Terminus Centre CC v Henry Mansell (Pty) Ltd and Others (2141/04) [2006] ZAWCHC 1; [2007] 3 All SA 668 (C) (16 January 2006)

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[2006] ZAWCHC 1
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Terminus Centre CC v Henry Mansell (Pty) Ltd and Others (2141/04) [2006] ZAWCHC 1; [2007] 3 All SA 668 (C) (16 January 2006)

IN THE HIGH COURT OF SOUTH AFRICA
(CAPE OF GOOD HOPE PROVINCIAL
DIVISION)
CASE NO: 2141/2004
In the matter between:
TERMINUS CENTRE CC
Plaintiff
and
HENRY MANSELL (PTY) LTD
1
st
Defendant
HENRY ROSSER MANSEL
2
nd
Defendant
GARRY MITCHELL PRICE
3
rd
Defendant
MICHAEL ANTHONY AIREY
4
th
Defendant
______________________________________________________________
JUDGMENT:
16/01/006
VAN
REENEN, J:
1] The
plaintiff a company with a share capital and at the time known as
Betting World (Pty) Ltd on 1 June 1999 entered into a written
agreement of lease (the first agreement) in terms whereof it let to
the first defendant shops numbers 2 and 3 in the Terminus Centre,
Wynberg as well as 10 parking bays, for a period commencing on 1
August 1999 and terminating on 31 July 2006 at a monthly rental,
exclusive of value-added tax, of R17 724 in respect of the shops and
R800 in respect of the parking bays payable monthly in advance
escalating at 11% per annum during the second and third years; the
greater of 11% or the market value as determined by arbitration
during the 4
th
year; and 11% per annum during the
remainder of the lease period. It also provided for an option of
renewal for a further period
of 3 years terminating on 31 July 2001.
2] The
second to fourth defendants, in terms of written deeds of suretyship
executed by the second and third defendants on 1 June
1999, and by
the fourth defendant on 13 June 1999, bound themselves as sureties
and co-principal debtors in solidum for the due and
punctual
fulfilment by the first respondent of all its obligations under and
in terms of the said agreement.
3] Pursuant
to the conclusion of the said agreement the first defendant took
occupation of the leased premises on 1 August 1999.
4] The
first defendant, in terms of a written agreement entered into on 2
August 2000, sold, inter alia, the cash bookmaking business
conducted
by it on the premises under the style “Betting World” to
Styleprops 33 (Pty) Ltd (Styleprops) subject to the fulfilment
of
certain conditions precedent one whereof, namely Clause 5.1.2,
provided as follows:
“
The satisfactory conclusion of
leases, sub-leases and/or deeds of assignment of the existing leases
pertaining to the various premises
as may be required to facilitate
to the reasonable satisfaction of Gold Circle, secure tenure by the
Purchaser of the premises.”
(Gold
Circle is the controlling share-holder of Styleprops)
5] Styleprops
with the knowledge of the plaintiff took occupation of the leased
premises on or about 1 September 1999 but as clause
5.1.2 of the
agreement of sale had not been given effect to the first agreement
remained of full force and effect.
6] It
is common cause that the plaintiff, the first defendant and
Styleprops entered into an oral agreement during July 2001 in terms
whereof the first defendant remained bound to all the terms of the
first agreement but that Styleprops would effect payment of the
rental directly to the plaintiff.
7] It
is also common cause that the plaintiff as from 9 October 2000 was
converted into a close corporation and changed its name from
Betting
World (Pty) Ltd to Terminus Centre CC and that Styleprops
subsequently changed its name to Betting World (Pty) Ltd (Betting
World).
8] As
from 1 August 2002 Betting world failed to pay the full rental,
including the escalation, to the plaintiff as provided in the
first
agreement, and accordingly, the first defendant remained liable for
the payment of the shortfall in rental which, in each instance,
was
paid only after demand.
9] The
plaintiff and Betting World on 26 March 2003, entered into a written
agreement of lease in terms whereof the former let the
premises and
twelve parking bays to the latter for a period commencing on 1 August
2003 and terminating on 31 July 2008 at a monthly
rental, inclusive
of value-added tax, of R25 431,12 for the period 1 August 2003 to 31
July 2004 and escalating at 10% during the
second, third, fourth and
fifth years, calculated on the basic rental payable during the last
month of the preceding twelve month
period (the second agreement).
10] The
second agreement –
10.1 embodied
an option of renewal for a further period commencing on 1 August 2008
and terminating on 31 July 2011 on the same terms
and conditions at a
rental to be agreed upon or determined by arbitration
10.2 was
subject to a suspensive condition in the following terms: -
“
23.1 It is recorded that there is
presently a lease in force over the leased premises between the
Lessor and Messrs Henry Mansell
(Pty) Ltd
23.2 This Agreement of Lease shall
only become binding upon the Lessor subject to the following:
A. The original Agreement of Lease
being returned by the Lessee to the Lessor duly signed by the Lessee,
by the 31
st
March 2003.
B. Within one month after receipt by
the Lessor of the original Agreement of Lease duly signed by the
Lessee, the Lessor providing
written confirmation to the Lessee of
the cancellation of the current Agreement of Lease between the Lessor
and Henry Mansell (Pty)
Ltd.
C. In the event of the Lessor not
providing such written confirmation to the Lessee within the
stipulated period, then this Agreement
of Lease shall be deemed to be
void ab initio and of no force and effect.”
11] The
time-limit in clause 23.2 of the second agreement, by agreement
between the parties, was extended initially to 31 May 2003
and
subsequently to 31 July 2003. The provisions of the suspensive
condition, as extended, were duly complied with and accordingly,
the
second agreement took effect as from 1 August 2003.
12] The
plaintiff’s attorneys of record, Messrs C & A Friedlander Inc
on 15 July 2003, by means of a letter delivered by hand
and sent by
means of a facsimile transmission, cancelled the first agreement with
effect from 31 July 2003.
13] The
plaintiff, averring that it has suffered damages as a result of the
first defendant’s breach of the first agreement in an
amount equal
to the difference between the rental income it would have received if
the first defendant had not breached the first
agreement and the
rental income it will receive during the corresponding period under
the second agreement, instituted an action
in which it claims -
13.1 as
against the Fourth Defendant:
An
order rectifying the written deed of suretyship, Annexure “D” to
the Particulars of Claim by the substitution of “1
st
day
of June 1999” for “13
th
day of July 1999” on page 1
thereof; and
13.2 as
against first Defendant, alternatively against Second, Third and
Fourth Defendants jointly and severally, the one paying the
other to
be absolved:
Payment
of an amount of R210 075.21;
Interest
thereon at the rate of 15.5% with effect from 12 August, 2003, being
the date on which demand was made, to date of payment;
Payment
of value-added tax in an amount of R29 410.53;
Costs
of suit on a scale between attorney and client; and
Further
and/or alternative relief.
14] As
a result of an unopposed application the words “alternatively
against” in the second of the two headings were deleted.
15] The
defendants opposed the action and –
15.1
filed
a plea that need not be elaborated on in view of the subsequent
narrowing of the issues between the parties; and
15.2
instituted
a counterclaim for the repayment of an amount of R57 005,81 being the
deposit paid in terms of the first agreement.
16] As
the parties were in agreement that the fourth respondent was entitled
to an order in terms of claim (a) of the Particulars
of Claim such an
order was granted without further ado.
17] As
the parties’ legal representatives had reached agreement in respect
of a number of issues at the end of the trial only three
issues
remained for adjudication. The first is whether the plaintiff took
reasonable steps to mitigate any damages that it may have
suffered.
The second is whether if the damages claim is successful, the date
from which interest thereon is to be calculated. The
third is
whether, if the plaintiff is entitled to the payment of damages, it
is entitled to an order in terms of claim (d) of the
Particulars of
Claim.
18] A
party suing for damages on the basis of a breach of contract by the
other party bears the onus of proving, on a balance of probabilities,
that damage has been suffered (See:
Everett & Another v
Marian Heights (Pty) Ltd
1970(1) SA 198 (C) at 204 D). It is
generally accepted that there is a duty on a party who has suffered a
loss as a result of the
breach of an agreement to mitigate it (See:
Victoria Falls & Transvaal Power Co Ltd v Consolidated
Langlaagte Mines Ltd
1915 AD 1
at 22;
Versfeld v SA Citrus
Farms Ltd
1930 AD 452
at 454;
Hazis v Transvaal and
Delagoa Bay Investment Corporation Ltd
1939 AD 372
at 398). The
mitigation rule requires no more than that the party who has suffered
a loss should take such steps to minimize it
as would in the
circumstances have been taken by a reasonable man (See:
Hazis v
Transvaal and Delagoa Bay Investment Co Ltd
(supra) at 398;
Soar h/a Rebuilds for Africa v J.C. Motors en Andere
1992(4) SA 127 (A) at 135 C). The onus of showing that the plaintiff
failed to take reasonable steps to mitigate its loss rests
on the
first defendant (See:
Hazis v Transvaal and Delagoa Bay
Investment Co Ltd
(supra) at 388 – 389;
Minister of Water
Affairs v Mostert and Others
1966(4) SA 690 (A) at 736 (A);
Novick v Benjamin
1972(2) SA 842 (A) at 858 C;
De Pinto
and Another v Rensea Investments (Pty) Ltd
1977(2) SA 1000
(A), insertion at 1007 A in 1977(4) SA at 529 – 530). It is
accepted that as the party who has breached a contract
is the cause
of the other’s predicament, courts should not bend over backwards
to hold that such an onus has not been discharged
(See:
Holmdene
Brickworks (Pty) Ltd v Roberts Construction Co Ltd
1977(3) SA
670 (A) at 689 D – E).
19] It
is trite that the basic aim of an award of damages for a breach of
contract is to place the innocent party in the same patrimonial
position he or she would have been in had it been properly performed,
to the extent that it is capable of being achieved without
undue
hardship to the defaulting party, by awarding an amount of money
(See:
Victoria Falls and Transvaal Power Co Ltd v Consolidated
Langlaagte Mines Ltd
(supra) at 22;
Culverwell and Another
v Brown
1990(1) SA 7 (A) at 29 F;
Rens v Coltman
1996(1) SA 452 (A) at 458 E) and with due regard to both the
beneficial and detrimental results of the breach (See:
Everett
and Another v Marian Heights (Pty) Ltd
(supra) at 204 C –
D;
Sandown Park (Pty) Ltd v Hunter Your Wine & Spirit
Merchant (Pty) Ltd and Another
1985(1) 248 (W) at 253 B –
C).
20] When
a breach of an agreement of lease gives rise to a valid cancellation
thereof the ordinary measure of damages is the difference
between the
loss of rental income during the unexpired period thereof and the
rental that a lessor obtains or can reasonably be
expected to obtain
from reletting the premises
Wireless Rentals v Stander
1965(4) SA 753 (T) at 754 H – 755 A;
Western Credit Bank Ltd v
Kajee
1967(4) SA 386 (N) at 393 D). The plaintiff’s claim
for damages has in its particulars of claim been formulated on that
basis.
The conclusion of the first agreement and the rentals payable
in terms thereof; the plaintiff’s entitlement to have cancelled
same; and the conclusion and terms of the second agreement have not
been placed in dispute. As the parties furthermore have reached
agreement as regards the correctness of the calculation of such
damages and also the present-day value thereof as on 7 December 2005,
the plaintiff, in my view, has succeeded in adducing
prima facie
proof of the quantum of the loss suffered by it. In my view the
decided case relief on by the defendants’ counsel in support of
a
submission to the contrary namely,
Nedfin Bank Limited v Muller
& Others
1981(4) SA 229 (D) is distinguishable on the facts.
21] The
first defendant’s case - that the plaintiff failed to take steps
reasonable in the circumstances in order to minimize
its damages -
is based on the following submissions. The first is that Mr Michael
Weare, the Managing Director of Betting World
- who was the only
witness called by the defendants’ counsel - testified that he
during negotiations preceding the conclusion
of the second agreement,
offered Mr Leon John Singer - the sole member of the plaintiff and
the only witness called by the plaintiff’s
counsel - two choices
namely, that Betting World would uphold the first agreement for the
remainder of its duration and vacate
the premises by 31 July 2003 or
would be prepared to enter into a new agreement of lease for a
composite period of 10 years at a
market-related rental and that the
plaintiff by having failed to accept the first of those choices
alternatively, by not having upheld
the first agreement of lease, had
not acted reasonably and should have contented itself with “the
minimal amount of damages”
that resulted from the late payment of
rental. The second submission was, that the plaintiff failed to
satisfy the onus resting
on it as regards proof of the damages
suffered by it in that it failed to take into account the benefit of
having secured Betting
World as a tenant for an additional period of
two years beyond 31 July 2006, the date on the first agreement would
have expired.
22] On
the basis of what the respective parties’ counsel had conveyed to
the court during argument as well as the contents of their
heads of
argument, the only issue as regards the merits of the plaintiff’s
claim for damages that remained unresolved was whether
the plaintiff
had taken such steps as he was in law obliged to in order to mitigate
its damages.
22] A
recognition that the plaintiff in fact suffered damages as a result
of the first defendant’s breach of the first agreement
and the
cancellation thereof by the plaintiff, is implicit in the raising by
the first defendant of the defence that the plaintiff
failed to have
mitigated such damages as have been suffered by it either adequately
or at all (See:
Hazis
v Transvaal and Delagoa Bay Investment Co Ltd
(supra) at 388 where Stratford JA said:
“A defendant in
such claim says ‘admitting that in fact you suffered those damages
you have only yourself to blame for having
so much or at all, because
you did not take reasonable steps to protect yourself and therefore
me’ “;
cf also:
Smith
v Weeks
1922 TPD
235
at 236 in fine – 237). A lessor of immovable property in the
position of the plaintiff has two choices. It can either uphold
the
agreement of lease and sue for rental as and when it falls due in
terms of the agreement or it can cancel the agreement and sue
for
damages without the need to await the arrival of the expiry date
thereof.
23] A
proper analysis of the first of the submissions in paragraph 21 above
shows that the conduct on the part of the plaintiff which
is being
subjected to scrutiny relates to its election (see eg:
Desai v
Mohamed
1976(2) SA 709 (N) at 712 D) to resile from the first
agreement rather than to uphold it. What in fact is being challenged
is
the reasonableness of the plaintiff’s election to have cancelled
the first agreement, an act that constituted an indispensable
prerequisite for the coming into being of the plaintiff’s claim for
damages. As it is axiomatic that a duty to take reasonable
steps to
minimize damages cannot arise until a claim for such damages
manifests itself and the conduct of the plaintiff which is
the focus
of the first of the said submissions preceded the coming in existence
of such a claim, the contentions made thereanent
and also the
evidence presented in support thereof, fall outside the scope of the
issue for decision and accordingly, do not need
to be considered. In
any event: to the extent that the first part of the first of the
said submission is predicated on an acceptance
of Mr Weare’s
evidence that he presented Mr Singer with two alternatives, I find
myself in agreement with plaintiff’s counsel’s
submission that
the latter’s evidence is to be preferred. That Mr Weare would have
told Mr Singer that Betting World would uphold
and comply with the
terms of the first agreement is not only difficult to reconcile with
the contents of the correspondence and documents
that have been
placed before this court but would furthermore have emasculated the
enhanced bargaining position that had been contrived
by carefully
choreographed misrepresentations as regards Betting World’s
intentions relating to its continued occupation of the
premises. Not
only does what has been said in connection with the first part of the
first submission above apply to the second part
thereof, but the
categorisation of additional payments flowing from any late payments
of rental as damages and the assumption based
thereon, namely that a
duty to mitigate finds application, is totally misplaced in my view
(See:
W.E. Cooper: Landlord and Tenant
(2
nd
Edition) at 159) by reason of the fact that clause 12.2 of the first
agreement specifically provides for the payment of interest
at 2%
above the prime overdraft rate on any outstanding amounts of rental.
24] As
the second of the submissions in paragraph 21 above is restricted to
the failure on the part of the plaintiff, to have taken
into account
in the quantification of the damages suffered by it, such pecuniary
benefits as were allegedly derived from the fact
that the second
agreement enured for a period beyond the expiration of the first
agreement, implies that the entering into of the
second agreement at,
what is common cause is a market-related rental, was unexceptional.
That approach gives recognition to the
plaintiff’s right to claim
the rental payable in respect of the unexpired period of the first
agreement as damages (See:
Commercial Careers College (Pvt) Ltd
v Forest View (Pvt) Ltd
1979(2) SA 402 (R A) at 404 A – 405
F;
De Pinto and Another v Rensea Investments (Pty) Ltd
(supra) at 529) as well as that the plaintiff had in fact taken
steps to mitigate its loss as it was in law obliged to do (See:
De
Pinto and Another v Rensea (Pty) Ltd
(supra) at 529 E – F)
by having entered into the second agreement of lease. What is being
held against the plaintiff is that it
failed to quantify and bring
into account against such damages, in addition to the rental payable
under the second agreement during
the period that the first and
second agreements of lease overlapped, a monetary benefit that it
allegedly derived from the fact that
the second agreement of lease
enured for a two years longer than the first agreement.
PJ Visser
and JM Potgieter,
the authors of
The Law of Damages
(2
nd
Edition) at page 261, footnote 132, seem to support the view that
only the overlapping period is relevant.
25] The
plaintiff set about proving the damages suffered by it in the
conventional manner by having adduced evidence to the effect,
and
was common cause between the parties, that the rental payable under
the second agreement during the period that the two agreements
overlapped (as calculated at 16 January 2006) was R204 165,58 less
than would have been paid for the remaining period of the first
agreement of lease. The first respondents’ counsel challenged the
reasonableness of the manner in which the plaintiff mitigated
the
damages suffered by it. On my understanding of the law, there is no
onus
on the plaintiff to substantiate the reasonableness of
its conduct as regards mitigation - which has been held is a
factual enquiry
- but that the first defendant bears the onus of
substantiating its contrary challenge (See:
Hazis v Transvaal
and Delagoa Bay Investment Co (Pty) Ltd
(supra) at 388 – 9;
De Pinto and Another v Rensea Investments (Pty) Ltd
(supra)
at 529 H;
Macs Maritime Carrier AG v Keeley Forwarding &
Stevedoring (Pty) Ltd
1995(3) SA 377 (D & CLD) at 381 G –
H). Although it, to me as a lay person, appears to be self-evident
that the terms and
duration of an agreement of lease over immovable
property might, depending on perceptions of whether rentals are
likely to follow
an up- or downward trend in the future, affect the
market value thereof (Cf:
Solomon NO and Others v Spur Cool
Corporation (Pty) Ltd and Others
[2002] 2 All SA 359
(C) at 373
c – d) no evidence thereanent has been adduced by either of the
parties. In the absence of any evidence to the effect
that the
additional period of two years for which the second agreement will
enure enhanced the plaintiff’s patrimonial position,
no factual
basis on which the mitigation of the damages suffered by it could be
assailed, has been shown to be present. As in my
view, the onus in
that regard rested on the first defendant and it has not been
discharged the defence that the plaintiff failed
to mitigate its
damages, adequately or at all, cannot succeed.
26] In
the premises the plaintiff is entitled to an order in terms of claim
(b) of the Particulars of Claim but for an amount the
present-day
value whereof has to be determined as it includes amounts that would
have accumulated periodically in the future. The
amount thereof, as
calculated at 16 January 2006, has been agreed as being R204 165,58.
27] The
plaintiff claims interest on an amount of R210 075,21 at the rate of
15,5% from 12 August 2003 to date of payment, that date
being the
date on which demand was made. As already stated, the parties agreed
that the present-day value of the difference between
the rental
payable in terms of the first and second agreements as at 16 January
2006 is R204 165,58. It appears to be self-evident
from the manner
in which claim (c) has been formulated that it is based on the
provisions of section 2 A (2)(a) of the Prescribed
Rate of Interest
Act, No 55 of 1975 (the Act). Subsection 2 A (1) of the Act
provides that “
subject to the provisions of this subsection
”
the amount of every unliquidated debt as determined by a court of
law, or an arbitrator an arbitration tribunal or by agreement
between
the creditor and debtor, shall bear interest as contemplated in
section 1. Section 2 A (3) of the Act, which, by virtue
of the
underlined words, takes precedence (See:
Trend Finance (Pty)
and Another v Commissioner for Inland Revenue Services and Another
(2005) (67) SATC 334
(C);
[2005] 4 All SA 657
(C) and the cases
therein, cited at paragraph 36), provides as follows:
“
The interest on that part of a debt
which consists of the present value of a loss which will occur in the
future shall not commence
to run until the date upon which the
quantum of that part is determined by judgment, arbitration or
agreement and any such part shall
for the purposes of this act be
deemed to be a judgment debt”
28] As
a portion of the rental payable in terms of the first agreement had
been paid, albeit late, the whole of the plaintiff’s
claim for
damages was of a prospective nature on the day that it arose namely,
the date on which the cancellation became effective
i.e. 1 August
2003. That being the case, the provisions of section 2 A (3) of the
Act are applicable. Accordingly interest at the
maximum legally
prescribed rate of 15,5% is payable on the amount of R204 165,58 as
from 17 January 2006 to date of payment.
29] The
plaintiff in claim (d) of the Particulars of Claim seeks an order
that the first defendant be ordered to pay an amount of
R29 410,53 in
respect of value-added tax on the basis of an allegation that the
plaintiff is obliged to pay such tax on the damages
claimed by it.
It is common cause that both the plaintiff and the first defendant
are value-added tax vendors and that the first
respondent, in terms
of the provisions of the first agreement was liable to pay to the
plaintiff the value-added tax payable by it
on the rental to be paid
in terms thereof. Although the plaintiff’s counsel in her
supplementary heads of argument submitted that
it is common cause
between the parties that value-added tax will be payable by the
plaintiff on any amount of damages that may be
awarded to it, my
recollection is that the first defendant’s counsel during argument
adopted the attitude that such an award, being
one of damages, would
not attract such liability as it falls outside the ambit of the
provisions of Act 89 of 1991. Although my
prima facie view, after a
rather cursory perusal of the said act, is that such an award does
not attract liability for value-added
tax, I am not in a position to
make a considered finding thereanent as I have not had the benefit of
full argument thereon by either
of the parties’ counsel. In order
to obviate the possibility of the plaintiff being under- or
over-compensated the appropriate
manner to deal with that aspect
appears to me be to reserve judgment on claim (c) of the Particulars
of Claim and to grant the plaintiff
leave to approach this court,
after proper notice to the defendants and further argument, if
necessary, for the granting thereof
should the South African Revenue
Services rule that value-added tax is payable on the award that I
intend making. Such an order
gives recognition thereto that whether
the plaintiff is so liable or not is a matter between it and the
South African Revenue Services
(Cf:
Solomon NO v Spur Cool
Corporation (Pty) Ltd and Others
(supra) at 374 a – b).
30] The
plaintiff in claim (e) of the Particulars of Claim also claims costs
of suit on a scale as between attorney and client. That
claim is
based on two grounds. The first is that costs on such a scale are
claimable in terms of the provisions of clause 15 of
the first
agreement. The second is that an award of costs on such a scale is
warranted because the representatives of Betting World
and the first
defendant colluded to deliberately mislead the plaintiff as regards
the status of the former’s sub-tenancy as well
as its intentions as
regards its future occupation of the premises.
31] First
defenant’s counsel disputed that the plaintiff was entitled to
claim costs on a punitive scale because, so it was submitted,
the
plaintiff had elected to cancel the first agreement and was not
entitled to rely on the provisions of section 15 of the first
agreement. Clause 15 of that agreement provides as follows:
“
In the event of the lessor finding
it necessary to instruct attorneys to take steps … to claim …
damages arising out of this
lease … then the lessee shall pay all
legal costs incurred by the lessor in connection therewith as between
attorneys and client
…”
32] The
question for decision is whether, despite the plaintiff’s
cancellation of the first agreement, its claim for damages could
still be said to have arisen out of it. It was held in
Sydney
Road Holdings (Pty) Ltd v Simon
1981(3) SA 104 (D &
CLD) - in which a surety had bound himself to a lessor of premises
for all obligations of the lessee
“arising from” an agreement of
lease - that damages suffered as a result of a premature
termination thereof “would spring
from” the agreement of lease
(also see:
Norex Industrial Properties (Pty) Ltd v Monarch
South Africa Insurance Co Ltd
1987(1) SA 827 (A) at 836 J –
837 A). As the plaintiff’s claim for damages flowed from the
cancellation of the first agreement,
which in turn followed upon the
invocation by it of the lex commissoria embodied in clauses 12.1 and
12.2 thereof I, by parity of
reasoning, incline to the view that the
plaintiff’s claim did in fact arise therefrom and that it is
entitled to an award of costs
on a scale as between attorney and
client. That finding obviates the need to express any firm views in
respect of the second ground
on which costs on a punitive scale is
being claimed.
33] The
defendants’ counsel has submitted that the wasted costs occasioned
by the postponement, which was sought and granted on
8 November 2005,
had been brought about by the failure on the part of the plaintiff to
have made adequate discovery. The nature
of the plaintiff’s
failure appears from the supplementary heads of argument that had
been filed by the defendants’ counsel.
It appears therefrom that
as a result of the perusal of the documentation in Mr Weare’s
possession during consultations, there
were documents in the
plaintiff’s possession which had not been discovered. After the
plaintiff had responded to the first respondent’s
request to make
its file relating to the matter available, the existence of
additional documents relevant to the extension of the
suspensive
condition embodied in the second agreement and the negotiations
thereanent came to light of which the plaintiff had not
made
discovery in its affidavit of 7 October 2005. My recollection is
that the defendant’s counsel in chambers conveyed to me
that the
postponement was sought, inter alia, to consider whether the
additional documents necessitated an application for an amendment.

As the plaintiff’s counsel has not joined issue in her
supplementary heads of argument therewith, the accuracy of the
factual
averments made by the defendants’ counsel must be accepted.
A perusal of the documents in question (exhibits A, pages 115 –
121; 126 – 133; 149 – 151; and 183 – 187) shows that they
relate to matters in question in the action within the meaning
thereof in Uniform Rule 35(1) and accordingly had to be discovered.
The purpose of timeous and adequate discovery and the importance
thereof in the finalization of civil trials need not be
re-emphasised. Where there has been inadequate discovery, such as
happened
in the instant case, there is an onus on the defaulting
party to show an absence of prejudice on the part of the innocent
party:
not vice versa (See:
Ferreira v Endley
1966(3) SA
618 (E) at 621 E – G). As the plaintiff has not even attempted to
provide a reason for its failure, the onus has not
been discharged.
It follows logically that the defendants are entitled to an order
compelling the applicant to pay all wasted costs
occasioned by the
postponement of the matter on 8 November 2005.
34] In
the premises the following orders are made: -
a) An
order is made in terms of claim (a) of the Particulars of Claim in
favour of the 4
th
Defendant.
b) The
following orders are made in favour of the plaintiff against the
first, second, third and fourth respondents jointly and severally,
the one paying the other to be absolved –
i) payment
of damages in an amount of R204 165,58.
ii) interest
on the amount of R204 165,58 at the rate of 15,5% from 17 January
2006 to date of payment
judgment
on claim (c) of the Particulars of Claim is reserved and the
plaintiff is authorised to approach this court for relief
thereon,
after notice to the applicant and argument if necessary, in the
event of the South African Revenue Services ruling that
the
plaintiff is obliged to pay value-added tax on the amount of
paragraph (b)(i) hereof. It is recorded, for the sake of clarity,
that no provision has been made in arriving at the amount in (b)(i)
hereof for the payment of such tax.
c) The
first, second, third and fourth defendants jointly and severally, the
one paying the other to be absolved, are ordered to pay
the
plaintiffs costs (excluding the costs in paragraph (d) below) on an
attorney and client scale.
d) The
plaintiff is ordered to pay the first, second, third and fourth
defendants’ wasted costs occasioned by the postponement of
8
November 2005.
e) Claim
2 of the first, second, third and fourth defendants counter claim is
granted but in an amount of R73 448,11 as agreed between
the parties.
______________
D.
VAN REENEN