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[2014] ZAFSHC 64
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MPS Consulting Engineers And Town Planners (Pty) Ltd v Archi-M Architects CC (873/2013) [2014] ZAFSHC 64 (20 March 2014)
IN
THE HIGH COURT OF SOUTH AFRICA
FREE
STATE DIVISION, BLOEMFONTEIN
Case
No.: 873/2013
In
the matter between:
MPS
CONSULTING ENGINEERS AND
TOWN
PLANNERS (PTY)
LTD
...........................................................................................
Appellant
(Registration
number: 2004/000413/07)
and
ARCHI-M
ARCHITECTS CC
….....................................................................................
Respondent
(Registration
number: CK94/39446/23)
CORAM:
EBRAHIM, C J MUSI
et
VAN ZYL, JJJ
HEARD
ON:
10 FEBRUARY 2014
JUDGMENT
BY:
C.J. MUSI, J
DELIVERED
ON:
20 MARCH 2014
[1]
This appeal, which is brought with the leave of the court a
quo
,
is against the judgment of a single judge of this division. The court
a
quo
granted summary judgment against the appellant in the following
terms:
“
1.1
Payment in the amount of R2 415 291.06
1.2 Interest thereon
at 15,5% per annum
a tempora morae
to date of final payment
1.3
Costs of suit.”
I
shall refer to the appellant as the defendant and to the respondent
as the plaintiff.
[2]
The claim arose pursuant to a written agreement entered into on 28
January 2008 by the plaintiff and defendant. In terms of
the
agreement, the defendant engaged the plaintiff to act as consultants
for structural, civil and related engineering work to
be performed
during the construction of new offices for the Free State Government.
[3]
Although the plaintiff rendered the services as part of a joint
venture with Siphelele Consulting and Skosana Technical Consulting,
the agreement between the defendant and the joint venture clearly
stipulated the term “consultant” shall in all cases
include the separate consulting firms comprising the joint venture.
[4]
In terms of the agreement:
4.1
The plaintiff was responsible for:
“
design,
preparation of all drawings, documentation and supervision of the
earthworks and the concrete retaining walls of the complete
project.
In addition, for the design, preparation of drawings, documentation
and supervision of the foundations, columns
and all of the floors for
the six storey structure on area C. including the sub soil drainage
and storm water reticulation for
this area.”
4.2
The defendant would remunerate the plaintiff for services rendered,
as well as for any additional services, at the rates and
prices
determined in the Government Gazette for the plaintiff’s
discipline.
[5]
The plaintiff duly performed and fulfilled its obligations in terms
of the agreement and submitted its invoice on 2 May 2012
for the
amount of R2 754 383.40. Despite proper and lawful
demand the defendant failed to pay.
[6]
The plaintiff issued summons against the defendant for payment of
R2 754 383.40 plus 15,5% per annum interest.
The
summons was served on 6 March 2013. On 18 March 2013, the
defendant delivered a notice of intention to defend.
On 28
March 2013, the plaintiff brought an application for summary
judgment. The defendant opposed the application.
[7]
On 16 May 2013, the application for summary judgment was granted in
the terms set out in paragraph one above. Before setting
out
the defendant’s basis for resisting the summary judgment
application, I pause to briefly say something about rule 32(3)
(b)
sub-rule 5. The sub-rule reads as follows:
“
Upon
the hearing of an application for summary judgment the defendant may
–
(a)
…
(b)
satisfy the court by affidavit (which shall
be delivered before noon on the court day but one preceding the day
on which the application
is to be heard) or with the leave of the
court by oral evidence of himself or of any other person who can
swear positively to the
fact that he has a
bona
fide
defence to the action; such
affidavit or evidence shall disclose fully the nature and grounds of
the defence and the material facts
relied upon therefor.”
In
terms of sub-rule 5, if the defendant does not satisfy the court as
provided in paragraph (b) of sub-rule 3, the court may enter
summary
judgment for the plaintiff. Sub-rule 5 confers a discretion on
the court to refuse to grant summary judgment even
in cases where the
affidavit in terms of rule 32(3)(b) is not entirely satisfactory.
The discretion should however not be
exercised capriciously so as to
deprive a deserving plaintiff of the relief to which he/she is
entitled. The discretion should
also not be exercised against a
plaintiff on the basis of mere conjecture or speculation. The
“test” for refusing
summary judgment where the affidavit
does not strictly meet the threshold in rule 32(3)(b) has been stated
as follows:
“
If,
on the material before it, the court sees a reasonable possibility
that an injustice may be done if summary judgment is granted,
that is
a sufficient basis on which to exercise its discretion in favour of
the defendant.”
See:
Breitenbach v Fiat SA (Edms) Bpk
1976 (2) SA 226
(TPD) at 229 A – H;
Gruhn
v M Pupkewitz and Sons (Pty) Ltd
1973 (3) SA 49
(AD) at 58 C – E.
[8]
In
Joob Joob Investments (Pty) Ltd v
Stocks Mavundla ZEK Joint Venture
2009 (5) SA 1
(SCA) at para 31 Navsa JA set out a brief history of
the summary judgment procedure and pointed out that the procedure was
not
intended to “shut (a defendant) out from defending”,
unless it was very clear indeed that he had no case in the action,
but that it was intended to prevent sham defences from defeating the
rights of parties by delay and at the same time causing great
loss to
plaintiffs who were endeavouring to enforce their rights.
[9]
Summary judgment proceedings are a relatively inexpensive and quick
way for a plaintiff to enforce his/her claim. It obviates
the need
for a long protracted trial where the defendant has an unmeritorious
defence. The expeditious resolution of disputes holds
self-evident
benefits for the litigants, in terms of excessive costs and time, and
the administration of justice, in terms of resolving
more disputes in
less time and thereby reducing the backlogs which plague our courts.
[10]
Navsa JA also pointed out that summary judgment proceedings only hold
terrors and are drastic for a defendant who has no defence.
He
stated it thus:
“
The
rationale for summary judgment proceedings is impeccable. The
procedure is not intended to deprive a defendant with a triable
issue
or a sustainable defence of her/his day in court. After almost a
century of successful application in our courts, summary
judgment
proceedings can hardly continue to be described as extraordinary. Our
courts, both of first instance and at appellate
level, have during
that time rightly been trusted to ensure that a defendant with a
triable issue is not shut out. In the
Maharaj
case at 425G - 426E, Corbett JA was keen to ensure, first, an
examination of whether there has been sufficient disclosure by a
defendant of the nature and grounds of his defence and the facts upon
which it is founded. The second consideration is that the
defence so
disclosed must be both bona fide and good in law. A court which is
satisfied that this threshold has been crossed is
then bound to
refuse summary judgment. Corbett JA also warned against requiring of
a defendant the precision apposite to pleadings.
However, the learned
judge was equally astute to ensure that recalcitrant debtors pay what
is due to a creditor.
Having
regard to its purpose and its proper application, summary judgment
proceedings only hold terrors and are 'drastic' for a
defendant who
has no defence. Perhaps the time has come to discard these labels and
to concentrate rather on the proper application
of the rule, as set
out with customary clarity and elegance by Corbett JA in the
Maharaj
case at 425G - 426E.”
[11]
In
Maharaj v Barclays National Bank
Ltd
1976 (1) SA 418
(A) at 426 A –
E Corbett JA, as he then was, said the following:
“
Accordingly,
one of the ways in which a defendant may successfully oppose a claim
for summary judgment is by satisfying the
Court by affidavit
that he has a
bona
fide
defence to the claim. Where the defence is based upon facts, in the
sense that material facts alleged by the plaintiff in his summons,
or
combined summons, are disputed or new facts are alleged constituting
a defence, the Court does not attempt to decide these issues
or to
determine whether or not there is a balance of probabilities in
favour of the one party or the other. 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. The
word 'fully' as used in the context of the Rule (and its
predecessors), has been the cause of some Judicial controversy
in the
past. It connotes, in my view, that, while the defendant need not
deal exhaustively with the facts and the evidence relied
upon to
substantiate them, he must at least disclose his defence and the
material facts upon which it is based with sufficient
particularity and completeness to enable the Court to decide whether
the affidavit discloses a
bona
fide
defence… At the same time the defendant is not expected
to formulate his opposition to the claim with the precision
that
would be required of a plea; nor does the Court examine it by the
standards of pleading.”
[12]
In its affidavit filed in terms of rule 32(3)(b) the defendant denied
that it has no defence against the plaintiff’s
claim and that
appearance to defend was only given with the intention of delaying
the plaintiff’s claim. It admitted
that it entered into
an agreement with the plaintiff.
[13]
The relevant parts of the affidavit read as follows:
“
5.1.2
In terms of said agreement the Plaintiff will deliver accounts and
claims to the Defendant in respect of professional services
rendered
by the Plaintiff. The Defendant will in turn verify and submit
said accounts to the department for payment.
5.1.3 In this regard
the Honourable Court is respectfully referred to Clause 5 of said
Agreement under the heading ‘Remuneration
– General’.
5.1.4 In terms of
Clause 5.2 all undisputed claims of the Plaintiff (Consultant) will
be settled by the Defendant (Client) ‘in
full on the agreed
dates or within thirty (30) days of the date of issue of any
account’.
5.1.5 I respectfully
draw the Courts attention thereto that the Plaintiff is a
well-established Engineering Firm in the Free State
and that it has,
as such, on previous occasions dealt with the Free State Provincial
Government either directly or, indirectly
in matters where it was
appointed by other consultants.
5.1.6 Although not
specifically mentioned in the Agreement entered into between the
parties it is a well-known fact that the Defendant
only acts as
intermediary between the government (Department) and the Plaintiff
(Consultants) in as far as payment of all accounts
are concerned.
5.1.7 Payments are
made to the Defendant by the Department who in turn, make payments to
the Plaintiff and other consultants on
submitted accounts.
5.1.8 All accounts
lodged by the Consultants are verified by the Defendant and the
Departments in-house engineers and payment officers.
Once all
requirements have been met, the Department initiates payment to the
Defendant who in turn pays the Consultants (Plaintiff).
5.1.9 It is
therefore my submission that it was, and is at present, specifically
agreed upon by the Parties that payments will only
be made to the
Plaintiff once payment was received from the Department, and that it
will thus be done as envisaged in Par. 5.2,
‘on agreed
dates..’.
5.1.10 During the
recent past and even now the Department are (sic) experiencing
difficulty in meeting its obligations towards its
consultants.
To that effect I attach hereto marked as Annexure ‘B’ a
letter received from the Department of Public
Works dated 9 October
2012 and as such respectfully refer the Court thereto.
5.1.11 This delay
was brought to the attention of the Plaintiff and was accepted by the
Plaintiff as will be shown herein later.
5.1.12 I also
herewith marked as Annexure ‘C’ correspondence dated 26
September 2012, received from Phatsoane Henney
Attorneys who at that
time acted on behalf of and on instruction of the Plaintiff.
5.1.13 The Court’s
attention is specifically drawn to paragraph 2 of said correspondence
where the Plaintiff requests payment
of his account ‘once the
Department has come into the necessary funds…’.
5.1.14 It is
therefore clear that the Plaintiff agreed to the late payment of his
claims.
5.1.15 It is
therefore my respectful submission that not only is the Plaintiff
premature in his action, but also that it is clear
that the Plaintiff
reached an agreement with the Defendant that his account will be
settled as soon as funds become available from
the Department.
5.1.16 This
agreement was never cancelled by the Plaintiff and therefore still
subsist.
5.1.17
I therefore deny that the Defendant is in ‘material breach of
the agreement’ as alleged, and specifically pleads
(sic) that
any amount due to the Plaintiff will only become due and payable by
the Defendant once payment was (sic) received from
the Department.”
Paragraph
2 of annexure “C” referred to in paragraph 5.1.12 reads
as follows:
“
We
are addressing this letter to your good selves with the request that
our client’s account first be paid once the Department
has come
into the necessary funds, thereafter the remaining consultants be
paid pro rata with regard to their outstanding accounts.”
[14]
The defendant filed a supplementary affidavit wherein it stated that
it paid the plaintiff an amount of R339.091.76, on 19
April 2013, in
accordance with the agreement between them.
[15]
In the court
a quo
the defendant took a technical point relating to the fact that clause
8.1 of the contract, which states that the parties shall
negotiate in
good faith with a view to settling any dispute or claim arising out
of or relating to the agreement and may not initiate
any further
proceedings until either party has, by written notice to the other,
declared that such negotiations have failed.
The defendant
contended that the plaintiff did not comply with clause 8.1 and that
the application should be dismissed for that
reason too. The
court
a quo
rejected that argument.
[16]
The court
a quo
also rejected the defendant’s explanation that the parties
agreed that the plaintiff would be paid when the Department paid
the
defendant. The court
a quo
said the following in this regard:
“
I
found no support whatsoever of (sic) this allegation from all
documents placed before me, except repeating that the contract ‘B’
identifies the parties to the contract herein – client being
defendant and plaintiff herein as the consultant with no reference
to
the Department, expressly nor impliedly as being a party thereto.”
The
court
a quo
therefore found that the defendant did not have a
bona
fide
defence to the plaintiff’s
claim.
[17]
It is clear from the court
a quo
’s
judgment that it did not consider the factual matrix or context
within which the contract ought to be interpreted.
[18]
Clause 5.2 of the agreement states that:
“
Amounts
due to the consultant shall be paid in full on the agreed dates or
within thirty (30) days of the date of issue of any account.”
[19]
Mr Hefer argued that because there was no payment schedule, clause
5.2 empowered the parties to enter into an agreement as
to a date of
payment. He contended that by virtue of paragraph 2 of the
letter dated 26 September 2012, the parties agreed
that the plaintiff
will be paid when the Department pays the plaintiff.
[20]
Mr Keet, on behalf of the plaintiff, argued that the agreement
contains a non-variation clause and that the defendant must
be kept,
strictly, to the terms of the contract. According to Mr Keet,
the defendant should not be allowed to adduce evidence
on matters
that do not form part of the contract, because the Department is not
a party to the contract. According to him
the defendant now
endeavours to vary the terms of the contract. I disagree.
[21]
The non-variation clause reads as follows:
“
7.10
Sole Agreement
This
Agreement together with the attachments and appendices detailed in
the Agreement and the Specific Provisions constitutes the
Sole
Agreement for the services between the parties and no representation
not contained herein shall be of any force or effect
between the
parties. No amendments will be of any force and effect unless
reduced to writing and signed by both parties as
expressly intended
to form part of the Agreement.”
[22]
There being no agreed dates of payment, this matter falls to be
decided on the interpretation of clause 5.2. In doing
so we
must, in view of the defence raised, look at the surrounding
circumstances to properly contextualise the clause. We
would be
remiss if we do not have regard to the proper factual matrix.
This is so because the proper context is an important
tool in
interpreting a contractual clause even where there is no ambiguity.
In
Masstores (Pty) Ltd v Murray &
Roberts Construction (Pty) Ltd and Another
[2008] ZASCA 94
;
2008 (6) SA 654
(SCA) at para 7 Lewis JA said:
“
(
i)t
is important to state that an ambiguity is not, in my view, a
precondition for a court to interpret a provision by having regard
to
the context of the contract and the surrounding circumstances. More
than ten years ago this court said in
Pangbourne
Properties
Ltd v Gill & Ramsden (Pty) Ltd
that the time appeared to be ripe for this court 'to reconsider the
limitations placed' on the 'use of ''surrounding circumstances''
in
interpreting documents'” (Footnote omitted)
[23]
In
KPMG Chartered Accountants (SA) v
Securefin Ltd and Another
2009 (4)
SA 399
(SCA) at para [39] Harms DP lucidly summarised the legal
position with regard to establishing the proper factual matrix as
follows:
“
[39]
First, the integration (or parol evidence) rule remains part of our
law. However, it is frequently ignored by practitioners
and seldom
enforced by trial courts. If a document was intended to provide a
complete memorial of a jural act, extrinsic evidence
may not
contradict, add to or modify its meaning (
Johnson
v Leal
1980
(3) SA 927 (A)
at
943B). Second, interpretation is a matter of law and not of fact and,
accordingly, interpretation is a matter for the court and
not for
witnesses (or, as said in common-law jurisprudence, it is not a jury
question: Hodge M Malek (ed)
Phipson
on Evidence
(16 ed 2005) paras 33 - 64). Third, the rules about
admissibility of evidence in this regard do not depend on the nature
of the document, whether statute, contract or patent (
Johnson
& Johnson (Pty) Ltd v Kimberly-Clark Corporation and
Kimberly-Clark of South Africa (Pty) Ltd
1985 BP 126 (A) ([1985] ZASCA 132 (at www.saflii.org.za)). Fourth, to
the extent that evidence may be admissible to contextualise
the
document (since 'context is everything') to establish its factual
matrix or purpose or for purposes of identification, 'one
must use it
as conservatively as possible' (
Delmas
Milling Co Ltd v Du Plessis
1955
(3) SA 447
(A)
at
455B - C). The time has arrived for us to accept that there is no
merit in trying to distinguish between 'background circumstances'
and
'surrounding circumstances'.
The
distinction is artificial and, in addition, both terms are vague and
confusing. Consequently, everything tends to be admitted.
The terms
'context' or 'factual matrix' ought to suffice. (See
Van
der Westhuizen v Arnold
2002
(6) SA 453
(SCA)
([2002]
4 All SA 331)
paras 22 and 23, and
Masstores
(Pty) Ltd v Murray & Roberts Construction (Pty) Ltd and
Another
[2008] ZASCA 94
;
2008
(6) SA 654
(SCA)
para
7.)”
[24]
I now turn to the factual matrix. The defendant contended that
it had always been within the parties’ contemplation
that the
defendant will pay the plaintiff after the Province or Department
(they seem to use these words interchangeably) had paid.
[25]
On 8 May 2012 the plaintiff’s erstwhile attorneys wrote a
letter to the defendant wherein it,
inter
alia
, stated the following:
“
We
require before the close of business on 11 May 2013 confirmation that
the account has been submitted to Bernie Keyter at the
Province
alternatively that you provide us with a tax invoice in the amount of
R2 754 383.40 that our clients can submit
same to Mr Bernie
Keyter.”
[26]
Thereafter, on 26 September 2012, the plaintiff wrote the letter
mentioned in paragraph 13 above.
[27]
On 9 October 2012 the Chief Director: Public Works of the Department
of Public Works of the Free State Province wrote the following
letter
to the defendant:
“
Your
professional fee invoice no. 8 for the new Government Building
refers:
1.
The Department
of Public Works acknowledges receipt of the invoice. However
due to financial constraints within the Department
and the fact that
amendments to the invoice of the Quantity Surveyor appointed by your
good self, had to be done, lead to delays
in processing of the
invoice (sic).
2.
The Department
is attending to solving the matter as soon as possible. You are
kindly requested to bear with the situation
prevailing in the
Department.”
[28]
The defendant brought the contents of the Department’s letter
to the plaintiff’s attention.
[29]
On 23 October 2012 the plaintiff wrote the following letter to the
defendant:
“
We
refer to the abovementioned matter and more specifically your letter
dated 9 October 2012 and have noted the contents thereof.
We
confirm that on the 4
th
of May 2012 our client submitted their fee account Nr 4 to your good
selves which you were in turn, suppose (sic) to submit to
the
Province for payment.
We
confirm that it is our instructions that you did not comply with this
and did not submit the fee account to Province for payment
timeously.
We
confirm that only after our offices placed demands on your offices,
did you submit our client’s fee account with the other
consultants (sic) accounts to the Province as a collective account.
We
herewith request by close of business on the 29
th
of October 2012, that you provide us with a tax invoice in the amount
of R2 754 383.40 so that our client’s (sic)
can
submit same to Province, failing which we have instructions to
proceed with the necessary legal action and you will also be
held
liable for any legal costs incurred in such event.”
(My
emphasis.)
[30]
It is clear, in my view, that if one has proper regard to the factual
matrix of this matter, that, although the Department
was not a party
to the contract, both parties were aware that the payment of the
plaintiff’s fees was conditional on the
Department paying the
defendant. The plaintiff’s missives to the defendant are
very clear in this regard. The
subsequent conduct of both
parties show what their common intention was at the time they made
the contract. See
Breed v Van
den Berg
1932 AD 283
at 292 –
293. The request of the plaintiff that it be paid first once
the Department has come into the necessary funds,
is indicative of
the fact that the date of payment was to be the date when the
Department pays.
[31]
Clause 5.2 empowers the parties to agree on a payment date.
When the parties so agree, verbally or in writing, that would
not
constitute a variation of their agreement. That agreement,
relating to the date of payment, would give meaning to what
is agreed
on in the contract. The non-variation clause prohibits a
variation of the contract except under the circumstances
as mentioned
therein. In this case there was no need for a variation,
because of the wording of clause 5.2. The evidence
relating to
the agreed date would probably, at trial, be admitted irrespective of
the parol evidence rule. In
Affirmative
Portfolios CC v Transnet Ltd t/a Metrorail
[2008] ZASCA 127
;
2009 (1) SA 196
(SCA) at para
[14]
it was said:
“
Where
the written agreement is intended merely to record a portion of the
agreed transaction, leaving the remainder as an oral agreement,
then
the rule prevents the admission only of extrinsic evidence to
contradict or vary the written portion without precluding
proof of
the additional or supplemental oral agreement. This is often referred
to as the 'partial integration' rule.”
[32]
Likewise if a contract records a portion of an agreement and leaves
the other portion for subsequent agreement, whether oral
or in
writing, evidence of the subsequent agreement would not be precluded
by the parol evidence rule. All that the defendant
did in this
matter was to prove that the “agreed date” mentioned in
clause 5.2 was subsequently agreed to as the date
on which the
Department pays.
[33]
Although the defendant did not expressly accept the offer to pay the
plaintiff when the Department pays, it is clear that there
was, at
least, tacit acceptance of the offer. The defendant did not
reject the offer. In fact, it relied on the offer
and its tacit
acceptance thereof in its opposing affidavit. In
Timoney
and King v King
1920 AD 133
at 141
it was said that:
“”
An
acceptance may be inferred from conduct.”
[34]
In
Reid
Bros (South Africa) Ltd v Fischer Bearings Co Ltd
1943 AD 232
at 241
the following was said:
“
Now
a binding contract is as a rule constituted by the acceptance of an
offer, and an offer can be accepted by conduct indicating
acceptance,
as well as by words expressing acceptance.”
[35]
It must be remembered that it is always open to the defendant to
apply for rectification, at trial, in order to align the written
agreement with the true agreement between the parties. I say this
because the defendant, in paragraph 5.1.2 of its affidavit, states
that it was part of the agreement between the parties that it will
receive and verify accounts for professional services rendered
by the
plaintiff and submit same to the Department for payment. This
allegation is supported by the facts. There is, however,
no
such clause in the contract. I am of the view that the defendant has
satisfied us that it has a
bona fide
defence to the action. In any event, in my judgment, in the
light of all material placed before us, there is a reasonable
possibility that an injustice may be done if summary judgment is
granted.
[36]
I accordingly make the following order:
1.
The appeal is upheld with costs.
2.
The order of the court
a quo
is set aside and replaced with
the following:
(i)
The
application for summary judgment is dismissed.
(ii)
The costs of
the application for summary judgment shall be costs in the action.
(iii)
The defendant
must file its plea within twenty (20) days of the date of this order.
__________
C.J. MUSI, J
I
agree.
_____________
S. EBRAHIM, J
I
agree.
____________
C. VAN ZYL, J
On behalf of
appellant: Adv J.J.F. Hefer
Instructed
by:
Alberts
Attorneys
BLOEMFONTEIN
On
behalf of respondent: Adv Keet
Instructed
by:
Van
der berg Van Vuuren Attorneys
BLOEMFONTEIN