About SAFLII
Databases
Search
Terms of Use
RSS Feeds
South Africa: Free State High Court, Bloemfontein
SAFLII
>>
Databases
>>
South Africa: Free State High Court, Bloemfontein
>>
2015
>>
[2015] ZAFSHC 92
|
|
Cembrick Manufacturers CC v Dube (2030/2012) [2015] ZAFSHC 92 (21 May 2015)
FREE
STATE
HIGH COURT, BLOEMFONTEIN
REPUBLIC
OF SOUTH AFRICA
Case
No. : 2032/2012
In the
matter between:-
CEMBRICK
MANUFACTURERS CC
….................................................................................
Plaintiff
and
SA
DUBE
…...............................................................................................................................
Defendant
HEARD
ON:
5 & 6 MAY 2015
JUDGMENT
BY:
KRUGER, J
DELIVERED
ON:
21 MAY 2015
[1] The
question in this trial is whether the monies claimed by the plaintiff
constitute a debt by Creative Thinking 534 t/a TK
Developers
(Creative Thinking). The defendant is sued in his capacity as
surety and co-principal debtor for the debts due
by Creative Thinking
to the plaintiff on the basis of a written deed of suretyship.
[2] The
plaintiff’s case is that it sold and delivered goods to
Creative Thinking on the basis of an approved credit application.
Defendant’s case is that Creative Thinking’s credit
application was never approved and that the goods claimed for were
sold to the sub-contractor of Creative Thinking, namely JAZ
Construction Trust, (JAZ) represented by Ms Ethel van Zyl. The
defence is that there was no valid principal debt, i.e. a contract
between plaintiff and Creative Thinking. It is of the
essence
of suretyship that there be a principal contract (
Trust Bank of
Africa Ltd v Frysch
1977 (3) SA 562
(A) at 584F-G). The
question which must be investigated and answered is whether there was
a contract between plaintiff and
Creative Thinking.
[3] The
defendant is the sole member of Creative Thinking, which got a
contract to build 200 RDP houses in Petrusburg. Because
defendant had several other commitments, he decided to appoint JAZ
represented by Ms Ethal van Zyl as his subcontractor for the
project. All actions on behalf of JAZ were, for purposes of
this case, performed by Ms Ethal van Zyl. Ms van Zyl informed
the defendant that the credit of JAZ with the plaintiff was
exhausted. It appeared that JAZ had several contracts with the
plaintiff. The account number allocated to Creative Thinking
was JAZ 015. Ms van Zyl arranged a meeting between herself,
Mr
Spinola, the plaintiff’s managing member and the defendant.
The defendant could not recall exact dates, but it appears
that the
events took place in March 2009.
[4] A
credit application form for Creative Thinking, incorporating a Deed
of Suretyship for the defendant was given to the defendant.
Spinola testified that he gave the credit application form to Ms van
Zyl. He did not talk to the defendant at the stage.
Ms
van Zyl gave the credit application form back to Spinola during the
first week of March 2009. Some information on the
form was
outstanding.
[5]
Spinola testified that it is plaintiff’s practice to obtain a
credit guarantee insurance for all their clients before
the plaintiff
is willing to provide credit. Spinola was informed by the
credit guarantee concern that they were not willing
to provide the
plaintiff with any cover on the defendant. Spinola informed the
defendant of this fact, and they had a meeting.
[6] On
the evidence of Spinola and the probabilities their meeting took
place on 11 March 2009. At that meeting Spinola asked
the
defendant for other security. In his evidence in chief Spinola
said that the defendant suggested that Creative Thinking
make a
cession for direct payment by the Free State Department of Local
Government and Housing. When it was put to him in
cross-examination that it was his suggestion that a cession for
direct payment from the Department of Housing be obtained, Spinola
said he was not sure. He said there was a follow-up meeting on
16 March 2009. Spinola said he completed the cession
for direct
payment in the presence of the defendant, and gave it to defendant to
give to the Department for signature. It
was clear that the
Department would take time to sign the document, and according to
Spinola the defendant needed delivery of the
bricks urgently.
According to Spinola the defendant told him that he does not usually
open accounts when he uses a sub-contractor,
as here. Spinola
said because this housing contract was important to defendant, he was
willing to open an account with plaintiff.
The defendant
disputed that he was keen to open an account, and said he was
informed that his credit application was turned down,
and defendant
accepted that there would be no sales to Creative Thinking.
[7] A
second form of security was then agreed upon, because the defendant
needed delivery of the bricks from plaintiff urgently,
as testified
by Spinola. According to the contract between Creative Thinking
and JAZ, JAZ was to supply the bricks for the
project. Spinola
testified that the defendant told him that he would subtract the
payments for bricks from what he paid JAZ.
This second form of
security proposed by Spinola was a cession of book debts by Creative
Thinking to the plaintiff. That
cession appears in plaintiff’s
trial bundle extract at page 43, signed by the defendant and dated 11
March 2009. Because
he now had that cession of book debts,
Spinola was willing to start delivery of the bricks immediately.
The contract according
to Spinola was that Ms van Zyl would place the
orders on behalf of Creative Thinking. The defendant testified
that he never
gave Ms van Zyl or JAZ authority to place orders for
bricks on behalf of Creative Thinking. Defendant’s
evidence is
that JAZ ordered bricks.
[8] As
to the delivery of bricks, Spinola testified that once he had the
cession of book debts he was willing to commence supply,
and the
first bricks were delivered on 16 March 2009. Ethal van Zyl
gave plaintiff the erf numbers where delivery had to
be made.
The defendant told Spinola he would get the cession for direct
payment signed. Spinola testified that the
defendant also
requested him to email the cession for direct payment document to the
engineer, Mr Nortje. This evidence was
not disputed in
cross-examination, but when the defendant testified he denied that he
requested that the document be emailed to
the engineer. By the
end of March 2009 Spinola still did not have the signed cession of
direct payment back. He phoned
the defendant. Spinola
told the defendant that that cession was a very important document to
him. Spinola said that
during the first week in April he phoned
the defendant again. He told defendant that if he did not get
the signed cession
back within two to three days he would stop the
account. On about the 7-8 April 2009 Spinola stopped the
account. Then
Spinola got nervous calls from Ethal van Zyl,
asking why he had stopped the account. On 24 April 2009 he
continued with delivery.
He got a payment of R90 000.
On 20 May 2009 Spinola got a second payment of R90 000, and he
again delivered.
On 1 June 2009 the last delivery was made.
Spinola testified that he stopped delivery on 1 June 2009 because he
did not get
the cession for direct payment.
[9] As
to the cession for direct payment, Spinola testified that during or
about May 2009 he got a telephone call from the defendant’s
office, telling him that he had not initialed all the pages of the
cession for direct payment. Spinola asked that the defendant
come to see him, but that did not happen. He waited for two
weeks, and when he did not get the cession for direct payment
back,
stopped delivery. In cross-examination it was put that
according to the defendant, when he left Spinola’s office
with
the cession for direct payment, it was complete, but the amount was
in the order of R600 000 not R932 961.01 as
appears on the
document in plaintiff’s trial bundle. The defendant’s
version put in cross-examination was that
the defendant said the
document was not the original, the defendant wanted the original.
He then went back to Spinola, who
printed an original document, and
the defendant signed that in blank. At the Department the
defendant the saw the document,
with the amount of R932 961.01
filled in, not the amount of about R600 000 that had been filled
in on the document the
defendant signed. In his evidence the
defendant added that when he saw the R932 961.01, he told the
Department not to
proceed with the cession, after he had phoned Ms
van Zyl and asked why there was now also a claim for material.
[10]
According to the defendant, the first he heard that the account of
Creative Thinking had been approved was in 2010, when Spinola
and
Ethal van Zyl came to see him. He was under the impression that
Ethal van Zyl had made other arrangements for getting
and paying for
the bricks from plaintiff. He says he never got any accounts
form plaintiff, but admitted that he did get
other mail daily
addressed to the same post box.
[11] I
found neither Spinola nor the defendant to be completely satisfactory
witnesses. In his evidence in chief Spinola said
that the
suggestion for the cession for direct payment came from defendant,
yet in cross-examination he conceded that he could
have made the
suggestion. He claimed against the Department for payment of
the debts of Creative Thinking and JAZ. The
allegation in his
letter of 11 February 2010 that the cession applied to debts of
Creative Thinking and JAZ is incorrect.
In the letter Spinola
claims payment from the Department of money allegedly due by Creative
Thinking to JAZ. There appeared
to be a close relationship
between plaintiff and JAZ, both seeking payment from the defendant.
Plaintiff and JAZ launched
a joint liquidation application against
Creative Thinking, which application was not proceeded with.
[12] As
to defendant, I find it difficult to understand why he was willing to
state in his credit application to the plaintiff that
he required a
facility of R900 000, yet when he saw R932 961.01 on the
cession of direct payment document at the Department,
he told the
Department not to proceed with the cession for direct payment.
A further difficulty with defendant’s version
is that he
maintained throughout that Spinola informed him that the credit
application was turned down, and defendant accepted
that. Yet
he signed a cession of book debts of Creative Thinking and he went to
give the cession for direct payment to the
Department of Housing.
Defendant at his weekly visits to the erven where JAZ was building as
his sub-contractor saw bricks
of the plaintiff. He never asked
Ms van Zyl who paid for those bricks. The evidence of Spinola
that the credit of Ms
van Zyl (JAZ) was exhausted was not assailed.
The fact that JAZ could not get credit is confirmed by the fact that
defendant
applied for credit. He was told the credit would only
be for diamond and stock bricks, and he was happy with that.
[13]
Defendant testified that JAZ and Ms van Zyl had no authority to order
bricks on behalf of Creative Thinking. Yet the
defendant knew
that bricks were necessary for his housing project he had
sub-contracted to JAZ. It was in defendant’s
interest
that the houses be built. On the probabilities defendant knew
that Creative Thinking was being debited for the bricks
by
plaintiff. I find that an account was opened for Creative
Thinking, credit was granted to Creative Thinking, and defendant
is
liable as surety for the proven debts of Creative Thinking to
plaintiff.
[14] As
to quantum, Ms Wright devoted a considerable portion of her address
at the end of the case to the question whether the amount
of
plaintiff’s claim was proved. She conceded that the
certificate of balance constituted
prima facie
proof.
Although Ms Comache, who signed the certificate, said she was
satisfied with all the invoices, Spinola conceded that
mistakes were
made by his sales staff. Ms Wright says Spinola relied on
plaintiff’s accounting department, he did not
deal with the
account personally. The initial statements show two payments of
R90 000, yet those payments are removed
later. Those
amounts were paid by Ms Ethal van Zyl, who was responsible for
payment for the bricks in terms of her contact
with Creative
Thinking. Ms Wright points out that all the invoices presented
in court are photocopies, some of them illegible.
Ms van Zyl
used the account to order bricks. The question arises why the
account should not, on the delivery note and on
the invoice, which
two documents are created at the same time, refer to JAZ, stating the
delivery address. Ms Wright describes
the practice of making
the delivery note out in the name of Creative Thinking as “fishy”.
She submits that enough
doubt has been created about the
certificate. As to the interest calculation, Ms Wright submits
that the manner of calculation
is unsatisfactory and incorrect.
Amounts of interest are taken out and re-inserted.
[15]
For purpose of interpreting the contract, Ms Wright referred to
Bothma-Batho Transport (Edms) Bpk v S. Bothma en Seun Transport
(Edms) Bpk
2014 (2) SA 494
(SCA) par [12], where Wallace JA
points out that in interpreting a contract one looks at inter alia
the circumstances in which
the document came into being. In
this case the evidence shows that Ms van Zyl needed another account.
For that reason
she submits that an account was created for Ms
van Zyl or JAZ, not the defendant. This is an attractive
argument, implying
a rectification of the Credit application and
Suretyship, listing the principal debtor as JAZ, not Creative
Thinking. There was
never such rectification application.
[16]
The point is that defendant needed bricks urgently for his housing
project. He signed several documents to make the giving
of
credit for the purchase of the bricks from the plaintiff possible.
The only way the bricks were going to be delivered
was if defendant
guaranteed the debt. The reason why plaintiff supplied the
bricks was because it had the suretyship and
cession of book debts
from Creative Thinking; waiting for the cession of direct payment.
[17] In
considering the quantum the question arises: What is the
significance of the fact that two payments of R90 000
were made
for bricks by Ethel van Zyl? These two payments were initially
credited to the account of Creative Thinking, but
later reversed by
Spinola. The evidence does not disclose to which account the
amounts were then credited. The statements
of JAZ to Creative
Thinking dated 1 March 2011 lists that on 20 April 2009 and 20 May
2009 two amounts of R90 000 were for
“CEM Brick
Payments”. Thus JAZ paid plaintiff for bricks. The
fact that these two payments were initially
credited to Creative
Thinking’s account and the fact that, after receiving these two
payments, Spinola proceeded to make
further deliveries, indicate that
defendant should receive the benefit of those two payments.
Plaintiff’s claim should
be reduced by R180 000.
[18]
The capital claim by plaintiff is R336 459,10. That amount
should be reduced by R180 000. The calculation
of interest
by plaintiff as set out in Exhibit “B” page 4a is in my
view subject to doubt. The calculations have
not been proved
beyond reasonable doubt. In terms of clause 17.1(c) of the
Credit Agreement, interest runs at 1.5% per month.
That is what
plaintiff is entitled to, as from 30 days after the last delivery 1
June 2009.
ORDER
1. Defendant is ordered to pay plaintiff R156 459,10
plus interest on R156 459,10 at the rate of 1.5% per month from
1
July 2009 to date of payment.
2. Plaintiff is ordered to pay the wasted costs of the
hearing on 29 October 2013.
3. Save as is set out in paragraph 2 above defendant is
ordered to pay the costs of suit.
____________
A. KRUGER, J
On
behalf of plaintiff: Adv P Zietsman S.C.
Instructed by:
E.G Cooper Majiedt Inc
BLOEMFONTEIN
On
behalf of defendant: Adv GJM Wright
Instructed by:
Spangenberg Zietsman & Bloem
BLOEMFONTEIN