Cape Cobra (Pty) Ltd v Landman (A970/2005) [2007] ZAWCHC 57 (25 October 2007)

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[2007] ZAWCHC 57
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Cape Cobra (Pty) Ltd v Landman (A970/2005) [2007] ZAWCHC 57 (25 October 2007)

REPORTABLE
IN THE HIGH COURT OF SOUTH AFRICA
(CAPE OF GOOD HOPE
PROVINCIAL DIVISION)
CASE NUMBER: A970/2005
In the matter between
CAPE COBRA (PTY)
LTD
Appellant
and
ANN
LANDMAN
Respondent
______________________________________________________________________
JUDGMENT DELIVERED ON 25 OCTOBER 2007
SAMELA, AJ
[1]
INTRODUCTION
This is an appeal against the judgment of a Magistrate for the
district of Cape Town, handed down on 30 April 2004. The appellant
was sued by the respondent for damages arising from breach of
contract. On 31 August 2005, the appellant noted an appeal against
the judgment of the court
a quo
. Notice of appeal was served
on the respondent’s attorneys on the same day, that is, 31 August
2005. An application for a date
on which the appeal was to be heard
was filed with the Registrar on 15 March 2006, served on the
respondent’s attorneys on the
same day.
Mr H Rademeyer appeared
for the appellant.
Mr A Kantor appeared
for the respondent.
[2] Rule 50 (1) of the Uniform Rules of Court provides that:
“
An appeal to the court against the decision of a magistrate in
a civil matter shall be prosecuted within sixty (60) days after the
noting of such appeal, and unless so prosecuted it shall be deemed to
have lapsed.
”
Furthermore, in terms
of Rule 50 (4):
“(a)
The appellant shall, within forty (40) days after noting
the appeal, apply to the registrar in writing and with notice to all
other
parties for the assignment of a date for hearing of the appeal
and shall at the same time make available to the registrar in writing
his full residential and postal addresses and the address of his
attorney if he is represented.
(b) In the absence
of such an application by the appellant, the respondent may at any
time before the expiry of the period of sixty
(60) days referred to
in sub-rule (1) apply for a date of hearing in like manner.
(c) Upon receipt of
such application from appellant or respondent, the appeal shall be
deemed to have been duly prosecuted.
”
[3] This court is required to exercise its discretion to grant or
refuse condonation for non-compliance with its rules. Dealing
with
a similar problem in
Melane v Santam Insurance Co Ltd
1962 (4)
SA 531
(A) the Appellate Division (as it then was) at 532 C to D
stated (per Holmes, J A,) as follows:
“
In deciding whether sufficient cause has been shown, the basic
principle is that the court has a discretion, to be exercised
judicially
upon a consideration of all the facts, and in essence it
is a matter of fairness to
both sides. Among
the facts usually relevant are the degree of lateness, the
explanation therefor, the prospects of success, and
the importance of
the case.
Ordinarily these
facts are interrelated: they are not individually decisive, for
that would be a piecemeal approach incompatible
with a true
discretion, save of course that if there are no prospects of success
there
would be no point in granting condonation.
Any attempt to formulate a rule of thumb would only serve to harden
the arteries of what
should be a flexible discretion.
”
The learned judge of appeal added that:
“
What is needed is an objective conspectus of all the facts.
Thus a slight delay and a good explanation may help to compensate for
prospects of success which are not strong. Or the importance of the
issue and strong prospects of success may tend to compensate
for a
long delay.
”(532 D-E).
The aforementioned Appeal Court judgment provides a proper guidance
of how the court should exercise its discretion to grant or
refuse
condonation.
Van Winsen et al
The Civil Practice of the
Supreme Court of South Africa
(Juta 1997) at 898 succinctly
summarized some of the important factors the Court should consider.
The learned authors emphasize
what the Court in
Melane’s
said:
“
the Court will not fetter its discretion, but will consider all
the circumstances of the case, there are certain facts that are
usually
relevant to the decision whether to grant relief, the reason
for default, the nature of the case, the probability of success on
the
merits, the time that has elapsed, the benefit to the applicant
and the nature of the default.
”
See also
Finbro Furnishers v Registrar of Deeds
1985 (4) 773
(A) at 789 C – D and
S A Allied Workers’ Union (in Liq) v De
Klerk N O & Another
1992 (3) SA (A) 1 at 4 B-C.
[4] Mr Kantor argued that the appellant delayed unduly in prosecuting
this appeal. Such delay, he argued, was extraordinarily long
and
that the court in the exercise of its discretion, should not condone
the late prosecution of the appeal. Furthermore he argued
that the
explanation therefor was neither valid nor convincing. The period
of three and a half years, according to Mr Kantor, was
too excessive
delay and should not be condoned by this court in the exercise of its
discretion. Mr Kantor furthermore argued that
, where there has
been a flagrant breach of the Rules and there is a lack of
explanation therefor, condonation will not be granted,
no matter what
the prospects of success might be. See
P E Bosman Transport v
Piet Bosman Transport
1980 (4) SA 794
(A) at 799 DE, and also
Ferreira v Ntshingila
1990 (4) SA 271
(A) at 281-282A. Mr
Kantor did not explain the failure on the part of the respondent to
act in terms of Rule 50 (4) (b) of the
rules, as the appellant had
failed to observe the rules of court.
Mr Rademeyer who appeared for the appellant argued that on 4 January
2006 an application for condonation, as well as request for
late
prosecution of appeal and for re-instatement of appeal before us was
lodged. He added that no opposing papers from the respondent
were
likewise filed.
[5] In this matter, one would sympathize with the propositions that
the delay was unusually long and the explanation for such delay
was
not very convincing. However, one must also consider fairness to
both parties in the interest of justice. The Court’s inherent
discretion in such circumstances becomes important. For fairness to
both parties, the Court is called upon to exercise its discretion
judicially. In exercising its discretion, the court is expected not
to look at one factor exclusively, but to consider all the
aforementioned
factors collectively. According to Holmes JA’s test,
other factors have also to be considered, amongst others, the
importance of
the case and the prospects of success, which may
compensate long delay. I am of the view that this matter is
important to the appellant.
It involves personal income. In this
matter, appellant was ordered to pay R40 856.82 being six months’
commission to the respondent.
In my judgment the argument against
condonation is not persuasive. There are indications that there are
reasonably strong prospects
of success on appeal. I am of the view
that condonation should therefore be granted. We shall now turn to
the merits of this appeal.
[6]
EVALUATION OF
EVIDENCE
The respondent entered into a verbal agreement with the appellant
approximately in March 1994. The respondent worked as a freelance
commission agent for the appellant. The respondent earned
commission on direct sales, indirect sales and on consignment sales.

By mutual agreement between appellant and respondent, commission on
consignment sales was terminated in 2000. Appellant had three
designated signatories, but only two signatures were required on a
cheque for payment purposes. In May 2002, the respondent’s
commission cheque was not paid by the 7
th
day of the
month. It was only paid on the 17 May 2002, after the respondent’s
attorneys had demanded same from the appellant.
The employment
relationship between appellant and respondent deteriorated in such a
way that the respondent terminated the employment
with appellant in
May 2002. The respondent sued appellant for damages suffered as a
result of the termination of the employment.
The commission was
initially paid on an
ad hoc
basis. The appellant denied that
there was an agreement that the said commission would be paid on the
7
th
day of the month following that in which the
commission became due. The Respondent, however, insisted that there
was an agreement.
The appellant alleged that there was a discussion
between them in terms of which the appellant would endeavour to pay
the respondent
on or about the 7
th
day of every month.
Evidence was led that
the respondent was, during the currency of the agreement, paid her
commission cheque on the 22
nd
day of the month. Although
she was unhappy, there is no evidence that she was never paid and she
continued her job. Evidence was
also led that the late payment was
on account of “chronic cash flow problems” on the part of the
appellant.
[7] Against the aforesaid, the court must decide whether the late
payment of the commission constitute a breach of the agreement
between parties. Mr Rademeyer argued that the appellant had had
discussions with the respondent regarding payment. The discussions
were that the appellant would endeavour to pay the respondent on or
about the 7
th
day of each and every month. On four
occasions during the running of the agreement, Mr Rademeyer argued
the respondent was paid
her commission by the 22
nd
day of
the month. Even though she was unhappy, she knew that eventually
she would get paid, and therefore continued with her work.
It was
common cause that the delay was due to chronic cash flow problems on
appellant’s part. The working relationship between
appellant and
respondent deteriorated such that the appellant refused to sign the
respondent’s commission cheque on the 7
th
May 2002.
The appellant referred the respondent to the other two authorized
signatories for signatures. On approaching the other
two authorized
signatories, the respondent failed to request their signatures for
the cheque. Mr Kantor argued that there was an
agreement between the
appellant and the respondent, that payment had to be made by the 7
th
day of the month following that in which the commission became due.
The failure to pay on the 7
th
May 2002 by the appellant
was on account of the appellant remarks that “the respondent did
not deserve the commission and therefore
told her to approach the
other directors for signature.”
[8] The following are common cause:
the respondent’s cheque was ready on 7 May 2002 waiting only for
the two signatories to sign;
the appellant refused to sign as one of the signatories to the
respondent’s cheque; instead he referred the respondent to other
two signatories to sign;
despite contacting the other two signatories, the respondent did not
request the two unwilling signatories to sign the respondent’s
cheque.
Mr Rademeyer argued that this indicates that the appellant did not
fail to perform in terms of the contract. He argued further
that an
ordinary breach of an agreement takes place when a party without
lawful excuse fails to do what he or she has contracted
to do. Mr
Rademeyer did not explain what the lawful excuse the appellant had in
mind in not signing the respondent’s cheque.
Whereas Mr Kantor
argued that the failure of the appellant to sign the cheque because
he thought that the respondent did not deserve
the commission and he
therefore told her to approach the other directors for signatures,
constitutes a material breach of the agreement
between the parties.
I am of the view that
there was a breach by the appellant in failing to sign the
respondent’s cheque on the 7 May 2002. However
I regard the
breach as minor and therefore not material. I am of the view that
the breach does not go to the root of the contract
and therefore the
respondent was not entitled to cancel the contract. It is not every
breach of contract which is material. Even
if the breach of
contract is material, that, however, does not necessarily mean the
contract will be cancelled in every case. The
innocent party has an
option even in the event of a material breach of contract.
[9] Can late payment of the commission justify cancellation of the
agreement between the parties? On 15 May 2002 the appellant
received a letter of demand from the respondent’s attorneys. The
letter firstly indicated that the non-payment was a breach of
contract and secondly, demanded that the appellant pay the
outstanding amount within three days. The appellant complied. In
my
view payment (though late) is an indication of a specific
performance. Mr Rademeyer correctly argued that the payment by the
appellant
effectively remedied the situation, as both parties had
performed. See
Custom Credit Corporation (Pty) Ltd v Shembe
1972 (3) SA 462
(A) at 469H. In the latter case the court emphasized
that the innocent party cannot keep on changing the minds. Once the
innocent
party has made the choice that election is binding. (Compare
to
SA Wood Turning Mills (Pty) Ltd v Price Brothers (Pty) Ltd
1962 (4) SA 263
(T), where the court held that once the innocent
party elect to stand by the contract, it cannot cancel for the
breach). The late
payment of commission did not justify the
cancellation of agreement. On the contrary the respondent demanded
specific performance
and claimed for damages. This clearly
indicates that the innocent party had made her choice which was
binding on her.
[10] Lastly, can it be said that the respondent was entitled to six
months’ worth of commission as damages. What formula was used
to
calculate the said damages? Mr Rademeyer argued that a period of
six months’ worth of commission, as damages, is excessive.
Mr
Rademeyer had suggested that should this court accept that the breach
was material and respondent validly cancelled the agreement,
four
months’ worth of commission as damages should be awarded. As for
the formula used in calculating such damages, he suggested
the
following: The respondent’s earnings in the previous six month
period, the agreement being reviewed every six months. He
submitted
that the total average earnings over six months would be equal to R4
687,95. Mr Kantor argued that, the respondent had
explained the
problems faced by her in the period from May to December 2002 and the
efforts which she had made to obtain replacement
income without
success. Secondly, the respondent calculated her monthly damages on
the basis of her average monthly commission
income over the twenty
months prior to the termination of the agreement. Mr Kantor argued
that the assessment of the respondent’s
damages by the court
a
quo
cannot be faulted. I am of the view that as the innocent
party had made its election, it could not cancel for the breach.
Consequently
the selection of six months by the court
a quo
hardly gives one a meaningful direction in this matter. The formula
used to arithmetically calculate the damages is also not convincing.

In my judgment the innocent party was not entitled to the aforesaid
commission.
[11]
APPLICABLE LAW
Looking at the difficulty in the interpretation of an oral contract,
Christie,
The Law of Contract in South Africa, 5
th
edition
, 2006 at page 192 writes that:
“
Theoretically, difficulties of interpretation can arise as
frequently with oral as with written contracts, since spoken words
are
no more and no less capable of conveying an unequivocal message
than written words, but in practice this is not found to be so, and
disputes on interpretation arise almost exclusively from written
contracts. The reason, no doubt, is that witnesses giving evidence
about the terms of an oral contract consciously or unconsciously
inject into their evidence something more than a straight
recollection
of the words used, so that what they tell the court
tends to be their understanding of the words of the contract rather
than the
plain unvarnished words themselves.”
I am of the view that every contract has to be interpreted
holistically when determining whether there is a minor or material
breach
thereof. Where there is a material breach of contract,
Kerr
Principles of the Law of Contract 6
th
edition
at page 602 argues that:
“
a breach is a major one if it ‘goes to the root of the
contract’, or affects a ‘vital part’ of the obligations or
means that
there is no ‘substantial performance’.”
In this matter by conduct, the innocent party made a choice. The
aggrieved party elected not to cancel the contract but to demand
specific performance. The choice clearly is an indication that the
innocent party regarded the breach of contract as minor.
[12] In conclusion, I am of the view that in this matter there is no
material breach justifying any legitimate claim for cancellation
of
the contract. Importantly both parties apparently are in agreement
that there was never any breach of any serious nature.
This is
illustrated by the fact that, the innocent party elected not to
cancel the contract but to demand specific performance.
It follows therefore,
that the appeal must be upheld. I would therefore propose the
following order:
The appeal succeeds. Judgment in the court
a quo
is hereby
set aside, and the appeal be upheld with costs.
_____________________________
SAMELA, AJ
I agree and it is so ordered.
_____________________________
HLOPHE, JP