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[2007] ZAWCHC 91
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Wallace v Ballprop Ten (Pty) Ltd (1153/2005) [2007] ZAWCHC 91 (16 October 2007)
IN
THE LABOUR COURT OF SOUTH AFRICA
(CAPE OF GOOD HOPE PROVINCIAL
DIVISION)
CASE NO
:
1153/2005
DATE
:
16
OCTOBER 2007
In
the matter between:
BURGER
AND WALLACE
Plaintiff
and
BALLPROP
TEN (PTY) LIMITED
Defendant
JUDGMENT
BOZALEK,
J
This
is an interlocutory application in terms of Rule 22(4) of the Uniform
Rules of Court, in which plaintiff, the applicant in
the application,
seeks an early judgment in respect of an admitted claim in
convention. The plaintiff sued defendant, respondent
in the
application for services rendered, which claim was eventually
admitted by defendant in the amount of R461 335,25. Defendant
however
filed a counterclaim for unliquidated damages in the amount of
R98million odd and pleaded that its indebtedness to plaintiff
fell to
be set off against the plaintiff's indebtedness to it. It prayed
therefore that plaintiffs claim be postponed until the
adjudication
of its claim in reconvention.
In
this application plaintiff asked for judgment in respect of its
admitted claim, not to be postponed, but to be granted in its
favour
immediately, as well as the costs of the application. The application
is opposed and has lead to a record, including annexures,
of close to
400 pages. Many aspects of the defendant's counterclaim are dealt
with in great and, in my view, unnecessary detail
in these papers,
hence their voluminousness.
Rule
22{4) permits a party in the position of defendant to request in its
pleadings that judgment in respect of an admitted claim
in convention
be postponed. Judgment is then automatically postponed "unless
the Court upon the application of any interested
party otherwise
orders ...". The learned authors of
Erasmus,
Superior Court Practice
comment that;
"The
purpose of the practice is to avoid a multiplicity of consecutive
actions and cross-actions and of process in execution
between the
same parties and, where possible and just, to dispose of all issues,
claims and counterclaims between the same litigants
in one and the
same trial in order that there should be an end to litigation."
That
is at page B1-149.
Commenting
further on the nature of the discretion to be exercised by the Court,
which might "otherwise order
1
'
the authors state;
"This
discretion must be judicially exercised in accordance with the tenets
of justice, fairness and reasonableness and with
reference to all the
relevant facts and circumstances. It is not necessary for the Court
to consider the merits or demerits of
a counterclaim in weighing up
its decision. Generally speaking the Court will lean in favour of
granting a postponement, for it
is desirable that in the absence of
cogent reasons to the contrary the process of the Court should not
issue until all claims and
counterclaims between the parties not
being manifestly unsubstantial have been determined."
That
is at page B1-150,
One
of the authorities quoted by the authors in this regard, and relied
on by both parties in this application, is
Consol
Limited
t/a Consol Glass v Twee Jongezellen (Ptv) Limited and Another
2002(3) SA at 580c. There
Van
Zvl J
observed that the discretion;
"must
be exercised judicially in accordance with the tenets of
justice, fairness and reasonableness and with
reference
to all relevant facts and circumstances." At page 585c-d.
He
disagreed with the proposition which I have quoted earEier from
Erasmus, that there is a genera! ruie that a Court will lean
in
favour of granting a postponement. He stated as follows, at page
585g-h of his judgment;
"There
is no indication in Rule 22{4) that the discretion is limited or
otherwise restricted. Provided it is judicially exercised,
it is wide
and unfettered. If the plaintiff shows good cause as to why a
postponement should not be granted the Court will give
due
consideration to refusing a postponement."
Associating
himself with the approach adopted in
Truter
v Wieqenaar
1990(1) SA 206T at page 211e-f
p
Van
Zvl, J
held that it was not necessary for the Court to consider the merits
or demerits of the counterclaim in weighing up its decision.
In this
regard it goes without saying that any Court will have great
difficulty in proceedings such as these in determining the
merits of
a counterclaim where it is faced with conflicting versions regarding
the merits in the papers.
Apart
from making the observation that it remains open to a Court to
consider at least on a
prima
facie
and
provisional basis, the merits of a counterclaim I find myself in
agreement with the approach enunciated in the
Consol
matter.
Turning
to the facts of this matter the papers reveal that the plaintiff is a
construction company which rendered certain civil
services on land in
the Muizenberg area at the behest of defendant, a property
development company. The work was certified as completed
by March
2003, but defendant failed to pay the full balance owing in terms of
the certificates. In an affidavit deposing summary
judgment,
defendant's director initially claimed that it was not liable for the
sum claimed by plaintiff since its indebtedness
was offset by damages
it had suffered as a result of delays on the part of plaintiff in
installing the services. This defence was
abandoned however, and the
claim is admitted in full.
Defendant's
counterclaim arises out of an alleged joint venture agreement
concluded between it and plaintiff in early 2001. The
terms thereof,
broadly speaking, were that plaintiff would install services on
certain land which would be rezoned and sub-divided
by defendant.
Defendant would, it alleged, as contractor construct numerous
residential properties in the building. In turn it
would be entitled
to half of the profit generated by the sales of the property
purchases and would be compensated, by whom It is
not clear, for its
building work. The counter claim specifies that defendant suffered
R30miMion odd worth of damages in respect
of its 50% share of the
"land profit" and some R69million odd in respect of its
"construction profit". The
damages were allegedly incurred
by reason of plaintiff's alleged breach of the joint venture
agreement through its contracting
with a third party to do the
necessary building work and its failure to honour its commitment with
regards to the division of profit
from the sale of erven.
Plaintiff
denies the existence of any joint venture agreement and devoted the
bulk of both of the affidavits filed on its behalf
in this
application, and the argument delivered to this Court, to
illustrating the allegedly specious nature of the counterclaim.
Amongst the points relied on by plaintiff was the almost complete
written reference to the alleged joint venture agreement,
notwithstanding the large amount of correspondence
and documentation which passed between the parties during
and after
the course of their commercial relationship.
It
was also contended on behalf of plaintiff that defendant had advanced
inconsistent versions in its pleadings and under oath in
various
interlocutory applications, as to when the agreement was concluded.
Further criticisms relate to the vagueness of the circumstances
in
which the alleged agreement was completed as well as the existence of
a letter from the defendant's director to the plaintiff,
long after
the conclusion of the alleged joint venture agreement, in which
defendant advises that it had entered into a joint venture
agreement
with a completely separate entity, involving some of the property
allegedly involved in the first alleged joint venture
agreement. In
that letter there is no mention of any earlier joint venture
agreement between the parties, let alone a complaint
regarding any
breach thereof.
The
plaintiff also relies on various alleged inconsistencies, omissions
and falsehoods committed by the defendant's director, one
Carse, in
affidavits filed by him in one or more of the interlocutory
applications in this matter.
There
are indeed several disquieting features to the
defendant's counterclaim, not least its apparent inflated nature
and
the sparseness of any contemporaneous reference to the alleged joint
venture agreement. There Is but one written reference
to a possible
joint venture agreement between the parties. This is contained in a
memorandum from defendant to plaintiff's representatives
dated 15 May
2001, drawn up in order to enable defendant to obtain finance for the
purchase of certain property. The memorandum
contains the bald
statement under the heading "legal entity" that "this
is a joint venture between Burger and Wallace
and Ballprop Ten (Pty)
Limited". No details or terms of the alleged agreement are
recorded however.
Plaintiff
admits that there was talk of a joint venture agreement. It states
that the memorandum in question was however no more
than a proposal
to which it never responded and thus no joint venture agreement was
ever concluded. It also appears from the papers
that as at May 2001
defendant had purchased certain property, but lacked the necessary
finance therefor and was casting about for
partners In a proposed
development scheme. Such finance was eventually forthcoming from a
third party Introduced to defendant by
piaintiff, or its directors.
Furthermore in due course plaintiff or its holding company acquired a
substantial interest in the
development, directly from that third
party, a position which appears to obtain until the present day.
Given
these objective facts which indicate the possibility of an oral joint
venture agreement, and I can put it no higher than this,
notwithstanding the apparent improbabilities and inconsistencies
relating to defendant's counterclaim, in my view it is not possible
to find at this stage that it is frivolous, vexatious or manifestly
unsubstantial. This is not the end of the enquiry however,
since the
merits of the counterclaim is but one possible factor relevant to the
determination of the question before the Court.
Plaintiff
did not rely solefy on the weakness of the defendant's counterclaim,
but cited other factors in seeking to persuade the
Court to exercise
its discretion in its favour. Mr
Newdigate
SC,
who appeared together with Mr
Howie,
for plaintiff, also relied on the fact that the subject matter of
plaintiff's admitted claim was entirely separate to the subject
matter of the defendant's counterclaim. This is correct only in the
strict sense that they arise out of different agreements or
alleged
agreements.
Seen
in broader perspective, however, both claims relate to and arise out
of, at least according to defendant's version, the commercial
relationship which existed between the parties for a number of years.
Furthermore the provisions of Rule 22{4) are not available
onEy to
defendants whose counterclaim arises out of the same set of facts and
circumstances as does the plaintiff's admitted claim.
The plaintiff
also relied on atleged instances of defendant and its director,
Carse, having been dishonest in the course of deposing
to various
affidavits in the interlocutory proceedings, including the present
application.
There
is no need to cite the details of these various instances. None of
them is in my view so clear as to permit a finding on papers
that
Carse was deliberately dishonest. Even if such a finding was to be
made in relation to one or more of the instances in question,
they
relate to ancillary matters which do not go to the heart of the
defendant's counterclaim, and as such would not
be
of
great assistance to this Court in determining whether judgment on the
plaintiff's admitted claim should
be
postponed
or not.
As
a final factor Mr
Newdigate
relied on considerations of delay in contending that were judgment on
the admitted claim to
be
postponed
until determination of the defendant's counterclaim the plaintiff
would be unfairly kept out of its money. This consideration
must
enjoy closer attention. Plaintiff issued a summons against defendant
only in early 2005, nearly three years after
the last
certificate of indebtedness on the part of defendant was issued.
The evidence reveaEs that during the prior three
year period
defendant had made promises of payment and arguably strung the
pfaintiff along. It was however plaintiff's decision
to only summons
as a last resort and in these circumstances that period of any delay
in plaintiff being kept out of its monies
cannot be laid solely at
the door of defendant.
Since
February 2005 the matter has been litigated strenuously through this
Court, there have been opposed applications for summary
judgment and
requiring defendant to furnish security for plaintiff's costs in
relation to defendant's counterclaim. Earlier, default
judgment was
taken against defendant and rescinded. Finally the present
application was launched, which, with the exchange of four
affidavits
and voluminous annexures, has also taken up not inconsiderable time.
The matter has now been set down for trial in September
2008.
Notwithstanding
all these legal skirmishes there is no serious suggestion from
plaintiff that in the litigation itself defendant
has been
responsible for undue delay. It goes without saying that, subject to
constraints relating to delaying tactics, vexatious
and frivolous
applications or defences, any litigant is entitled to strenuously
defend proceedings and interlocutory applications.
There has been
no question of the defendant seeking a postponement of the trial, or
unduly prolonging interlocutory applications.
Indeed, for what it is
worth, defendant has through its director, stated under oath that it
will play its full part in ensuring
that the trial is heard ttmeously
and expeditiously. It is not for this Court to go behind such
assertions on a speculative basis,
nor does it assist plaintiff to
speculate that the trial may well be postponed should defendant not
provide particulars which may
be sought, or should it not make
timeous discovery. Plaintiff has both time and the rules of court at
its disposal to ensure that
the trial commences in due course. The
trial itself need not necessarily be a protracted one, since, as far
as one can determine
from this vantage point, the critical issue, the
existence or not of the alleged joint venture agreement, is likely to
be resolved
after hearing the evidence of two or three witnesses.
It
is so that pending the outcome of the trial plaintiff is kept out of
its money. This is an unfortunate, but often necessary consequence
of
the general rule of practice, which is recognised and enshrined in
the provisions of Rule 22(4). No case has been made out by
plaintiff
that it would suffer especial financial prejudice as a result of this
consequence, for example that its financial viability
will be
threatened. As has been pointed out in similar cases, should judgment
on the admitted claim not be postponed there could
equally be a
detrimental effect for defendant should its counterclaim eventually
be upheld in a sum greater than the admitted claim
in convention.
In
broad terms the Court in
Van
den Bergh and Partners Limited v Robinson
1952(3) SALR 747 SR was confronted with a similar situation to that
which this Court is faced in the present matter. There the
Court
found that there were suspicious features about the counterclaim,
which was based on an agreement to which no reference could
be found
in contemporaneous correspondence. The counterclaim itself appeared
to the Court to be inflated. Nonetheless
Tredgold,
CJ
considered that he would not be justified in deciding at that stage
that the counterclaim was without substance. He too found that
were
the plaintiff to act with expedition it would be possible to bring
the issues to trial without undue delay.
In
the present matter exercising the discretion which this Court enjoys,
and taking into account all the relevant circumstances
and having
regard to the "tenets of justice, fairness and reasonableness"
1 am not persuaded that plaintiff is entitled
to the relief sought in
this application. In the result the
APPLICATION
FOR EARLY JUDGMENT iS REFUSED.
Mr
Grobbelaar
,
who appeared on behalf of defendant, sought the costs of the
application in the event that it was refused. In the circumstances
of
the present matter however I consider that plaintiff may well be done
an injustice were I to order costs against it at this
stage. Only
time wilt tell whether defendant will succeed with its counterclaim,
and if so, to what extent. Should that counterclaim
evaporate at some
time in the future under the pressure of further litigation, or when
it comes under a judicial microscope, plaintiff
could welf consider
himself hard done by had it nevertheless to bear the costs of this
application.
There
are sufficient question marks in my mind concerning the validity of
defendant's counterclaim to justify deferring any order
of costs for
later determination. This too was the course followed by the Court in
Van den Bergh's case. In the result the following
order is made:
The
PLAINTIFF'S
APPLICATION IN TERMS OF RULE
24(4)
IS
REFUSED
;
The
COSTS
OF THIS APPLICATION WILL STAND OVER FOR LATER DETERMINATION
.
BOZALEK,
J