgment,
supra,
paragraph 11, for this contention.
[24] In the circumstances of this
matter, where the first defendant, although it admits its
indebtedness to the plaintiff in the
amount claimed in the second
claim, avers that such indebtedness originated from a different
agreement than the written agreement
which the plaintiff relies on,
it would, in my view, be in the interest of justice that the second
claim and the intended counterclaim
be adjudicated upon pari passu.
Moreover so where the plaintiff has already granted leave to the
second defendant, in its capacity
as alleged surety, to defend the
second claim. In Standard Bank of SA Ltd v SA Fire Equipment (Pty)
Ltd and Another
1984 (2) SA 693
(CPD) at 701 A – C it was held
that:
“To the extent that the surety
and co-debtor has in his own right all the defences in rem of the
principal debtor, a counterclaim
giving rise to set-off upon judgment
being granted is as much a defence ‘of the defendant’
whether defendant refer
to is the principal debtor or the surety and
co-debtor sued in the same action. In my opinion , therefore, a
surety and co-debtor
may avail himself of the same defence of set-off
as a principal debtor according to the practice described in Rule of
Court 22(4).
…
It should as a general rule not be
granted against the surety in an action which a principal debtor has
also been sued for the same
debt and it has been shown in the
application for summary judgment that the principal debtor has a bona
fide defence which, if
it should succeed in the action, will
simultaneously result in the discharge of the surety from his
accessory liability for the
debt claimed in the action. In the
present case considerations of convenience and justice as between the
parties concerned satisfy
me that the claim against first defendant
and second defendant and the counterclaim should be adjudicated upon
pari passu and not
piece-meal, particularly since the ultimate
liability of second defendant depends upon the outcome of the claim
and counterclaim
as between plaintiff and first defendant.”
Also see Cape Town Transitional
Metropolitan Substructive v Ilco Homes Ltd
1996 (3) SA 492
(CPD) at
501 D – E:
“For purposes of the alternative
claim the plaintiff has, however, conceded that the defendant has a
bona fide defence, on
the basis of the counterclaim. That being so,
I should not interfere at this stage with the normal development of
the case through
the pleadings by granting summary judgment,
particularly where the plaintiff will have a further remedy under
Rule 22(4) if it
concludes, in due course, that it has adequate
grounds for seeking acceleration of the adjudication of the claim in
convention.
I would accordingly dismiss the
application for summary judgment and grant leave to defend on the
basis of the defendant’s
alleged counterclaim.”
[25] I accordingly conclude that leave
should be granted to the first defendant to defend the plaintiff’s
second claim against
it.
COSTS:
[26] In my view there is no reason, nor
was any reason advanced by any of the counsel, why the usual order in
summary judgment proceedings
where leave is granted to the
defendant(s) to defend the matter, should not be granted in this
instance.
[27] The following order is therefore
made:
1. The application for summary judgment
is refused.
2. Leave is granted to the defendants
to defend the action.
3. The costs of the application for
summary judgment are costs in the cause.
C. VAN ZYL, J
On behalf of Plaintiff: Adv. S.J.
Reinders
Instructed by: Peyper Attorneys
Bloemfontein
On behalf of First and Second
Defendants: Adv. J.L. Olivier
Instructed by: Saffy &
Associates
Bloemfontein