About SAFLII
Databases
Search
Terms of Use
RSS Feeds
South Africa: Free State High Court, Bloemfontein
SAFLII
>>
Databases
>>
South Africa: Free State High Court, Bloemfontein
>>
2011
>>
[2011] ZAFSHC 11
|
|
Spar Group v Webber (4193/2010) [2011] ZAFSHC 11 (27 January 2011)
FREE STATE HIGH
COURT, BLOEMFONTEIN
REPUBLIC OF SOUTH
AFRICA
Case No.: 4193/2010
In
the matter between:
THE SPAR GROUP
…..................................................................
Plaintiff
and
MARK GRAEME WEBBER
….................................................
Defendant
_____________________________________________________
JUDGEMENT:
RAMPAI J
HEARD ON:
2
DECEMBER 2010
_____________________________________________________
DELIVERED ON:
27 JANUARY 2011
_____________________________________________________
[1] This is an
application for summary judgment. The plaintiff’s action
against the defendant is based on two claims. Firstly,
the plaintiff
sues the defendant for the shortfall in the sum of R66 926,40 alleged
to be the unpaid portion of a grand debt in
respect of certain
drop-shipment transactions. Secondly the plaintiff also sues the
defendant for the legal costs in the sum of
R168 696,82 alleged to be
the unpaid total of taxed costs. The defendant opposes the
application and prays for leave to defend
the action.
[2] In its particulars of
claim, under prayer one, the plaintiff prayed for payment of the sum
of R66 926,40 plus interest
a tempore morae
thereon at the
rate of 15% per annum calculated from the 27
th
February
2009 until the date of final payment. Meanwhile the first claim was
settled. Consequently the plaintiff abandoned its
request for summary
judgment as regards the first claim (annexure “a”
defendant’s heads of argument).
[3] The application was
first enrolled for hearing on the 28 October 2010. By agreement
between the parties my brother, C B Cillié
J, postponed it to
4 November 2010 and reserved the decision concerning the wasted costs
occasioned by such postponement for later
adjudication.
[4] On the 4
th
November 2010 the matter was allocated to my brother, G F Wright, J.
Once again the application was postponed, on that second occasion,
to
the 2 December 2010 and a similar reservation made concerning the
wasted costs. The order was likewise by agreement
inter partes.
[5] Seeing that the
plaintiff has already abandoned the first relief sought in terms of
prayer 1 of the particulars of claim dated
the 11
August
2010 and has accordingly only moved for an order in terms of prayers
2, 3 and 4 of the particulars of claim – the first
claim falls
away. The first five defences raised by the defendant were concerned
with the first claim. They too, obviously all
fall away. From now on
I shall say no more about them and the claim which gave rise to them.
[6] Now the undisputed
historical backdrop needs to be narrated. It provides lucid
exposition which clarifies the dispute about
the second claim.
[7] The defendant was the
sole member of a now defunct business enterprise, called Marbid
Hardware CC at Clarens. On 8 November
2006 the close corporation
applied to the plaintiff for credit facilities. The credit
application was made in writing (annexure
“a”, summons).
The defendant represented the close corporation and signed the credit
application on its behalf.
[8] The plaintiff duly
granted such an application. The close corporation purchased stock
not only from the plaintiff but also from
a whole range of other
hardware suppliers. From time to time goods were then delivered
direct to the close corporation by certain
approved drop-shipments
suppliers on order from the close corporation. The payment for the
goods so drop-shipped was guaranteed
by the plaintiff. The
drop-shipment supplier concerned would then bill the plaintiff for
goods sold and delivered to the close
corporation.
[9] In turn the plaintiff
picked up the bills and settled the accounts of the dropshipment
supplier. The plaintiff was entitled
to make a profit in connection
with each dropshipment transaction. The plaintiff would after
settling the supplier’s account,
debit the stock account of the
close corporation. The close corporation was obliged to make regular
payments to the plaintiff on
such stock account.
[10] Marbid Hardware CC
trading as Build It Clarens and Build It Guild of South Africa
concluded a written contract termed membership
agreement at Clarens
on the 23 May 2007. The Guild has as its members hardware wholesalers
and retailers. It has been set up for
the purpose of facilitating the
implementation of the system of voluntary group trading by
wholesalers and retailers of hardware,
building materials and related
products formulated and promoted by Spar, in other words, the
plaintiff (clause 2, annexure “b”).
[10] The close
corporation, as time went on, did not regularly comply with the terms
and conditions of the credit agreement. As
on 27 February 2009 Marbid
was indebted to the plaintiff in the sum of approximately R1 million.
On that day the defendant again
personally bound himself, jointly and
severally, as surety and co-principle debtor
in solidum
with
Marbid in favour of the plaintiff (annexure “c”) for the
due and punctual performance by Marbid of all its contractual
obligations (annexure “a”) towards the plaintiff.
[12] During or about
March 2009 the plaintiff cancelled all the credit facilities
agreement Marbid had with the plaintiff. As a
result of the
cancellation Marbid could no longer procure further stock from either
the plaintiff or any drop-shipment supplier
to sustain its commercial
operations.
[13] The plaintiff then
initiated legal proceedings against Marbid for the perfection of its
security held under a general notorial
covering bond registered over
all the moveable assets of Marbid. On the 18 June 2009 the plaintiff
obtained a provisional perfection
order against Marbid.
[14] The defendant, in
his capacity as the only member of Marbid Hardware CC passed a
special resolution to have the close corporation
liquidated. On 23
June 2009 Marbid, the plaintiff’s principal debtor, was
liquidated by virtue of its deregistration by the
registrar of close
corporations.
[15] This court confirmed
the provisional perfection order as the final perfection order on 8
October 2009. The result of such confirmation
was that by virtue of
such final perfection order the plaintiff became a secured creditor
in the judicial winding-up of Marbid
in respect of its movable
property up to the maximum capital sum of R1 million.
[16] Subsequently the
plaintiff proved a claim of R804 755,03 in the insolvent estate of
Marbid. The liquidators paid a dividend
of R737 828,63 to the
plaintiff, leaving a shortfall of R66 926,40 as an unpaid portion of
the dropshipment transactions. This
was the basis of the plaintiff’s
first claim (prayer 1, summons).
[17] The principal
debtor, Marbid Hardware CC, was directed in terms of the court order
of 8 October 2009 to pay, on the scale as
between attorney and
clients, the costs of the application pertaining to the legal
proceedings for the perfection of the general
notarial covering bond
held by the plaintiff. The plaintiff’s bill of costs was taxed
and allowed by the taxing master in
the amount of R168 696,82 on 9
June 2010. This then is what the plaintiff’s second claim is
all about.
[18] The plaintiff’s
cause of action against the defendant is based on suretyship
agreement. The suretyship is unlimited.
The plaintiff caused a
summons to be issued against the defendant as surety for and
co-principal debtor on 19 August 2010 for the
payment of the sum of
R168 696,82. The sheriff served the summons on 31 August 2010. The
defendant filed a notice of intention
to defend on 15 September 2010.
The plaintiff filed notice of application for summary judgment on 5
October 2010. The defendant
filed his opposing affidavit on the 22
October 2010. The application was postponed on two occasions as
previously pointed out.
[19] The divisional
credit manager of the plaintiff, Mr N M Makue, made an affidavit in
support of the plaintiff’s application
for summary judgment. He
verified the cause of action, confirmed the defendant’s
indebtedness, and the amount claimed. He
expressed the opinion that
the defendant had no
bona fide
defence to the plaintiff’s
action and that he had delivered notice of intention to defend for
the sole purpose of delaying
the plaintiff’s action.
[20] In his opposing
affidavit the defendant denied the allegations that he had no
bona
fide
defence to the plaintiff’s claim and that he delivered
notice of intention to defend with the sole purpose of delaying the
finalisation of the plaintiff’s action.
[21] The defendant
admitted, among others, the plaintiff’s averments: that he was
the sole member of the business entity known
as Marbid Hardware CC
which once traded as a franchise of Build It Guild at Clarens in the
Free State Province; that the plaintiff
had granted a credit facility
to Marbid; that the plaintiff had advanced stock to Marbid by virtue
of direct warehouse purchase
transactions and also by virtue of
indirect drop-shipment transactions; that he personally signed a
surety agreement for and on
behalf of the close corporation in favour
of the plaintiff; that the close corporation also signed a membership
agreement with
Guild; that in terms of that agreement the close
corporation took out an insurance policy as it was obliged to, for
the purpose
of providing indemnity or security to the plaintiff
against possible loss resulting from possible failure by the close
corporation
to comply with the terms and conditions of the credit
agreement; that the plaintiff also held a general notarial covering
bond
over the movable property of the close corporation as a form of
further security and that initially the close corporation regularly
settled the plaintiff’s accounts as agreed.
[22] It was also
undisputed by the defendant that, with the passage of time, the close
corporation failed to maintain regular and
due payments, that as a
result of such inability, its indebtedness to the plaintiff steadily
increased; that the plaintiff cancelled
the credit agreement; that
the close corporation stopped trading; that the close corporation was
eventually liquidated; that the
plaintiff successfully obtained the
provisional perfection order which was in due course confirmed as a
final perfection order
against the movable property of the close
corporation; that the legal costs incurred by the plaintiff in
connection with such legal
proceedings were taxed and allowed in the
amount as claimed by the plaintiff and that the close corporation was
contractually bound
to pay such costs on the scale as between
attorney and client.
[23] Notwithstanding such
admissions, the defendant averred that for any amount he could be
held accountable or liable for, Refine
Underwriting was, on behalf of
Absa Insurance Company Limited, obliged to effect such payment to the
plaintiff. The essence of
the defendant’s defence was that
notwithstanding the suretyship agreement, the plaintiff was
contractually precluded from
directly suing him in the first instance
without, first and foremost, submitting its claim to the insurance
underwriter. The correlative
of this was that the plaintiff did not
have a complete cause of action or a right immediately to enforce
against him.
[24] It is trite that the
surety, when sued by a debtor’s creditor, can raise all the
defences that were open to the principal
debtor. This is so because
the creditor’s claim against the surety has as its foundation
precisely the same claim as against
the principal debtor.
BANK OF
THE OFS v CLOETE
1985 (2) SA 859
(E) on 862G to 863J. The
defence(s) advanced by the defendant in this case, are not defences
in persona
to the principal debtor. Therefore the defendant as
surety is entitled to advance them in much the same way as Marbid,
the principal
debtor, could have.
[25] In this type of
applications it is incumbent upon a defendant to sufficiently extend
to the court all the material facts on
which the defence rests so as
to bridge the onus placed upon the defendant. The
crux
of the
onus is that a defence should be
bona fidely
advanced. The
test is and has always being that the defendant must only aver facts
which, if they were proved at the trial, would
entitle him to the
relief sought. It is certainly not the test that the defendant, must
in this proceedings for summary judgement,
prove his defence –
FNB v MEYBURGH
2002 (4) SA176 (E) at para [9] and [10].
[26] In this instance,
the edifice of the defendant’s defence in respect of the
plaintiff’s second claim related to
an insurance policy
contract that has been concluded with a third party, namely: Refine,
for the due and punctual performance of
obligations made by Marbid to
the plaintiff. As part of the contractual obligations of Marbid to
the plaintiff in terms of the
credit agreement, Marbid had to take
out an insurance policy contract with Refine as a form of security.
The obligation of Marbid
to take out an insurance policy for the
benefit of the plaintiff was expressly provided for in the membership
agreement (annexure
“b”). It was a tripartite agreement.
The parties were Marbid Hardware CC, The Guild SA and The Spar Group
Limited.
[27] The salient terms
and conditions of the insurance policy contract issued by Refine were
that:
“
13.
The salient terms of this agreement
were:
13.1
Refine
guaranteed all
payments from
Marbid
to the plaintiff to the maximum amount of
R500 000,00
, from effective date
2 October 2007.
13.2 This policy covered all purchases
that
Marbid
was to make from the plaintiff (both warehouse and
drop shipment transactions).
13.3 This policy would also cover all
guild fees that were to be payable to the Build-It guild and any
other fees or charges due
and payable by
Marbid
to the
plaintiff from time to time, including all interest on such
outstanding amounts.
13.4
Marbid
was to pay a
premium to
Refine
totally
R2 432,00
per month.”
[28] The aforegoing
material terms and conditions of the insurance policy contract were
summarised in a letter from Refine Underwriting
Managers (Pty) Ltd to
Marbid Hardware CC dated 2 October 2007. Although certain documents,
which were collectively but regrettably,
labelled as annexure “mgw1”
were unsigned, the letter in question was duly signed by a certain Mr
Timothy Paramasiram.
This letter together with the letter from the
plaintiff’s attorneys, Matsepes, addressed to the defendant’s
attorneys
Symington & De Kok dated 23 November 2010 annexed to
the defendant’s head of argument irrefutably proved that a
signed
copy of such insurance policy contract indeed existed
somewhere. In my view annexure “mgw1” cannot be simply
ignored
because certain of its parts were unsigned documents. Nothing
significant really turns on the point.
[29] Clause 5 of the
suretyship agreement (annexure “c”) provides:
“
5. We
renounce the beneficium ordinis seu excussionis et divisionis and
agree and declare that this suretyship is in addition and
without
prejudice to any other securities now held or hereafter to be held
from or on behalf of the debtor and that it shall remain
in force as
a continuing covering security, notwithstanding any intermediate
settlement of account and notwithstanding our death
or legal
disability. Furthermore this suretyship shall similarly remain in
force as a continuing covering security as regards us
or one or more
of us, notwithstanding it may have ceased to bind one or more of the
other undersigned, if any, on account of liquidation,
insolvency or
otherwise.”
[30] Mr Cillié,
counsel for the plaintiff, submitted, on the strength of this
particular clause that the plaintiff was not
obliged to first seek
indemnification from Refine before turning to the defendant as surety
for compensation for its loss occasioned
by the failure by Marbid to
duly and punctually perform.
[31] Mr Grobler, counsel
for the defendant, sharply differed. He submitted that it was an
implied term of the interrelated agreements
(annexures “a”,
“b”, “c” and “mgw1”) between all
the parties concerned, that the
plaintiff was contractually obliged
to submit the claim to Refine in terms of the insurance policy
contract, first and foremost,
before the plaintiff could turn to the
defendant to enforce its right of recourse.
[32] The plaintiff’s
second contention was that, at any rate, the insurance policy contact
issued by the insurance underwriter,
Refine, did not cover the taxed
costs currently claimed by the plaintiffs from the defendant. Yet
again the defendant joined issue
on this plaintiff’s second
submission. He contended that the insurance policy contract did cover
such legal costs and that
Refine erroneously distinguished the second
component of the plaintiff’s claim from the first and thereby
erroneously repudiated
(annexure “a”-defendant’s
heads of argument).
[33] It would seem that
Refine was initially unwilling to indemnify the plaintiff at all for
whatever reason. It seems to me that
the belated payment of the
plaintiff’s first claim by Refine, only a few days before the
hearing of the application, was
prompted by the averments contained
in the defendant’s opposing affidavit. If the initial stance of
Refine in respect of
the first claim was shown to have been
incorrect, as the letter from Matsepes implicitly seems to suggest,
it is not unthinkable
that its current construction of the policy
contract in respect of the second claim might also similarly be
proved to be incorrect
later at the trial.
[34] The insurance policy
contract, annexure “mgw1” expressly covers the following:
“√
All
purchases from The Spar Group Ltd (both Warehouse and Drop shipment
Transaction)
√
Guild fees
√
Any
other fees or charges due and payable by the Customer as agreed with
Spar from time to time
,
including interest on outstanding amounts.”
[35] The crux of the
dispute focused around the construction of the third item above. It
was the defendant’s case that the
wording of the phrase “any
other fees and charges due and payable” was sufficiently broad
to encompass legal fees and
disbursements. Mr Grobler argued that
there appeared to be no reason why reference to the generous words
“any other fees
or charges” should be restrictively
construed to exclude legal fees and disbursements incurred by the
plaintiff in its dealings
with the principal debtor, Marbid. This
contention raises an arguable point, in my view.
[36] It must also be
pointed out that the plaintiff’s entitlement to legal costs on
the special scale as between attorney
and client emanates from the
wording of the credit agreement (annexure “a”, summons)
which credit agreement was the
foundation of the rest of the
agreements, namely the membership agreement, (annexure “b”),
the suretyship agreement,
(annexure “c”), the insurance
agreement, (annexure “mgw1”) and last but not least
Refine’s belated
acceptance of liability in respect of the
first component of the plaintiff’s claim, (annexure “a”)
the letter
ex Matsepes, attorneys for the plaintiff attached to
defendant’s heads of argument. Since it was foreseeable that
the principal
debtor might default and that the plaintiff would then
resort to a litigation process to enforce its rights, the defendant’s
contention that indemnifying the plaintiff for litigation costs was
tacitly agreed and indeed contemplated in the phrase “any
other
fees or charges” of the policy contract – does raise
plausible and triable issue.
[37] Ordinarily in a case
where a vehicle driven by X collides with another driven by Y, it is
not open to Y, whose negligence has
caused the accident, to contend
that X must first sue Y’s comprehensive insurer, Koloi
Insurance Co (Pty) Ltd for instance.
This is so because X would not
have been a party to the comprehensive insurance policy contract
between Y and Koloi. In the instant
case the facts are different. The
plaintiff, as I have already pointed out, was a signatory to the
membership agreement whereby
the principal debtor was obliged to
enter into an insurance policy contract to secure the plaintiff.
Therefore the two scenario’s
cannot be equated to each other as
counsel for the plaintiff contended they should.
[38] In these
circumstances, I am persuaded that the defendant has sufficiently set
out material facts and the grounds on which
his defence is founded. I
am not required to thoroughly adjudicate the merits of the dispute to
ascertain whether the defendant
has proven his defence. My function
at this junction is to see whether the defendant has averred facts
which, if proved at the
hearing proper, would entitle him to the
relief of him being exonerated. On the facts, it cannot be said that
the defendant has
no
bona fide
defence and that he has
delivered notice of intention for the sole purpose of
mala fidely
delaying the finalisation of the plaintiff’s case. I am of the
firm view that the defendant has in good faith raised justiciable
issues disentitling the plaintiff to the harsh relief by way of
summary judgment. I would therefore be inclined to refuse the
plaintiff’s application.
[39] Accordingly I make
the following order:
39.1 The plaintiff’s
application for summary judgment is refused;
39.2 The defendant is
granted leave to defend the action as regards the second claim
thereof;
39.3 The costs hereof
shall be costs in cause.
______________
M. H. RAMPAI, J
On behalf of plaintiff:
Adv. H. J. Cilliers
Instructed by:
Matsepes Inc.
BLOEMFONTEIN
On behalf of defendant:
Adv. S. Grobler
Instructed by:
Symington & De Kok
BLOEMFONTEIN
/eb