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[2014] ZAGPPHC 358
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Liberty Lane Trading 337 (Pty) Ltd v F and S Scaffolding (Pty) Ltd (65526/2012) [2014] ZAGPPHC 358 (9 May 2014)
IN
THE HIGH COURT OF SOUTH AFRICA
(GAUTENG
DIVISION, PRETORIA)
CASE
NO: 65526/2012
DATE
OF HEARING: 11 FEBRUARY 2014
DATE:
9 MAY 2014
NOT
REPORTABLE
NOT
OF INTEREST TO OTHER JUDGES
In the matter
between:
LIBERTY LANE
TRADING 337 (PTY) LTD
(In liquidation)
….............................................................................................................
APPLICANT
and
F AND S
SCAFFOLDING (PTY)
LTD
......................................................................
RESPONDENT
J U D G M E N T
MALI
AJ:
INTRODUCTION
[1]
This
is an application for the payment of an undisputed amount of
R545.488.00
[2]
The
respondent does not dispute the payment of the amount but has
instituted a counter application in respect of rental claims and
damages related to certain scaffolding.
BACKGROUND
[3]
The
applicant sold scaffolding and related products to the respondent
amounting to R653. 331.33. The respondent made payment of
an amount
of R107. 843.33 leaving a balance of R545, 488.00 due to the
applicant.
[4]
On
10 June 2011, the applicant was placed under provisional liquidation
by the order of this honourable court.
[5]
On
19 April 2012, the joint provisional liquidators of the applicant
instructed a firm of attorneys to collect monies owed to the
applicant by the respondent.
AD
POINT IN LIMINE
[6]
The
respondent contends that the applicant through its liquidators does
not have the necessary powers to institute actions or applications
for the recovery of alleged outstanding debts. The applicant’s
powers are derived from the court order dated 28 June 2011.
[7]
The
abovementioned court order reads as follows:
“
It
is ordered that:
6.1. the
applicants are authorised to bring this application in terms of
section 386(5) of the Companies Act No 61 of 1973 ( as
amended)(“
the Old Companies Act”) as read with item 9 (1)of
schedule 5 of the Companies Act 71 of 1973 (“the
Current
Companies Act”);
6.2. the
applicants are authorised, in terms of section 386(5) of the Old
Companies Act, to exercise the following powers in relation
to the
administration of Liberty Lane Trading 337 (Pty) Limited ( in
provisional liquidation) ( “ Liberty Lane”):
6.2.1 to obtain
legal advice on any question of law affecting the administration of
Liberty Lane and to engage the services of attorneys
and counsel in
connection with any matter arising out of or related to the affairs
of Liberty Lane;
6.2.2 to agree
with such attorneys and/or counsel on the tariff or scale of fees
to be charged by and paid to such attorneys
and/or counsel for the
rendering of services to Liberty Lane and to conclude written
agreements with attorneys and/or counsel on
the basis of that the
costs incurred by the applicant, except costs awarded against the
company in liquidation in legal proceedings,
shall not be subject to
taxation by the taxing master if the applicants have entered into a
written agreement in terms of which
the fees of any attorneys or
counsel will be determined in accordance with a specific tariff,
provided only that no contingency
fee arrangement shall be entered
into without the prior written consent of creditors;
6.2.3 to pay the
attorneys and/or counsel the agreed costs and the disbursements made
by the attorneys and/or counsel out of the
funds of Liberty Lane as
costs in the administration of Liberty Lane as and when such services
are rendered and the disbursements
are made;
6.2.4 to agree
any reasonable offer of composition made to Liberty Lane by any
debtor and/or to accept payment of any part of a
debt due to Liberty
Lane in settlement thereof and/or to grant an extension of time of
the payment of any such debt owing to Liberty
Lane;
6.2.5. to
compromise or admit any claim or demand against Liberty Lane,
including an unliquidated claim;
6.2.6 to carry on
or discontinue any part of the business of Liberty Lane in so far as
it may be necessary;
6.2.7 to elect
whether or not to abide by certain agreements concluded by Liberty
Lane prior to its liquidation;
6.2.8 to submit
any dispute concerning Liberty Lane or any claim or demand by or upon
Liberty Lane to the determination of arbitrators;
6.2.9 to
terminate lease agreements concluded by Liberty Lane prior to its
liquidation in respect of movable and immovable property;
6.2.10 to sell
any movable and immovable assets of Liberty Lane by public auction,
public tender or private contract and to give
delivery thereof;
6.2.11 to borrow
funds on behalf of Liberty Lane and to ratify any decision by the
provisional liquidators regarding funds borrowed
prior to the date of
this Order.
6.3 The actions
of the Applicants to date hereof in respect of the engagement of the
services of attorneys and counsel are ratified
and confirmed, in
accordance section 386 (5) of the Old Companies Act; and
The
costs of this application to be paid out of the assets of Liberty
Lane.
[8]
The
respondent`s counsel relied on section 386(4) (a) of the
Companies Act 61 of 1973, which reads as follows:
“…
to
bring or defend in the name and on behalf of the company any action
or other legal proceedings of a civil nature, and, subject
to the
provisions of any law relating to criminal procedure, any criminal
proceedings: Provided that immediately upon the
appointment of
a liquidator and in the absence of the authority referred to in
subsection (3), the Master may authorise, upon such
terms as he
thinks fit, any urgent legal proceedings for the recovery of
outstanding accounts”.
[9]
The
respondent’s counsel argued that having regard to the
provisions of section 386 (4) above, the liquidators have not been
granted, nor have their powers been extended to bring this
application in the name of the applicant. Such powers can only be
granted
to the provisional liquidators by the Master, or with the
leave of the Court. Accordingly, the provisional liquidators ought to
have proceeded in their own names as representatives of the applicant
and not in the name of the applicant directly.
[10]
The
respondent’s counsel referred to Henochsberg`s commentary on
section 386 of the Companies Act. (“the Act”).
The
relevant excerpt at page 818 reads as follows:
“
Proceedings
to obtain directions under S387 (3) must, however, be distinguished
from proceedings by or against the company as envisaged
by S 386 (4)
(a). The reference to “liquidator” in S 359 does not
include a reference to a provisional liquidator.
Because
S 359(1) (a) suspends all civil proceedings by or against the company
until the appointment of a liquidator, i.e. the liquidator
finally
appointed, it follows, it is submitted, that the reference to
the “liquidator in S 386(4) (a) read with S 386(3)
does not, in
the context, include a reference to a provisional liquidator.
Therefore , the provisional liquidator has no power
under S 386(4)(a)
to bring or defend proceedings, whatever the terms of his
appointment, not even with authority or directions
as envisaged by S
386 (3)(a) and the Master cannot grant to him the authority envisaged
by the proviso to S 386(4)(a).If any proceedings
by the company
required to be taken , it is submitted that the only basis upon which
the provisional liquidator can take them,
in the light of the
provisions of S 359 (1)(a) is for him to approach the court under S
386(5) read with S 387 (3) and S 361 (3)
to procure the vesting in
him in his official capacity of the company’s right of action,
thereby enabling him, as distinct
from the company, to take the
proceedings…. Ordinarily, in view of the provisions of
S359(1)(a), there should be no occasion
for the provisional
liquidator to require authority to defend civil proceedings against
the company, since they may not be brought
at all during his period
of office. If they are, however, it is submitted that the court may
empower him to defend them in his
own name in terms of S 361 (3) read
with S 385(5) and S 387(3).”
[11]
In
Millman
NO and Steub NO v Koetter
1993
(C)
at 758D,
Marais J, while accepting that the term ‘liquidator’ in s
359 means a liquidator of the company in liquidation and
not for the
benefit of the company’s debtors; states that it would be
absurd to read into them a desire to prohibit absolutely
a
provisional liquidator from litigating in the name and on behalf of
the company.
[12]
The
respondent’s counsel argued that the liquidators’ powers
are limited to the powers as recorded in Clause 2.8 of
the court
order. Clause 2.8 reads as follows:
“
to
submit any dispute concerning Liberty Lane or any claim or demand by
or upon Liberty Lane to the determination of arbitrators;
[13]
The
respondent’s counsel further argued that it is incorrect for
the applicants to rely on section 386 (4) (f) of the Act
which reads:
“
The
liquidator in any winding –up shall have power to carry on or
discontinue any part of the business of the company in so
far as may
be necessary for the beneficial winding-up thereof: Provided that, if
he considers necessary, the liquidator may carry
on or discontinue
any part of the business of the company concerned before he has
obtained the leave of the Court or the authority
referred to in
subsection 3.”
[14]
The
respondent’s counsel submitted that the applicant is attempting
to read into the above provision a power to litigate,
whereas there
is a difference between litigation for the recovery of assets and
litigation for the purpose of collecting debts.
The respondent`s
counsel submits that a provisional liquidator has no power under
section 386(4)(a) because this section clearly
prohibits litigation
and therefore the applicant is prohibited to apply section
386(4)(f). The carrying on part of
the business envisaged in
386(4)(f) does not include litigation. Any issues requiring
litigation fall squarely under section 386(4)
(a).
[15]
The
respondent submits that the applicant approached the court to seek
the powers which were granted in the court order which do
not cover
litigation. The only officer authorised to deal with litigation
is the final liquidator. The court deemed it fit
to grant the
applicant order which on interpretation is inclusive of litigation
powers. The honourable court rightfully granted
the order without
subjecting the applicants to the provisions of section 386(4)(a) of
the Act.
[16]
The
respondent further referred to
Blackman
[1]
page
386 at paragraph 14-357, wherein it is stated that;
“
While
the purpose for the enactment of section 359)1)(a) no doubt includes
some of those listed by the learned judge, the fundamental
purpose of
the section is to ensure that, before the company is committed to
legal proceedings, the liquidator finally appointed
is given
sufficient time to consider the matter and obtain authority to do so
from those whose interests are at risk, namely the
creditors and
members of the company”.
[17]
To
permit a provisional liquidator to waive the provisions of s 315(1)
(a), and so free himself to seek the authority of the court
to
litigate would defeat the purpose of the subsection. Unlike the
provisional liquidator (who is appointed by the Master and whose
task
is merely to conserve and protect assets of the company until the
liquidator is appointed), the liquidator is chosen by the
creditors
and members, and it is his, and not the provisional liquidator’s
duty to wind up the company. Furthermore, it is
only at and after the
first meeting of the creditors (where the final liquidator is
nominated) that creditors have an opportunity
to prove their claims
and thus it is only at and after that meeting that the creditors can
authorise the liquidator to institute
proceedings on behalf of the
company.
[18]
My
view is that the learned judge who granted the order would have
clearly set the limitations if the law intended to do so. The
court
order constitutes wide powers befitting the role of the provisional
liquidators. Clause 2.1 of the court order clarifies
the wide scope
within which the liquidators should operate. Clause 2.1 reads
as follows:
“
to
obtain legal advice on any question of law affecting the
administration of Liberty Lane
and
to engage the services of attorneys and counsel in connection with
any matter arising out of or related to the affairs of Liberty
Lane;”
(my
emphasis).
It
is my considered view that debt collection arises out of and/or is
related to the affairs of the applicant. Debt collection is
therefore
inherent to any process of trade.
[19]
The
applicant’s counsel submitted that the provisional liquidators
have the powers as conferred by the Master to exercise
discretion. In
this regard he referred to Section 386(1)(a) (b)(c)(d) and section
386(4)(f) of the Companies Act 61 of 1973.
Sections
386(1)(a)-(d) reads:
“
(a)
to execute in the name and on behalf of
the company all deeds, receipts and other documents, and for that
purpose to use the company’s
seal;
(b) to prove
a claim in the estate of any debtor or contributory of the company
and receive payment in full or a dividend
in respect thereof;
( c) to draw,
accept, make and endorse any bill of exchange or promissory note in
the name and on behalf of the company: Provided
that no liquidator
shall, except with the leave of the Court or the authority referred
to in subsection (3) or (4), or for the
purposes of carrying on the
business of the company in terms of subsection (4)(f) have power to
impose any additional liabilities
upon the company;
(d) to summon any
general meeting of the company or the creditors or contributories of
the company for the purposes of obtaining
its or their authority of
sanction with respect to any matter or for such other purposes as he
may consider necessary;
Section 386 (4) (f)
reads:
“
to
carry on or discontinue any part of the business of the company in so
far as may be necessary for the beneficial winding-up thereof:
Provided that, if he considers it necessary, the liquidator may carry
on or discontinue any part of the business of the company
concerned
before he has obtained the leave of the Court or the authority
referred to in subsection (3)…”
[20]
The
applicant’s counsel further referred to Section 386 (4) (f)
which grants the joint provisional liquidators the powers
to carry on
with the business. The liquidators acted within their ambit by
carrying on with the applicant’s business. Debt
collection is
an integral part of any trade in the event the debtors are involved.
[21]
In
further amplification of his argument, the applicant’s counsel
referred to
Fourie
NO v Le Roux
and
others
2006(1)
SA at page 279 particularly paragraph 8 where the learned judge
Boshielo stated that:
‘
it
appears to me that ss 386 (1)(e) of the Act, read with
s 69(2)
of the
Insolvency Act 24 of 1936
(‘the
Insolvency Act&rsquo
;) , are
relevant to a resolution of this polemic. Section 386(1) (3) of the
Companies Act provides that:
(1)
The
liquidator in any winding-up shall have power-
…
.
(e) subject to
the provisions of ss (3),(4) and (5), to take such measures for the
protection and better administration of the affairs
and property of
the company as the trustees of an insolvent estate may take in the
ordinary course of his duties and without the
authority or a
resolution of the creditors.’
On the other
hand,
s 69(2)
of the
Insolvency Act provides
that:
‘
(2)
If the trustee has reason to believe that any property, book or
document is concealed or otherwise unlawfully withheld from
him, he
may apply to a magistrate having jurisdiction for a search warrant
mentioned in ss (3).’
Equally important
is s 386 (5) of the Companies Act which provides as follows:
‘
(5)
In a winding-up by the Court, the Court may, if it deems fit, grant
leave to a liquidator to raise money on the security of
the assets of
the company concerned or
to
do anything which the Court may consider necessary for winding –up
the affairs of the company
(my
emphasis) and distributing its assets.
’
[22]
The
applicant’s counsel also referred to paragraph 10 of
Fourie
NO
supra where the honourable judge Boshielo stated that:
“
Borrowing
the elegant expression of Marais J in
Milliman
NO and Steub NO v Koetter
1993
(C) at 758D, I cannot accept that a provisional liquidator can do
more than impotently wring his hands. The respondent’s
argument
in this case is suggestive of the wringing of hands by the
provisional liquidators”.
[23]
The
honourable Judge Boshielo further stated at 10 paragraph 2 that:
“
speaking
for myself, I find it startling if not incongruous that the
Legislature could deny a provisional liquidator, who has an
interest
in the protection and preservation of the assets of a company in
liquidation, of the right to approach the Court for leave
to
institute proceedings
or
whatever directions specifically intended to protect and preserve the
assets of such a company.
(
my
underlining).Such an interpretation of the Act in any event appears
to me to be in conflict with the underlying spirit of ss
386(1), (5)
and 387 (3) of the Act read with
s 69
(2) of the
Insolvency Act.”
>
[24]
Referring
to the honourable Judge Boshielo’s finding above the
applicant’s counsel submitted that certainly the money
owed to
the applicant in this case is the property of the applicant. Part of
the functions of the provisional liquidators is to
recover money. The
purpose of the Act is not to stand in the way of proper
administration of estates. Litigation squarely
falls under
directions which are intended to protect and preserve the assets of a
company.
[25]
The
respondent’s counsel in response to the above submitted that
the decision in
Fourie
NO v LE Roux and others
is
distinguishable as it deals with the preservation of property and not
debt collection and in particular litigation therefore it
does not
extend to litigation.
[26]
I
am in full agreement with the applicant’s submissions. When the
business carries on trade, the scope of trade cannot be
limited to
certain areas of the business with the exclusion of debt collection.
Doing anything which the court may consider necessary
to recover
monies can be carried in any manner deemed necessary by the
provisional liquidators including litigation. The
respondent
could not make a case as to what qualifies the final liquidators to
be in a better position than that of provisional
liquidators
regarding the litigation proceedings. The major role of a liquidation
process takes into account the interests of the
company in
liquidation; a role which also covers the rights of the creditors.
[27]
I
have regard to the fact that the learned Judge in Le Roux
specifically referred to
Milliman
NO and Steub NO v Koetter
above,
wherein it was decided that the provisions of s 359 do not read into
them a desire to prohibit absolutely a provisional liquidator
from
litigating in the name and on behalf of the company. For the
aforementioned submissions and due consideration of the above
two
cases; I find that the provisional liquidators in this matter have
powers to litigate.
Accordingly
the point in
limine
is dismissed.
AD MERITS
[28]
It
is common cause that the respondent owes the applicant, the sum of
R545.488.00. The respondent brought a counter application,
consisting
of claim A and B against the applicant’s undisputed claim for
payment.
[29]
In
the introductory remarks, the respondent’s counsel referred to
the case of
Truter
v Degenaar
1990
(1) SA at page 206, wherein it was stated that :
“
Although
Rule 22 (4) of the uniform rules (which provides for the suspension
of judgment on a claim pending the decision of the
counter- claim in
the case of actions) is limited to actions only, it did not amend the
existing law which was applicable to both
actions and motions. In
terms thereof, the premise was that the claim and counterclaim
(application and counter- application) should
be adjudicated
pari
passu
and that where the
claim/application was unopposed judgment thereon was suspended
pending finalisation of the unliquidated
counterclaim/counter-application”.
[30]
The
respondent’s papers allude to the fact that the court has a
discretion to depart from Rule 22(4). The discretion is not
limited
to cases where the counter-application is frivolous or vexatious and
instituted merely to delay judgment on the claim/application.
The
discretion is wider and the good reasons which would move a court to
exercise it in favour of a plaintiff/applicant are not
capable of
pre-definition.
[31]
This
court is therefore asked to exercise its discretion in respect of the
counter application as it is founded in fact and law.
The court
should allow proper investigation by referring the respondent’s
counter application for trial. The
respondent’s
counsel further submitted that in the circumstances the court should
weigh the respondent’s counterclaim.
The respondent argued that
it has a strong counterclaim, which is not vexatious, it cannot be
right to be ordered to pay the applicant
whilst ignoring the
counterclaim.
[32]
I
now turn to the respondent’s counter application. The
respondent in claim A seeks payment of the amount of R171. 932.69,
being the amounts due by the applicant to the respondent for the
rental of scaffolding equipment which has been rented to the
applicant at the applicant’s special instance and request.
[33]
The
respondent’s counsel argued that the directors of the applicant
melted down the respondent’s equipment and were
therefore
unable to return the scaffolding. The applicant was in possession of
97 tonnes of the respondent`s scaffolding equipment.
It is common
cause between the parties that the applicant returned 97 tonnes of
scaffolding by way of scaffolding boards as was
agreed between the
parties.
[34]
The
respondent further submitted that it is common cause between the
parties that 29.574 tonnes of such scaffolding boards were
defective
and were to be replaced by the applicant. In this regard the
respondent referred to the letter sent by the applicant’s
attorneys to the respondent’s attorneys on 5 March 2012. The
relevant extract of the letter reads:
“
The
future rental stock will be regarded as a post-liquidation expense
therefore form an administration cost in the estate for the
period in
which lease and therefore until its return to your clients”.
[35]
In
support of the above the respondent claims that 29, 574 tonnes of the
scaffolding returned to it by the applicant is defective
and as such
the respondent states that contractually it can continue to claim
rent until the proper scaffolding is returned by
the applicant. The
respondent also referred to its customer statement clearly setting
out the calculation of the amount claimed
and the method of
calculation. In this regard the respondent submitted that the amount
is readily and easily ascertainable and
is accordingly liquidated.
[36]
The
respondent further referred to the applicant’s letter to the
respondent dated 28 May 2012 wherein the applicant set forth
the
following:
“
with
regards to the purported defective material, our client as a sign of
good faith replace the material which your client has
indicated is
defective without admitting liability and on a without prejudice
basis”.
[37]
In
response to the above the applicant submitted that it is common cause
that since 20 April 2012 the applicant has not been in
possession of
any scaffolding. The applicant in challenging the respondent’s
argument submitted that the respondent has failed
to present
admissible evidence in support of the allegation of a defective
scaffolding.
[38]
In
respect of claim B, the respondents seeks the replacement of
scaffolding, as per the applicant’s undertaking to replace
29.584 defective tonnes. The replacement amount is R529.224.42. The
respondent referred to the relevant clause in the written agreement
between the parties which reads:
“
In
the event of the goods being lost or damaged or should the customer
fail to return the goods to the respondent, the respondent’s
current catalogue price for such lost or damage goods as
liquidated(sic).
[39]
In
support of the above the respondent referred to the catalogued price
of the goods in a document titled “sale by loss quotation”.
The respondent submitted that the amount reflected in the document of
R529.224.42 is a liquidated amount as per the written credit
application between the parties.
[40]
I
have regard to the averments made in page 14, paragraph 5.19 of the
applicant’s founding affidavit. The applicant stated
that it
was unable to return approximately 200 tonnes of scaffolding to the
respondent. The applicant was however able to return
99 tons and
concluded an agreement with the respondent that it would collect
scaffolding from current sites where it was no longer
needed and
return it to the respondents. Alternatively the applicant could
instead of replacing the scaffolding, rather replace
the stock owed
to the respondent with boards and related material incidental to the
scaffolding as long as the tonnage returned
remained the same.
[41]
The
applicant adhered to its undertaking and supplied 97 tons of
scaffolding, boards and related material to the respondent. The
applicant argued that the court should find that the applicants
returned damaged goods, in the event that the respondent does not
succeed on the alternative of a liquidated rental claim. The
respondent persists that the scaffolding so supplied is of
sub-standard
quality. The applicant denies the allegation.
[42]
The
court’s difficulty with the applicant’ bare denial that
the scaffolding is defective is that the applicant stated
on its own
accord that it collected scaffolding from current sites where it was
no longer needed and gave it to the respondents.
It is reasonable to
assume that any item that is no longer needed is probably defective,
particularly an invaluable equipment such
as a construction tool. The
applicant does not even attempt to offer an explanation as to why it
submits “the no longer needed
scaffolding” is up to
standard.
[43]
The
applicant argued that the respondent should sue for damages and
present admissible evidence to prove its allegations about the
defective scaffolding. The applicant submitted that the allegation
that the scaffolding was defective creates a substantial factual
dispute which cannot be resolved through motion proceedings.
[44]
The
applicant further argued that the claim is not liquidated and that no
evidential value can be attached to annexures submitted
without
accompanying affidavits of the expert. The applicant’s
submission essentially is that the respondent is not entitled
to
claim damages in motion proceedings. The applicant further submitted
that its denial that the respondent is entitled to claim
damages
creates a further factual dispute.
[45]
I
find the applicant’s blameless approach based on its undisputed
claim opportunistic. The applicant does not appreciate that
the
counter application by the respondent overlaps its undisputed claim
and therefore is a defence on the part of the respondent.
I have also
regarded the applicant’s undertakings in respect of the
defective material
.
The
applicant by its own admission returned the respondent’s
scaffolding by replacing it with the unwanted scaffolding.
It
seems as if it is the applicant’s view that the respondent must
be satisfied with the defective scaffolding despite the
applicant’s
acknowledgment of providing the respondent with unwanted material.
AD
DISPUTE OF FACTS
[46]
The
applicant submitted that the disputes of fact concerning the alleged
damaged scaffolding was known to the respondent before
it launched
its counter application. If a party makes use of motion proceedings
despite knowing that a dispute of facts, exists
his application will,
as a general rule be dismissed with costs.
[47]
The
applicant further submitted that the correct approach in applying the
Plascon
Evans Paints
Rule
(
Plascon-
Evans v van Riebeeck Paints 1984(3) SA 623(A) at 634G-I,
)
is that the applicant is the respondent in the counter application
and as such applicant’s version should, for purpose of
motion
proceedings, be preferred over the version of the respondent.
[48]
I
allowed the parties to file further heads of argument dealing with
the Plascon Evans Rule. The applicant in support of the reversal
application of Plascon- Evans Rule referred to the case of
Luster
Products Inc v Magic Style Sales CC
1997
(3) SA 13 (A) at 21
wherein
the learned Plewman JA, at page 22 , held that where, in an
application for a final interdict, the respondent
has brought a
counter- application for certain relief, there is a dispute of fact
and the rule in Plascon- Evans is to be
applied, the
proceedings consist of separate applications, having a certain
overlap and being argued at a combined hearing, but
separate and
independent applications nonetheless.
[49]
The
proper approach in such circumstances is that while the respondent’s
version must be looked insofar as the main application
is concerned
the reverse is the case with the counter- application.
The
applicant also referred to
Livanos
NO and Others v Oates and Others
2013
(5) SA 165 (GSJ)
wherein Wepener J followed the approach in
Luster
Products
above.
[50]
The
respondent’s counsel argued that the Plascon Evans Rule is not
applied in reverse. The counsel for the respondent referred
to
Ngqumba/Damons
NO/Jooste
1988
(4) SA 224
.
The Ngqumba reasoning is that the applicant knows when he embarks on
motion proceedings that if there are disputes he is
at risk due
to the nature of the proceedings. It does not matter if the dispute
takes the form of a counterclaim. It still amounts
to defence, that
the respondent is not obliged to pay for reasons sets out in its
counterclaim.
[51]
In
support of the above the respondent’s counsel also relied on
National
Director of Public Prosecutions v Zuma
2009(2)
SA 277 SCA at 290D-291C.
The
respondent further submits that the rule is not applicable when
deciding whether the counterclaim should be referred to trial.
[52]
In
principle I am inclined to follow the honourable Plewman JA and
Wepener J`s approaches, however I am also enjoined to examine
the
merits of this case. It is not in the interest of justice to accept
the applicant’s version blindly. In my view
the
applicant’s version should be tested. I say so
because of the rigorous factual argument, namely the applicant
admit
that it collected used scaffolding alleged to be defective and
therefore the court need to test the allegations. The court
should
also consider the issue of the replacement stock with boards, and
related material incidental to the scaffolding.
[53]
The
respondent is not satisfied with the quality of the replaced
scaffolding, hence there was an understanding between the parties,
in
a letter dated 14 March 2012 addressed to the respondents by the
applicant to continue with the rent of the scaffolding in order
to
address the issue of defective scaffolding. When the respondent
raises the issue of the defective scaffolding as its defence
the applicant elects to deny this notwithstanding that the applicant
made written undertakings in this regard.
[54]
The
difficulty in accepting the applicant’s version is that the
substance of the respondent’s counterclaim revolves
around the
unreturned scaffolding and/ or the returned but defective
scaffolding. The applicant’s argument is not satisfactory
regarding the rental undertakings in lieu of the defective
scaffolding. With regards to the applicant’s submission
that the respondent must claim damages through action proceedings, it
is common cause that the applicant knew about the respondent’s
position regarding set-off before the applicant launched this
application.
[55]
The
applicant’s version that the respondent’s claim is
unliquidated despite the applicant being party to an agreement
which
stipulates that the catalogue price for lost or damaged goods
constitutes a liquid document is not acceptable. The applicant’s
argument that the respondent should have foreseen the disputes of
facts before bringing a counter application, could also applicable
to
the applicant; because in its founding affidavit for its undisputed
claim in page 4, paragraph 4.2 the deponent states:
“
despite
a substantial period of time passing by the Respondent has failed and
or refused to pay the indebted amount. The Respondent
claims the
liquidated company is indebted to it, and as such it appears that the
respondent is applying a set-off. The joint provisional
liquidators
hold the view that set-off may not be applied against a liquidated
estate and that the Respondent should lodge a claim
for any monies
that is allegedly owed to it”.
[56]
The
general rule established in
Room
Hire Co (Pty) Ltd v Jeppe Street Mansions (Pty) Ltd
1949(3)
SA 1155 at 1162,
is
that the application may be dismissed with costs when the applicant
should have realised when launching the application that
a serious
dispute of fact was bound to develop. It does not follow that the
application will always be dismissed with costs in
such a case. There
may still be circumstances that will persuade a court not to dismiss
the application but to order the parties
to trial together with a
suitable order as to costs.
[2]
[57]
I
am of the view that there is a lot of dispute facts in relation to
the counter application, namely whether the replacement material
is
defective or not, interpretation of rental agreements, proof of
claims, etc.
Accordingly
I make the following order:
1.
The
matter is referred to trial.
2.
The
notice of motion shall stand as a simple summons and the answering
affidavit as a notice of intention to defend.
3.
A
declaration shall be delivered within thirty (30) days as from the
date of this order.
4.
The
Uniform Rules dealing with further pleadings, discovery and the
conduct of trial shall apply.
5.
The
costs of the application be reserved for determination by the trial
court.
MALI, AJ
ACTING JUDGE OF
THE HIGH COURT
APPEARANCES:
Counsel on behalf
of applicant: Adv. J. Vorster
Instructed
by
: JI Van Niekerk Attorneys
Counsel on behalf
of defendant: Adv. GM. Young
Instructed
by
: Meltz- Le Roux- Motshekga Attorneys
Date
Heard
:
11 February 2014
Date
Delivered
: 09 May 2014
[1]
Blackman et al Commentary on the Companies Act volume 3
[2]
Herbstein
& van Winsen volume 1, fifth edition – The Civil Practice
of the High Court page 460