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[2015] ZAKZPHC 22
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SA Taxi Securisation (Pty) Ltd v Booyens Ad Co. Inc and Others (13452/2013) [2015] ZAKZPHC 22 (24 April 2015)
IN
THE HIGH COURT OF SOUTH AFRICA
KWAZULU-NATAL
LOCAL DIVISION, PIETERMARITZBURG
Case
no: 13452/2013
In
the matter between:
SA
TAXI SECURISATION (PTY)
LTD
...........................................................................
APPLICANT
(Registration
number: 2005/021852/07)
and
BOOYENS
AD CO.
INC
...................................................................................
FIRST
RESPONDENT
PHAMBUKA
LINDELANI BLESSING
...................................................
SECOND RESPONDENT
SHERIFF
OF THE HIGH COURT, DURBAN COASTAL
.........................
THIRD
RESPONDENT
JUDGMENT
Delivered on: 24
April 2015
MBATHA J
INTRODUCTION
On
the 4
th
of March 2015 I made an order dismissing the Applicant’s claim
with costs and I indicated that my reasons will follow.
[1]
The Applicant is SA Taxi Securisation (PTY) Ltd (Registration number
2005/021852/07) a company registered and incorporated with
limited
liability in accordance with the laws of the Republic of South
Africa. It has it principal place of business at 179,
15
th
Road, Randjespark, Midrand.
[2]
The First Respondent is Booyens and Co. Incorporated, whose
principal place of business is at 1A Holwood Park, corner
Armstrong
Avenue and Canegate Road, Umhlanga Rocks, cited in their capacity as
attorneys of record for the Second Respondent.
[3]
The Second Respondent is Phambuka Lindelani Blessing, an adult male
person of 120 Mzansi Road, Ward 03, Umzinto, cited in his
capacity as
a Lessee to the Applicant.
[4]
The Third Respondent is the Sheriff of the High Court, Durban
Coastal, entrusted with the execution of the writs issued by the
First Respondent. No relief is sought against him.
[5]
The Applicant seeks the setting aside of the writs of execution and
attachments undertaken by the Third Respondent, which was
effected
pursuant thereto, on the basis that the Second Respondent’s
claims were settled or extinguished by a set-off.
The writs of
execution were issued in terms of the taxed bills of costs under case
number 8821/2011 and 2968/2012.
THE
APPLICANT’S AND RESPONDENTS’ SUBMISSIONS ON THE MERITS OF
THE CASE.
[6]
In support of its case, the Applicant made the following
submissions:-
That
the amount due in terms of the taxed bills of costs have been
extinguished by a set-off before the writs were issued, a fact
of
which the First Respondent has been aware, and in addition, in
respect of the second taxed bill of costs, a letter of demand
was
not served on the Applicant and therefore the writ stands to be set
aside;
That
the Applicant is a company that provides finance for motor
vehicles. It provided finance to the Second Respondent by
leasing motor vehicles that were used by him in his taxi business.
The Applicant states that the Second Respondent defaulted
in making
payments in respect of the motor vehicles as a result that it
instituted actions against him under case number 8821/2011
and
2968/2012;
That
the costs arose as a result of a dismissal of a summary judgment
application against the Applicant and also in terms of Rule
41(1)(c)
of the Uniform Rules of Court where it had been ordered to pay the
Second Respondent’s costs. The First
Respondent having
taxed the bills of costs proceeded to issue the writs of execution
and attachment against it. Furthermore,
the Applicant submits
that the Respondent was not entitled to issue a writ for payment of
the costs in respect of both matters
and pleads a set-off, as the
insurance had not settled in full the indebtedness of the Second
Respondent;
It
is the Applicant’s contention that the shortfall of
R118 296,29 not settled by the insurance company is a
liquidated
claim. Being a liquidated claim, an automatic
set-off should take place in respect of the taxed costs awarded in
favour
of the Second Respondent;
That
the lease agreement was between the Applicant and the Second
Respondent, but the insurance agreement was between the Second
Respondent and the insurer, a third party who had to insure the
leased motor vehicle. The Second Respondent signed the
agreement and signed for the settlement amount which left a
shortfall to the amount due and payable to the Applicant. He
should therefore be bound by the terms of that settlement agreement,
though he disputes that he signed the agreement. It
is
submitted that he under insured the motor vehicle;
It
is submitted that the shortfall from the insurance pay-out is a
liquidated amount, being a claim for a fixed, certain or ascertained
amount. In this regard, I was referred to various authorities
including
Fattis
Engineering Co (Pty) Ltd v Vendick Spares (Pty) Ltd
[1]
;
Upon
the rescission of judgment application, the Applicant learnt that
motor vehicle was involved in a collision and the insurance
company
decided to write it off. The value of the motor vehicle was
R252 288,59 and it settled at R133 992,30
on the 6
th
of July 2012. The balance outstanding is the sum of
R118 296,29. The lease agreement between the Applicant
and the Second Respondent states that the Second Respondent will be
liable for any shortfall should the insurer not settle the
entire
amount; and
It
was further submitted that the shortfall was due and payable and did
not form part of the rescheduling order and should the
Court find
that it fell within a restructuring agreement, the Court should
order that the Second Respondent pay to the Applicant
an amount of
R2 659,69 per month in terms of the debt restructuring
agreement. Therefore, a set off should also take
place
automatically and
ipso
jure
in respect of this agreement.
The
gravamen of the Applicant’s case is that the writs should be
set aside as the debt upon which Second Respondent relies
upon is no
longer in existence as it has been extinguished by set-off.
[7]
The Respondents are opposing the application on the basis that the
Second Respondent is not indebted to the Applicant at all.
The
motor vehicle leased from the Applicant was written off after it was
involved in a collision. The insurance which had
been arranged
by the Applicant paid out the Applicant in full. Therefore,
there were no monies owed by the Second Respondent
to the Applicant.
If there is any shortfall as alleged by the Applicant, it was not due
to any fault of the Second Respondent
as the Applicant had
under-insured the motor vehicle;
7.1
The Respondents’ submissions are that the costs were awarded as
both actions were withdrawn by the Applicant. In
case number
2968/2012, the Second Respondent had applied for a rescission of
judgment on the basis that he does not owe the Applicant
any monies.
The Applicant consented to the rescission of judgment, withdrew its
action, and tendered the Second Respondent’s
costs. No
further proceedings were instituted by the Applicant save for this
application;
7.2
It is further submitted that both actions pertain to one and the same
credit agreement concluded between the Applicant and Second
Respondent, on which no judgment was granted; and
7.3
That the documents that the Applicant rely on were signed by a P.H.
Phambuka and not the Second Respondent;
7.4
In reply the Respondents submit that in law a set-off can only take
place when both parties are indebted to each other, the
debts are
liquidated and due and payable. Furthermore, the Respondents
herein dispute the indebtedness to the Applicant,
therefore, making
Applicant’s claim not a liquidated claim and not due and
payable. The basis for this argument being
that the Applicant
has failed to respond to the First Respondent’s notice in terms
of
section 110
of the
National Credit Act 34 of 2005
, whereby a
request was made for the current balance of the account and the
amount credited or debited against the Second Respondent’s
account for the past three (3) years. This appears in the
letter from the First Respondent to the Applicant’s attorneys
dated the 23
rd
of August 2012. Therefore, this correspondence indicated the
existence of a dispute between the parties;
7.5
That the Applicant was notified of the taxation on the 28
th
of January 2014 and there was no objection from the Applicant in the
matter under case under 2968/2012. The other bill of
costs was
in respect of the costs due to the correspondent attorney WHA Compton
Attorneys and has got nothing to do with the subject
matter in this
case;
7.6
That Wanless AJ in dismissing the Application for summary judgment by
the Applicant found that the agreement between the parties
had not
been cancelled and that it was a subject of a debt restructuring
order. Therefore, the only payments that were due
and payable
were in terms of that order. That issue is not before this
Court; and
7.7
That the Second Respondent notified the Applicant that by issuing
summons it was repudiating the agreement. The Repudiation
cancelled the agreement and that the insurer had settled his
indebtedness to the Applicant. The Applicant consented to the
Rescission and withdrawal of its action. It never proceeded
with any action against the Respondent thereafter. Second
Respondent submits that, therefore, a set-off cannot be applied here
by reason of the fact that the claim is disputed and it is
not a
liquidated claim.
[8]
In support of their case the Respondents relied on various
authorities, including
Bamabas
v
Govender
[2]
which spelt out the requirements for reliance on a set-off, which
stated as follows:-
“
It
is quite clear on the law that there can only be compensation or
set-off in the case of mutual debts, each is liquidated, absolute
and
presently due.”
And
in
Ford
Brothers v Clayton and Clayton
[3]
where it was stated as follows:-
“
Where
a claim is disputed especially upon grounds which affect the very
basis upon which it is framed, it can hardly be said to
be promptly
established. Such uncertainty as existed in this matter appears
to me as fatal to the existence of a right of
set-off until the
dispute is settled and this uncertainty dispelled by the judgment of
a competent Court.”
[9]
CONSIDERATION OF THE APPLICATION.
9.1
The question to be decided by this Court is whether the Applicant’s
claim is a liquidated claim and if so, whether it
can be set-off
against the claim of the First and Second Respondents for taxed
costs.
9.2
It is common cause that the actions instituted by the Applicant
against the Second Respondent were withdrawn. This led
to an
award of costs in favour of the Respondents. The Respondents
taxed their bills of costs and demanded payment from the
Applicant.
Later on they proceeded to execute and attach against the Applicant.
The Applicant avers that an amount
of R118 296,29 is still
outstanding, due and payable by the Second Respondent and it is
entitled to set-off any amount owed
to the Second Respondent because
of this debt.
The
claim of R118 296,29 is disputed by the Second Respondent as
being non-existent and an unliquidated claim and that it should
not
be set-off against any taxed costs due and payable to the
Respondents.
[10]
It is common cause that the Applicant after consenting to a
rescission of judgment on the 14
th
of May 2015; it withdrew the action. This put an end to the
matter. At this stage the motor vehicle had been written
off as
a result of an accident which occurred on the 2
nd
of March 2012. It is not in dispute that the founding affidavit
to the rescission of judgment application categorically states
that
the Second Respondent disputes any indebtedness to the Applicant.
The Applicant having withdrawn its action under case
number 2968/2012
never made any demand for any shortfall by the insurance company,
irrespective that it had been paid less by the
insurance company.
The set-off defence only arose when the Applicant proceeded with a
warrant of execution upon failure by
the Applicant to settle payment
in respect of the taxed costs.
[11]
I am of the view that the Second Respondent had every right to
believe that the insurance claim had been settled in full.
The
insurer of the motor vehicle was chosen by the Applicant. It
was a material term of the agreement between the Applicant
and the
Second Respondent that the motor vehicle should be comprehensively
insured. It is common knowledge that a comprehensive
insurance
cover offers greater protection than any other limited cover.
This was a requirement from the Applicant and it
provided the insurer
who had to comprehensively cover such a risk. The provision of
the insurer by the Applicant can be accepted
as a guarantee to the
Lessee, in this case, that the insurer was
au
fait
with the terms of the Lessor’s
insurance requirements.
[12]
If one looks at Annexure RA3 at page 163 of the indexed papers, the
insurance was brokered by the Applicant. The proposal
form
states that the Broker is SA Taxi Risk Management Services (PTY)
LTD. It goes on further to state that:-
“
SA
Taxi Risk Management will act in its capacity as your insurance
broker unless you provide alternative cover that meets your
contractual obligations to SA Taxi prior to the signature of the
contract.”
Then
it goes on to state at page 164 of the indexed papers that:
“
This
insurance policy will be ceded to SA Taxi for the duration of the
agreement as per clause 4.6 of the contract.”
Clause
4.6 of the Lease Agreement states as follows:-
“
The
Lessee hereby cedes his entire right, title and interest in and to
every insurance policy effected in terms of this agreement
to the
Lessor including the right to receive any payment from the insurer in
terms of each such policy, and the Lessee undertakes
upon demand, to
deliver each such insurance policy to the Lessor…”
Paragraph
4.9 of the Lease agreement goes on further to state that:-
“
When
an insured event occurs in terms of either of the insurance policies
referred to above, the Lessor shall have the sole and
exclusive right
to accept payment of, compromise or agrees to a settlement with the
underwriter of the amounts payable under either
of the policies,
which payment shall be made to and received by the Lessor, upon
receipt of which the Lessor shall be obliged to
credit the amount of
such payment against any amount outstanding by the Lessee to the
Lessor in terms of the agreement.”
[13]
There was an out and out cession to the Applicant and the Applicant
had the sole discretion to accept payment from its insurers
and this
had nothing to do with the Second Respondent. In the light
thereof, I find that it should have comprehensively insured
the
Second Respondents’ motor vehicle.
[14]
The contract signed by the Second Respondent also provides that any
shortfall by the insurer will be paid by the insured person.
It
cannot be construed that this meant that the insured had to pay
almost the same amount as the insurer. The duty therefore
lay
upon the Applicant to select a comprehensive cover for the Lessee.
We need to look at the purpose of the comprehensive
insurance cover
as well as the intention of the parties. The purpose was to
provide protection against the risk and the intention
to settle the
indebtedness of the Second Respondent in the event of an accident or
any other loss. In coming to that conclusion,
I am guided here
by the judgment of Wallis JA in
Natal
Joint Municipal Fund v
Endumeni
Municipality
[4]
.
[15]
The agreement of settlement is signed by one Philani Phambuka,
whereas the Respondent is Lindelani Blessing Phambuka.
It does
not even state where it was signed. Furthermore, if one looks
carefully at the agreement of loss, no salvage/scrap
value is given
for the motor vehicle. However, the very same insurance company
states in the very same document that:
“
The
salvage of the above motor vehicle shall be disposed for the benefit
of the Hollard Insurance Company Limited and I further
relinquish by
rights to the abovementioned vehicle to Clarendon Transport
Underwriters (Pty) Limited and Hollard Insurance Company.”
[16]
My view is that this benefit was relinquished only on the basis that
the insurer would have fully extinguished the liability
of the
insured. It cannot make sense that the insured is left to foot
the unsettled claim, whilst the Applicant keeps all
the spoils.
It goes against the grain that the Applicant would require a
comprehensive cover, and then select an insurer
that would not give
the required protection against the risk, being the people who
provided the insurance.
[17]
If the Applicant was
bona fide
,
and had a genuine claim against the Second Respondent it would not
have withdrawn its second action against the Second Respondent.
Even if it had a claim against the Second Respondent, it should have
first obtained judgment against the Second Respondent, as
the Second
Respondent had denied being indebted to the Applicant at all.
The Applicant’s debt is inclusive of legal
costs and I accept
the submissions made on behalf of the Second Respondent that without
a Court order or a taxation of such fees,
the Applicant’s claim
is not liquidated.
[18]
It is also trite that a liquidated claim in money is an amount which
is either agreed upon or which is capable of speedy and
prompt
ascertainment. In my view, the Applicant’s claim does not
fall within that category as it requires an enquiry
into the nature
of the claim by the Applicant. It is also trite that a set-off
can take place if both debts are liquidated
in the sense that they
are both capable of speedy and easy proof.
Treasurer-General
v Van Vuren
[5]
;
Fattis
Engineering Co. (Pty) Ltd v Vendick Spares (Pty) Ltd
[6]
.
[19]
I accept the Respondents’ submission that there can be no
set-off. They have correctly relied on
Barnabas
v Govender
[7]
,
a full bench decision of this division which spells out the
requirements for reliance on a set-off:
“
It
is quite clear on the law that there can only be compensation or
set-off in the case of mutual debts each is liquidated, absolute
and
presently due.”
[20]
A set-off comes into operation when parties are mutually indebted to
each other and both debts are liquidated and fully due.
This
comes on automatically.
Absa
Bank Ltd v Standard Bank of South Africa Ltd
[8]
.
It
is only a liquidated claim that can be set-off. The Applicant
in this case has not obtained a judgment against the Second
Respondent or the First Respondent who have categorically denied his
indebtedness to the Applicant. I am saying this as the
party
who is relying on this remedy bears the
onus
of proving the indebtedness of the Respondents to the Applicant and
that the Defendant’s debt or liability is also due and
payable.
[21]
A party wishing to rely on set-off must allege and prove the
following:-
“
a)
The indebtedness of the of the Plaintiff to the Defendant;
b)
That the Plaintiff’s debt is
also due and legally payable;
Mohamed
v Nagalie
[9]
,
Sonnehage
v Bezuidenhout
[10]
c)
That both debts are liquidated
debts. A debt liquidated if:
(i)
it is liquid in the sense that it is based on a liquid document;
(ii)
it is admitted;
(iii)
its money value has been ascertained;
(iv)
it is capable of prompt ascertainment; and
Fattis
Engineering Co (Pty) Ltd v Vendick Spares (Pty) Ltd
[11]
.
d)
That the reciprocal debt was owed to by the Plaintiff to the
Defendant.
Potterstraat
69 Eiendomme (Pty) Ltd v PA Venter Worcester (Pty) Ltd
[12]
.”
These
principles appear in
Amler’s
Precedents of Pleadings, 7
th
Edition
at
page 352
.
[22]
I am also of the view that since there is a dispute as to the
validity and authority of the signature on the insurance settlement
document, this amongst other things, does not make the Applicants
claim ascertainable, or admitted. In respect of the alternative
prayer by the Applicant, there is nothing in the application before
me where a case is made out for such a prayer in terms of the
restructuring order, nor did the Applicant present any evidence in
support thereof.
23.1
I have observed that the Applicant since the inception of its actions
against the Second Respondent, does as it pleases.
In the first
case, case number 8821/2011, it took judgment with full knowledge of
the existence of a debt restructuring order.
The Second Respondent
was granted leave to defend the action after its application for
summary judgment. The Applicant then
withdrew the action
without tendering costs and the Second Respondent had to bring an
application to Court to get his costs.
23.2
It then issued a new summons under case 2968/2012, did not serve it
at the
domicillium citandi
of the Second Respondent, but served it at his employers’
address. The Second Respondent did not receive the summons
as
he was in Malawi. Default Judgment was entered against the
Second Respondent. The Second Respondent had to bring
an
application for rescission of judgment irrespective of the
irregularity being pointed out to the Applicant in writing.
The
Applicant only consented to a rescission of judgment later and
tendered costs. Both costs were not settled by the Applicant.
23.3
The Applicant had applied for Default Judgment having been aware
that the motor vehicle had been involved in a collision and
had been
written off. This kind of ambush litigation needs to be
discouraged at all costs, as in most cases the Defendant
would not be
in a financial position to defend all these actions. However,
irrespective of all these irregularities, the
Applicant has the
audacity to seek an order for costs on an attorney and client scale.
CONCLUSION.
[24]
I therefore find that the Applicant’s claim is unliquidated and
a set-off remedy cannot be applied thereto.
Accordingly,
for these reasons I gave the order dated the 4
th
of March 2015.
_______________
MBATHA
J
Appearances
Date
of hearing: 4 March 2015
Date
for reasons for judgment: 24 April 2015
For
the Applicant: Adv. M.E. Jan Jaarsveld
Instructed
by: Marie-Lou Bester Inc.
c/o
Nicholson & Hainsworth
For
the Respondents: Adv E. Crots
Instructed
by: Booyens and Co. Inc.
c/o
WHA Compton Attorneys
[1]
1962
(1) SA 736
(T) at 739.
[2]
1928
NPD 260.
[3]
1960
TPD 06
at 208.
[4]
(920/2010)
[2012] ZASCA.
[5]
1905
TS 582
at 589.
[6]
1962
(1) SA 736
(T) at 738 F-G.
[7]
1928
NPD 260.
[8]
1997
(4) All SA 673 (A), 1998 (1) SA 242 (SCA).
[9]
1952(2)
All SA 11 (A), 1952 (1) SA 410 (A).
[10]
1977
(1) SA 362 (O).
[11]
1962
(1) All SA 578 (T), 1962 (1) SA 736 (T).
[12]
2000
(4) SA 598
(C).