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[2011] ZAFSHC 154
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Quince Capital (Pty) Ltd v Lisele, Sabata Dominic t/a Lenong Services (764/2010) [2011] ZAFSHC 154 (15 September 2011)
FREE STATE HIGH
COURT, BLOEMFONTEIN
REPUBLIC OF SOUTH
AFRICA
Case No: 764/2010
In the matter between:
QUINCE CAPITAL
(PTY) LTD
….................................................
Plaintiff
and
LISELE, SABATA
DOMINIC
t/a LENONG SERVICES
…...................................................
Respondent
____________________________________________________
HEARD ON
: 6
& 7 SEPTEMBER 2011
_____________________________________________________
JUDGMENT BY
:
KRUGER, J
_____________________________________________________
DELIVERED ON
:
15 SEPTEMBER 2011
[1] Plaintiff claims R93
155,54 from the defendant being the outstanding payment under two
rental agreements. Plaintiff no longer
seeks an order that defendant
return the goods because the goods were collected on 30 November
2009.
[2] It is not in dispute
that on 29 May 2007 the defendant entered into a written contract of
lease in terms whereof defendant leased
goods described as AF3224C,
serial number K7167130232 for 60 months, commencing on 1 July 2007,
at a monthly rental of R825,00.
The second lease was concluded on the
same day. This was a lease in respect of goods described as SP1000SF,
Serial Number M0869622225
for 60 months, commencing on 1 June 2007 at
a monthly rental of R825,00. The goods were a Nashua copier and
printer.
[3] Plaintiff sues as
cessionary of the lease agreements. On the pleadings the cessions are
denied. The plaintiff led evidence of
the cessions and Mr Louw, for
defendant, correctly did not dispute the cessions in argument.
[4] The defendant pleaded
that the first agreement was cancelled by mutual consent between the
parties during November 2009, precipitated
by plaintiff’s
breach. As to the second agreement, the defendant alleges
cancellation by mutual consent, but defendant does
not say when. From
the defendant’s evidence it appeared that he was in hospital
for 8 months from October 2008, and his wife
wrote a letter
cancelling the agreements. No such letter was handed in. His wife did
not testify. It was pointed out to defendant
in cross-examination
that clause 19 requires cancellation to be in writing which must be
signed by the parties.
[5] The defendant also
denied that he was in arrears, but could provide no proof of payment.
He said the bank closed his account
in about March 2009 while he was
in hospital.
[6] Plaintiff seeks
payment of all arrear and future rentals for the full five-year
period. In the pleadings and in argument the
parties agree that the
National Credit Act 34 of 2005
does not apply.
[7] Although the
defendant in his plea denied the cessions, pleaded payment and
cancellation, not one of these defences was established
by the
evidence, as was correctly conceded by Mr Louw. The only issues in
this case are whether plaintiff has proved its quantum
and whether
the Conventional Penalties Act 34 of 1962 applies, and if so, whether
it serves to reduce plaintiff’s claim.
The Conventional
Penalties Act will first be addressed, and thereafter the issue of
quantum.
The Conventional
Penalties Act 15 of 1962 (“the Act”)
[8] Although not raised
on the pleadings, I raised the question whether the penalty which the
defendant is asked to pay is not out
of proportion to the prejudice
suffered by the plaintiff. Receiving the full balance of rentals that
would have been payable over
five years in one sum constitutes a
penalty –
CLAUDE NEON LIGHTS (SA) LTD v SCHLEMMER
1974 (1) SA 143
(N). Accelerated rentals as plaintiff claims here
must be considered a penalty –
ABSA TECHNOLOGY FINANCE
SOLUTIONS (PTY) LTD PREVIOULY KNOWN AS UNION FINANCE HOLDINGS (PTY)
LTD v PLANNED PARENTHOOD ASSOCIATION
OF SOUTH AFRICA
(Case
A3059/2008, South Gauteng High Court, 29 April 2011). Once a court
finds that the provision for the payment is a penalty,
the next
enquiry is whether the penalty is out of proportion to the prejudice
suffered as contemplated in section 3 of the Act.
The penalty is to
be reduced if it is markedly, not infinitesimally, beyond the
prejudice suffered -
WESTERN CREDIT BANK LTD v KAJEE
1967 (4) SA 386
(N). The onus to prove that the penalty is
unconscionable is on the defendant –
STEINBERG v LAZARD
2006 (5) SA 42
(SCA) par [10].
[9] In
PLUMBAGO
FINANCIAL SERVICES (PTY) LTD t/a TOSHIBA RENTALS v JANAP JOSEPH t/a
PROJECT FINANCE
2008 (3) SA 47
(C) a judgment of Bozalek J
decided on default, the facts were to a large extent similar to the
facts in the present case. In
PLUMBAGO
the defendant
defaulted on rentals for two photocopiers after about a year. The
plaintiff elected to adhere to the contracts and
claimed arrears and
accelerated future rentals. Plaintiff’s claim was for some R228
000,00 comprising both arrear and future
rentals. When summons was
issued all but R13 000,00 of this sum related to future rentals.
Plaintiff also claimed interest on the
R228 000,00 at 6% above the
overdraft rate, costs on a scale as between attorney and own client
and collection commission, and
return of the goods.
[10] Even if not raised
in the pleadings, the court can deal with the issue of a penalty
under the Conventional Penalties Act, by
virtue of its primary
function to ensure that justice is done on the basis of what is fair
and reasonable under all the circumstances,
subject to it being fully
canvassed in evidence and in argument (
PLUMBAGO
, par
[18]).
[11] In
PLUMBAGO
the one machine was repossessed and sold about a year after the lease
commenced for R99 825,00. The other machine was repossessed
and
leased out by the plaintiff for 16 months at R1 035,00 excluding VAT.
Thus the two machines produced an income of not less
than R116 085,00
after being repossessed from the defendant. Bozalek, J held that the
claim for arrear rentals is not a penalty,
but the bulk of the claim
related to future rentals, which claim would be a penalty as
contemplated by the Act. He also held the
interest provision to be a
penalty. In the result he reduced plaintiff’s claim of R228
000,00 by R116 085,00 (the recoupment
on the sale and the 16 month
further lease). He also disallowed interest at the rate claimed, and
only allowed interest at the
legal rate of 15,5%. He excluded
collection commission from the costs order, and added an order that
the goods have to be returned
to defendant after receiving payment in
full.
[12] In the present
matter the issue of a penalty was not canvassed in the evidence, not
having be pleaded. Mr Durant pointed out
that although the plaintiff
is in terms of the contract entitled to a 15% or more escalation of
the interest each year, the future
rentals claim of R70 726,00 has
been calculated at the instalment as at December 2009, without any
escalation. He referred to a
document in the discovery bundle (which
was not dealt with in evidence) which indicated that after
repossession one machine was
sold on auction for R1 200,00 plus VAT.
[13] In
PLUMBAGO
there was evidence that the value of 5-years old equipment is
virtually nil. The profit is only really made in the last third of
a
five year contract; a substantive part of the 60 months’ income
goes to paying the finance house.
[14] In this matter the
defendant already has the benefits granted in the
PLUMBAGO
case. The escalation on future instalments has been omitted. The
interest claimed is only 10,5%, although the contract makes provision
for interest to be paid at 5% above prime. The costs will be on the
magistrate’s court scale. The recoupment of R1 200,00
is
minimal, and there was no evidence on it, or the costs involved. The
Act was not raised by the Defendant, and it was not canvassed
in
evidence. Apart from that, as stated, the defendant’s penalties
have already been reduced. There is no basis for any further
reduction.
The Certificate of
Balance and Quantum
[15] Plaintiff relies on
a certificate of balance to prove the quantum of its claim. Mr van
Rensburg testified for the plaintiff
on the certificate of balance.
He signed one certificate of balance which reflects the balance
outstanding on both contracts as
one composite amount, without
distinguish between the contracts. There are two errors on the
certificate which Van Rensburg admitted
to. The first error is a
company registration number which appears after the name of the
defendant. Van Rensburg explained that
that number had been in the
document previously printed. A more serious error is that the
certificate of balance states that the
last payment was received on
23 November 2009. Van Rensburg did not explain this error, but stated
that the correct date of the
last payment was 22 September 2009. In
re-examination he referred to the plaintiff’s “Schedule
of Account” and
pointed out that the total amount was reflected
on that Schedule. According to that account, R49 038,43 was received
on rental
billed. 28 and 29 months respectively remain of the
contracts, presumably after acceleration and return of the goods.
[16] Mr Louw on behalf of
the defendant said that clause 15 of the lease agreements is a
draconian provision which should be strictly
interpreted. Clause 15
reads:
“
15.
CERTIFICATE
The amount of the Lessee’s
indebtedness to the Lessor at any time, the interest rates from time
to time and any other factor
relating to the termination of such
indebtedness as well as the due date for payment of such amount, may
at the option of the Lessor
be proved by a certificate signed by any
manager of the Lessor. It shall not be necessary to prove the
appointment and authority
of the person signing such certificate.
Such certificate shall be binding on the Lessee as prima facie proof
of the facts contained
therein and shall by agreement constitute a
valid liquid document against the Lessee in any competent Court for
the purpose of
obtaining provisional sentence or summary judgement
against the Lessee.”
Mr Louw raised the
following objections to the certificate:
There are two leases,
but only one certificate. One does not know how the debts on the two
contracts were allocated or calculated.
Van Rensburg, who signed the
certificate, could in his evidence not say how the monies paid had
been allocated on the two contracts.
Van Rensburg in
cross-examination conceded that the certificate was based on
information he got from the system and his staff
and was hearsay and
worthless.
Van Rensburg conceded to
two errors on the certificate:
the number which
appears after the name of the defendant belongs to the debtor in
respect whereof the previous certificate had
been drafted.
The certificate
reflects the date of the last payment as 23 November 2009, whereas
the correct date of the last page was 22
September 2009. Van
Rensburg did not explain this error.
The “Statement”
explaining the certificate dated 11 March 2010, and the “Schedule
of Account” up to 31
December 2009, both state that an amount
of R2 500,00 was paid on 22 September 2009, but allow a credit of
only R451,48. There
was no explanation in the evidence as to how the
R2 500,00 was dealt with in the account. Van Rensburg was not asked
about this,
and did not explain it.
Mr Louw says because
plaintiff has not proved its quantum, absolution from the instance
should be granted.
[17] On behalf of
plaintiff, Mr Durant responds to these points as follows:
(i)
One Certificate,
two leases.
In plaintiff’s
books, these two leases were in one account reflected as Number
604454. Defendant made payments on both leases
into this account,
without distinguishing between the two leases. This is evidenced by
the two deposit slips whereby defendant
made payment after his bank
account was closed early in 2009. These two deposit slips appear on
the second last and third last
pages of Bundle “B”. The
reference number 604454 appears on both as the only reference to the
debt. This defendant
did not ask for any separate allocation in
respect of the two leases. In defendant’s evidence he did not
say that he ever
intended to pay separately on each contract. He
treated the two leases as one debt.
(ii)
Van Rensburg’s
concession that the certificate is based on hearsay and is worthless.
Mr Durant points out that
the court must consider the certificate together with plaintiff’s
Statements of Account number 604454
dated 11 March 2010 which
confirms the balance on the certificate, and plaintiff’s
Schedule of Account, which refers to the
leases and shows the
payments and calculations of the further rentals. In
SENEKAL
v TRUST BANK OF AFRICA LTD
1978 (3) SA
375
(A) at 382G Miller JA said:
“At the end of the case,
when all the evidence (which includes the certificate) is in, the
court must decide whether the party
on whom the
onus
rests has
discharged it on a proper balance of probabilities.”
Mr Durandt also referred
to the plea, where defendant simply denies plaintiff’s quantum.
(iii)
Two acknowledged
errors on the certificate.
The insertion of an
incorrect number on the certificate at defendant’s name does
not detract from the certificate. The name
of the defendant and the
account number are correct and accord with plaintiff’s
financial statements.
The date of the last
deposit is correctly reflected on the deposit slips, plaintiff’s
Statement and Schedule of Payments,
from which the certificate of
balance was drawn up.
Nothing turns on these
two errors.
(iv)
In respect of the
R2 500,00 deposit only a credit of R451,48 is shown.
Both plaintiff’s
Statement and Schedule of Payments list the receipt of the R2 500,00
on 22 September. Plaintiff was aware
of that payment and took it into
account in its calculations. The amount of R451,48 must be the result
of a calculation. In cross-examination
Van Rensburg said the R2
500,00 was allocated to the last amount which was unpaid. Allocation
is done automatically.
Mr Durant contends that
it is not sufficient for a defendant merely to cast suspicion on the
correctness of the facts established
by the certificate of balance;
mere theories or hypothetical suggestions will not avail the
defendant; the defendant’s attack
upon the certificate must be
based on some substantial foundation.
TRUST BANK OF AFRICA LTD
v SENEKAL
1977 (2) SA 587
(W) at 593D – F, which
decision was confirmed in
SENEKAL v TRUST BANK OF AFRICA LTD
1978 (3) SA 373
(A). It appears that in the
SENEKAL
case the fact that the Bank had previously issued two certificates of
balance which varied in certain respects from the certificates
relied
upon in court, did not assist Senekal in destroying the
prima
facie
evidence created by the certificate relied therein (see
counsel’s argument at 379E – F).
Conclusion
[18] The only issue
remaining for decision is whether plaintiff has established its
quantum. Van Rensburg was a poor witness. But
the Certificate of
Balance must, in line with the
SENEKAL
– case
(above) be assessed in the light of all the evidence. Van Rensburg’s
concession that the certificate is worthless
is one bit of evidence
which must be considered in the light of all the evidence. The
defendant has done no more than cast suspicion
on the certificate,
and made hypothetical suggestions. I agree with the points raised by
Mr Durant in relation to the certificate.
The defendant’s
evidence shows that he treated the two leases as one debt. Allocation
of payments was never a problem for
him. The certificate, read with
the plaintiff’s Statement and Schedule of Payments, establishes
the indebtedness
prima facie
. That
prima facie
proof
has not distributed by defendant’s evidence, the
cross-examination of Van Rensburg or argument. Judgment must be given
for the plaintiff. As the amount claimed falls within the
jurisdiction of the magistrate’s court, only costs of that
court
are to be allowed.
[19]
ORDER
Defendant is ordered to
pay plaintiff –
1. R93 115,54.
2. Interest on R93 155,54
from 22 February 2010, being the date of service of summons at the
rate of 10,5% per annum to date of
payment.
3. Costs of suit on the
magistrates’ court scale.
____________
A. KRUGER, J
On behalf of the
plaintiff: Adv. J. J. Durant
Instructed by:
E G Cooper Majiedt Inc.
Attention: N C Oosthuizen
BLOEMFONTEIN
On behalf of the
defendant: Adv. M. C. Louw
Instructed by:
Honey Attorneys
Attention: R J Britz
BLOEMFONTEIN
/EB/wm