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[2013] ZAFSHC 82
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MPS Consulting engineering and Town Planners (Pty) Ltd v Archi-M Architects CC (873/2013) [2013] ZAFSHC 82 (16 May 2013)
FREE STATE HIGH
COURT, BLOEMFONTEIN
REPUBLIC OF SOUTH
AFRICA
Case No: 873/2013
In the matter between:
MPS CONSULTING
ENGINEERS AND TOWN
PLANNERS (PTY) LTD
....................................................................
Plaintiff
(Registration number:
2004/000413/07)
and
ARCHI-M ARCHITECTS
CC
........................................................
Defendant
(Registration number:
CK94/39446/23)
_____________________________________________________
JUDGE:
SEPATO, AJ
_____________________________________________________
HEARD ON:
16 MAY 2013
_____________________________________________________
REASONS FOR
JUDGMENT
_____________________________________________________
INTRODUCTION
[1] Plaintiff issued
summons against defendant for payment of R2 754 383.40,
being remuneration for professional services
rendered as per an
agreement between the two.Defendant entered appearance to defend,
whereupon plaintiff then brought an application
for summary judgement
in the above stated amount, with interest and costs. Defendant
resisted and opposed the summary judgement
application. On the 16
th
of May 2013 I granted plaintiff summary judgement in the following
terms:
Payment in the amount
of R2 415 291.06;
Interest thereon at
15.5% per annum a
temporamorae
to date of final payment;
Costs of suit.
[2] Defendant was granted
leave to appeal this order. Having undertaken to furnish reasons for
my order, same follow hereunder.
FACTS AND
BACKGROUND
[3] Much of the facts
herein are common causebetween the parties and are summarised as
follows:
(i) On the 24
th
January
2008, plaintiff an engineering company, entered into a formal
agreement with defendant, a close corporation in terms of
which
plaintiff would render certain specified professional services to the
defendant in exchange for remuneration by the latter.
It is apparent
that this deal arose out of defendant having been awarded a tender by
the Free State Government to build the “New
Offices Free State
Government’’ whereupon defendant then subcontracted the
engineering services to plaintiff, in association
with two
consultants as a Joint Venture.
(ii) Plaintiff’s
letter of appointment by defendant as consultant and the subsequent
formal agreement between them are Annexures
‘A’ and ‘B’
respectively, to the particulars of claim. The full terms of the
agreement are expressly and
clearly set out in ‘B’ the
contract. Of relevant significance herein is that the contract
amongst others is specific
re: the identity of the parties thereto;
the services to be rendered by plaintiff, payment therefore by
defendant; a non-variation
clause and dispute resolution steps to be
taken by a party,in the event of any.
[4] These aspects of the
contract are singled out because the issues to be decided herein, as
shall appear hereunder, revolve around
them.
[5] I believe one can
safely assume that for some time since the inception of the
agreement, plaintiff and defendant enjoyed a fairly
harmonious
relationship, each performing in accordance with the agreement. This
up until March 2012 whence from a series of correspondence
at least
from plaintiff’s side, there appears a souring of the
relationship, stemming from the fact that defendant had apparently
been failing to make payments due to plaintiff as expected.
[6] For instance,
annexure E1 to the particulars of claim is a letter from plaintiff’s
attorneys dated 14th March 2012 claiming
an amount of
R3 338 899.81from defendant, same being allegedly
outstanding since about November 2009 – June 2010.Annexure
“E2”
is another letter by plaintiff’s attorney referring to and
demanding from defendant payment of account number
5 of February 2012
in the amount of R2 754 383.40 for professional
servicesrendered. This latter account forms the subject-matter
herein.Annexures “C” – “E3” to the
particulars of claim show numerous requests and demands of payment
of
this account, without any success. It is common cause that up until
March 2013, defendant had not yet paid this amount at all,
which
compelled plaintiff to institute the current proceedings.
THE ISSUES
[7] From the issues and
response thereto as were ultimately argued before me by both counsel
in court I understood the crux of the
defendant’s case to be to
that:-
Firstly,that the amount
of R2 741 383.40 sued for by plaintiff is not yet due and
claimable in terms of the contract between
them and that therefore
these proceedings are premature based on the following grounds:
That the claim is a
“dispute” as envisaged in clause 8.1 of the contract,
which I shall refer to as “B”,and
that plaintiff failed
to initiate and engage defendant in negotiations in good faith, with
a view to settle the dispute before
them.
Further, that plaintiff
proceeded to initiate these proceedings without having furnished
defendant with a written notice declaring
that such negotiations
have failed, thereby
Contrary to clause 8.2,
never engaged in any mediation before taking further steps.
Defendant avers that
Clause 8 is a material term of the contract and that any breach
thereof amounts to breach of the contract.
Secondly, defendant
contends that plaintiff per a letter dated 26
th
September
2012Annexure “C” to defendant’s opposing affidavit
waived his right to payment as set out in Clause
5.2 of the contract,
that is to payment of the account within thirty days of issue up
until defendant had received payment from
the Department, relating to
the project.
[8] Clause 8 of the
contract is titled ‘Settlement of disputes’. Clause 8.1
reads:
“
The
parties shall negotiate in good faith with a view to settling any
dispute or claim arising out of or relating to this agreement
and may
not initiate any further proceedings until either party has by
written notice to the other, declared that such negotiations
have
failed.”
[9] In response to
defendant’s allegation that the outstanding payment of R2
754 383.40 is a “dispute” plaintiff
denies as per
heads of argument this and argues that defendant has never attempted
at all, in any sense at any stage, to argue
why he says the claim is
a dispute, in what respect is it being disputed or by whom. The
Plaintiff describes the claim in Annexure
“C” as payment
for professional services rendered as agreed: Structural Engineering
Services Account no: 5. Annexure
“D” is a summary of the
fee account 5.
[10] Further, plaintiff
argued that defendant has not alleged that the said services have not
been properly rendered or that they
are lacking in one way or another
or above all, that the amount claimed is incorrect in any
sense.That,to the contrary, defendant
has always acknowledged and
undertaken to pay the account, but only upon receipt of payment by
the Department.
[11] Further,that as
confirmation of this acknowledgement of indebtedness and the
undertaking to settle same, on 19
th
April 2013 whilst
these proceedings were pending, defendant made a part - payment of
R339 091.74 towards this debt, into plaintiff’s
account.
This is confirmed by defendant in his supplementary affidavit filed
on 10
th
May 2013.
[12] Further, plaintiff
denies that he failed to engage in negotiations with a view to settle
the dispute in good faith, but that
all the invoices and letters sent
to defendant for payment are the attempts to negotiate and settle the
claim, referring to Annexures
“C” – “E”
and the fact that certain payments were made in these periods up to
and including after
the issuing of the summons shows co-operation
between the two.
[13] Plaintiff alleges
that he has always acted in good faith and that Annexures“E2”
and “E3” for instance,
particularly the last paragraphs
in each letter, set out a tone of a person trying to have a dispute
resolved. Further that, plaintiff’s
letter dated 26
th
September 2012, i.e. Annexure “C”to defendant opposing
affidavit is actually the expression of his
bona fides
in his
dealings with the defendant in that in paragraph 2 thereof, defendant
is requested to see to it that plaintiff’s account
is paid
first once money is received from the Department, in preference over
other consultants.
[14] During oral
submissions plaintiff’s counsel tried to hand in or read into
record a letter he says was written by plaintiff’s
attorneys
earlier on notifying defendant that the negotiations between them
have failed but was interrupted with a fierce objection
from his
opponent that such letter cannot be admissible at that stage and that
the court should solely confine itself to the documents
already on
file.
[15] Plaintiff’s
counsel however maintained that still, from the contents of Annexures
“E3” defendant got it clearly
from plaintiff in paragraph
4,thereof which reads
“…
we confirm
that if you do not comply with the above, we have instructions to
proceed with the necessary action against yourself…”
that negotiations would have failed should he fail to
comply.That indeed defendant failed to comply being well aware of
plaintiff’s
view.
[16] Lastly, plaintiff’s
counsel disputed that plaintiff has waived any of his rights to
payment for the services rendered
to defendant, be it expressly or by
any conduct on his part.
[17] Firstly, counsel
argued that throughout the duration of the contract between them,
defendant has always been the person responsible
for remunerating
plaintiff for the services rendered and that no one else, let alone
the Department,ever assumed such responsibility.
That the contract
itself stipulates so, and that it has never been varied nor altered
to relieve defendant of such responsibility
and specifically shifting
same to the Department.
[18] This, more
especially because Clause 7.10 of the contract titled ‘Sole
Agreement’ reads:
“
This
agreement together with the attachment 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 and effect
unless reduced to
writing and signed by both parties as expressly intended to form part
of the agreement.”
[19] Keeping all the
aforegoing in mind, it is important to note the initial case of
defendant as set out in the opposing affidavit.In
paragraph 5.1.1 of
his opposing affidavit defendant does admit the formal agreement
between them that is “B” and in
fact attached an exact
copy thereof, too. Then in paragraph 5.1.2 he avers:
“
In
terms of the said agreement plaintiff will deliver accounts and claim
to defendant in respect of professional services rendered
by
plaintiff, defendant will inturn verify and submit same to the
Department for payment.”
[20] Interestingly,
defendant does not quote the relevant portion of the contract which
stipulates this. To the contrary, he refers
the court to Clause 5 of
the contract titled “Remuneration general”. Clause 5.1:
“
The
client shall pay the consultant for performing the services in
accordance with details stated in Appendix ‘B’, and
shall
further pay for any additional services... Where a payment schedule
has not been agreed then the Consultant will be entitled
to render
interim monthly accounts, based on progress, throughout the duration
of the services.”
[21] In the first
paragraph of the contract it is stated in bold that the ‘client’
is ARCHI-M-STUDIO CIVIL CONSTRUCTION
and the consultant, amongst
others,is MPS CONSULTING AND ENGINEERS. Appendix “B”
referred to in the contract, merely
states REMUNERATION: “As
stated on the letter of appointment”.
[22] The said letter of
appointment ‘A’ only
states “…
Applicable fees will be as per the gazetted Government fees
structures for your respective discipline…”.
Nothing
is elaborated on in this regard, except for me to mention that none
of these provide support for defendant’s contention
that
plaintiff had anythingwhatsoever, to do with the Department.
[23] Further in paragraph
5.1.4, defendant refers to Clause 5.2 which provides that undisputed
claims of the plaintiff will be settled
by defendant(client) in full
on the agreed dates or within thirty days of the issue of the
account.
[24] In paragraph 5.1.5
he then says, plaintiff being a well-established engineering firm in
the Free State province, has had dealings
with the provincial
Government before, as a consultant either directly or indirectly and
that, in paragraph 5.1.6, he knows for
a fact that defendant merely
acts as an intermediary between the government and plaintiff as a
consultant as far as payments of
accounts are concerned.
[25] He further goes to
give details of how the accounts are handled by himself and the
Department before payment is made.Of significance,
he says at a
stage, the Department informed him of its financial situation and
therefore the inability to settle accounts timeously,
which fact, he
duly communicated to plaintiff. Annexure “B” to his
opposing affidavit refers.
[26] This is a letter
from the Department of Public Works, Free State Province addressed to
Defendant and no one else, and acknowledging
receipt of defendant’s
invoice no: 8 and that some delays may occur in paying same for
reasons stated. This letter is dated
9
th
October 2012.
[27] According to
defendant, plaintiff received and accepted the contents of the letter
indicating delay in payment and this is
evidenced by his
(plaintiff’s) letter dated 26
th
September 2012,
Annexure “C” to defendant’s affidavit. He refers to
paragraph 2 thereof.
[28] But it is important
to look at its exact contents.Firstly, Plaintiff’s letter is
dated 26th September 2012 and is purportedly
a response to aletter
dated 9th October 2012. Obviously that cannot be.Anyway, from its
opening paragraph, the letter makes no
reference to any particular
letter received. Instead paragraph 2 reads:
“
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...”
[29] According to
defendant, paragraph 2 of this letter constitutes a new or at least
another agreement reached between him and
the plaintiff that the
“
agreed date”
of
payment of plaintiff’s outstanding account is, “
after
payment by the Department”.
In Paragraph
5.1.16 he states
“
This agreement was never
cancelled by the plaintiff and therefore still subsist.
”
I
need to mention that nowhere in this affidavit does the defendant
refer to any ‘waiver’ of any right by the plaintiff
at
all.
[30] Plaintiff having
fully dealt with and disputing defendant’s case as per the
opposing affidavit, the defendant then changed
his tone as shall be
set out. The defendant’s Heads of Argument firstly deals with
the approach that the court should adopt
in relation to the case i.e.
whether to grant or refuse summary judgment.
[31] Whilst paragraphs
5-6 of the Heads deal with the defendant’s defence as raised in
his affidavit but then, in paragraph
7, counsel submits that
actually, the plaintiff’s letter dated the 26
th
September 2012 does not constitute an amendment to the
contract i.e.“B” but that it amounts to waiver by the
plaintiff
of his right to payment within 30 days. Interestingly,
Counsel refers to a clause in the Contract which states that
“
No
amendments will be of any force and affect unless reduced to writing
and signing by both parties as expressly intending to form
part of
the agreement”,
i.e. the non-variation
clause, which directly contradicts defendant’s case set out in
paragraphs 5.1.15 and 5.1.16. In fact,Counsel
expressly withdraws
defendant’s own defence of a variation to the contract and
replaces it with wavier.
[32] Defendant’s
counsel contends that therefore, having waived his right to payment
within 30 days, plaintiff cannot institute
the action until such time
the Department has come into the necessary funds and that therefore
summary judgement should be refused.He
refers to the case of
Hepner
V Roodepoort – MaraisburgTown Council
1962(4) SA 772 (A)
without any motivation. Having gone through the decision, I found no
support for defendant’s case therein.
Instead, the court
clearly set out what should a waiver entail and defendant herein is
not clear as to what has actually been waived.
THE LAW
[33] Rule 32 of the
uniform Rules of the Supreme Court provides:
“
Upon
the hearing of an application for summary judgement, the defendant
may
[a]…
[b] satisfy the court by
affidavit or with the leave of the court by oral evidence that he has
a
bona fide
defence…., such affidavit or evidence shall
disclose fully the nature and groundsof the defence and the material
facts relied
upon.”
[34] This means that an
application is, in the absence of oral evidence decided on the
affidavits on record. Heads of Argument are
only to assist to set out
the party’s case with more precision, and certainly are not to
substitute such case with another
version as counsel may deem it fit.
Above all, Heads are not in a form of affidavit that carries the
weight of evidence.
[35] The law is very
clear as to what constitutes a
bona fide
defence.
Erasmus-
Superior Court Practice
in their
discussion of the Rule 32 at Page B1-223-224 states as follows:
Firstly, that the term
‘bona fides’ should be given its literal meaning, i.e.
the defence itself must be
bona
fide
.Of significance, is that defendant must
swear
“
to a defence, validin law, in a
manner which is not inherently or seriously unconvincing”
,
or that his affidavit must show that there is a real possibility that
the defence he raises may succeed, otherwise his defence
must fail.
[36] Essentially,
defendant’s counsel aslo advanced these arguments too, however,
in paragraph 2.2 of the Heads of Argument,
he argues that the court
is not necessarily bound to the manner in which defendant has
presented his case and that the discretion
to refuse summary judgment
is notdependent upon the quality of the defendant’s opposing
affidavit.
[37] According to him the
court should adopt a lenient approach to the allegations contained
therein and then draw reasonable inferences.
This, certainly in
defence of the unacceptable manner in which defendant’s case
has been presented.
REASONS AND
FINDINGS
[38]
The Nature of
the claim
:
I am satisfied that the
plaintiff’s claim herein is a liquidated amount of money as
envisaged in Rule 32,and that defendant
has not disputed this in any
manner.Further that defendant has not established in what respect is
the claim a dispute which is
envisaged in Clause 8 of the contract as
plaintiff correctly argued it.
[39]
A
bona
fide
defence
:
Re
the argument
that plaintiff was not entitled to institute these proceedings
without having referred the issue of the payment for
mediation,
Clause 8.2 of the contract, provides that a party
may
(my
emphasis) refer the dispute or claim for mediation before taking any
further steps in relation thereto.
[40] The choice of the
word “may” over “shall”by theparties
themselves in the contract, means that a party
is at liberty to go
for mediation or take other further steps. That includes the
defendant. Defendant has not attempted at all
to explain why he,
since March 2012 until in March 2013, seeing that he could not agree
with plaintiff as to the payment of the
account, failed to exercise
his contractual right to seek mediation as provided for in Clause
8.2.Only when plaintiff chooses not
to go that route does defendant
want to hold him in breach. This simply shows that there was nothing
to be mediated on as in accordance
with their own contract, except
that he wanted to effect payment as and when it was convenient for
him.Is that
bona fides
or reasonableness in dealing with the
other party? Certainly not.
[41] Further, defendant
alleges that plaintiff never engaged in good faith with him. However,
he has not attempted to show any malicious
conduct on the part of
plaintiff since the account was rendered. The contract provides that
payment will be made as agreed or within
30 days of the account.
[42] The fact that
plaintiff’s account stood outstanding since March 2012 until
March 2013 should reasonably suggest as he
argues, that he had been
understanding and considerate as he always acceded to and agreed with
the defendant’s request to
wait for payment.
[43] But clearly, this
was on the terms of the defendant. Plaintiff has throughout,even
before the summons was issued, been making
it abundantly clear to
defendant that he has got nocontract with any other person nor has he
agreed that some other person will
be responsible for paying his
account, but was only being considerate to his requests. Annexures E1
– E3 abundantly show
this. I fully agree with plaintiff, that,
this was just compromise on his part. Malice never entails
compromise.These were negotiations
in good faith.
[44] Defendant also
argued that plaintiff failed to issue him with a written notice that
the negotiations have failed and that he
intends instituting legal
action. In plaintiff’s letter dated 23/10/12 his attorney’s
warned defendant that should
payment not be made within 21 days
thereof, instructionswere that they should proceed with legal action.
Certainly whilst in law
this constitutes a letter of demand, the
practical effect thereof is to notify defendant that since it is
clear he and plaintiff
have failed to agree with each other about
settlement of the account, plaintiff feels his only recourse, is
litigation. Logic and
common sense have to prevail. That wasin
October. Defendant does not say what he did since then up
untilplaintiff chose to proceed
with legal action.
[45] In March 2013 when
the summons was issued to resolve the matter, he was simply waiting
for payment from the Department and
his attitude was that plaintiff
could do as he pleased.
[46] Lastly, defendant
alleges that plaintiff, per a letter dated 26
th
September
2012 had entered into another agreement altering the initial
agreement. Despite having shown earlier herein that plaintiff
could
not have been responding to a letter dated 9th October 2012 on 26th
September 2012 already, plaintiff vehemently denied this
and
specifically referred to Clause 7 of the contract in terms of
whichthere cannot be a variation of the contract except with
the
express intention and agreement to do so by both parties. Besides, if
plaintiff had agreed to vary the contract per letter
dated
26
th
September 2012, why did he per letter dated
23
rd
October 2012, after the Department had advised of its
situation, then notify defendant of the intended legal action should
payment
remain outstanding after twenty one days?
[47] I take it, defendant
concedes on this fact, but unfortunately seeks to change his case
through the Heads of Argument, alleging
waiver. Are these still
bona
fides
on
his part? Not at all. To the contrary, this is an indication of a
person who has got no
bona
fide
defence
at all, but merely trying to clutch at straws.
[48] I fully agree with
plaintiff that defendant’s case is based only on
technicalities, which in law should not avail him
of success in the
case. He refers to the case of
Breitenbach
v Fiat
1976
(2) SA 226
(T)
and
W
M Mentz&Seuns (Edms) Bpk v Katzake
1969
(3) SA 306
(T) 311A. In the latter case it was held that to give
effect to purely technical defences in an application for summary
judgment
would frustrate the purpose of rule 32.
[49] Defendant’s
counsel argued that the defences raised herein are not technicalities
since the latter would only relate
to procedural aspects of a case
and not the substance thereof. This is fallacious. The defendant is
accusing plaintiff for failing
to engage in good faith before issuing
letters of demand, for failing to engage mediation and lastly, for
failing to issue a formal
notice that negotiations have failed before
resorting to legal proceedings. These are procedural steps and
therefore technical.
In accordance with the court’s reasoning
in
Mentz’s
case above, such a
defence cannot stand.
[50]
Throughout this case,
defendant has not attempted to state why payment of plaintiff’s
claim should be conditional upon payment
by the Department; i.e. why
on his part he cannot pay but wait for the department. He has not
alleged any lack of funds or some
financial difficulties. He chose
not to take the court into his confidence. All he says is that
plaintiff knows as awell-established
engineering company that
defendant merely acts as an intermediary between plaintiff and the
Department.
[51] As I have already
pointed out, I found no support whatsoever of 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.
[52] I find that there
has not been any variation of the contract “B” at all,
nor waiver of any right to payment. The
only reasonable inference
that the court can safely draw from the defendant’s attitude
presented herein is that, he just
wants to delay payment of
plaintiff’s account unduly so, contra to the purpose of summary
judgment. I therefore find that
defendant does not have a
bona
fide
defence to the claim. Seeing that defendant on the 19
th
April 2013 made a part payment on this claim, same had to be set off
when judgment was granted on the 16
th
May 2013, with
interest and costs.
________________
R. M. SEPATO, AJ
On behalf of the
applicant: Adv. De Wet Keet
Instructed by:
Van der Berg Van Vuuren
Attorneys
BLOEMFONTEIN
On behalf of the
defendant: Adv. J. G. Gilliland
Instructed by:
Alberts Attorneys
BLOEMFONTEIN
/eb