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[2014] ZAGPPHC 420
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Stalcor (Pty) Limited v Cawac Solutions CC and Others (54182/13) [2014] ZAGPPHC 420 (30 May 2014)
IN
THE HIGH COURT OF SOUTH AFRICA
(GAUTENG
DIVISION, PRETORIA)
CASE NO 54182/13
DATE: 30 MAY 2014
REPORTABLE
OF INTEREST TO
OTHER JUDGES
STALCOR (PTY)
LIMITED
......................................................................................................
APPLICANT
And
CAWAC SOLUTIONS
CC
........................................................................................
FIRST
RESPONDENT
AUCAMP
CHRISTIAN
.........................................................................................
SECOND
RESPONDENT
MICHIELSEN AND
HOFMAN
CC
........................................................................
THIRD
RESPONDENT
THE
SHERIFF
.......................................................................................................
FOURTH
RESPONDENT
OF THE COURT -
BOKSBURG
JUDGMENT
MALI AJ:
[1] This is an
application to set aside the Deed of Cession concluded between the
Applicant and the First Respondent on or about
8 March 2011. The
Applicant’ basis of its application is that the Deed of Cession
entered into between the Applicant and
the First Respondent, is of no
value to the Applicant. Furthermore that the cession was not accepted
by the Applicant and that
the cession was cancelled by the Judgment
issued in favour of the Applicant by the Regional Court on 29 August
2012
[2] The Applicant
seeks relief against the first and second Respondents only. No relief
is sought against the third and fourth Respondents.
BACKGROUND
[3] The First and
the Third Respondent entered into an agreement in terms whereof the
First Respondent was appointed to render service
as a contractor on a
construction project, for the Third Respondent. On or about 21
February 2005 the Applicant and the First Respondent
represented by
the Second Respondent concluded a Credit Facilities Agreement (“the
Agreement”) in respect of goods
supplied by the Applicant to
the First Respondent. The Agreement entailed the cession (“first
cession”) of the Book
Debt of the First Respondent to the
(“first cession”) of the Book Debt of the First
Respondent to the Applicant.
[4] On 8 March 2011
in order to reduce the commercial risk in the facility the Applicant
and the First Respondent concluded another
cession (“second
cession"), the subject of this application.
[5] The significance
of the second cession was to record the transfer of the First
Respondent’s right to the Applicant in
respect of the amounts
owed by the Third Respondent to the First Respondent. The effect of
the cession was that the Third Respondent
would pay R20.000.00
monthly instalment directly to the Applicant up until the First
Respondent’s liabilities to the Applicant
were fully paid.
[6] The Applicant
and the First Respondent opened a joint banking account wherein the
debtors (including the Third Respondent) of
the First Respondent were
informed to make payments due to the First Respondent into the
account.
APPLICANT’S
CASE
[7] The Applicant
submitted that the First Respondent breached the terms of the
Agreement and failed to make payment due to the
Applicant for goods
supplied by the Applicant to the First Respondent under the credit
facilities agreement. The arrears amounted
to more than R290 385.98
(two hundred and ninety thousand three hundred ad eighty five rand
ninety eight cents) together with interest
and costs.
[8] Due to the
breach by the First Respondent, the Applicant elected to cancel the
agreement, and instituted legal proceedings against
the First
Respondent wherein the Applicant obtained a default judgment against
the First Respondent. The default judgment was entered
on 29 August
2012 by the Germiston Regional Court under case number CRC 46/2012.
The Applicant submitted that the cession was therefore
cancelled
accordingly in terms of clause 24 of the agreement.
[9] Subsequent to
the Applicant obtaining the judgment, the Applicant served a warrant
of execution on 19 April 2013 and the First
Respondent’s
movable property estimated to be valued in the sum of R70 000.00(
seventy thousand rand) were attached.
[10] The First
Respondent never disputed the judgment; however to avoid the removal
of the movable property he agreed to make 2
(two) payments to the
Applicant of R80 000, 00 (eighty thousand rands) each, the first
payment to be made on or about 16 May 2013
and the second payment to
be made on or about 12 June 2013. The first Respondent eventually
paid the amount of R160 000.00 As a
result of this agreement the
Applicant argued that the First Respondent acquiesced to the judgment
and therefore the acquiescence
confirmed the cancellation of the
second cession.
[11] The Applicant
further submitted that afier the First Respondent made the payment of
R160. 000.00 The First Respondent then
refused to make payment and
relied on the terms of the second cession; namely that the Third
Respondent was to effect monthly payments
of R20 000.00 to the
Applicant in order to extinguish the remaining liabilities arising
from the Judgment.
[12] The Applicant
argued that it never agreed to the second cession, and neither
consented to the arrangements flowing thereof.
The Applicant further
argued that the First Respondent intended to resurrect the second
cession which was never accented and would
never had any effect due
to the judgment and the fact that it was acquiesced by the First
Respondent.
Applicant stated
that the first respondent refuses to pay its debt because it alleges
that the Third Respondent is liable for its
debts to the Applicant on
the basis of the cession. The debt has not been paid for a period of
three (3) years.
[13] The Applicant
further denies the existence of the second cession and does not wish
to be beholden to the third party. The Applicant
further seeks that
the cession insofar as it may exist, be set aside and also that the
Third Respondent makes no payment to the
Applicant. The Applicant
also seeks that the First Respondent makes the payment directly
through the mechanism of a sale in execution.
[14]
The Applicant referred to
Trust
Bank
v
Frysch
1
wherein
it was stated that for cession to come into existence there must be
consensus between the cessionary and the cedent. In
casu
the
applicant stated that it did not accept the transfer and therefore
there was no consensus.
[15] The Applicant
argued that the Respondent says that the Applicant appeared to have
accepted the cession by allowing the Third
Respondent to make payment
to its banking account. In this regard the Applicant stated that the
account wherein the Third Respondent
made payments is the joint
account between the Applicant and the First Respondent. The payments
made by the Third Respondent could
not be construed to be acceptance
of cession by the Applicant. The instruction to the Third Respondent
to pay the Applicant were
communicated by the Applicant through a
letter. The letter is addressed to the Third Respondent and it reads
as follows:
“
We
hereby wish to confirm that we are the steel supplier of Cawac
Solutions. In accordance with the supply of material to Cawac
Solutions, we have opened a joint bank account, copies of which are
attached hereto. Before any supplies can be made to Cawac Solutions
,
we need written confirmation from you that all monies owing to Cawac
Solutions
Please note that
should any monies be paid over directly to Cawac or into another bank
account, we will still hold you responsible
for payment until the
monies reach KMG. ”
The Applicant
submitted that the purpose of the letter related to the supplies and
not to other debts and that the joint account
was opened before the
litigation and that the same cancelled everything. The Applicant
therefore submits that the existence of
the joint account is not
consistent with cession.
[16] Based on the
above submissions the Applicant seeks an order to set aside the Deed
of Cession and the related prayers as stated
in in the introduction
above.
RESPONDENTS’
CASE
[17] The First and
second Respondent submitted that the First and the Third Respondent
entered into an agreement in terms whereof
the First Respondent was
appointed to render service as a contractor on a construction
project, for the Third Respondent. On 21
February 2005 the First
Respondent obtained goods/ and or materials for the construction
project on credit from the Applicant.
[18] The payment
terms included cession of Book Debt and Suretyship on behalf of the
Applicant. On 8 March 2011 on the Applicant’s
insistence behalf
of the Applicant. On 8 March 2011 on the Applicant’s insistence
the parties concluded the second cession
in terms whereof the First
Respondent ceded the right, title and interest in and to all the book
debts of the First Respondent.
In terms of the Deed of Cession the
parties agreed that this cession and pledge would be of force and
effect until the First Respondent’s
liabilities to the
Applicant had been paid or otherwise discharged. The First
Respondent’ Book Debts included the monies
owed by the Third
Respondent to the First Respondent.
[19] The First and
Second Respondent’s counsel argued that the second cession,
entered on 8 March 2011 exists between the
Applicant and the First
Respondent. He further argued that the Applicant’s argument
submitted during the hearing differs
with the one set out in the
Applicant’s founding affidavit and in its heads of arguments.
In support of this argument he
referred to paragraph 3 of the
Applicant’s heads the applicant wherein it is submitted that
the agreement was entered into
on 21 February 2005, and due to
breaches by the First Respondent it was cancelled.
[20]
The Respondents counsel referred to paragraph 10, last sentence of
the Applicant’s founding affidavit wherein the Applicant
averred that
“
In
March 2011, and in order to reduce the commercial risk in the
facility, the second Cession
was
concluded on or
about 8 March of that year”.
[21] The Counsel
further argued that the Applicant in its founding affidavit confirms
the existence of the second cession, however
alleges that it has been
cancelled due to the judgment against the First Respondent. The
Counsel further referred to paragraph
26 of the Applicant’s
founding affidavit which reads as follows:
[22]
“
In
correspondence of 25 April 2013, Christie (who was not aware of the
second Cession at that point) was dealing with the Cession
of Book
Debts which was contained in the Agreement. This cession had been
cancelled as a consequence of the cancellation of the
Agreement by
the Applicant’s judgment
..........”
[23]
The counsel also referred to paragraph 27 of the Applicant’s
founding affidavit reading”.....................
it
will be argued that at this stage, both the First and Second
Respondent were aware that the Applicant did not consent to a
resurrection
(my
emphasis)
of
the second Cession”.
[24] The Counsel
argued that the above averments by the Applicant make it clear that
the Applicant accepted the second cession but
during the hearing the
Applicant submitted that the second cession was not accepted at all.
Of importance is that the second cession
was concluded at the
instance of the Applicant. The Respondents’ counsel further
submitted that it was a matter of procedure
that the applicant should
stand or fall by the case made in its founding affidavit.
[25] The Respondents
counsel further submitted that the Applicant failed to address the
Regional Court on the fact that the parties
entered in to a Deed of
Cession, on the Applicant’s proposal. The agreement was that
the cession and pledge would be of force
and effect until all the
First Respondent’s liabilities to the Applicant had been paid
or otherwise discharged. In essence
the First Respondent’s
argument is that in the event that the Regional Court was appraised
of the Deed of Cession, the Regional
court would have made reference
to the cession.
[26] The
Respondent’s counsel also referred to the extract of the letter
quoted in paragraph 13 above and submitted that the
letter is a clear
acceptance and instruction to cession. The letter is dated 9 May
2011. The relevant extract of the letter reads
as follows:
“
Before
any supplies can be made to Cawac Solutions, we need written
confirmation from you that all monies owing to Cawac Solutions
will
be paid over into this joint account... ”
[27] The
Respondents’ counsel further argued that on 9 May 2011 the
First Respondent in compliance with the Applicant’s
instructions quoted above addressed the letter to the Third
Respondent informing the Third Respondent to make payments to the
joint account of the Applicant and the First Respondent.
[28]
The Third Respondent made payments to the Applicant based on the
abovementioned instructions by the Applicant in acquiescence
with the
terms of the cession between the parties. The Third Respondent paid a
total amount of R80 000.00 for four consecutive
months commencing on
31 May 2013 to the joint account per
the
Applicant’s
instruction
[29] The First
Respondent submitted that it made payments to the Applicant in the
amount of R61, 905.97 and R13, 094.03 on 6 and
8 June 2013
respectively. The First Respondent further submitted that it made
payments because it was pressurised by the Applicant
despite the
terms of the second cession and the First Respondent’s numerous
proposals for a full and final settlement which
were rejected by the
Applicant.
[30] The First
Respondent further submitted that on 13 June the Applicant’
attorneys addressed the letter to the First Respondent
advising that
the Applicant does not accept payments from the Third Respondent and
does not accept any cession of obligations vesting
upon the First
Respondent to a third party. This is after the Third Respondent had
made some payments as submitted above.
[31] The total
outstanding capital balance due and payable to the Applicant as at 25
September 2013, at the date the First Respondent
deposed to its
answering affidavit was approximately R50 385.98.The Applicant did
not dispute this submission by the First Respondent.
[32] The Respondents
‘s counsel concluded by submitting that the Applicant had made
no case against the First and the Second
Respondents and the
application should be dismissed with costs.
THE LAW
[33]
THE
LAW OF CESSION
2
page
23, refers to the case of
J
McNeil v Insolvent Estate of R Robertson
3
which
stated that
“
Rights
of action are, we are told, ceded by any expression of intention for
the purpose of the ceder and the cessionary.
[34]
The Applicant’s actions
inter
alia,
occasioning
the second cession and sending letter with banking details and
warnings to the Third Respondent is more than enough
to prove
expression of intention that the Applicant accepted the cession. The
Applicant’s latter stance to ‘cancel’
the cession
by informing the Third Respondent who was making payments subsequent
to the judgment on regularly is found insincere,
detrimental to the
First Respondent and not to be in the interests of justice.
EVALUATION
[35] In respect of
the submissions made by the Applicant with regards to the payments
made by the Third Respondent to the abovementioned
joint account I do
not agree with the Applicant. I say so because it is not disputed
that the supplies made to the First Respondent
by the Applicant were
for the purposes of enabling the First Respondent to use the same to
carry out the Third Respondent’s
project. Therefore the debt
which was serviced by the Third Respondent is related to the second
cession.
[36] The Applicant
addressed a letter to Absa bank with clear instructions that the bank
should enable it to view and transfer payments.
It is my considered
view that the Applicant had absolute control over the joint bank
account. Nothing inhibited the Applicant to
transfer the payments
made by the Third Respondent to its banking account. No explanation
offered by the Applicant as to the purpose
of the joint account
between the Applicant and the First Respondent if it is not related
to the cession. Furthermore it is the
Applicant who addressed the
letters regarding the payment instructions to the Third Respondent.
[37] It appears that
the Applicant admits to the existence of the second cession, though
at times it says it was not accepted. In
the event that there was
one, it has been cancelled by the judgment. To this submission the
Applicant did not refer to any authority.
The Applicant did not
dispute that the second cession was concluded on the Applicant’s
instance with a view to reduce the
commercial risk in the facility.
This is the cession sought to be denied by the Applicant now.
Furthermore the Applicant stated
that the cession has no value to the
Applicant. Having regard to the fact that the debt which is a subject
of the cession was more?
than the amount of R290 385.98 (two hundred
and ninety thousand three hundred ad eighty five rand ninety eight
cents) together
with interest and costs; as a result of some payments
made by the Third Respondent in terms of the cession the debt as at
25 September
2013 had been reduced to R50385.98 I do not see how the
second cession holds no value for the Applicant.
[38] It is my view
that if the Applicant did not instruct the Third Respondent against
making payments, the debt would have been
extinguished by now; and
this Application would not have been necessitated. Just on the basis
that the Applicant prays for the
cancellation of the cession because
it is of no value, this argument fails.
[39] Having regards
to the Respondent’s counsel submission regarding the procedure,
namely that the Applicant should stand
or fall by the averments on
its affidavit I am in agreement with the Respondents counsel; the
Applicant’s argument should
follow the Affidavit.
[40] The Applicant’s
omission to disclose that there was a cession in existence and did
not pray for the cancellation of the
same when it applied for default
judgment is unfortunate as the Regional Court would have pronounced
upon the second cession. I
fully agree with the Respondent that this
application has no basis.
[41] In the result,
I make the following order:
1. The application
is dismissed.
2. The applicant to
pay costs on attorney and client scale.
NP MALI
ACTING JUDGE OF
THE HIGH COURT
APPEARANCES
FOR THE. APPLICANT:
ADV C D ROUX
INSTRUCTED BY:
MARKRAM INC ATTORNEYS
FOR THE RESPONDENT:
ADV HC BOTHA
INSTRUCTED BY
CHRISITIE ATTORNEYS
DATE OF HEARING: 6
March 2014
DATE OF JUDGMENT: 23
May 2014
1
1 1977
(3) SA page 565
2
2nd Edition by Susan
Scott
3
(1882)
3 NLR 190
193